ANNUAL REPORT 2016/2017 NSR ANNUAL REPORT 2016/2017 IMPORTANT INFORMATION
ABOUT THIS REPORT Welcome to National Storage REIT’s 2017 Annual Report which reports our performance for the financial year 1 July 2016 – 30 June 2017.
The 2017 Reporting Suite includes: Annual Report – a review of FY17 performance, strategy and governance Financial Report – FY17 financial accounts and detailed financial performance Sustainability Report – outlines NSR’s approach to sustainability based on the Global Reporting Initiatives (GRI) G4 framework The 2017 Reporting Suite is available online at www.nationalstorageinvest.com.au
National Storage Holdings Limited ACN 166 572 845 (“NSH” or the “Company”) National Storage Property Trust ARSN 101 227 712 (“NSPT”) together form the stapled entity National Storage REIT (“NSR” or the “Consolidated Group”)
RESPONSIBLE ENTITY OF NSPT National Storage Financial Services Limited (NSFL) ACN 600 787 246 AFSL 475 228 Level 23, 71 Eagle Street, Brisbane QLD 4000
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.
TABLE OF CONTENTS TABLE OF CONTENTS
04 OUR BUSINESS 06 OUR FY17 PERFORMANCE 08 OUR STRATEGY 10 OUR PORTFOLIO 14 CHAIRMAN & MANAGING DIRECTOR’S REPORT 18 INVESTMENT PARTNERS 20 THE YEAR IN REVIEW 26 BOARD OF DIRECTORS 30 SENIOR EXECUTIVES 32 CORPORATE GOVERNANCE 34 DIRECTORS' REPORT 60 FINANCIAL STATEMENTS
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 3 OUR BUSINESS
National Storage is one of Australasia’s largest self- storage providers, tailoring self-storage solutions to 40,000 residential and commercial customers at more than 115 storage centres across Australia and New Zealand.
National Storage REIT is the only publicly listed fully integrated owner and operator of self-storage centres in Australasia. The National Storage offering spans self-storage, business storage, records management, climate controlled wine storage, vehicle storage, vehicle and trailer hire, packaging, insurance and other value added services. 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 wide range of packaging materials on offer, together with a team of professionals trained in the exacting task of efficient storage.
OUR BUSINESS NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 5 OUR FY17 PERFORMANCE at 30 June 2017
Financial Highlights
$117.5m $103.4m $45.7m
Total Revenue IFRS profit Underlying Earnings1
FY16: $79.8m FY16: $44.0m FY16: $29.2m 47% 135% 57%
Operational Highlights
116 622,000 65,000
Number of Centres Square Metres of Number of Storage Units Net Lettable Area
FY16: 105 FY16: 542,000 FY16: 59,000 11 81,000 10%
Capital Strength
$1,437m 37% 4.6
Total Asset Value Gearing Weight Average Debt Tenor
FY16: $900m FY16: 38% FY16: 2.0 $537m 1% 2.6years
OUR FY17 PERFORMANCE 1 Underlying earnings is a non-IFRS measure (unaudited) 9.2cps 9.2cps 2 Same centre 30 June 2016 excluding New Zealand and developing centres 3 Investment properties net of finance lease Underlying Earnings Distribution per liabilities per Stapled Security1 Stapled Security
FY16: 8.7cps FY16: 8.7cps 5.7% 5.7%
77.5% $212m $1,163m
Like for Like Like for Like Revenue Assets Under Occupancy 2 per Available Metre Management (AUM)3 (REVPAM)2 FY16: 75.4% FY16: $202.0m FY16: $959m 2.1% 5.0% 21%
$1.34
Net Tangible Assets per Stapled Security
FY16: $1.14 18%
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 7 OUR STRATEGY
NSR’s objective is to deliver investors a stable and growing income stream from a diversified portfolio of high quality self-storage assets and to drive income and capital growth through active asset and portfolio management.
Acquisitions execute high quality acquisitions in a fragmented industry
+ + +
Asset Portfolio, Management Development balance occupancy and rate to achieve & Centre Management organic growth and drive revenue growth focus on development in markets where leverage management platform and acquisition is challenging economies of scale to extract value maximise portfolio potential through drive cost efficiencies across the portfolio expansion of outperforming assets align with investment partners to execute development opportunities undertake portfolio recycling opportunities to maximise value
OUR STRATEGY Product & Innovation explore market opportunities for revenue generation focus on digital transformation drive innovation and sustainability at a Develop multiple revenue product and portfolio level streams to maximise returns
+ =
Portfolio, Capital Development Management & Centre Management maintain an efficient capital structure
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 9 DARWIN 1 CENTRE
116 CENTRES
PERTH 19 CENTRES
ADELAIDE 6 CENTRES
OUR PORTFOLIO
The National Storage portfolio continues to grow across Australia and New Zealand, with storage centres well located in capital cities and regional areas that exhibit drivers of storage demand.
OUR PORTFOLIO NORTH QUEENSLAND 3 CENTRES SUNSHINE COAST 4 CENTRES
BRISBANE GOLD COAST 19 4 CENTRES CENTRES
CANBERRA SYDNEY 4 16 CENTRES WELLINGTON CENTRES 3 HAMILTON CENTRES MELBOURNE 1 23 CENTRE CENTRES GEELONG 2 CENTRES HOBART 4 CENTRES 5 CENTRES
2 CHRISTCHURCH CENTRES
DUNEDIN
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 11 PORTFOLIO STATISTICS
PORTFOLIO DIVERSIFICATION BY NLA PORTFOLIO DIVERSIFICATION BY VALUE
6% 10% 1% 1% 2% 23% 12% 29% 16%
6%
6% 17%
12% 28% 5% 20% 4%
Queensland South Australia Queensland South Australia New South Wales Western Australia New South Wales Western Australia Australian Capital Territory Northern Territory Australian Capital Territory Tasmania Victoria New Zealand Victoria Northern Territory New Zealand
NUMBER OF JUNE PORTFOLIO VALUATION PORTFOLIO BY NLA CENTRES 2017 NSR Portfolio Value $1.16 billion North Queensland 3 30,100 Weighted Average Cap Rate 7.86% Sunshine Coast 4 19,500 Gold Coast 4 22,100 PORTFOLIO COMPOSITION NUMBER OF CENTRES Brisbane 19 106,100 NSR Freehold 98 Sydney 16 85,700 NSR Leasehold 15 Canberra 4 27,800 Managed for third party owner 3 Melbourne 23 111,400 TOTAL 116 Geelong 2 8,700 Adelaide 6 35,000 Hobart 4 13,100 Perth 19 97,300 Darwin 1 6,200 Christchurch 5 17,900 Hamilton 1 5,200 Wellington 3 12,300 Dunedin 2 24,100 TOTAL 116 622,500
OUR PORTFOLIO NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 13 CHAIRMAN & MANAGING DIRECTOR’S REPORT
National Storage has experienced significant growth We have achieved a strong result with 5.7% growth since listing in December 2013, with our share price in underlying earnings per stapled security to $45.7 increasing from 98 cents at IPO to over $1.50 and our million, supported by revenue growth of 47% to market capitalisation rising from $200 million to over $117.5 million. Our organic revenue growth in FY17 $750 million. At the same time our portfolio of storage has been underpinned by the delivery of combined assets has grown from an initial 28 owned storage improvement in our twin drivers of occupancy and rate properties and 62 operating business to over 100 per square metre, resulting in revenue per available owned properties and 116 operating business today. metre (REVPAM) growth of 5.0% from $202 to $212. We Our shareholders have enjoyed increasing earnings have continued to successfully execute our acquisition and distributions with earnings per share growing from strategy with a further $138 million in acquisitions 7.5 cps in year one to 9.2 cps or 23% growth over the transacted across the year at an average weighted period to the end of FY17. Total distributions paid or passing income yield of 7.2%, highlighting the long declared to securityholders over the period from IPO term accretive nature of our acquisitions. An additional to date has been 29.9 cps and when combined with $100 million of assets are actively under consideration share price appreciation total securityholder returns of as we move into FY18 and we continue to execute 93.0% or 19.8% compound annual return have been our strategy in the highly fragmented Australian and achieved. Given our significant expansion since listing, New Zealand self storage markets. Assets under this year we have focused on consolidating our growth management have grown by 21% to surpass $1.1 and ensuring our systems and processes are at the billion, firmly cementing our position as the largest forefront of industry best practice. storage owner-operator in Australasia. We commenced FY17 with two transformational A range of tools are assisting us to deliver increasing transactions – announcing the acquisition of a 100% underlying earnings, including our industry leading interest in the 26 centre Southern Cross Storage portfolio revenue management system and a greater focus and a concurrent $260 million capital raising. For the on data analytics. This is consistent with industry best balance of FY17 we have focused on improving our practice as witnessed in the storage industry globally. operating fundamentals and transacting high quality acquisitions while continuing to evolve our business model to deliver synergies and scalability.
CHAIRMAN & MANAGING DIRECTOR’S REPORT Our successful investment partnerships and third party construction arrangements provide ongoing development and project management fee income through our joint ventures and, when combined with a select number of on-balance sheet expansions, will provide a highly accretive mix of NTA growth and revenue generation from these new projects. Strategically, this will help enhance our long term revenue and capital growth prospects, to the benefit of all of our stakeholders. We continue to reinforce our prudent approach to capital management, having entered into an institutional term loan securing $100 million of long term debt funding. Under this loan arrangement, the lender acceded into NSR’s existing club finance group providing two $50 million tranches of debt with tenors of eight and ten years. This arrangement illustrates the continued evolution and maturation of our capital management strategy as we seek to broaden our funding sources, better manage refinance risk and balance funding costs with significantly extended tenor. Over the year we have placed an emphasis on building our sustainability expertise and FY17 marks the first year NSR will release a standalone sustainability report – an important milestone in the continued growth of our business. The NSR Sustainability Report has been prepared in accordance with the Global Reporting Initiative’s G4 reporting guidelines, the global benchmark and leading framework for sustainability reporting. As part of our work in this area, we have conducted a feasibility and impact study on the installation of a solar network across the NSR portfolio. NSR currently consumes approximately 9 Megawatt hours of electricity and phase one of the program (involving an initial tranche of 50 storage centres) seeks to save approximately 2 Megawatt hours once operational, with the potential for this to reduce our emissions by up to 2,600 tonnes of carbon dioxide and electricity costs by approximately one third. This will be an ongoing process and represents a landmark project for the broader industry and will be a significant contributor to the long term sustainability and energy efficiency of our portfolio.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 15 MANAGING DIRECTOR'S REPORT At every level of our organisation, our team is At a Board level, we are pleased to welcome Ms Claire committed to the growth and the success of the Fidler onto the NSR Board as an executive director. business. Their engagement and dedication is Claire is an outstanding candidate and has already paramount to our success and we remain deeply added significant value to the business in her roles as co- appreciative of their efforts. Over the year we company secretary and senior legal counsel. She has a completed a health program that witnessed the strong legal and commercial background together with National Storage team collectively take more than a focus on governance and compliance and will bolster 99 million steps and delivered wellbeing outcomes the Board’s skills in these areas. across a range of factors. We continue to embrace The Board is confident National Storage is well placed the diversity of our team and we are pleased to to continue the success of the past year, with the senior support the Pride in Diversity workplace initiative. A truly executive team focused on driving growth across the inclusive workplace fosters a diversity of views, greater business and developing multiple revenue streams to creativity and ultimately allows all employees to work in deliver stable and growing returns for our investors. an environment where they feel safe, valued and able to be their true selves, creating a fully engaged, highly We would like to thank the Board and the broader motivated and united National Storage team. National Storage team for their continued commitment to the growth of National Storage. To our valued We continued our strong commitment to community investors we thank you for your continued support and engagement throughout the year, supporting more look forward to the year ahead. than 80 not-for-profit organisations with more than $300,000 in in-kind support for important community initiatives. The National Storage senior management Yours sincerely team led by example, committing more than 200 hours to community service and actively encouraging their teams to do the same. As an extension of commitment to our team, throughout the year we embarked on a number of Laurence Brindle innovations in process optimisation and automation, Chairman with a strong technology program under development to better support and engage our workforce. By using technology as an enabler we are also building the efficiency of our operating platform and focusing on reduction opportunities. These projects include upgrading our operating environments, transitioning to Andrew Catsoulis paperless ways of working and providing an improved, Managing Director simple and streamlined experience for our internal and external customers. Our customers provide valuable feedback on their tailored storage solutions, and this year we were proud to receive the coveted Canstar Blue award for the Most Satisfied Customers in self-storage in 2017. An ongoing focus on multi-channel marketing and leveraging our strong branding across a range of mediums has delivered improvements in brand and product awareness. Our brand will be viewed more than 70 million times across the calendar year in Australia and New Zealand – an amazing result for a storage business and illustrated by our marketing model being showcased internationally within the storage industry. The National Storage business has reached a critical mass of centres. Looking further into the future we have a superb platform from which to continue to build the business and drive significant efficiencies of scale which will ultimately serve to provide long term value for shareholders.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 17 INVESTMENT PARTNERS
SOUTHERN CROSS PORTFOLIO The Southern Cross Storage Group (Southern The strategy underpins APSF's mandate to maximise Cross) was an unlisted joint venture between absolute investment returns over the investment term. National Storage and Heitman, a global real estate NSR's involvement will serve to grow market share for investment manager. The Southern Cross portfolio the National Storage brand. NSR provides assistance comprised 26 storage centres operated by National and advice to the Fund on a range of matters Storage, and in which NSR held a 10% interest. including site identification, selection and acquisition, In August 2016, NSR acquired the Southern Cross feasibility and input into design and development. portfolio for a net consideration of $285 million. On completion of construction, assets will be Importantly, this transaction secured the long term integrated onto the National Storage operating ownership of these strategically important assets and platform and managed as part of the National will provide NSR the opportunity to unlock further Storage portfolio. NSR holds certain rights to value as the centres continue to mature. purchase the assets upon termination of the Fund, or earlier sale. National Storage Carrara and National Storage PERTH DEVELOPMENT PORTFOLIO Albion opened successfully during FY17 and are The Perth Development Portfolio is a construction performing in line with expectations. and management arrangement with one of Perth’s National Storage Kelvin Grove is currently under leading self-storage construction companies, Parsons construction and is scheduled to open in late 2017. Group. This venture reinforces the National Storage brand as a prominent player in the Perth market. Five sites in and around Perth have been identified LEYSHON GROUP as part of the arrangement, whereby Parsons Group In March 2017, NSR entered into arrangements with long constructs quality self-storage centres branded term investment partner Leyshon Group to acquire a site National Storage. The arrangement will see some on Bundall Road, Bundall on the Gold Coast. centres acquired by NSR on completion and others managed by Parsons Group under the guidelines of Bundall is located approximately 2.5km west of the National Storage operating platform. Surfers Paradise, in close proximity to established drivers of storage demand including residential The partnership has delivered centres at Jandakot, markets and substantial retail and commercial Butler and Perth Airport. NSR acquired Jandakot developments. The 6,900 sqm site currently comprises and Butler during FY17, and Perth Airport is currently retail and warehouse components, and is located operating as a managed centre. NSR retains certain immediately adjacent to the former Masters rights to purchase the assets under this arrangement Hardware store which is proposed for large format retail redevelopment.
AUSTRALIAN PRIME STORAGE FUND It is anticipated the 2,400 sqm existing retail component of the site will be retained and NSR is a cornerstone investor in the Australian enhanced, with the warehouse component Prime Storage Fund (APSF) with an equity interest redeveloped into a multi-level state-of-the-art of up to 25%. APSF was established to facilitate the storage centre comprising approximately 7,000sqm development and ownership of premium self-storage of net lettable area. centres in select major cities around Australia. APSF focuses its activity in inner city markets where there is demand for a premium storage product, developing new institutional grade assets with state-of-the-art facilities and freehold tenure.
INVESTMENT PARTNERS NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 19 THE YEAR IN REVIEW
ASSET MANAGEMENT Revenue per Available Square Metre (REVPAM) is the key operational metric for the NSR portfolio. The Operations Management Team maintain a focus on driving REVPAM using a balanced approach to rate per square metre and occupancy growth on an individual centre and unit type basis. At 30 June 2017, REVPAM on a like-for-like basis (all owned centres at June 2016) was $212/sqm (June 2016: $202/sqm). Occupancy across the portfolio on a like-for-like basis increased to 77.5% (June 2016: 75.4%). A continued focus on active revenue management delivered growth across FY17. The progressive implementation of an advanced multiple signal revenue management modelling system, together with a storage specific data analytics platform continues to deliver efficiencies and enhance scalability across the operating platform. FY17 saw an evolution of the management structure across storage operations, with a number of senior operational management roles created to strengthen accountability at a regional level. As the portfolio continues to grow, the NSR operating model will continue to evolve in order to meet the challenges of trading environments, and to optimise operating performance. Partnerships with ParcelPoint, Australia’s largest network of locations for parcel collection, and U-Haul, a leading national trailer rental provider work to drive foot traffic and generate awareness of centres in local areas. ParcelPoint delivered more than 11,500 parcels to National Storage centres in FY17, while U-Haul rented more than 1,700 trailers from National Storage centres across Australia.
Ancillary income streams including packaging sales, insurance and vehicle/trailer hire increased by 27% across FY17.
THE YEAR IN REVIEW ACQUISITIONS National Storage has successfully completed 12 acquisitions (excluding the Southern Cross portfolio) in FY17 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.
NLA STORAGE PURCHASE CENTRE STATE DATE (Sqm) UNITS PRICE Butler1,2 Western Australia August 2016 5,100 480 $8.8m Kurnell1 New South Wales August 2016 12,400 750 $17.5m Moonah Central Tasmania September 2016 2,400 200 $3.3m Artarmon Central New South Wales December 2016 3,400 560 $10.8m Guilford, Rockingham, Subiaco2 Western Australia January 2017 - - $30.0m Kenepuru Wellington (NZ) January 2017 4,300 500 NZ $9.8m Brooklyn Victoria March 2017 5,300 350 $9.0m Gardens, Kaikorai Dunedin (NZ) March 2017 20,800 1,550 NZ $14.0m Jandakot1 Western Australia May 2017 5,200 500 $8.1m Brendale, Lawnton, Rothwell Queensland June 2017 19,700 1,800 $28.0m Total (since 1 July 2016) - 12 Centres 78,600 6,690 $138.0m
1 - Developing Centres 2 - Purchase of leasehold interest and renegotiation of lease terms in Subiaco
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 21 WINE ARK Wine Ark, Australia’s largest wine storage provider is part of the National Storage group and houses over two million bottles of fine wine across 16 centres for clients located in over thirty countries. There are few businesses in Australia with more experience when it comes to storing and managing premium wine. During FY17, Wine Ark released its highly anticipated Australia's Most Collected Wines 2016, with Penfolds Bin 389 atop the list, toppling big brother Penfolds Grange after nine years in the top spot. Wine Ark’s list of the 50 most collectable wines, released every three years, has become the go-to guide on the subject and the results are a clear indication of trends when it comes to cellaring. Jeremy Oliver, wine writer and presenter believes “There are lists and rankings of Australian wine labels but none are more current than this list from Wine Ark, which presents a genuine reflection of what Australian wines are being cellared in this country in almost real time”. This campaign received broad media coverage across main stream and specialist wine media. Wine Ark’s growing customer base and calendar of wine events, hosted in bespoke event spaces in Alexandria NSW, Brisbane City QLD and Hawthorn VIC, contributed to more than 50% growth in wine sales across the business. This increase in wine sales continues to drive capacity into both managed cellarage and private wine vaults. Throughout FY17 Wine Ark continued to strengthen its relationship and involvement in the greater wine trade supporting the Wine Communicators of Australia, Sommeliers Association of Australia, Wine Australia, Commanderie de Bordeaux (Australian Chapter). Wine Ark proudly supports women in wine, and is the principal sponsor of the Australian Women in Wine Winemaker of the Year Awards. Wine Australia is the governing body of wine in Australia and invests in research and development, marketing, disseminating knowledge, encouraging adoption and protecting the reputation of Australian wine. Wine Australia has centralised its wine storage, logistics and consolidation requirements for Australian and International Tasting activities within Wine Ark’s national cellars. It is important for Wine Australia to showcase Australian wine that has been stored in optimum conditions to demonstrate the best of Australian wine, its finest characters and vibrancy. In April 2017 Wine Ark was the exclusive storage and logistics provider for the Sommeliers of the World and Top 50 Restaurants in the World campaign in Melbourne. More than 2,600 bottles were managed for over 20 events spanning seven days and 18 event venues.
THE YEAR IN REVIEW MARKETING & CUSTOMER EXPERIENCE Awareness, engagement and conversion continued to drive marketing strategy in FY17 to deliver growth across the business. A strong focus on digital channels and platforms saw website traffic increase by 50% over the year. Search engine optimisation strategies delivered results with more customers finding the National Storage website organically than via paid advertising channels, and the emphasis on creating authentic, helpful content on the National Storage blog, The Store-y, contributed to this growth. Engaging content from The Store-y is also gaining reach and momentum on social media, which is playing a more prominent role in our strategy as a platform for building product and brand awareness, reach and engagement. The National Storage Online Box Shop successfully launched during the year, with a new click-and-collect platform to encourage foot traffic into the centres. Investment continues into digital channels including search engine optimisation and online advertising platforms to drive brand awareness and deliver conversions, with the aim of nurturing a digital competitive advantage to capitalise on the shift to digital across the storage landscape. Sponsorship continued generating high level brand awareness across FY17, engaging fans across Australia and New Zealand and bringing product and brand awareness to a broad demographic across a range of capital city markets and sporting codes. In FY17, collectively the National Storage brand was seen by audiences of over 35 million and tens of thousands of fans engaged with the National Storage Locker Room platform online, through social channels and on game days. Delivering excellent customer experience is central to the National Storage ethos and this dedication to customer service saw Canstar Blue award National Storage “Most Satisfied Customers” in 2017. National Storage received five stars across all categories, including overall satisfaction, value for money, customer service, safety and security and quality of storage. Customers continue to share their experiences with National Storage on independent review websites, which currently rank National Storage 8.6 out of 10.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 23 SUSTAINABILITY This year National Storage releases its first standalone sustainability report. The report can be found online at www.nationalstorage.com.au and details performance across environmental, social and governance aspects based on the Global Reporting Initiative framework. The overall vision and strategy for National Storage is to ensure we set realistic and achievable goals whilst ensuring rigorous and appropriate sustainability targets in the short, medium and long-term. These targets are designed to manage any potentially significant economic, environmental, and social impacts that National Storage causes, contributes to, or that may be directly linked to our service delivery, products or as a result of relationships with others, including our suppliers and communities. NSR’s key stakeholders have been identified and prioritised according to the level of sustainability impact we believe our operations have on their day to day activities, and, in turn, their sustainability impact on day to day activities. These impacts span our identified material economic, social and environmental sustainability risks. NSR's key stakeholder groups are: • Employees • Customers • Investors • Suppliers • Community • Government and Regulators
THE YEAR IN REVIEW In preparation for this report, the GRI Reporting Principles were incorporated into a review as follows: • A review of stakeholders and associated engagement throughout the reporting year was conducted, but not specifically for compilation of this report (GRI Principle ‘Stakeholder Inclusiveness’) • Economic, social and environmental impacts of National Storage operations were identified and reviewed (GRI Principle ‘Sustainability Context’) • Economic, social and environmental impacts were assessed and ranked in terms of risk to the organisation and stakeholders (GRI Principle ‘Materiality’) • The GRI and other topics included in this report are those that have been identified as material to National Storage and its stakeholders in FY17 (GRI Principle ‘Completeness’) and are:
ECONOMIC SOCIAL ENVIRONMENTAL GENERAL Economic Performance Employment Materials Data Management Systems Labour / Management Cyber Security Anti-Corruption Energy Relations Occupational Health Governance / Shareholder Anti-Competitive Behaviour Emissions and Safety Rights Access to Markets Training and Education Effluents and Waste Technology / Connectivity Diversity and Equal Maintenance of Investments Land Remediation Opportunity Non-Discrimination Natural Hazards Local Communities Customer Health and Safety Customer Privacy Socio-economic Compliance Ageing population/Changing demographics Changes in consumer expectations
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 25 BOARD OF DIRECTORS
LAURENCE BRINDLE ANTHONY KEANE
Independent Non-executive Chairman Independent Non-executive Director BCom BE (Hons) MBA BSc(Maths) GradDipCorpFin
Laurence has extensive experience in funds Anthony is an experienced finance and business management, finance and investment. Until 2009 executive with over 30 years background in he was an executive with Queensland Investment corporate, institutional, business and retail banking. Corporation (QIC). During his twenty-one years with Prior to accepting his directorship with National QIC he served in various senior positions including Head Storage, Anthony was most recently Head of of Global Real Estate where he was responsible for a Corporate Banking Queensland for National portfolio of $9 billion. Laurence was also a long term Australia Bank and was responsible for the bank’s member of QIC’s Investment Strategy Committee. He relationships with large privately owned and public provides advice to a number of investment institutions listed companies across a broad range of industries on real estate investment and funds management including manufacturing, retail, wholesale, property, matters. Laurence holds a Bachelor of Engineering professional services, technology, leisure and tourism, (Honours) and a Bachelor of Commerce from the transport, mining and associated services. Anthony University of Queensland, and a Master of Business has a Bachelor of Science (Mathematics) from Administration from Cass Business School, London. He University of Adelaide and a Graduate Diploma in is a former Chairman of the Shopping Centre Council Corporate Finance from Swinburne. He is a Fellow of Australia and a former director of Westfield Retail of the Financial Services Institute of Australasia, a Trust and Scentre Group, which owns, operates and Graduate of the Australian Institute of Company develops Westfield shopping centres in Australia and Directors and a member of the CEO Institute. He is a New Zealand. Laurence is also currently the Non- Director of Queensland Symphony Orchestra Pty Ltd. executive Chairman of the listed entity, Viva Energy REIT. Anthony acts as Chairman of the Audit and Risk Laurence serves on the Audit and Risk Committees Committee and is a member of the Nomination and and is Chairman of the Nomination and Remuneration Remuneration Committee. Committees.
BOARD OF DIRECTORS HOWARD BRENCHLEY STEVEN LEIGH
Independent Non-executive Director Independent Non-executive Director BEc Cert Practising Valuer Grad Dip Proj Mgmt
Howard has over 30 years’ involvement in the Steven Leigh joined QIC Global Real Estate in 1991 Australian property industry, as an analyst, investor and was a key member of the senior executive team and fund manager. He is now a professional that acquired and or created through development company director and consultant to the property a portfolio of high quality retail and commercial assets funds industry. Howard co-founded Property in Australia, USA and the UK. Steven has had significant Investment Research Pty Ltd (PIR) in 1989, which experience in the wholesale funds management during the 1990’s was considered a leading business through various market cycles and conditions researcher of both listed and unlisted property funds. and has a strong background in retail, commercial and industrial property with a particular focus on shopping In 1998 Howard was instrumental in establishing the centre acquisitions and redevelopments. funds management business of APN Property Group Limited. During this period he was responsible for After time as the Managing Director of Trinity Limited, the establishment and operations of a number of and later Head of Australia for LaSalle Investment funds investing both directly and indirectly in real Management, Steven re-joined QIC as Managing estate. Howard is currently a non-executive director Director QIC Global Real Estate in 2012 where he is of the ASX-listed APN Property Group Limited (APD) responsible for the group’s $12bn plus property portfolio. and is also a non-executive director of APN Funds Steven is a certified practising valuer and holds a Management Limited, responsible entity for ASX- Graduate Diploma in Project Management from the listed Industria REIT (IDR) and Convenience Retail Queensland University of Technology. Steven is an REIT (CRR). Until July 2017, APN Funds Management associate member of the Australian Property Institute. Limited was also responsible entity for Generation Healthcare REIT (GHC). Steven is a member of the Remuneration and Nomination Committees Howard is a member of the Audit and Risk Committees.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 27 ANDREW CATSOULIS CLAIRE FIDLER
Managing Director Executive Director and Company Secretary BA, LLB, Grad Dip Project Mgmt (Hons) LLB (Honours) BBus (Intl Bus)
Andrew is a qualified lawyer who has been admitted Claire was appointed as the principal company to the Supreme Court of Queensland and the secretary of National Storage on 26 November 2015 Federal Court of Australia. He has had extensive and was appointed Executive Director on 18 July experience in the fields of finance, commercial and 2017. She holds legal and international business property law during his tenure at major law firms qualifications and is admitted as a solicitor of the both in Australia and overseas. He is also a qualified Supreme Court of Queensland. project manager and has considerable property development experience both within the storage Claire has over ten years’ experience in corporate industry and in broader markets. and commercial law in private practice, having practiced in the litigation, resources and corporate A founder of the original National Storage business, areas of two large law firms. Prior to joining National he has over 20 years of specific self-storage industry Storage, Claire spent four and a half years as expertise including in the areas of acquisition, Corporate Counsel and Company Secretary at Rio development, integration and operation of Tinto Coal Australia. During this time, in addition ‘greenfield’ and developed self-storage centres. to providing legal services to the business, she was Andrew was instrumental in the successful acquisition responsible for the corporate governance and ASX and integration of the original portfolio and led the compliance of one of Rio Tinto’s listed subsidiaries company through the IPO. as well as managing the corporate secretarial responsibilities of approximately 60 subsidiaries within the group and providing joint venture support.
Claire has also worked in corporate compliance with the Australian Securities and Investments Commission.
BOARD OF DIRECTORS NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 29 Andrew Catsoulis Managing Director BA, LLB, Grad Dip Project Mgmt (Honours)
Claire Fidler SENIOR EXECUTIVES Executive Director and Company Secretary LLB (Honours) BBus (Intl Bus)
See page 28.
PETER GREER STUART OWEN
Chief Operating Officer Chief Financial Officer BBus, CPA, GAICD
Peter gained his experience over 15 years in the Stuart joined National Storage in late 2014, with finance industry with one of Australia’s largest banking extensive experience in the energy sector in coal and organisations. He developed extensive experience gas fired power generation. He has held wide ranging in relation to the self-storage industry, specifically in finance and commercial management roles, including the financing, operations and development of self- as Commercial Manager for Energy Developments storage centres. Peter then transferred these skills Limited. Prior to this, Stuart was commercial manager on and has exclusively worked in the self-storage industry the delivery of a multi-site gas fired power generation for the last 20 years with a focus on commercial project and micro LNG plant. management, strategic business planning and day- He has significant experience in project financing, to-day operational management. He was one of the mergers and acquisitions and project development. founding shareholders of National Storage and has Stuart holds a Bachelor of Business, is a Certified worked side by side with Andrew to grow the National Practising Accountant and is a graduate of the Storage business. Australian Institute of Company Directors. Peter is a former board member of the Self Storage Association of Australia (SSAA), including a term as the President of this body and a regular speaker at the national SSAA conference.
SENIOR EXECUTIVES PATRICK ROGERS MAKALA FFRENCH CASTELLI
General Counsel and Chief Risk Officer General Manager - Marketing and Corporate LLB, BBus (Accty) BBus (Marketing/E-Business), Grad Dip Arts
Patrick holds both legal and accounting qualifications Makala has twelve years’ experience in corporate and is admitted as a solicitor of the Supreme Court of communications, investor relations and marketing Queensland. He has practiced as a solicitor for over 18 communications. She has worked with leading years in both fields. During his time in private practice, companies in the property and finance industries, Patrick has had significant experience in corporate, including one of Australia's major investment banks. property, commercial, taxation and transactional A range of roles across marketing, customer work. In addition to private practice, Patrick held experience, corporate affairs and compliance senior finance roles and was the general counsel and have afforded her commercial and transactional company secretary of the Super A-Mart Group for over experience in property and funds management eight years where he was extensively involved in the environments. She joined National Storage pre- operations of the company. Patrick was appointed IPO and oversees a broad portfolio including Chief Risk Officer of National Storage REIT in June retail marketing, technology, innovation, business 2016, in addition to his role as General Counsel and a improvement and corporate affairs. Company Secretary of NSR. Makala holds a Bachelor of Business (Marketing/E- Business) and a Graduate Diploma in Arts. She is the Deputy Chair of the Self Storage Association of Australasia.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 31 CORPORATE GOVERNANCE
The boards of NSH and NSFSL are comprised of the An important component of the NSR corporate same members. NSH and NSFSL have their own governance structure is the ASX Corporate constitutions. The relationship between NSH and the Governance Principles and Recommendations Responsible Entity is governed by a Cooperation (the “ASX Recommendations”). The NSH Board Deed and Management Agreement. These considers that as at the date of this statement, the documents facilitate common processes and governance practices adopted by NSR comply with governance for NSR. Through the Board Charter, the the third edition of the ASX Recommendations. NSH Board is charged with the function of providing overall strategic guidance and effective oversight of management of NSR. BOARD & MANAGEMENT RESPONSIBILITY NSR’s compliance with the ASX Recommendations are detailed in the NSR Corporate Governance GOVERNANCE FRAMEWORK Statement, Appendix 4G and all NSR governance The NSH and Responsible Entity Boards and NSH Policies and Charters, full copies of which can be management are committed to high standards found in the Governance section of the website at of corporate governance and to ensure NSH www.nationalstorageinvest.com.au. NSFSL became acts in the best interests of the Stapled Entity and the responsible entity for the NSPT in November its Securityholders as a whole, balanced with its 2015. The majority of the board of NSFSL have been broader community obligations. To achieve this, the determined to be external directors and therefore NSH Board has created a framework for managing a compliance committee has not been convened. National Storage Group including internal controls NSPT is a registered managed investment scheme and a business risk management process. The and the rights and obligations of the Responsible governance system is reviewed during each year Entity as a responsible entity of NSPT and NSPT by the Company Secretary, Chief Risk Officer and Unitholders are governed by the constitution of NSPT. the Board to ensure that it reflects changes in the As the responsible entity of NSPT, the Responsible law. In its ongoing commitment to solid corporate Entity must comply with all obligations set out in governance, NSR completed the roll out of its the constitution and the Corporations Act. The broad-scoped enterprise risk project during FY17. Responsible Entity is also subject to duties including The NSH Board’s obligations are discharged through duties to act in the best interests of NSPT Unitholders, a number of mechanisms including meetings and act honestly, exercise care and diligence, and treat its committees. During the financial year ended NSPT Unitholders of the same class equally. In order 30 June 2017, the NSH Board has convened the to ensure compliance with the constitution and the following committees as part of its corporate Corporations Act, the Responsible Entity has in place governance framework: a compliance plan which sets out the measures it will apply in operating NSPT. The role of the NSH Board is to provide overall strategic guidance for NSR and COMMITTEE CHAIR MEMBERS effective oversight of management. It is responsible Laurence Brindle, for monitoring the financial performance of NSR and Audit Anthony Keane Howard Brenchley the performance of the Managing Director and senior executive team. Laurence Brindle, Risk Anthony Keane Howard Brenchley The NSH Board ensures the activities of NSR comply Anthony Keane, with its constitutions, from which NSH Board derives Nomination Laurence Brindle Steven Leigh its authority to act, and with legal and regulatory Anthony Keane, requirements. The responsibility for the daily Remuneration Laurence Brindle Steven Leigh operation and management of NSR is delegated to the Managing Director who undertakes this NSH committees are governed by their respective task in accordance with the strategy, policies and Charters. plans approved by the NSH Board. The Managing The NSH Policies provide for an Investment Committee Director has authority to subdelegate to the senior and a Diversity Committee. The Board has determined management team. that the Investment Committee and Diversity Committee functions be undertaken by the full Board at this time.
CORPORATE GOVERNANCE BOARD COMPOSITION & INDEPENDENCE RISK MANAGEMENT The current NSH Board is comprised of six Directors, NSR’s operations expose it to risks. A summary of being four non-executive Directors (one of whom potential risks is set out on pages 39-40 of this report. is the Chairman), the Managing Director and an Risks can be either of a controllable nature or of a Executive Director. Detailed information about non-controllable / less controllable nature. Examples the Directors is set out on pages 26-28. The NSH of controllable risks are systems, processes and staff Board considers that its current members have based risk. Non-controllable or less controllable risks an appropriate balance of skills, independence are generally risks considered to be “external” to and experience to discharge their obligations and the Company such as macroeconomic factors, effectively chart the strategy of NSR. The NSH Board financial, regulatory or market risks. Assumption considers that it is appropriate and in the best interests of operating risks is undertaken through the risk of NSR and the stapled securityholders to periodically management framework which seeks to identify, review the size of the Board and its skill set to ensure control and minimise risk where possible. NSR that it remains appropriate for NSR. In July 2017, the maintains a Risk Management Policy which NSH Board resolved to expand the size and skill set of lays a foundation for the NSH Board and senior the Board by appointing Ms Claire Fidler as a director management to manage risk and decision making of the Board. Ms Fidler has been the Company by officers of NSR. A copy of the Risk Management Secretary of NSH and NSFSL since November 2015 Policy can be found on the website at www. and has worked in the senior executive team during nationalstorageinvest.com.au. Senior management this period. She brings to the Board an extensive legal of NSR and the NSH Board are committed to and compliance background. effective risk management in the operation of NSR. The Boards of NSH and NSFSL, as responsible entity, consider that all of the current non-executive Directors, being the Chairman Mr Laurence Brindle, Mr Anthony Keane, Mr Howard Brenchley and Mr Steven Leigh to be independent.
COMPANY SECRETARIES Ms Claire Fidler is the principal Company Secretary of NSH and NSFSL. Mr Patrick Rogers is an additional Company Secretary for each of NSH and NSFSL. Detailed information on Ms Fidler and Mr Rogers is contained on page 28 and 31 in this report.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 33 DIRECTORS' REPORT
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017 KEY HIGHLIGHTS
Group FY16 FY17 Change Tot Re e e . 11 . IFRS profit fter t .0 103. 13 E r i s per st p e sec rit 13.0 cps 20. cps U er i e r i s 1 2 .2 . U er i e r i s per st p e sec rit 1 . cps .2cps . Net oper ti c shf o .3 .1 32 Distri tio per sec rit . cps .2cps .
At June At June Portfolio Change 2016 2017 N er of Ce tres o e e Tot 2 10 113 3 11 3 2 11 i e for i e occ p c 2 . . 2.1 i e for i e Re e e per i e etre RE PA 2 202 212 .2 ei hte A er e Pri r C p R te (AU) .2 . 0.3 Assets U er e e t AU 3 1 1 3 21 J e 201 Portfo io 3 11 Ac isitio s Ce tres 1 23 13 11 12 N A s 1 000 22 000 1 Co p ete c isitio of re i i 0 i terest i the So ther Cross portfo io of 2 stor e ce tres for 2 i io
At June At June Balance Sheet Change 2016 2017 Tot Assets 00 1 3 3 De t r 2 1 I terest R te He es 120 2 1 e ri 3 3 1 ei ht er e cost of e t .1 3. 0. 0 ei ht er e e t te or e rs 2.0 . 2. NTA 1.1 1.3 1 E tere i to 100 i io o Ter I stit tio o
PRINCIPAL ACTIVITIES NSR is the first i ter e f i te r te o er oper tor of se f stor e ce tres to e iste o the AS .
NSR is o e of A str i s r est se f stor e o er oper tors ith 11 se f stor e ce tres er oper tio or e e t t i ori stor e so tio s to o er 0 000 c sto ers cross A str i Ne e . NSR h s ro its portfo io of o e e ce tres o er fro 2 ce tres i Dece er 2013 to 11 ce tres t the te of this Directors’ Report. NSR o es o er 00 stor e its cross ppro i te 22 000 s of hich 000 s is occ pie of et ett e re ro A str i Ne e . AU h s i cre se to 1 1 3 i io s t 30 J e 201 .
Of the 11 se f stor e properties i the NSR portfo io o ership is s fo o s
se f stor e ce tres o e NSPT 1 se f stor e ce tres oper te s o ter e seho ce tres e seho Ce tres 3 thir p rt e ce tres.
1 U er i e r i s is o IFRS e s re ite see t e ithi Oper ti Res ts for reco ci i tio 2 S e ce tre 30 J e 201 excluding New Zealand and developing centres 3 I est e t properties et of fi ce e se i i it E c i tr s ctio costs App i N D AUD e ch e r te of 1.0 Net co si er tio pre tr s ctio costs
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 2
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 35 T e National Storage core rod ct offering covers self storage b siness storage ard stand ve icle storage and wine storage at National Storage’s climate controlled storage facilities and via Wine Ar w ic o erates dedicated self access and managed cellars Ancillar income streams are derived from ot er related activities incl ding ac aging sales and ve icle trailer ire
BUSINESS STRATEGY
NSR’s objective is to deliver investors a stable and growing income stream from a diversified ortfolio of ig alit self storage assets and to drive income and ca ital growt t ro g active asset and ortfolio management incl ding t e ac isition develo ment or redevelo ment and ortfolio rec cling of self storage centres
T e e drivers of t e b siness are
Asset management – driving an a ro riate balance between rental rate and occ anc growt and activel rs ing ot er b siness develo ment initiatives in com lementar areas s c as wine storage doc ment storage and mini logistics for S Es Portfolio management – ac iring and integrating alit self storage assets into t e NSR ortfolio Centre anagement – effective o eration of individ al self storage assets and t e e ansion of t e National Storage Centre anagement latform reven e from t ird arties Develo ment management – develo ment ref rbis ment redevelo ment of new and e isting centres and activel managing ortfolio rec cling o ort nities Ca ital management – maintaining an a ro riate and efficient ca ital str ct re wit a foc s on ris minimisation and t e develo ment of long term s stainable and growing reven e streams and Prod ct and innovation – e loring o ort nities for reven e generation across new sales c annels digital strategies and ancillar rod ct ranges
F rt er details on t ese e b siness drivers can be fo nd in t e National Storage 201 Ann al Re ort
REVIEW AND RESULTS OF OPERATIONS
T e Financial Statements of NSR are re ared in com liance wit A stralian Acco nting Standards and t e re irements of t e Corporations Act Cth 2001
OPERATING RESULTS
IFRS Profit after ta for t e Re orting Period was 103 million wit EPS of 20 cents Underl ing earnings increased b to million NSR also delivered solid growt of in nderl ing earnings er sta led sec rit to 2c s for t e 201 financial ear
FY17 FY16 IFRS Profit 103 m 0m Pl s ta e ense benefit 2m 0 2 m Pl s b siness combination restr ct re and ot er non rec rring costs 1 0m Pl s contracted gain in res ect of sale of investment ro ert 1 m ess fair val e adj stment m 10 0m ess finance lease dimin tion 3 m m Underlying Earnings $45.7m $29.2m
Total reven e rose b to 11 million Occ anc across t e J ne 201 ortfolio incl ding So t ern Cross e cl ding develo ing centres increased to from at 30 J ne 201 T is is a leasing res lt and demonstrates t at t e contin ed foc s on driving increased occ anc is delivering res lts Reven e er available metre RE PA increased b to 212 s m from 202 s m at J ne 201 demonstrating strong reven e growt via t e combination of growing occ anc and rental rates
Underl ing earnings is a non IFRS meas re na dited
DIRECTORS'DIRECTORS’ REPORT REPORT FOR FOR THE THE YEAR YEAR ENDED ENDED 30 JUNE 30 JUNE 2017 201 3
CASH MANAGEMENT
Cash and cash equi alents as at 30 June 201 were 23.2 million compared to 13. million at 30 June 201 . Net operating cashflow for the ear increased to .1 million 201 .3 million .
On 2 June 201 NSR announced a full underwritten 2 0 million equit raising comprising a 101 million institutional placement of new stapled securities in NSR and a 1 million pro rata accelerated non renounceable entitlement offer. The purpose of the equit raising was to fund the acquisition of the remaining 0 interest in the Southern Cross Joint enture and four new centres as well as to strengthen the balance sheet and pro ide funding for future acquisitions in accordance with NSR’s acquisition strateg . The Entitlement Offer closed on 1 Jul 201 and completion of the issuance of new securities to in estors was finalised on 22 Jul 201 .
An interim distribution of . cents per stapled securit 23.1 million was paid on 2 Februar 201 with a final distribution of . cents per stapled securit 23. million declared on 22 June 201 with an estimated pa ment date of 30 August 201 deli ering a . increase in the total distribution for the ear to .2 cents per stapled securit .
During the reporting period NSR once again offered the Distribution Rein estment Plan DRP which enables eligible securit holders to recei e part or all of their distribution b wa of securities rather than cash.
For the December 201 interim distribution approximatel 2 of eligible securit holders b number of securities elected to recei e their distributions as securities totalling 2 2 . The DRP price was set at 1. 0 which resulted in 3 31 3 new securities being issued.
The June 201 final distribution has seen approximatel 20. of eligible securit holders b number of securities elect to recei e their distributions as securities totalling approximatel . million. The price of the DRP securities will be determined on a 10 da olume weighted a erage market price AP commencing on and including August 201 less a 2.0 discount.
NSR’s finance facilities are on a “Club” arrangement with a selection of major Australian banks and a major Australian superannuation fund. The Consolidated Group’s borrowing facilities are AUD million and N D million. As at the reporting date AUD 2 million was undrawn and a ailable. NSR acti el manages its debt facilities and continues to increase when and where required to ensure adequate capacit for future acquisitions and working capital requirements. The weighted a erage debt tenor as at the reporting date is . ears up from 2.0 ears as at 30 June 201 . NSR’s target gearing range remains 2 0 to pro ide flexibilit and the abilit to act on acquisition opportunities.
NSR maintains interest rate hedges in accordance with NSR’s hedging polic which is re iewed on a regular basis. Additional interest rate hedges were entered into during the ear to enable NSR to extend the tenor of its hedge portfolio and lock in historicall low interest rates for an extended period. As at the reporting date interest rate hedges totalling A 1 million were in place with expir dates ranging from 0. ears to . ears.
ACQUISITIONS AND INVESTMENTS
NSR considers its abilit to acquire and integrate qualit assets to be one of the ke dri ers of its growth strateg . During the course of the Reporting Period the dedicated acquisitions team continued to identif facilitate and transact on acquisitions that were considered appropriate for the portfolio.
The successful execution of NSR’s acquisition strateg has seen 11 new centres acquired and the freehold interest in three existing leasehold centres from 1 Jul 201 to the date of this Directors’ Report alued at 13 million . Further a combined process was undertaken b both external aluers and the Directors to re alue the 30 June 201 NSR owned centres as at 30 June 201 based on aluations and methodologies from independent aluers m3 Propert and andmark hite which ielded an increase in aluation of 11 from million to 3 million.
Excluding transaction costs
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 37
Centre State Date NLA (Sqm) Units Purchase Price
Butler 1,2 Western Australia August 2016 5,100 480 $8.8m
Kurnell 1 New South Wales August 2016 12,400 750 $17.5m
Moonah Central Tasmania September 2016 2,400 200 $3.3m
Artarmon Central New South Wales December 2016 3,400 560 $10.8m
Guilford, Rockingham, Subiaco2 Western Australia January 2017 - - $30.0m
Kenepuru Wellington (NZ) January 2017 4,300 500 NZ$9.8m
Brooklyn Victoria March 2017 5,300 350 $9.0m
Gardens, Kaikorai Dunedin (NZ) March 2017 20,800 1,550 NZ$14.0m
Jandakot1 Western Australia May 2017 5,200 500 $8.1m
Brendale, Lawnton, Rothwell Queensland June 2017 19,700 1,800 $28.0m Total (Since 1 July 2016) - 11 Centres 78,600 6,690 $138.0m 1 - Developing Centres 2 - Purchase of leasehold interest and renegotiation of lease terms on Subiaco
INVESTMENT IN JOINT VENTURES
NSR 2 201 2 A P S F APSF APSF U S S A T 100 – 0 0 NSR T C A S E A C
I 201 NSR R C NSR 2 2 S P I 2 00 000 NSR
LIKELY DEVELOPMENTS NSR A AS REIT A N NSR I NSR
DIVIDENDS AND DISTRIBUTIONS NSR 2 R P
A 30 J 201 T 30 A 201 A 1 J 201 31 D 201 2 F 201
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
OPTIONS OVER STAPLED SECURITIES No options o er issued stapled securities or interests in a Controlled Entit ha e been granted in NSR during the Reporting Period. There are no options in stapled securities outstanding as at the date of this report.
ENVIRONMENTAL REGULATION NSR’s operations are not regulated b an en ironmental la of the Common ealth or a State or Territor that is enacted specificall for NSR. Ho e er NSR must compl ith broader en ironmental la s. NSH management on behalf of NSR has in place procedures to identif and ensure compliance ith such la s including identif ing and obtaining of necessar appro als consents or licences.
There ha e been no kno n material breaches during the Reporting Period of an en ironmental la s to hich NSR is sub ect.
ENVIRONMENTAL, ECONOMIC AND OTHER SUSTAINABILITY RISKS NSR recognises that it’s operating acti ities and strategic goal of deli ering securit holder gro th and returns e pose it to potential risks. The identification management and here possible elimination or mitigation of those risks is a ke facet of our dail operations.
Risk is managed centrall b management to minimise potential ad erse effects on the financial performance of NSR and protect long term securit holder alue.
The Chief Risk Officer is responsible for management of NSR’s risk function and in turn reports to the anaging Director and the Risk Committee. The Risk Committee is charged ith risk o ersight and reports to the full oard. The full oard is then acti el in ol ed in the ultimate re ie of and determination of risk to ithin sensible tolerances.
Potential risks faced b NSR and its mitigation strategies include but are not limited to
RISK Strategic Risk Poor de elopment and or e ecution of business strateg b the e ecuti e management team can lead to the risk of loss and or poor performance. To mitigate this risk strategies are de eloped b the rele ant responsible e ecuti e or senior officer. These are then re ie ed and discussed as appropriate b other e ecuti e officers and appro ed b the anaging Director and or Chief Operating Officer. Strategic decisions of a significant nature are further put before the oard and discussed in detail and re uire oard appro al. The senior e ecuti e team meet a number of times a ear to discuss strateg and ensure that it remains current and appropriate. This allo s management to ensure it is emplo ing strategies that are updated for changes in the operating en ironment of the business. Economic Conditions Fluctuations in economic conditions including consumer confidence ma ad ersel impact upon demand for storage space. aterial macroeconomic e ents occurring or an significant trading do nturns due to factors be ond the control of management ha e the potential to negati el impact on forecast trading performance. The results of NSR’s operating acti ities are dependent on the performance of the properties in hich it in ests and those it manages on behalf of other parties. This performance in turn depends on economic factors these include economic gro th rates inflation rates and ta ation le els. There are also industr and location specific risks to consider including competitor beha iour. Operational Risk Risk of loss due to its o erall operations and management of other risks e ists as a function of an operating business. NSR aims to ensure that the necessar processes training and super ision is in place and effected to eliminate such loss here er possible. The risk of loss from s stem failures is reduced through s stem backups and disaster reco er contingenc procedures hich aim to ensure the maintenance of NSR’s critical data a ailabilit . General commercial property risks Risks commonl associated ith commercial propert in estment appl e uall to NSR including le els of occupanc capital e penditure re uirements de elopment and refurbishment risk en ironmental or compliance issues changes to go ernment and planning regulations including oning and damage caused b flood or other e treme eather to the e tent that it is not or could not be insured against . NSR utilises a comprehensi e due diligence process hen ac uiring centres to mitigate or eliminate risk here possible. Tenure Storage agreements are t picall month to month and there is no guarantee customers ill rene or that other customers ill be found to take their place upon departure. To mitigate this risk customer relationships are carefull managed to ma imise duration of sta and highl de eloped marketing and management s stems are in place to ma imise con ersion of ne customer en uiries. Competition Entr b ne competing storage centres or discounting b e isting storage centres ma ad ersel impact upon occupanc and rental rates on a centre specific basis. hile there are
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 39 RISK barriers to entry for new competition, NSR constantly monitors its competitors activities to ensure pricing and terms remain competitive. Valuations - Valuations ascribed to NSR’s assets will be influenced by a number of ongoing factors including supply and demand for self storage centres and general property mar et conditions. Valuations represent only the analysis and opinion of qualified experts at a certain point in time. There is no guarantee that a property will achieve a capital gain on its sale or that the value of the property will not fall as a result of the assumptions on which the relevant valuations are based proving to be incorrect. Property liquidity Self storage centres are property based illiquid assets and sub ect to supply and demand factors dependent upon prevailing mar et conditions. As a result it may not be possible for NSR to dispose of assets in a timely or price accretive fashion should the need to do so arise. Future acquisitions and expansions NSR may consider opportunities to ma e further acquisitions of self storage assets. NSR may also develop and expand the lettable area at a number of NSR’s centres. The rate at which NSR is able to expand will reflect mar et forces and the availability of capital at the time. Forecast distributions may be affected by such actions. The ris s faced by NSR in relation to any future development pro ects will depend on the terms of the transaction at the time. There can be no assurance that NSR will successfully identify, acquire and integrate further self storage assets, or successfully implement acquisitions on time and on budget. Furthermore, there is no guarantee that any acquisition will perform as expected. Future acquisitions may also expose NSR to unanticipated business ris s and liabilities. Personnel risk NSR relies upon the expertise and experience of the senior management team. As a consequence, if the services of ey personnel were no longer available this may have an adverse impact on the financial performance of NSR. However, NSR’s senior management team are considered internally to be stable and committed and succession planning is underta en periodically by the NSH oard and anaging Director. Interest rate fluctuations and derivative exposure unfavourable movements in interest rates could lead to increased interest expense to the extent that these rates are not hedged. NSR uses derivative instruments to hedge a percentage of its exposure to interest rates however the interest rate movements could still result in an adverse effect on financial performance. Workplace health and safety There is a ris that liability arising from occupational health and safety matters at a property in NSR’s portfolio may be attributable to NSR as the registered proprietor. To the extent that any liabilities may be incurred by NSR, this may impact upon the financial position and performance of NSR (to the extent not covered by insurance). In addition, penalties may be imposed upon NSR which may have an adverse impact on NSR. NSR has a dedicated focus on Health and Safety including comprehensive reporting to assist in the mitigation or elimination of such ris s and eep our team members, customers and contractors safe. Insurance risk - There is no certainty that appropriate insurance will be available for all ris s on acceptable commercial terms or that the cost of insurance premiums will not continue to rise. Some ris s are not able to be insured at acceptable premiums. Examples of losses that are generally not insured against include war or acts of terrorism and natural phenomena. If any of NSR’s assets are damaged or destroyed by an event for which NSR does not have cover, or a loss occurs which is in excess of the insured amounts, NSR could incur a capital loss and lost income which could reduce returns for holders of stapled securities. Any failure by the company or companies providing insurance (or any reinsurance) may adversely affect NSR’s right of recovery under its insurance. Funding NSR’s ability to raise funds from either debt or equity sources in the future depends on a number of factors, including the state of debt and equity mar ets, the general economic and political climate and the performance, reputation and financial strength of NSR. Changes to any of these underlying factors could lead to an increase in the cost of funding, limit the availability of funding, and increase the ris that NSR may not be able to refinance its debt and or interest rate hedges before expiry or may not be able to refinance them on substantially the same terms as the existing facility or hedge instruments. If alternative financing is not available, this could adversely affect NSR’s ability to acquire new properties and to fund capital expenditure, and NSR may need to realise assets at less than valuation, which may result in financial loss to NSR. Leasehold interests NSR holds lease agreements with certain third parties which allow it to operate storage centres from these properties. ease terms for these properties are typically long (greater than 10 years). However, there is no guarantee that these lease arrangements will be able to be renewed upon expiry or if so on suitable terms to NSR. Environmental issues Unforeseen environmental issues may affect the properties in the property portfolio owned by NSR. These liabilities may be imposed irrespective of whether or not NSR is responsible for the circumstances to which they relate. NSR may also be required to remediate sites affected by environmental liabilities. The cost of remediation of sites could be substantial. If NSR is not able to remediate the site properly, this may adversely affect its ability to sell the relevant property or to use it as collateral for future borrowings. aterial expenditure may also be required to comply with new or more stringent environmental laws or regulations introduced in the future, for example in relation to climate change.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS
NATIONAL STORAGE HOLDINGS LIMITED The NSH Directors in office during the Reporting Period or appointed prior to the date of this Directors’ Report and continuing as at the date of this Directors’ Report are set out below.
NAME POSITION Laurence rindle Non E ecutive Chairman Appointed 1 November 2013 Andrew Catsoulis anaging Director Appointed 1 November 2013 Anthony eane Non E ecutive Director Appointed 1 November 2013 Howard renchley Non E ecutive Director Appointed 21 November 201 Steven Leigh Non E ecutive Director Appointed 21 November 201 Claire Fidler E ecutive Director Appointed 1 July 201
NATIONAL STORAGE FINANCIAL SERVICES LIMITED (NSFSL)
NSFSL was appointed as responsible entity on 10 November 201 . The Directors of NSFSL in office during the Reporting Period or appointed prior to the date of this Directors’ Report and continuing as at the date of this Directors’ Report are set out below.
NAME POSITION Laurence rindle Non E ecutive Chairman appointed 1 July 201 Andrew Catsoulis anaging Director appointed 1 July 201 Anthony eane Non E ecutive Director appointed 1 July 201 Howard renchley Non E ecutive Director appointed September 201 Steven Leigh Non E ecutive Director appointed September 201 Claire Fidler E ecutive Director appointed 1 July 201
DIRECTORS’ QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
Boards of National Storage Holdings Limited and National Storage Financial Services Limited
Laurence Brindle, Independent Non-executive Chairman BCom, BE (Hons), MBA
Laurence has e tensive e perience in funds management finance and investment. Until 2009 he was an e ecutive with Queensland Investment Corporation QIC . During his twenty one years with QIC he served in various senior positions including Head of lobal Real Estate where he was responsible for a portfolio of $9 billion. Laurence was also a long term member of QIC’s Investment Strategy Committee. He provides advice to a number of investment institutions on real estate investment and funds management matters. Laurence holds a achelor of Engineering Honours and a achelor of Commerce from the University of Queensland and a aster of usiness Administration from Cass usiness School London. He is a former Chairman of the Shopping Centre Council of Australia and a former director of estfield Retail Trust and Scentre roup which owns operates and develops estfield shopping centres in Australia and New ealand. Laurence is also currently the Non e ecutive Chairman of the listed entity iva Energy REIT.
Laurence serves on the Audit and Ris Committees and is Chairman of the Nomination and Remuneration Committees.
Andrew Catsoulis, Managing Director BA, LLB, Grad Dip Proj Mgmt (Hons)
Andrew is a ualified lawyer who has been admitted to the Supreme Court of Queensland. He has had e tensive e perience in the fields of finance commercial and property law during his tenure at ma or law firms both in Australia and overseas. He is also a ualified pro ect manager and has considerable property development e perience both within the storage industry and in broader mar ets. A founder of the original National Storage business he has over 20 years of specific self storage industry e pertise including in the areas of ac uisition development integration and operation of ‘greenfield’ and developed self storage centres. Andrew was instrumental in the successful ac uisition and integration of the original pre e isting roup portfolio and led the Company through the IPO and planned and negotiated the ac uisition of the Southern Cross portfolio in 201 .
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 41
Anthony Keane, Independent Non-executive Director BSc (Maths), Grad Dip Corp Fin
Anthony is an experienced finance and business executive with over 30 years background in corporate, institutional, business and retail banking. Prior to accepting his directorship with the Company, Anthony was most recently Head of Corporate Banking ueensland for National Australia Bank and was responsible for the bank’s relationships with large privately owned and public listed companies across a broad range of industries including manufacturing, retail, wholesale, property, professional services, technology, leisure and tourism, transport, mining and associated services. Anthony has a Bachelor of Science athematics from University of Adelaide and a raduate Diploma in Corporate Finance from Swinburne. He is a Fellow of the Financial Services Institute of Australasia, a raduate of the Australian Institute of Company Directors and a fellow of the CEO Institute. He is a director of ueensland Symphony Orchestra Holdings imited and an Independent Non executive director of Oncore roup Holdings Pty td.
Anthony acts as Chairman of the Audit and Risk Committees and is a member of the Remuneration and Nomination Committees.
Howard Brenchley, Independent Non-executive Director BEc
Howard has over 30 years’ involvement in the Australian property industry, as an analyst, investor and fund manager. He is now a professional company director and consultant to the property funds industry. Howard co founded Property Investment Research Pty td PIR in 19 9, which during the 1990’s was considered a leading researcher of both listed and unlisted property funds.
In 199 Howard was instrumental in establishing the funds management business of APN Property roup imited. During this period he was responsible for the establishment and operations of a number of funds investing both directly and indirectly in real estate.
Howard is currently a non executive director of the ASX listed APN Property roup imited APD and is also a non executive director of APN Funds anagement imited, responsible entity for ASX listed Industria REIT IDR and Convenience Retail REIT CRR . Until July 201 , APN Funds anagement imited was also responsible entity for eneration Healthcare REIT HC .
Howard is a member of the Audit and Risk Committees.
Steven Leigh, Independent Non-executive Director Certified Practising Valuer, Grad Dip Proj Mgmt
Steven oined IC lobal Real Estate in 1991 and was a key member of the senior executive team that ac uired and or created through development a portfolio of high uality retail and commercial assets in Australia, USA and the U . Steven has had significant experience in the wholesale funds management business through various market cycles and conditions and has a strong background in retail, commercial and industrial property with a particular focus on shopping centre ac uisitions and redevelopments.
After time as the anaging Director of Trinity imited, and later Head of Australia for aSalle Investment anagement, Steven re oined IC as anaging Director IC lobal Real Estate in 2012 where he is responsible for the group’s $12bn plus property portfolio. Steven is a certified practising valuer and holds a raduate Diploma in Pro ect anagement from the ueensland University of Technology. Steven is an associate member of the Australian Property Institute.
Steven is a member of the Remuneration and Nomination Committees.
Claire Fidler, Executive Director LLB (Hons), B Bus (Int)
Claire was appointed as an executive director on 1 July 201 after acting as the principal company secretary of National Storage since 2 November 201 . She holds legal and international business ualifications and is admitted as a solicitor of the Supreme Court of ueensland. Claire has over 10 years’ experience in corporate and commercial law in private practice, having practiced in the litigation, resources and corporate areas of two large law firms. Prior to oining National Storage, Claire was Corporate Counsel and Company Secretary at Rio Tinto Coal Australia. During this time, in addition to providing legal services to the business, she was responsible for the corporate governance and ASX compliance of one of Rio Tinto’s listed subsidiaries as well as managing the corporate secretarial responsibilities of over 0 subsidiaries within the group and providing oint venture support. Claire has also worked in corporate compliance with the Australian Securities and Investments Commission.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 9 DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017 DIRECTORS I S OF OT ER LISTED CO A IES
Directorships of other listed companies held b current Directors in the three ears immediatel before the end of the financial ear are as follows
A E CO A ERIOD OF DIRECTORS I aurence rindle Scentre roup (AS SC 01 0 201 – 0 0 201 estfield Retail Trust (AS RT December 2010 30 0 201 i a Energ REIT (AS R 10 0 201 Current Howard renchle APN Propert roup (AS APD 1 Current APN Funds Management imited, responsible entit for Industria REIT (AS IDR 03 12 2013 Current Con enience Retail REIT (AS CRR 2 07 201 Current And pre iousl eneration Healthcare REIT (AS HC 12 0 2011 – Jul 201
DIRECTORS’ INTERESTS I SR 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 I DIRECT TOTAL aurence rindle 1,3 2,120 1,3 2,120 Anthon eane 1 ,200 1 ,200 Andrew Catsoulis 3, 00 12, , 13,321, Howard renchle 0,000 0,000 Ste en eigh 1, 00 1, 00 Claire Fidler , 3 , 3
DIRECTORS’ EETI S
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 b each director were as follows
DIRECTOR OARD AUDIT RIS RE U ERATIO O I ATIO CO ITTEE CO ITTEE CO ITTEE CO ITTEE aurence rindle 11 (11 ( ( ( 3 (3 Anthon eane 11 (11 ( ( ( 3 (3 Andrew Catsoulis 11 (11 Howard renchle 11 (11 ( ( Ste en eigh 10 (11 ( 3 (3
Notes 1 Figures in brac ets indicate the number of meetings held whilst the director was in office or was a member of the rele ant Committee during the Reporting Period Figures not in brac ets indicate the number of meetings or Committee meetings that the director attended 2 Mr Catsoulis attends Nomination, Remuneration, Ris and Audit Committee meetings b in itation 3 The Compan has an In estment Committee Charter to go ern an In estment Committee The oard has determined that at this time, the full oard will act as the In estment Committee and therefore there are no separate In estment Committee meetings noted Ms Fidler was ineligible to attend Directors’ meetings through the period as her appointment as Director being post 30 June 201
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 10
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 43 COMPANY SECRETARY
NATIONAL STORAGE HOLDINGS LIMITED
NAME APPOINTMENT DATE C F P R
NATIONAL STORAGE FINANCIAL SERVICES LIMITED
NAME APPOINTMENT DATE C F P R
Claire Fidler LLB (Hons), B Bus (Int)
R
Patrick Rogers LLB, B Bus - Accounting
P S C H D P I P S A P C R O SR C C S
DIRECTORS’ REPORT FOR THE YEAR E DED E
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017 COR OR TE O ERN NCE NSH and The Responsible Entity have their own respective oards and constitutions. The relationship between NSH and the Responsible Entity is overned by a Cooperation Deed and ana ement A reement that allows NSH to provide ey services to NSFS as Responsible Entity in exchan e for a monthly fee. These services include finance and administrative services property mana ement provision of staff and e uipment.
The NSH and Responsible Entity oards and NSH mana ement are committed to achievin and demonstratin to securityholders hi h standards of corporate overnance and to ensure NSH acts in the best interests of its securityholders balanced with its broader community obli ations.
An important component of the NSR corporate overnance structure is the 3rd edition of the ASX Corporate Governance Principles and Recommendations (the “ASX Recommendations”). A more detailed discussion of NSR’s Corporate Governance is found on pa es 32 33 of the Annual Report and a statement of the extent of NSR’s compliance with the ASX Recommendations can be viewed on the NSR website at www.nationalstora einvest.com.au. Full copies of all NSR overnance policies and Charters can also be found in the Governance section of the website.
INDE NI IC TION ND INS R NCE O DIRECTORS ND O ICERS The Company has a reed to indemnify all the Directors and executive officers of the Company and its roup entities to the extent permitted by law for the amount of any liability loss cost char e dama e expense or other liability suffered by the Director or executive officer as an officer of the Company or roup entity or as a result of havin been an officer of the Company or any Group entity. This includes any liability arisin out of or in connection with any ne li ence breach of duty or breach of trust (“Indemnity”).
However the Indemnity does not extend to a claim in the nature of
(a) a challen e to any re ection of a Director’s claim by the provider of the Company’s insurance cover or (b) a cross claim or a third party claim for contribution or indemnity in and results directly from any Proceedin s in respect of which the Director has made a claim under the Indemnity.
Deeds of indemnity to effect the above have been formally entered into by the Company and each of the Directors.
The Deeds of Indemnity re uire the Company to obtain a bac to bac 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 bac to bac indemnity re uires 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 obli ation. The indemnity does not extend to any payment made or due as a result of a breach by the Company of its obli ations under a Director officer indemnity or to any payment which the Company ma es 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 (includin subsidiary entities) durin the Reportin Period was 1 01 .
No insurance premiums are paid out of the assets of the NSPT in re ards to insurance cover provided to either the Responsible Entity or the auditors of the NSPT. So lon 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 a ainst losses incurred while actin on behalf of the NSPT. The auditors of the NSPT are in no way indemnified out of the assets of the NSPT.
INDE NI IC TION O DITORS To the extent permitted by law the Company has a reed to indemnify its auditors Ernst Youn as part of the terms of its audit en a ement a reement a ainst claims by third parties arisin from the audit (for an unspecified amount). No payment has been made or claim received by NSR to indemnify Ernst Youn durin the Reportin Period or up to the date of this report.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 12 NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 45 RE NER TION RE ORT DITED – NS RO
ESS E RO T E O RD
The NSH oard remains committed to ensuring that remuneration strategies are structured to support and reinforce NSR’s overall business strategy y lin ing the Short Term Incentive (“STI”) and Long Term Incentive (“LTI”) (at ris remuneration) of e ecutive remuneration to the drivers that support the business strategy the remuneration of e ecutives is aligned with the creation of long term value for securityholders The oard believes that the remuneration practices of NSR should fairly and responsibly reward Key Management Personnel (“KMP”) having regard to their individual performance the performance of NSH and NSPT and the broader e ternal environment as it relates to KMP reward
The policy also aims to provide a platform for sustainable value creation for securityholders by attracting and retaining uality KMP
CO ER E O T IS RE ORT
The following remuneration report has been prepared to provide information to securityholders of the remuneration details of the KMP of NSH involved in the management of 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 ta e into account the comple ity involved and additional duties in the operation of the Responsible Entity as a subsidiary of NSH and as part of the consolidated governance group The Responsible Entity receives a fee for management services rendered
This information has been audited as re uired by section 30 (3C) of the Act
KMP are defined as “those persons having authority and responsibility for planning, directing and controlling the a or activities of NSH, the onsolidated roup and the NS , directly or indirectly, including any director (whether executive or otherwise) of NSH.”
Key management personnel covered in this report are as follows
NON E EC TI E ND E EC TI E DIRECTORS Laurence rindle Chairman (non e ecutive) Andrew Catsoulis – Managing Director (e ecutive) Anthony Keane Director (non e ecutive) Howard renchley Director (non e ecutive) Steven Leigh Director (non e ecutive) Claire Fidler – Company Secretary (appointed e ecutive Director effective 1 July 201 )
E N E ENT ERSONNE – SENIOR E EC TI ES Peter reer – Chief Operating Officer (COO) Stuart Owen – Chief Financial Officer (CFO) Patric Rogers – eneral Counsel and Chief Ris Officer ( C CRO)
RE NER TION O ERN NCE
RE NER TION CO ITTEE ND SE O RE NER TION CONS T NTS
The Remuneration Committees activities are governed by its Charter a copy of which is available at www.nationalstorageinvest.co .au
The responsibilities of the Remuneration Committee include
Formulate and recommend remuneration policies to apply to the Company’s Managing Director senior e ecutives and non e ecutive Directors; Formulate the specific remuneration pac ages for senior e ecutives (including base salary STIs LTIs and other contractual benefits); Review contractual rights of termination for senior e ecutives; Review the appropriateness of the Company’s succession planning policies; Review management’s recommendation of the total proposed STI and LTI awards; Administering the STI and LTI awards; and Review management recommendations regarding the remuneration framewor for the company as a whole
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 13 DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017 The deliberations of the Remuneration Committee, including any recommendations made on remuneration issues, are considered by the NSH oard. In making its recommendations to the oard, the Remuneration Committee takes into account advice from independent remuneration advisers on trends in remuneration for P. The independent remuneration advisors consider a range of factors including the specific responsibilities assumed by P. The Remuneration Committee determined it was not necessary to engage an independent remuneration consultant during the reporting period. An independent report was previously commissioned in the 201 financial year. The oard reviewed the independent consultants previous report and determined that there had been no significant changes to either the oard and Executive structure or the market parameters used in the independent consultants previous report and determined that a new independent consultants report was not required.
The Remuneration Committee comprises three independent non executive directors and is chaired by Laurence rindle. The Remuneration committee met four times during the Reporting Period.
The ob ective of the remuneration policy is to ensure that roup 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 ob ectives.
The remuneration of directors and senior executives is reviewed at least annually by the Remuneration Committee and the full NSH oard. External analysis and advice is sought by the Committee, where considered appropriate, to ensure that the remuneration for directors and senior executives is competitive in the market place and appropriate for the organisation.
The policy seeks to align executive reward with the achievement of strategic ob ectives and the creation of value for securityholders. The primary tenets of the policy are
Attract and retain high quality executives and to reward the capabilities and experience brought to NSR by those executives. Total reward for key executives is to have a significant “at risk” component. The “at risk” component for key executives is to include both short term incentives (“STI”) and long term incentives (“LTI”) which have a strong focus on quantitative 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 oard of NSR and to securityholders.
Total Annual Remuneration (TAR) is assessed against a broad comparator group and ad usted to reflect factors such as the criticality of the role, experience, length of service and NSR’s positioning within the comparator group. The individual components of TAR, comprising Total Fixed Remuneration (TFR), STI and LTI are individually assessed within this framework and structured to provide both short term and long terms incentives to P that align with delivery of short term and long term value to securityholders.
hen selecting the comparator group the data is collected from a combination of sources including audited Remuneration Reports of the selected companies. It provides an appropriate pool of data that is statistically relevant. This data is then assessed against NSR’s current si e, industry positioning and other relevant factors to determine the appropriate information against which to assess NSR’s remuneration framework.
The composition of 201 1 TAR for P is detailed in the table below.
D . 21.3 21.3 COO .2 21. 21. CFO . 1 .2 1 .2 C CRO . 12. 12. CoSec 0.0 10.0 10.0
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 47
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 1 NSR PERFORMANCE
SR has deli ered its growth o ecti es o er the reporting period including the ac uisition of million in new storage centres in addition to the successful completion of the million capital raise associated with the finalisation of the million ac uisition of the remaining interest in the Southern Cross Storage oint enture. This is a significant achie ement for the company which can e attri uted to a com ination of a strong share price continued growth in earnings and the successful implementation of the Company’s growth strategy. This has resulted in significant growth in assets under management during this time which in turn has deli ered returns to securityholders.
The Company has esta lished a trac record of deli ering strong and consistent underlying earnings growth since listing increasing underlying earnings per stapled security y . in the months to une o er the corresponding period to une . A consistent and considered approach to dri ing increased underlying earnings through a com ination of organic growth from e isting assets as well as targeted EPS accreti e ac uisitions has een instrumental in achie ing this result.
nderlying Earnings Per Security
. . . . . .
. Cents . . . . .
.
. CY FY FY FY
SR has maintained a distri ution policy which targets distri ution of of underlying earnings to securityholders. During financial year SR declared distri utions totalling . cents per stapled security eing at the upper end of the stated policy deli ering DPS yield of . some a o e that of the A REIT a erage of . .
FY Distri ution Yield
A REIT
SR
. . . . . .
Source loom erg. ar et Data as at uly
nderlying earnings is a non IFRS measure unaudited . See page of Directors’ Report for reconciliation of underlying earnings
DIRECTORS’ REPORT FOR THE YEAR E DED E DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
NSR has deli ered Total Shareholder Return “TSR” (a combination of share price growth and distributions recei ed b securit holders o er the past three ears to 30 June 201 of 2 outperforming the A REIT 200 inde a erage of 1
Total Shareholder Return
A REIT 200
NSR
2 2 2 31 33 3 3 3 1 3
Source loomberg ar et Data as at 2 Jul 201 Total shareholder return assuming di idends are re in ested in the underl ing shares Calculated dail o er 3 ears to 30 June 201
NSR listed in December 2013 with an issue price of 0 From that time to 30 June 201 the stapled securit price has increased b with 30 June 201 closing price of 1 1
NSR Stapled Securit Price
1 0 00
00 1 0 00 1 0 00 1 0 00 m 1 0 00 300 1 0 200 1 30 100
1 20 Jul 1 Sep 1 Dec 1 ar 1 Jun 1 Sep 1 Dec 1 ar 1 Jun 1 Sep 1 Dec 1 ar 1 Jun 1
t Cap Share Price
Securit price performance o er the period 1 Jul 201 to 30 June 201 has shown a 21 increase This compares to an increase of 23 for the A REIT 200 inde and for the broader AS 200 Inde o er the same period
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 49 1
Relative Performance
.
.
.
.
.
.
.
.
. ul Sep Dec ar un Sep Dec ar un Sep Dec ar un
NSR S P AS A REIT S P AS
NSR REMUNERATION FRAMEWORK
NON-EXECUTIVE DIRECTORS Fees and payments to non executive directors reflect the demands hich are made on and the responsibilities of the non executive directors and their contribution to ards the performance of NSR as ell as the complexity of the National Storage Property Trust National Storage Financial Services imited and the operating business. The remuneration policy see s to ensure that NSR attracts and retains directors ith appropriate experience and qualifications to oversee the operations of NSR on behalf of the securityholders.
The number of meetings of directors is sho n on page 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 general meeting. nder the AS isting 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 Annual eneral meeting is .
Annual NSH non executive directors’ fees and Committee fees currently agreed to be paid by NSH effective from uly are detailed belo . Non executive directors are not eligible to participate in NSR’s incentive plan.
NON-EXECUTIVE DIRECTORS BASE FEE AUDIT AND RISK REMUNERATION TOTAL COMMITTEE FEES AND NOMINATION COMMITTEE FEES aurence rindlea. Anthony eaneb. Steven eigh Ho ard renchley a. Chairman and chair of the Remuneration and Nomination Committees and receives a single fee for all roles b. Chair of the of Audit and Ris Committees
All NSH non executive directors’ fees include superannuation at the required statutory rate.
KEY MANAGEMENT PERSONNEL - EXECUTIVE DIRECTOR AND SENIOR EXECUTIVES All remuneration paid to executive directors and senior executives comprises four components
ase pay and benefits including superannuation Short term performance incentives ong term performance incentives Other remuneration if applicable
Base salary and benefits The anaging Director and senior executives are paid a base salary that includes employer contributions to superannuation funds. The remuneration of the anaging Director is revie ed annually by the Remuneration Committee and oard. The remuneration of senior executives is revie ed annually by the anaging Director ho ma es a recommendation to the Remuneration Committee.
DIRECTORS’ REPORT FOR THE YEAR ENDED NE
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017 The Committee then considers, but is not obliged to accept, the recommendation of the anaging Director and ta es whatever additional steps it determines appropriate to assess the senior executive salaries.
There is no guarantee of base salary increases included in any executive director or senior executive contracts or through the annual review process. The remuneration of all P was reviewed during the year.
The anaging Director and senior executives can potentially be paid a bonus as part of their remuneration. hether such a bonus is paid and the amount of such a bonus is at the discretion of the Remuneration Committee and the Board. Any bonuses paid would fall into the category of “other remuneration”.
Service agreements Remuneration and other terms of employment for the P 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 Cth 2001 such that they do not re uire securityholder approval. However, in addition, all executive contracts ma e any such benefits sub ect to the Corporations Act Cth 2001, all other applicable laws and where necessary securityholder approval. They also contain provisions which allow NSH to reduce any such payments to ensure compliance with the law.
NAME TERM OF BASE SALARY TERMINATION PAYMENTS AGREEMENT AND INCLUDING NOTICE PERIOD SUPERANNUATION*
Andrew No fixed term , months in lieu of notice if re uired by NSH. Catsoulis months months in the event of incapacity or illness.
Peter reer No fixed term , months in lieu of notice if re uired by NSH. months months in the event of incapacity or illness.
Stuart Owen No fixed term , months in lieu of notice if re uired by NSH. months months in the event of incapacity or illness. months fixed remuneration plus wee s for each year of service – capped at months in the event of redundancy
Patric Rogers No fixed term , months in lieu of notice if re uired by NSH. months months in the event of incapacity or illness. months fixed remuneration plus wee s for each year of service – capped at months in the event of redundancy
Claire Fidler No fixed term , months in lieu of notice if re uired by NSH. Part time months months in the event of incapacity or illness. months fixed remuneration plus wee s for each year of service – capped at months in the event of redundancy
Base salaries are annual salaries for the financial year commencing uly . They are reviewed annually by the Remuneration Committee. Actual salaries paid in the year ended une are shown on page .
Short and long term incentives P senior executives may also be entitled to participate in the STI and TI 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 P. Total incentive programs are assessed against a broad comparator group and ad usted to reflect factors such as the criticality of the role, experience, length of service and NSR’s positioning within the comparator group including the AS A REIT index. The Board continually assesses the structure of the incentive plans and has determined that at this point in time payments made under these plans will be paid in cash. The Board considers that there is a sufficient nexus between the cash remuneration and the e uity based payments given the lin between security price performance and TSR.
An independent consultant was engaged during the Reporting Period to assess the appropriateness of the remuneration structure currently in place and to provide advice on mar et practice relating to executive remunerations structures. The advice did not constitute a remuneration
DIRECTORS’ REPORT FOR THE YEAR ENDED NE NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 51
recommendation as defined in the orporations ct th After considerin all the relevant information the oard has determined that the e istin short and lon term incentive pro ram is appropriate The followin incentive pro ram is effective from 1 July 201
Short Term Incentive STI The STI contains four separate elements that will be assessed independently of the other elements The STI is an annual incentive and is to be paid in cash annually
Financial 0 Underlyin Earnin s 1 as determined by the oard
Financial – Out 10 E ceedin Underlyin Earnin s 1 tar ets Performance
Individual KPI’s 1 Individual performance criteria set in con unction with D oard
Strate ic 1 Assessment in accordance with performance in the followin areas Implementation of ma or pro ects Staff continuity Ris ana ement Innovation and enhancement of processes and procedures The Financial Out Performance STI is only payable to the e tent that the total STI payable does not e ceed 100 The minimum STI payable is ero and ma imum STI payable is 20 000 for FY1 in a re ate for all K P
Lon Term Incentive LTI The LTI criteria have been set so as to ali n the interests of K P with those of securityholders The LTI contains two separate components which are independently tested
Total Shareholder 0 inimum total shareholder return above the 0th percentile in Return comparison to the AS 200 A REIT inde The LTI becomes payable in accordance with the slidin scale below once the 0th percentile hurdle is met Earnin s Per Share 30 Earnin s per share rowth of per annum rowth
For the purposes of determinin the LTI attributable to Total Shareholder Return in any iven period the followin scale is applied
0th percentile 0 0th percentile 0 0th th percentile Pro rata from 0 100 th percentile 100
The LTI is assessed over a rollin 3 year period and as such to be eli ible for payment of the LTI K P must have been employed by NSR for three years or shorter period as determined by the oard Post three years’ service the LTI will be paid on an annual basis on the previous three years’ performance a ainst the pre determined criteria
The minimum LTI payable is ero and ma imum LTI payable is 20 000 for FY1 in a re ate for all K P
Other Incentives An additional one off incentive relatin to the successful delivery of the aspects of the sustainability pro ram cost savin initiatives and other measures is available to K P durin FY1 The sustainability pro ram relates to the roll out of solar initiatives which may deliver reduced ener y costs as well as improved asset valuations Any payment under this incentive pro ram will be at the discretion of the oard The minimum payable is ero and ma imum payable is 3 100 in a re ate for all K P
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 1
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
The P were eligible for payment of STI’s and LTI’s for the finan ial year ended 30 J ne 201 in a ordan e with the in enti e program o tlined in the 201 Ann al Report The program is the same as that o tlined abo e
The STI’s and LTI’s were agreed with the P to reward them for performan e against both finan ial and operational ob e ti es The minim m payable was ero and ma im m payable was 1 0 000 for FY1 in aggregate for all P
The STI and LTI h rdles in l ded 1 Underlying earnings1 e eeding 2 ents per se rity 2 TSR o er the period three years to 30 J ne 201 being greater than the 0th per entile of the omparator gro p AS A REIT 200 3 Rolling three year ompo nd EPS growth e eeding J ne 201 target 1 ps
The oard has assessed the performan e of the Company and the P against the performan e riteria and ha e determined that the following STI and LTI’s has been earned and is payable in l si e of stat tory S perann ation amo nts for the period 1 J ly 201 to 30 J ne 201 In addition to the formalised in enti e s heme the oard deemed it appropriate in iew of the signifi an e of the transa tion to pay a one off dis retionary bon s in relation to the s essf l ompletion of the 2 million a isition of the remaining 0 interest in the So thern Cross Storage Joint ent re and asso iated 2 0 million apital raising whi h is shown as Other Rem neration below
Andrew Catso lis D 1 200 0 000 30 0 000 2 200 Peter reer COO 11 3 0 3 2 00 30 0 000 2 1 0 St art Owen CFO 0 00 1 30 000 30 30 000 110 00 Patri Rogers C CRO 23 200 1 000 30 20 000 200 Claire Fidler CoSe 1 00 1 00 s Fidler was not an In enti ised Offi er d ring FY1
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 20
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 53 The followingThe following tables tables set out set details out details of the of theremuneration remuneration received received by by the the Company’s Company’s KMP KMP for for the the Reporting Reporting Period.Period.
2017 2017 Non executive Non executive directors directors aurence rindle 22 1 21 3 2 0 2 0 aurenceAnth rindleony Keane 22 1 11 21 310 12 12 0 2 0 0 AnthonyHoward Keane renchley 11 10 000 10 10 00012 1 0 0 HowardSteven renchley eigh 10 000 1 3 0 0 10 1 310 000 0 0 Steven eigh 1 3 0 0 10 1 3 0 xecutive director xecutiveAndrew director Catsoulis 2 1 1 3 2 0 1 2 1 2 1 3 1 1 2 23 Andrew Catsoulis 2 1 1 3 2 0 1 2 1 2 1 3 1 1 2 2 3 Senior executives Senior Peterexecutives reer 222 1 1 2 3 3 2 1 1 11 23 Peter reerStuart Owen 2223 1 1 1 2 3 2 2 3 133 0 2 3 3 2 1 0 1 01 1 11 20 2 3 Stuart Patric Owen Rogers 3 1 2 0 00 2 33 1 2 2 3 1332 102 13 2 3 0 3 1 1 01 1 20 Patric Claire Rogers Fidler 2 0 00 1 2 3 1 1 2 2 2 32 11 13 2 13 13 213 3 1 1 Claire Fidler 1 2 1 2 2 1 13 13 213
2016 Non executive directors 1 12 1 0 1 1 0 A 2 123 2 100 0 H 000 000 0 S 2 201 0 0 010 0
xecutive director A C 32 1 0 11 1 3 3 1
DIRECTORS’Senior executives REPORT FOR THE YEAR ENDED 30 JUNE 201 21 P 00 1 2 1 1 2 1 3 0 13 DIRECTORS’S REPORTO FOR THE YEAR ENDED 30 JUNE33 201 2 32 2 3 2 1 2111 P R 2 3 3 3 23 22 1 2 1 1
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 201 22
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
T R P D P
irectors of NSH C S
xecutives of NSH P S O P R C F C F E S
T P
DIRECTORS’ REPORT FOR T E E R E DED E
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 55
o subse uent events have occurred since the reportin date and the issue date o the annual report hich re uire disclosure in the inancial statements
The amounts contained in this Directors’ Report and in the Financial Report have been rounded to the nearest 1 000 unless other ise stated) under the option available under SIC Corporations Roundin in Financial/Directors’ Reports) Instrument 2016/191 The Consolidated roup and SPT roup are entities to hich the SIC Instrument applies
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS’ REPORT FOR T E E R E DED 0 E 201
AUDITOR’S INDEPENDEN E DE ARATION A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act Cth 2001 is set out on pa e
Non-audit services The follo in non audit ser ices ere pro ided y the entity s auditor Ernst Youn Australia The Directors of NSH are satisfied that the pro ision of non audit ser ices is co pati le ith the eneral standard of independence for auditors i posed y the Corporations Act Cth 2001 The nature and scope of each type of non audit ser ice pro ided eans that auditor independence as not co pro ised
Ernst Youn Australia recei ed or are due to recei e the follo in a ounts for the pro ision of non audit ser ices conducted durin the financial year
1 Ta co pliance 0 3 0 2 Assurance Related 1 7 3 Other 3 037
EES PAID TO AND INTERESTS E D IN T E NSPT T E RESPONSI E ENTIT OR ITS ASSO IATES Fees paid to the Responsi le Entity and its associates out of NSPT property durin the year are disclosed in the State ent of Co prehensi e Inco e and are detailed in Note 1 to the financial state ents No fees ere paid to the Directors of the Responsi le Entity durin the year out of NSPT
INTERESTS IN T E NSPT The o e ent in units on issue y the NSPT durin the year is set out in Note 1 to the financial state ents
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 57
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 7
This Directors’ Report is made on st in accordance ith a reso tion o the oard o Directors o ationa Stora e o din s imited and is si ned or and on eha o the Directors
Thi s Directors’ Report is made on st in accordance ith a reso tion o the oard o Directors o ationa Stora e o din s imited and is si ned or and on eha o the Directors
a rence rind e ndre Catso is Chairman ana in Director ationa Stora e o din s imited ationa Stora e o din s imited a rence ris ane rind e ndre ris ane Catso is Chairman ana in Director ationa Stora e o din s imited ationa Stora e o din s imited ris ane ris ane
This Directors’ Report is made on st in accordance ith a reso tion o the Responsi e Entit and is si ned or and on eha o the Responsi e Entit
This Directors’ Report is made on st in accordance ith a reso tion o the Responsi e Entit and is si ned or and on eha o the Responsi e Entit a rence rind e Director ationa Stora e Financia Ser ices imited ris anea rence rind e Director ationa Stora e Financia Ser ices imited ris ane
DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS’ REPORT FOR T E E R E DED E
DIRECTORS’ REPORT FOR T E E R E DED E
Ernst & Young Tel: +61 7 3011 3333 111 Eagle Street Fax: +61 7 3011 3100 Brisbane QLD 4000 Australia ey.com/au GPO Box 7878 Brisbane QLD 4001
Auditor’s Independence Declaration to the Directors of National tora e I
As lead auditor for the audit of National Storage REIT for the financial year ended 30 June 2017, 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; and b no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of National Storage REIT and the entities it controlled during the financial year.
Ernst & Young
Ric Roach Partner 22 August 2017
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 59
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation FINANCIAL STATEMENTS
FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF PROFIT OR LOSS For the year ended 30 June 2017 Consolidated Group NSPT Group 2017 2016 2017 2016 Notes $'000 $'000 $'000 $'000 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS For the year ended 30 June 2017 Revenue from storage rent Consolidated105,814 Group70,574 NSPT- Group - Rental revenue 2017 - 2016 - 52,5112017 34,2016894 Revenue from sale of goods and services Notes $'0006,999 $'0006,651 $'000 - $'000 - Other revenue 6 4,689 2,525 258 146 Total revenue 117,502 79,750 52,769 35,040 Revenue from storage rent 105,814 70,574 - - Rental revenue - - 52,511 34,894 ERevenuemployee from expenses sale of goods and services 7 (22,472)6,999 (15,460)6,651 - - PremisesOther revenue costs 6 (13,2844,689) (8,9562,525) 258- (15)146 AdvertisingTotal revenue and marketing 117,502(2,683) (1,646)79,750 52,769- 35,040- Cost of packaging and other products (1,433) (954) - - Management fees - operational (27) (215) (2,311) (908) OtherEmployee operational expenses expenses 7 (22,472)(7,967) (15,460)(4,753) (327)- (39)- FinancePremises costscosts 8 (24,160)(13,284) (15,787)(8,956) (15,137)- (7,011)(15) ShareAdvertising of profit and of marketing joint venture s and (2,683) (1,646) - - associatesCost of packaging and other products (1,433)2,110 1,732(954) 1,509- 1,732- FairManagement value adjustments fees - operational 11.4 76,803(27) 10,025(215) (2,311)73,975 15,531(908) BusinessOther operational combination expenses costs 57 (13,837)(7,967) (4,753)- (13,536)(327) (39)- RestructuringFinance costs and other non-recurring costs 8 (24,160)(2,971) (15,787)- (15,137)- (7,011)- Share of profit of joint ventures and Profitassociates before income tax 107,5812,110 43,7361,732 96,9421,509 44,3301,732 Fair value adjustments 11.4 76,803 10,025 73,975 15,531 IncomeBusiness taxcombination (expense) costs / benefit 95 (13,837)(4,168) 250- (13,536)(676) (165)- Restructuring and other non-recurring costs (2,971) - - - Profit after tax 103,413 43,986 96,266 44,165 Profit before income tax 107,581 43,736 96,942 44,330
Income tax (expense) / benefit 9 (4,168) 250 (676) (165) Profit / (loss) for the year attributable to: MembersProfit after of tax National Storage Holdings Limited 103,4137,147 43,986(179) 96,266- 44,165- Non -controlling interest (unit holders of NSPT) 96,266 44,165 96,266 44,165 103,413 43,986 96,266 44,165
BasicProfit /and (loss) diluted for the earnings year attributable per stapled to: securityMembers / unitof National (cents) Storage Holdings Limited 20 20.7,14774 13.06(179) 19.31- 13.11- Non-controlling interest (unit holders of NSPT) 96,266 44,165 96,266 44,165 103,413 43,986 96,266 44,165
Basic and diluted earnings per stapled security / unit (cents) 20 20.74 13.06 19.31 13.11
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes.
62
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 61 The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes.
62
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS For the year ended 30 June 2017 Consolidated Group NSPT Group 2017 2016 2017 2016 Notes $'000 $'000 $'000 $'000 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME RevenueFor the year from ended storage 30 rent June 2017 105,814 70,574 - - Rental revenue - - 52,511 34,894 Revenue from sale of goods and services 6,999Consolidated 6,651 - - Other revenue 6 4,689Group 2,525 2 NSPT58 Group146 Total revenue 117,5022017 79,7502016 52,7692017 35,0402016 Notes $'000 $'000 $'000 $'000
Employee expenses 7 (22,472) (15,460) - - ProfitPremises after costs tax (13,284103,413) (8,95643,986) 96,266- 44,165(15) Advertising and marketing (2,683) (1,646) - - OtherCost of comprehensive packaging and income other products (1,433) (954) - - ItemsManagement that may fees be reclassified- operational to profit or loss (27) (215) (2,311) (908) ExchangeOther operational differences expenses on translation 7 (7,967) (4,753) (327) (39) ofFinance foreign costs operations 8 (24,160) 38 (15,787)205 (15,137)5 (7,011)227 NetShare gain of profit/ (loss) of on joint cash venture flow hedgess and 15 6,403 (5,176) 6,403 (5,176) Otherassociates comprehensive income / (loss) 2,110 1,732 1,509 1,732 forFair the value year, adjustments net of tax 11.4 76,8036,441 10,025(4,971) 73,9756,408 (4,949)15,531 Business combination costs 5 (13,837) - (13,536) -
Restructuring and other non-recurring costs (2,971) - - - Total comprehensive income for the year 109,854 39,015 102,674 39,216 Profit before income tax 107,581 43,736 96,942 44,330
Income tax (expense) / benefit 9 (4,168) 250 (676) (165) Total comprehensive income for the year attributable to: Profit after tax 103,413 43,986 96,266 44,165
Members of National Storage Holdings Limited 7,180 (201) - - U nit holders of National Storage Property Trust 102,674 39,216 102,674 39,216 109,854 39,015 102,674 39,216 Profit / (loss) for the year attributable to:
Members of National Storage Holdings Limited 7,147 (179) - -
Non-controlling interest (unit holders of NSPT) 96,266 44,165 96,266 44,165
103,413 43,986 96,266 44,165
Basic and diluted earnings per stapled security / unit (cents) 20 20.74 13.06 19.31 13.11
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes.
62
FINANCIALThe above STATEMENTS Consolidated Statements of Other Comprehensive Income should be read in conjunction
with the accompanying notes. 63
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at 30 June 2017
Consolidated Group NSPT Group 2017 2016 2017 2016 Notes $'000 $'000 $'000 $'000 ASSETS Current assets Cash and cash equivalents 10.1 23,166 13,374 8,748 9,367 Trade and other receivables 10.2 11,340 7,329 58,756 9,224 Inventories 11.1 600 373 - - Assets held for sale 11.2 5,713 - 5,713 - Other current assets 10.3 4,309 2,743 7 206 Total current assets 45,128 23,819 73,224 18,797
Non-current assets Trade and other receivables 10.2 110 220 - - Property, plant and equipment 11.3 1,229 1,684 - - Investment properties 11.4 1,330,878 844,130 1,089,111 621,030 Investment in joint ventures and associates 13 10,591 15,101 913 8,441 Intangible assets 11.5 45,536 14,648 - - Deferred tax assets 9 525 125 - 61 Other non-current assets 10.3 3,328 - 3,328 - Total non-current assets 1,392,197 875,908 1,093,352 629,532
Total Assets 1,437,325 899,727 1,166,576 648,329
LIABILITIES Current liabilities Trade and other payables 10.4 8,778 6,198 642 4,095 Finance lease liability 10.7 4,504 4,425 - - Deferred revenue 11.6 11,585 7,726 138 59 Income tax payable 314 152 314 152 Provisions 11.7 2,188 1,750 - - Other liabilities 10.6 23,760 14,803 23,760 14,803 Total current liabilities 51,129 35,054 24,854 19,109
Non-current liabilities Interest bearing loans and borrowings 10.5 481,770 284,526 480,520 264,726 Finance lease liability 10.7 163,851 173,823 - - Provisions 11.7 1,331 1,316 - - Deferred tax liability 9 3,368 136 322 - Other liabilities 10.6 3,259 6,522 3,259 6,522 Total non-current liabilities 653,579 466,323 484,101 271,248
Total Liabilities 704,708 501,377 508,955 290,357
Net Assets 732,617 398,350 657,621 357,972
EQUITY Non-controlling interest (unit holders of NSPT) 664,627 364,978 - - Contributed equity 14 59,145 31,707 543,476 299,760 Other reserves 15 11 (22) 187 (6,221) Retained earnings 8,834 1,687 113,958 64,433 Total Equity 732,617 398,350 657,621 357,972
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes. 64
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 63 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS For the year ended 30 June 2017 Consolidated Group NSPT Group 2017 2016 2017 2016 Notes $'000 $'000 $'000 $'000 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the year ended 30 June 2017 Revenue from storage rent 105,814 70,574 - - RentalAttributable revenue to securityholders of National Storage REIT - - 52,511 34,894 Revenue from sale of goods and services 6,999 6,651 - - Foreign Other revenue 6 4,689 2,525 258 146 currency Non- Total revenue 117,502 79,750 52,769 35,040 Contributed Retained translation controlling Total equity earnings reserve interest Equity Notes $'000 $'000 $'000 $'000 $'000 Employee expenses 7 (22,472) (15,460) - - BalancePremises at costs 1 July 2016 31,707 (13,2841,687 ) (8,956(22) ) 364,978- 398,350(15) Advertising and marketing (2,683) (1,646) - - PCostrofit offor packaging the year and other products - 7,(1,433)147 (954)- 96,266- 103,413- OtherManagement comprehensive fees - operational (27) (215) (2,311) (908) incomeOther operational expenses 15 - 7 (7,967)- (4,75333 ) (327)6,408 (39)6,441 TotalFinance comprehensive costs 8 (24,160) (15,787) (15,137) (7,011) Shareincome of profit of joint ventures and - 7,147 33 102,674 109,854 associates 2,110 1,732 1,509 1,732 Fair value adjustments 11.4 76,803 10,025 73,975 15,531 BusinessIssue of stapled combination units through costs 5 (13,837) - (13,536) - Restructuringinstitutional and and retail other placement non-recurring costs26,354 (2,971)- - - 233,646- 260,000- Issue of stapled units through Profitdistribution before reinvestment income tax plan 897 107,581- 43,736- 96,9428,106 44,3309,003 Issue of stapled units through Incomevendor scrip tax (expense)issue / benefit 828 9 (4,168)- 250- (676)7,572 (165)8,400 Costs associated with issue of units (641) - - (5,608) (6,249)
Distributions provided for Profit after tax 103,413 43,986 96,266 44,165 or paid 17 - - - (46,741) (46,741) 27,438 - - 196,975 224,41 3
Balance at 30 June 2017 59,145 8,834 11 664,627 732,617 Profit / (loss) for the year attributable to: Members of National Storage Holdings Limited 7,147 (179) - - Non-controlling interest (unit holders of NSPT) 96,266 44,165 96,266 44,165 Balance at 1 July 2015 31,419 103,4131,866 43,986- 352,37796,266 44,165385,662
Basic(Loss) /and profit diluted for the earnings year per stapled - (179) - 44,165 43,986 securityOther comprehensive / unit (cents) 20 20.74 13.06 19.31 13.11 income / (loss) 15 - - (22) (4,949) (4,971) Total comprehensive income / (loss) - (179) (22) 39,216 39,015
Issue of stapled securities through distribution reinvestment plan 288 - - 2,569 2,857 Distributions provided for or paid 17 - - - (29,184) (29,184) 288 - - (26,615) (26,327)
Balance at 30 June 2016 31,707 1,687 (22) 364,978 398,350
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes. The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes. 62
FINANCIAL STATEMENTS 65
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS For the year ended 30 June 2017 Consolidated Group NSPT Group 2017 2016 2017 2016 Notes $'000 $'000 $'000 $'000 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED) RevenueFor the year from ended storage 30 rentJune 2017 105,814 70,574 - - Rental revenue - - 52,511 34,894 RevenueAttributable from to sale unitholders of goods of andthe Nationalservices Storage Property6,999 Trust Group6,651 - - Other revenue 6 4,689 2,525 258 146 Total revenue 117,502 79,750Foreign 52,769Cash 35,040 currency flow Contributed Retained translation hedge Employee expenses equity7 (22,472)earnings (15,460)reserve reserve- Total- Premises costs Notes $'000 (13,284$'000) (8,956$'000) $'000- $'000(15) Advertising and marketing (2,683) (1,646) - - CostBalance of packaging at 1 July 2016 and other products 299,760 (1,433)64,433 (954)227 (6,448)- 357,972- Management fees - operational (27) (215) (2,311) (908) OtherProfit for operational the year expenses -7 (7,967)96,266 (4,753) - (327) - 96,266(39) FinanceOther comprehensive costs 8 (24,160) (15,787) (15,137) (7,011) Shareincome of profit of joint ventures and15 - - 5 6,403 6,408 associatesTotal comprehensive 2,110 1,732 1,509 1,732 Fairincome value adjustments 11.4- 76,80396,266 10,025 5 73,9756,403 15,531102,674 Business combination costs 5 (13,837) - (13,536) - RestructuringIssue of stapled and units other through non- recurring costs (2,971) - - - institutional and retail placement 233,646 - - - 233,646 ProfitIssue ofbefore stapled income units throughtax 107,581 43,736 96,942 44,330 distribution reinvestment plan 8,106 - - - 8,106 IncomeIssue of stapled tax (expense) units / benefit 9 (4,168) 250 (676) (165) through vendor scrip issue 7,572 - - - 7,572 ProfitCosts afterassociated tax with issue of units (5,608) 103,413 - 43,986 - 96,266 - 44,165(5,608) Distributions provided for or paid 17 - (46,741) - - (46,741)
243,716 (46,741) - - 196,975
Profit / (loss) for the year attributable to: Balance at 30 June 2017 543,476 113,958 232 (45) 657,621 Members of National Storage Holdings Limited 7,147 (179) - -
Non -controlling interest (unit holders of NSPT) 96,266 44,165 96,266 44,165 103,413 43,986 96,266 44,165 Balance at 1 July 2015 297,191 49,452 - (1,272) 345,371 Basic and diluted earnings per stapled securityProfit for /the unit year (cents) 20- 44,16520.74 13.06 - 19.31 - 13.1144,165 Other comprehensive income / (loss) 15 - 227 (5,176) (4,949) Total comprehensive income / (loss) - 44,165 227 (5,176) 39,216
Issue of units through distribution reinvestment plan 2,569 - - - 2,569 Distributions provided for or paid 17 - (29,184) - - (29,184) 2,569 (29,184) - - (26,615)
Balance at 30 June 2016 299,760 64,433 227 (6,448) 357,972
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes.
The above Consolidated Statements of Changes in Equity should be read in conjunction with the 62 accompanying notes. NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 65
66
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS For the year ended 30 June 2017 Consolidated Group NSPT Group 2017 2016 2017 2016 Notes $'000 $'000 $'000 $'000 CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended 30 June 2017 Revenue from storage rent 105,814 70,574 - - Rental revenue Consolidated- Group - 52,511NSPT Group34, 894 Revenue from sale of goods and services 20176,999 20166,651 2017 - 2016 - Other revenue Notes 6 $’0004,689 $’0002,525 $’000258 $’000146 Total revenue 117,502 79,750 52,769 35,040 Operating activities
Receipts from customers 125,923 85,676 42,205 30,613 EmployeePayments expenses to suppliers and employees 7 (61(22,472),355) (36,546(15,460)) (2,465)- (2,083)- PremisesInterest receivedcosts (13,284683 ) (8,956155 ) 52- (15)79 AdvertisingIncome tax and paid marketing (2,683)(155) (1,646)- (155)- - - CostNet ofcash packaging flows from and operating other products (1,433) (954) - - Managementactivities fees - operational 10 .1 65,096(27) 49,285(215) (2,311)39,637 28,609(908) Other operational expenses 7 (7,967) (4,753 ) (327) (39) Investing activities Finance costs 8 (24,160) (15,787) (15,137) (7,011) SharePurchase of profit of investment of joint venture propertiess and (141,958) (145,597) (135,159) (132,425) associatesProceeds on sale of investment property 1,6002,110 1,732- 1,6001,509 1,732 - FairAcquisition value adjustments of subsidiary and property 11.4 76,803 10,025 73,975 15,531 Businessportfolio, combination net of cash costsacquired 5 5 (30(13,837)3,081) - - (273,(13,536)138) - - RestructuringReturn of capital and otheron dissolution non-recurring of joint costs (2,971) - - - venture 13 9,950 - 9,950 - ProfitImprovements before income to investment tax properties (5,571)107,581 (3,801)43,736 96,942(342) 44,330(462) Purchase of property, plant and Incomeequipment tax (expense) / benefit 11.3 9 (4,168)(900) (1,164)250 (676)- (165) - Purchase of intangible assets (364) (739) - - ProfitInvestment after taxs in associate and joint 103,413 43,986 96,266 44,165 venture 13 (3,330) (6,660) (913) - Net cash flows used in investing activities (443,654) (157,961) (398,002) (132,887)
Financing activities Profit / (loss) for the year attributable to: MembersProceeds of from National issue ofStorage stapled Holdings Limited 7,147 (179) - - Nonsecurities-controlling interest (unit holders of NSPT) 14 260,00096,266 44,165- 233,64696,266 44,165 - Transaction costs on issue of stapled 103,413 43,986 96,266 44,165 securities (6,249) - (5,608) - BasicDistributions and diluted paid earnings to stapled per security stapled securityholders / unit (cents) 20 (28,947)20.74 (25,572)13.06 (28,94719.31) (25,860)13.11 Proceeds from borrowings 409,291 160,469 408,041 140,669 Repayment of borrowings (210,580) - (190,780) - Financing provided to joint venture 18 (5,625) - - - Payment of finance lease liabilities (12,494) (12,800) - - Financing provided to related party - - (41,745) - Interest and other finance costs paid (17,105) (9,537) (16,897) (9,070) Net cash flows from financing activities 388,291 112,560 357,710 105,739
Net increase / (decrease) in cash and cash equivalents 9,733 3,884 (655) 1,461 Net foreign exchange difference 59 (4) 36 44 Cash and cash equivalents at 1 July 13,374 9,494 9,367 7,862 Cash and cash equivalents at 30 June 10.1 23,166 13,374 8,748 9,367
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes.
62 The above Consolidated Statements of Cash Flows should be read in conjunction with the FINANCIAL STATEMENTS accompanying notes.
67
For the year ended 30 June 2017
National Storage REIT (“the Consolidated Group” or “NSR”) is a joint quotation of National Storage Holdings Limited (“NSH” or “the Company”) and its controlled entities (“NSH Group”) and National Storage Property Trust (“NSPT” or “the Trust”) and its controlled entities (“NSPT Group”) on the Australian Securities Exchange (“ASX”).
The Constitutions of NSH and NSPT ensure that, for so long as the two entities remain jointly quoted, the number of shares in the Company and the number of units in the Trust shall be equal and that the shareholders and unitholders be identical. Both the Company and the Responsible Entity (National Storage Financial Services Limited) of the Trust must at all times act in the best interest of NSR. The stapling arrangement will continue until either the winding up of the Company or the Trust, or termination by either entity.
The financial report of NSR for the year ended 30 June 2017 was approved on 22 August 2017, in accordance with a resolution of the Board of Directors of NSH.
The financial report of NSPT for the year ended 30 June 2017 was approved on 22 August 2017, in accordance with a resolution of the Board of National Storage Financial Services Limited as the Responsible Entity for NSPT.
The nature of the operations and principal activities of the Consolidated Group are described in the Directors' Report.
These general purpose financial statements have been prepared in accordance with Australian accounting standards and interpretations issued by the Australian Accounting Standards Board 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. Both NSH and NSPT are for-profit entities for the purpose of preparing the financial statements. The financial statements are presented in Australian Dollars (“AUD”) and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated.
The accounting policies applied by NSH Group and the NSPT Group in these financial statements are the same as the 30 June 2016 financial statements except for the accounting policies impacted by new or amended accounting standards detailed in this note.
In this note reference to “the Group” or “Group” is used to refer to the Consolidated Group and the NSPT Group, unless otherwise indicated. The Group has elected to utilise ASIC Corporations (Stapled Group reports) Instruments 2015/838 and present the NSPT Group within the financial statements of NSR. In some circumstances the categorisation of prior year comparative figures has been adjusted to conform to changes in presentation for the current financial year.
As at 30 June 2017, the Consolidated Group had an excess of current liabilities over current assets of $6m.
Accounting standard AASB 140 Investment Property requires the financial lease liability to be split between current and non-current while the corresponding asset is classed as non-current. The Directors believe the excess value of the total investment property over the finance lease liability reflects the positive position in both the immediate and long-term and that sufficient cash inflows from operations will occur to enable all liabilities to be paid when due.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 67 68
Current lia ilities also include deferred re enue of m associated ith prepaid storage rentals hich are not e pected to result in a significant cash outflo The Consolidated Group also has a aila le funding facilities eyond months of m (see note )
n this asis the financial report has een prepared on a going concern asis as the irectors of NSH elie e the Consolidated Group ill continue to generate operating cash flo s to meet all payment o ligations
The consolidated financial statements of the Consolidated Group and the NSPT Group comply ith International inancial Reporting Standards (“I RS”) as issued y the International Accounting Standards oard
The accounting policies adopted are consistent ith those of the pre ious financial year e cept as detailed elo
The follo ing ne and amended standards rele ant to the Group’s activities have been adopted for the reporting period commencing uly
AAS Amendments to Australian Accounting Standards – anuary uly Accounting for Ac uisitions of Interests in oint perations (AAS and AAS ) AAS Clarification of Accepta le ethods of epreciation and anuary uly Amortisation (Amendments to AAS and AAS )
AAS Amendments to Australian Accounting Standards – E uity anuary uly ethod in Separate inancial Statements AAS Amendments to Australian Accounting Standards – anuary uly – Annual Impro ements to Australian Accounting Standards – Cycle AAS Amendments to Australian Accounting Standards – anuary uly isclosure Initiati e Amendments to AAS AAS Amendments to Australian Accounting Standards – anuary uly In estment Entities Applying the Consolidation E ception
Adoption of these standards ha e had no material impact in the presentation or disclosures ithin the financial statements and are not li ely to affect future periods
Australian Accounting Standards and interpretations relevant to the Group’s operations, that ha e recently een issued or amended ut are not yet effecti e and ha e not een adopted y the Group for the annual reporting period ended une are outlined in the follo ing ta le
FINANCIAL STATEMENTS
inancial is a ne standard hich replaces anuar ul nstru ents addresses the classi ication, easure ent and dereco nition o inancial assets and inancial liabilities his includes ne hed e accountin re uire ents, includin chan es to hed e e ectiveness testin , treat ent o hed in costs, ris co ponents that can be hed ed and disclosures he ne rules should a e it easier to appl hed e accountin oin or ard he ne standard also introduces e panded disclosure re uire ents and chan es in presentation
introduces a ne e pected loss i pair ent odel that ill re uire ore ti el reco nition o e pected credit losses peci icall , the ne standard re uires entities to account or e pected credit losses ro hen inancial instru ents are irst reco nised and to reco nise ull li eti e e pected losses on a ore ti el basis
n adoption o , the Group e pects no aterial chan es in the classi ication o inancial assets and liabilities he Group alread adopts hed e accountin under or interest rate s aps desi nated as a cash lo hed e and a net invest ent hed e a ainst orei n currenc ris he ne standard does not ateriall chan e the a ounts reco nised in relation to e istin arran e ents but ill si pli the re uire ents or easurin hed e e ectiveness and eli ibilit or appl in hed e accountin is e pected to have no notable i pact on the inancial ris and capital ana e ent structure adopted b the Group as detailed in notes and he introduction o the e pected loss i pair ent odel or deter inin an provision on trade receivables and other inancial assets is not e pected to have a material impact on the Group’s results. evenue ro evenue ro ontracts ith anuar ul ontracts ith usto ers replaces the e istin revenue usto ers reco nition standards onstruction ontracts, evenue and related nterpretations he core principle o is that an entit reco nises revenue to depict the trans er o pro ised oods or services to custo ers in an a ount that re lects the consideration to hich the entit e pects to be entitled in e chan e or those oods or services n entit reco nises revenue in accordance ith that core principle b
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 69
appl in the ollo in steps tep enti the contract s ith a customer tep enti the per ormance o li ations in the contract tep etermine the transaction price tep llocate the transaction price to the per ormance o li ations in the contract tep eco nise re enue hen or as the entit satis ies a per ormance o li ation
To date, the Group’s focus has been on e aluatin the impact o on re enue rom stora e rent hich in the current ear represents o total re enue. he Group has re ie e the per ormance o li ations un er an re enue reco nition in this area is e pecte to e unchan e un er the ne stan ar .
he Group also reco nises re enue rom the sale o oo s an ser ices. inclu es a itional ui ance to etermine an entity’s role as either principal or agent. t can occur in some cases that some re enue streams ill no lon er uali as a principal un er the ne ui ance ut instea enerate commission re enue rom their a ent acti ities. ach o the re enue streams in this cate or ill e re ie e in the upcomin inancial ear. n a ustment is li el to e one o presentation an the Group is currentl uanti in an impact o this chan e.
ithin other re enue the Group also reco nises re enue rom esi n e elopment an pro ect mana ement ees ase upon the achie ement o contractual pro ect milestones. re uires the separation o per ormance o li ations ithin a contract an reco nition o re enue hen a customer o tains control o a oo o ser ice. Depending on management’s assessment o the separation or com ination o per ormance stan ar s un er there coul e chan es in timin o re enue reco nition. he Group is currentl uanti in an impact o this chan e. eases re uires lessees to account or all anuar ul leases un er a sin le on alance sheet mo el in a similar a to inance leases un er eases. he stan ar inclu es t o reco nition e emptions or leases of ’low value’ assets and short term leases ith a term o months or less. t
FINANCIAL STATEMENTS
the commencement date of a lease, a lessee will recognise a liability to ma e lease payments i.e. the lease liability and an asset representing the right to use the underlying asset during the lease term i.e. the right of use asset . essees will be re uired to separately recognise the interest e pense on the lease liability and the depreciation e pense on the right of use asset. essees will be re uired to remeasure the lease liability upon the occurrence of certain events e.g. a change in the lease term . The lessee will generally recognise the amount of the remeasurement of the lease liability as an ad ustment to the right of use asset.
The Group has conducted a provisional assessment of the impact of the new standard. The standard removes the distinction between operating leases and finance leases and re uires that, where a lease is identified in a contract, a right of use asset and lease liability is recognised. The Group anticipates that adoption is li ely to result in the ma ority of arrangements currently accounted for as operating leases being recognised in the consolidated statement of financial position as right of use assets and liabilities. The Group’s current commitments under operating leases are detailed in note . Due to the relative si e of these commitments to the Group’s total assets, adoption of is not e pected to have a material impact on the Group’s financial statements. The Group’s leasehold investment properties will continue to be accounted for under and will be unaffected by the application of . mendments to amends anuary uly ustralian onsolidated inancial tatements and ccounting to address an inconsistency tandards – ale between the re uirements in and or ontribution of those in , in dealing with the sale or ssets between contribution of assets between an investor an nvestor and and its associate or oint venture. its ssociate or oint enture mendments to The amendments clarify certain anuary uly ustralian re uirements in ccounting irst time doption of ustralian tandards – ccounting tandards – deletion of Transfers of e emptions for first time adopters and nvestments addition of an e emption arising from roperty, nnual nterpretation oreign urrency mprovements Transactions and dvance ycle onsideration and ther Disclosure of nterests in ther
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 71
mendments ntities – clarification of scope nvestments in ssociates and oint entures – measurin an associate or oint venture at fair value nvestment ropert – chan e in use. orei n urrenc The nterpretation clarifies that in anuar ul nterpretation Transactions and determinin the spot e chan e rate to use dvance on initial reco nition of the related asset onsideration e pense or income or part of it on the dereco nition of a non monetar asset or non monetar liabilit relatin to advance consideration the date of the transaction is the date on hich an entit initiall reco nises the non monetar asset or non monetar liabilit arisin from the advance consideration. f there are multiple pa ments or receipts in advance then the entit must determine a date of the transactions for each pa ment or receipt of advance consideration. mendments to This standard ma es amendments to anuar ul ustralian ncome Ta es to clarif the accountin ccountin for deferred ta assets for unrealised losses tandards – on debt instruments measured at fair value. eco nition of eferred Ta ssets for nrealised osses mendments to The amendments to tatement of anuar ul ustralian Cash Flows are part of the IASB’s Disclosure ccountin nitiative and help users of financial tandards – statements better understand chan es in isclosure an entity’s debt. The amendments require nitiative entities to provide disclosures about mendments to chan es in their liabilities arisin from financin activities includin both chan es arisin from cash flo s and non cash chan es such as forei n e chan e ains or losses . ncertaint over The nterpretation clarifies the application of anuar ul ncome Ta the reco nition and measurement criteria in Treatments ncome Ta es hen there is uncertaint over income ta treatments. The nterpretation specificall addresses the follo in hether an entit considers uncertain ta treatments separatel The assumptions an entit ma es about the e amination of ta treatments b ta ation authorities o an entit determines ta able profit ta bases unused ta losses unused ta credits and ta rates o an entit considers chan es in facts and circumstances.
FINANCIAL STATEMENTS
a separate reser e within equity attributable to The Financial eport of S as at une owners of the parent entity. comprises the consolidated financial statements of the S roup and the S T roup. Associates Associates are all entities o er which the roup The consolidated financial statements of S T as has si nificant influence but not control or oint at une comprises the consolidated control. This is enerally the case where the financial statements of the S T roup. roup holds between and of the otin ri hts. In estments in associates are The financial statements for the Consolidated accounted for usin the equity method. The roup are prepared on the basis that S Consolidated roup has an associate was the acquirer of S T. The non controllin in estment that is accounted for usin the interest is attributable to stapled security holders equity method. presented separately in the statement of comprehensi e income and within equity in the Joint arrangements statement of financial position separately from nder AASB Joint Arrangements, in estments parent shareholders’ equity. in oint arran ements are classified as either oint operations or oint entures. The classification Subsidiaries depends on the contractual ri hts and Subsidiaries are all entities o er which the roup obli ations of each in estor rather than the has control. The roup controls an entity when it le al structure of the oint arran ement. The is e posed to or has ri hts to ariable returns Consolidated roup and S T ha e in estments from its in ol ement with the entity and has the in oint entures that are accounted for usin ability to affect those returns throu h the power the equity method. to direct the acti ities of the entity. Consolidation of a subsidiary be ins when the Equity method roup obtains control o er the subsidiary and nder the equity method the in estment in an ceases when the roup loses control. The associate or a oint enture is initially reco nised acquisition method of accountin is used to at cost. The carryin amount of the in estment is account for business combinations see note ad usted to reco nise chan es in the roup’s . share of net assets since the acquisition date. oodwill relatin to the associate or oint Intercompany transactions balances and enture is included in the carryin amount of the unrealised ains on transactions between roup in estment and is neither amortised nor entities are eliminated. nrealised losses are also indi idually tested for impairment. eliminated unless the transaction pro ides e idence of an impairment of the transferred The statement of profit or loss reflects the asset. Accountin policies of all subsidiaries are roup’s share of the results of operations of the consistent with the policies adopted by the associate or oint enture. Any chan e in other roup. comprehensi e income of those in estees is presented as part of the roup’s other on controllin interests are shown separately in comprehensi e income. In addition when there the consolidated statement of profit or loss has been a chan e reco nised directly in the statement of other comprehensi e income equity of the associate or oint enture the consolidated statement of chan es in equity roup reco nises its share of any chan es and consolidated statement of financial when applicable in the statement of chan es position. in equity. nrealised ains and losses resultin from transactions between the roup and the The roup treats transactions with non associate or oint enture are eliminated to the controllin interests that do not result in a loss of e tent of the interest in the associate or oint control as transactions with equity owners of the enture. roup. A chan e in ownership interest results in an ad ustment between the carryin amounts of The a re ate of the roup’s share of profit or the controllin and non controllin interests to loss of associates and oint entures is shown on reflect their relati e interests in the subsidiary. the face of the consolidated statement of profit Any difference between the amount of the or loss and represents profit or loss after ta and ad ustment to non controllin interests and any non controllin interests in the subsidiaries of consideration paid or recei ed is reco nised in associates or oint entures.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 73
he finan ial state ents of the asso iate and n the roup rental in o e fro oint enture are prepared for the sa e in est ent properties is re o nised on a reportin period as the roup. hen ne essary strai ht line asis o er the lease ter and is ad ust ents are ade to rin the a ountin in luded in re enue in the onsolidated poli ies in line ith those of the roup. state ent of profit or loss.
fter appli ation of the equity ethod the Sale of goods roup deter ines hether it is ne essary to e enue fro the sale of oods is re o nised re o nise an i pair ent loss on its in est ent in hen the si nifi ant ris s and re ards of its asso iate or oint enture. t ea h reportin o nership ha e passed to the uyer usually on date the roup deter ines hether there is deli ery of the oods. o e ti e e iden e that the in est ent in the asso iate or oint enture is i paired. f there is Interest income su h e iden e the roup al ulates the nterest in o e is re o nised usin the effe ti e a ount of i pair ent as the differen e interest ethod. hen a re ei a le is i paired et een the re o era le a ount of the the roup redu es the arryin a ount to its asso iate or oint enture and its arryin alue re o era le a ount ein the esti ated then re o nises the loss as ‘Share of profit or loss future ash flo dis ounted at the ori inal of oint entures and asso iates’ in the effe ti e interest rate of the instru ent and onsolidated state ent of profit or loss. pon ontinues un indin the dis ount as interest loss of si nifi ant influen e o er an asso iate or in o e. nterest in o e on i paired loans is oint ontrol o er the oint enture the roup re o nised usin the ori inal effe ti e interest easures and re o nises any retained rate. in est ent at its fair alue. ny differen e et een the arryin a ount of the asso iate Other revenue or oint enture upon loss of si nifi ant influen e esi n de elop ent and pro e t or oint ontrol and the fair alue of the retained ana e ent fees are re o nised on the in est ent and pro eeds fro disposal is fulfill ent of ontra tual onditions and the re o nised in profit or loss. a hie e ent of pro e t ilestones. ther re enue is re o nised to the e tent that it is pro a le that the e ono i enefits ill flo to the roup and the re enue an e relia ly e enue is re o nised to the e tent that it is easured. pro a le that the e ono i enefits ill flo to the roup and the re enue an e relia ly easured re ardless of hen the pay ent is re ei ed. e enue is easured at the fair alue he onsolidated roup o prises ta a le and of the onsideration re ei ed or re ei a le non ta a le entities. lia ility for urrent and ta in into a ount ontra tually defined ter s deferred ta e pense is only re o nised in of pay ent and e ludin ta es or duty. he respe t of ta a le entities that are su e t to roup assesses its re enue arran e ents in o e ta . a ainst spe ifi riteria to deter ine if it is a tin as prin ipal or a ent. he roup has nder urrent ustralian in o e ta le islation on luded that it is a tin as a prin ipal in all of trusts ithin the roup are not lia le to its aterial re enue arran e ents. he spe ifi ustralian in o e ta pro ided se urityholders re o nition riteria des ri ed elo ust also are presently entitled to the ta a le in o e of e et efore re enue is re o nised. the trusts and the trusts distri ute their ta a le in o e. NSPT’s subsidiary National Storage New Rental and storage revenue Zealand Property Trust (“NSNZPT”) is an e enue fro the pro ision of stora e spa e is ustralian re istered trust hi h o ns re o nised less any a ount ontra tually in est ent property in e ealand. or e refunda le to usto ers o er the ter of the ealand ta purposes is lassed as a unit eneral a ree ent. he alue of dis ounts trust and is su e t to e ealand in o e ta . offered to usto ers at the end of an in enti e period is re o nised on a strai ht line asis o er Current income tax the sa e period. urrent in o e ta assets and lia ilities are easured at the a ount e pe ted to e re o ered or paid to the ta ation authorities.
FINANCIAL STATEMENTS
The ta rates and ta laws used to o pute the that is not a business o bination and at a ount are those that are ena ted or the ti e of the transa tion affe ts neither substanti ely ena ted at the reporting date in the a ounting profit nor ta able profit or the ountries where the roup operates and loss generates ta able in o e n respe t of dedu tible te porary urrent in o e ta relating to ite s re ognised differen es asso iated with in est ents in dire tly in e uity is re ognised in e uity and not subsidiaries asso iates and interests in oint in the state ent of profit or loss anage ent arrange ents deferred ta assets are periodi ally e aluates positions ta en in the ta re ognised only to the e tent that it is returns with respe t to situations in whi h probable that the te porary differen e will appli able ta regulations are sub e t to not re erse in the foreseeable future and interpretation and establishes pro isions where ta able profit will be a ailable against appropriate whi h the te porary differen es an be utilised Deferred tax eferred ta is pro ided using the liability The arrying a ount of deferred ta assets is ethod on te porary differen es arising re iewed at ea h reporting date and ad usted between the ta bases of assets and liabilities to the e tent that it is probable that suffi ient and their arrying a ounts for finan ial ta able profit will be a ailable to allow all or reporting purposes at the reporting date part of the deferred ta asset to be utilised eferred ta liabilities are re ognised for all ta able te porary differen es e ept eferred ta assets and liabilities are easured at the ta rates that are e pe ted to apply in hen the deferred ta liability arises fro the year when the asset is realised or the liability the initial re ognition of goodwill or an asset is settled based on the ta rates (and laws) that or liability in a transa tion that is not a ha e been ena ted or substantially ena ted at business o bination and at the ti e of the reporting date the transa tion affe ts neither the a ounting profit nor ta able profit or loss eferred ta relating to ite s re ognised outside profit or loss is re ognised outside profit n respe t of ta able te porary differen es or loss eferred ta ite s are re ognised in asso iated with in est ents in subsidiaries orrelation to the underlying transa tion either asso iates and interest in oint in other o prehensi e in o e or dire tly in arrange ents when the ti ing of the e uity re ersal of te porary differen es an be ontrolled and it is probable that the eferred ta assets and liabilities are offset if a te porary differen e will not re erse in the legally enfor eable right to offset urrent ta foreseeable future assets and liabilities e ists and when the deferred ta balan es relate to the sa e The deferred ta liabilities in relation to freehold ta ation authority in est ent property easured at fair alue is deter ined assu ing the property alue will be Tax consolidation legislation re o ered entirely through a sale NS and its wholly owned ustralian ontrolled entities ha e i ple ented the ta onsolidation eferred ta assets are re ognised for all legislation s a onse uen e these entities are dedu tible te porary differen es the arry ta ed as a single entity and the deferred ta forward of unused ta redits and any unused assets and liabilities of these entities are set off in ta losses eferred ta assets are re ognised to the onsolidated finan ial state ents the e tent that it is probable that ta able profit ounting for the ta onsolidation legislation will be a ailable against whi h the dedu tible is only rele ant for the indi idual finan ial te porary differen es and the arry forward of state ents of the parent entity (head entity) in unused ta redits and unused ta losses an be the ta onsolidated group but not for the utilised e ept onsolidated finan ial state ents
hen the deferred ta asset relating to the Goods and services tax (“GST”) dedu tible te porary differen e arises fro e enue e penses assets and liabilities are the initial re ognition of an asset or liability re ognised net of the a ount of ST e ept
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 75
hen the ST in urred on a sale or Non onetary ite s that are easured in ter s pur hase of assets is not payable or of histori al ost in a foreign urren y are re o erable fro the ta ation authority in translated using the e hange rates at the whi h ase the ST is re ognised as part of dates of the initial transa tions Non onetary the re enue or e pense ite or part of the ite s easured at fair alue in a foreign ost of a uisition of the asset as urren y are translated using the e hange appli able rates at the date when the fair alue is deter ined hen re ei ables and payables are stated with the a ount of ST in luded The gain or loss arising on translation of non onetary ite s easured at fair alue is treated The net a ount of ST re o erable fro or in line with the re ognition of the gain or loss on payable to the ta ation authority is in luded as the hange in fair alue of the ite (i e part of re ei ables or payables in the state ent translation differen es on ite s whose fair alue of finan ial position o it ents and gain or loss is re ognised in other ontingen ies are dis losed net of the a ount o prehensi e in o e or profit or loss are also of ST re o erable fro or payable to the re ognised in other o prehensi e in o e or ta ation authority profit or loss respe ti ely)
ash flows are in luded in the state ent of ash flows on a gross basis and the ST n onsolidation the assets and liabilities of o ponent of ash flows arising fro in esting foreign operations are translated into ustralian and finan ing a ti ities whi h is re o erable dollars at the rate of e hange pre ailing at the fro or payable to the ta ation authority is reporting date and their state ents of profit or lassed as part of operating ash flows loss are translated at e hange rates pre ailing at the dates of the transa tions The e hange differen es arising on translation for onsolidation are re ognised in other The Group’s consolidated finan ial state ents o prehensi e in o e n disposal of a are presented in ustralian dollars or ea h foreign operation the o ponent of other entity the roup deter ines the fun tional o prehensi e in o e relating to that urren y and ite s in luded in the finan ial parti ular foreign operation is re ognised in state ents of ea h entity are easured using profit or loss that fun tional urren y ny goodwill arising on the a uisition of a foreign operation and any fair alue Transa tions in foreign urren ies are initially ad ust ents to the arrying a ounts of assets recorded by the Group’s entities at their and liabilities arising on the a uisition are respe ti e fun tional urren y spot rates at the treated as assets and liabilities of the foreign date the transa tion first ualifies for operation and translated at the spot rate of re ognition onetary assets and liabilities e hange at the reporting date deno inated in foreign urren ies are translated at the fun tional urren y spot rates of e hange at the reporting date usiness o binations are a ounted for using ifferen es arising on settle ent or translation of the a uisition ethod The ost of an onetary ite s are re ognised in profit or loss a uisition is easured as the aggregate of the with the e eption of onetary ite s that are onsideration transferred whi h is easured at designated as part of the hedge of the roup’s a uisition date fair alue and the a ount of net in est ent of a foreign operation These are any non ontrolling interests in the a uiree or re ognised in other o prehensi e in o e until ea h business o bination the roup ele ts the net in est ent is disposed of at whi h ti e whether to easure the non ontrolling interests the u ulati e a ount is re lassified to profit or in the a uiree at fair alue or at the loss Ta harges and redits attributable to proportionate share of the acquiree’s e hange differen es on those onetary ite s identifiable net assets uisition related osts are also re orded in other o prehensi e are e pensed as in urred and in luded in in o e business o bination e penses in the state ent of profit or loss
FINANCIAL STATEMENTS
hen the Group acquires a business it assesses the inancial assets and liabilities assu ed or appropriate classi ication and desi nation in The deter ination o hether an arran e ent is accordance ith the contractual ter s a lease is based on the substance o the econo ic circu stances and pertinent arran e ent at the inception o the lease The conditions as at the acquisition date This arran e ent is or contains a lease i ul il ent includes the separation o e bedded o the arran e ent is dependent on the use o deri ati es in host contracts by the acquiree a speci ic asset or assets and the arran e ent con eys a ri ht to use the asset or assets e en i ny contin ent consideration to be trans erred that ri ht is not e plicitly speci ied in an by the acquirer ill be reco nised at air alue arran e ent at the acquisition date ontin ent consideration classi ied as an asset or liability The onsolidated Group leases properties hich that is a inancial instru ent and ithin the are classi ied as in est ent properties note scope o inancial nstru ents The onsolidated Group also leases o ice eco nition and easure ent is easured at pre ises and ite s o plant and equip ent The air alue ith the chan es in air alue T Group does not ha e any inance leases reco nised in the state ent o pro it or loss or in est ent properties or property plant and equip ent Good ill is initially easured at cost bein the e cess o the a re ate o the consideration trans erred and the a ount reco nised or non controllin interests and any pre ious interest eases o in est ent property and property held o er the net identi iable assets acquired plant and equip ent here the roup as and liabilities assu ed the air alue o the lessee has substantially all the ris s and re ards net assets acquired is in e cess o the o o nership are classi ied as inance leases a re ate consideration trans erred the Group easehold in est ent property and property re assesses hether it has correctly identi ied all plant and equip ent inance leases are o the assets acquired and all o the liabilities capitalised at the lease’s inception at the fair assu ed and re ie s the procedures used to alue o the leased property easure the a ounts to be reco nised at the acquisition date the reassess ent still results in The correspondin rental obli ations net o an e cess o the air alue o net assets inance char es are included in other short acquired o er the a re ate consideration ter and lon ter liabilities ach lease trans erred then the ain is reco nised in pro it pay ent is allocated bet een the liability and or loss inance cost The inance cost is char ed to the pro it or loss o er the lease period so as to ter initial reco nition ood ill is easured at produce a constant periodic rate o interest on cost less any accu ulated i pair ent losses the re ainin balance o the liability or each or the purpose o i pair ent testin ood ill period The in est ent properties acquired acquired in a business co bination is ro the under inance leases are carried at air alue acquisition date allocated to each o the han es in alue are presented in pro it or loss Group’s cash eneratin units that are e pected to bene it ro the co bination The property plant and equip ent acquired irrespecti e o hether other assets or liabilities under inance leases is depreciated o er the o the acquiree are assi ned to those units asset’s useful life or over the shorter of the asset’s use ul li e and the lease ter i there is no here ood ill has been allocated to a cash reasonable certainty that the Group ill obtain eneratin unit “ G ” and part o the o nership at the end o the lease ter operation ithin that unit is disposed o the ood ill associated ith the disposed operation is included in the carryin a ount o the eases in hich a si ni icant portion o the ris s operation hen deter inin the ain or loss on and re ards o o nership are not trans erred to disposal Good ill disposed in these the Group as lessee are classi ied as operatin circu stances is easured based on the leases note ay ents ade under relati e alues o the disposed operation and operatin leases net o any incenti es recei ed the portion o the G retained ro the lessor are char ed to pro it or loss on a strai ht line basis o er the period o the lease
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 77
ease inco e fro operatin leases here the roup is a lessor is reco nised in revenue less inancial assets at fair value throu h profit or loss an a ount contractuall refunda le to include financial assets held for tradin and custo ers over the ter of lease financial assets desi nated upon initial reco nition at fair value throu h profit or loss inancial assets are classified as held for tradin if the are ac uired for the purpose of sellin or ash and cash e uivalents in the state ent of repurchasin in the near ter erivatives financial position co prise cash at an and on includin separated e edded derivatives are hand and ter deposits that are readil also classified as held for tradin unless the are converti le to no n a ounts of cash and desi nated as effective hed in instru ents as hich are su ect to an insi nificant ris of defined chan e in value or the purposes of the state ent of cash flo s oans and receiva les are non derivative cash and cash e uivalents consist of cash and financial assets ith fi ed or deter ina le ter deposits as defined a ove pa ents that are not uoted in an active ar et fter initial easure ent such financial assets are su se uentl easured at a ortised cost usin the effective interest rate ethod rade receiva les are reco nised initiall at fair less i pair ent he losses arisin fro value and su se uentl easured at a ortised i pair ent are reco nised in the state ent of cost usin the effective interest ethod less profit or loss in finance costs for loans and other provision for i pair ent see note for operational e penses for receiva les further infor ation a out the Group’s accountin for trade receiva les and note for a description of the group’s impairment on derivative financial assets ith fi ed or policies deter ina le pa ents and fi ed aturities are classified as held to aturit hen the Group has the positive intention and a ilit to hold the to aturit fter initial easure ent nventories are valued at the lo er of cost and held to aturit invest ents are easured at net realisa le value osts are assi ned on a a ortised cost usin the effective interest rate first in first out asis less i pair ent
et realisa le value is the esti ated sellin price in the ordinar course of usiness less the vaila le for sale financial assets include e uit esti ated costs necessar to a e the sale invest ents and de t securities uit invest ents classified as availa le for sale are those that are neither classified as held for tradin nor desi nated at fair value throu h profit or loss e t securities in this cate or are those that are intended to e held for an
indefinite period of ti e and that a e sold in inancial assets are classified at initial response to needs for li uidit or in response to reco nition as financial assets at fair value chan es in the ar et conditions he Group throu h profit or loss loans and receiva les currentl has no availa le for sale financial held to aturit invest ents and availa le for assets sale financial assets
ll financial assets are reco nised initiall at fair value plus in the case of financial assets not su se uentl easured at fair value throu h inancial assets are dereco nised hen the profit or loss transaction costs that are ri hts to receive cash flo s fro the financial attri uta le to the ac uisition of the financial assets have e pired or have een transferred asset and the Group has transferred su stantiall all the ris s and re ards of o nership hen
FINANCIAL STATEMENTS
securities c assified as a ai a e for sa e are so d a ai a e for sa e increases in a su se uent the accumu ated fair a ue ad ustments period and the increase can e o ecti e recognised in other comprehensi e income are re ated to an e ent occurring after the rec assified to profit or oss as gains and osses impairment oss as recognised in profit or oss from in estment securities the impairment oss is re ersed through profit or oss he roup assesses at the end of each reporting period hether there is o ecti e e idence that he roup uses deri ati e financia instruments a financia asset or group of financia assets is such as interest rate s aps and a net in estment impaired n impairment e ists if one or more hedge to hedge its foreign currenc and interest e ents that has occurred since the initia rate ris s recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future eri ati es are initia recognised at fair a ue cash f o s of the financia asset or the group of on the date a deri ati e contract is entered into financia assets that can e re ia estimated and are su se uent remeasured to their fair a ue at the end of each reporting period he accounting for su se uent changes in fair a ue or oans and recei a es and he d to maturit depends on hether the deri ati e is in estments the amount of the oss is measured designated as a hedging instrument and if so as the difference between the asset’s carrying the nature of the item eing hedged he roup amount and the present a ue of estimated designates certain deri ati es as either future cash f o s e c uding future credit osses that ha e not een incurred discounted at the hedges of the fair a ue of recognised financial asset’s original effecti e interest rate assets or ia i ities or a firm commitment fair he carr ing amount of the asset is reduced and a ue hedges the amount of the oss is recognised in profit or hedges of a particu ar ris associated ith oss f a oan or he d to maturit in estment has the cash f o s of recognised assets and a aria e interest rate the discount rate for ia i ities and high pro a e forecast measuring an impairment oss is the current transactions cash f o hedges or effecti e interest rate determined under the hedges of a net in estment in a foreign contract he roup ma measure impairment operation net in estment hedges on the basis of an instrument’s fair value using an o ser a e mar et price he roup documents at the inception of the hedging transaction the re ationship et een f in a su se uent period the amount of the hedging instruments and hedged items as e impairment oss decreases and the decrease as its ris management o ecti e and strateg can e re ated o ecti e to an e ent for underta ing arious hedge transactions he occurring after the impairment as recognised roup a so documents its assessment oth at (such as an improvement in the debtor’s credit hedge inception and on an ongoing asis of rating the re ersa of the pre ious recognised hether the deri ati es that are used in impairment oss is recognised in profit or oss hedging transactions ha e een and i continue to e high effecti e in offsetting changes in fair a ues or cash f o s of hedged f there is o ecti e e idence of impairment for items a ai a e for sa e financia assets the cumu ati e oss measured as the difference he fair a ues of arious deri ati e financia et een the ac uisition cost and the current instruments used for hedging purposes are fair a ue ess an impairment oss on that disc osed in note o ements in the financia asset pre ious recognised in profit or hedging reser e in e uit are sho n in note oss is remo ed from e uit and recognised in he fu fair a ue of a hedging deri ati e is profit or oss c assified as a non current asset or ia i it hen the remaining maturit of the hedged item is mpairment osses on e uit instruments that more than months it is c assified as a current ere recognised in profit or oss are not re ersed asset or ia i it hen the remaining maturit of through profit or oss in a su se uent period f the hedged item is ess than months rading the fair a ue of a de t instrument c assified as
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 79
derivatives are classified as a current asset or cumulative gain or loss e isting in e uity at that liability time remains in e uity and is recognised when the forecast transaction is ultimately recognised in profit or loss hen a forecast transaction is no hanges in the fair value of derivatives that are longer e pected to occur the cumulative gain designated and ualify as fair value hedges are or loss that was reported in e uity is immediately recorded in profit or loss together with any reclassified to profit or loss changes in the fair value of the hedged asset or liability that are attributable to the hedged ris he gain or loss relating to the effective portion of interest rate swaps hedging fi ed rate ertain derivative instruments do not ualify for borrowings is recognised in profit or loss within hedge accounting hanges in the fair value of finance costs together with changes in the fair any derivative instrument that does not ualify value of the hedged fi ed rate borrowings for hedge accounting are recognised immediately in profit or loss and are included in attributable to interest rate ris he gain or loss other income or other e penses relating to the ineffective portion is recognised
in profit or loss within other income or other e penses
roperty plant and e uipment is stated at f the hedge no longer meets the criteria for historical cost less depreciation istorical cost hedge accounting the ad ustment to the includes e penditure that is directly attributable carrying amount of a hedged item for which the to the ac uisition of the items ubse uent costs effective interest method is used is amortised to are included in the asset’s carrying amount or profit or loss over the period to maturity using a recognised as a separate asset as appropriate recalculated effective interest rate 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 he effective portion of changes in the fair value measured reliably he carrying amount of any of derivatives that are designated and ualify as component asset is derecognised when a cash flow hedge is recognised in other replaced ll repairs and maintenance are comprehensive income and accumulated in charged to profit or loss during the reporting reserves in e uity he gain or loss relating to the period in which they are incurred ineffective portion is recognised immediately in
profit or loss within finance income or finance epreciation is calculated on a straight line costs basis over the estimated useful life of the assets
as follows mounts accumulated in e uity are reclassified
to profit or loss in the periods when the hedged easehold improvements remaining length item affects profit or loss (for instance when the of lease term forecast sale that is hedged ta es place) n lant and e uipment to years reclassification the gain or loss relating to the
effective portion of interest rate swaps hedging ach asset’s residual value and useful life is variable rate borrowings is recognised in profit or reviewed and ad usted if appropriate at the loss within finance costs owever when the end of each reporting period forecast transaction that is hedged results in the
recognition of a non financial asset (for An asset’s carrying amount is written down e ample inventory or fi ed assets) the gains immediately to its recoverable amount if the and losses previously deferred in e uity are asset’s carrying amount is greater than its reclassified from e uity and included in the estimated recoverable amount (note ( )) initial measurement of the cost of the asset he ains and losses on disposals are determined by deferred amounts are ultimately recognised in comparing proceeds with carrying amount profit or loss as cost of goods sold in the case of hese are included in profit or loss inventory or as depreciation or impairment in
the case of fi ed assets
hen a hedging instrument e pires or is sold or terminated or when a hedge no longer meets the criteria for hedge accounting any
FINANCIAL STATEMENTS
lease and the air alue o the lease to the rou is recorded each eriod as in estment ro erty under an o erating lease n estment ro erties are measured initially at cost including transaction costs u se uent to ains or losses arising rom changes in the air initial recognition in estment ro erties are alues o in estment ro erties are included in stated at air alue which re lects mar et ro it or loss in the eriod in which they arise conditions at the re orting date ains or losses including the corres onding ta e ect air arising rom changes in the air alues o alues are determined using the same aluation in estment ro erties are included in ro it or rocess a lied to reehold in estment loss in the eriod in which they arise ro erty
air alues are determined y a com ination o ease ayments are allocated etween the inde endent aluations and irector aluations rinci al com onent o the lease lia ility and he inde endent aluations are er ormed y interest e ense so as to achie e a constant an accredited inde endent aluer n estment rate o interest on the remaining alance o the ro erties are inde endently alued on a lia ility nterest e ense is recognised in inance rotational asis e ery three years unless the costs in the consolidated statements o ro it underlying inancing re uires or the irectors and loss and within ayment o inance lease determine a more re uent aluation cycle or lia ilities within the consolidated statements o ro erties su ect to an inde endent aluation cash lows re ort the irectors eri y all ma or in uts to the aluation and re iew the results with the inde endent aluer he irector aluations are com leted y the rou oard he ntangi le assets ac uired se arately are aluations are determined using the same measured on initial recognition at cost he cost techni ues and similar estimates to those o intangi le assets ac uired in a usiness a lied y the inde endent aluer com ination is their air alue at the date o ac uisition ollowing initial recognition n estment ro erties are derecognised either intangi le assets are carried at cost less any when they ha e een dis osed o or when they accumulated amortisation and accumulated are ermanently withdrawn rom use and no im airment losses nternally generated uture economic ene it is e ected rom their intangi les e cluding ca italised de elo ment dis osal he di erence etween the net costs are not ca italised and the related dis osal roceeds and the carrying amount o e enditure is re lected in ro it or loss in the the asset is recognised in the statement o ro it eriod in which the e enditure is incurred or loss in the eriod o derecognition he use ul li es o intangi le assets are assessed rans ers are made to or rom in estment as either inite or inde inite ntangi le assets with ro erty only when there is a change in use or inite li es are amortised o er the use ul a trans er rom in estment ro erty to ro erty economic li e and assessed or im airment lant and e ui ment the deemed cost or whene er there is an indication that the su se uent accounting is the air alue at the intangi le asset may e im aired he date o change in use ro erty lant and amortisation eriod and the amortisation e ui ment ecomes an in estment ro erty method or an intangi le asset with a inite the rou accounts or such ro erty in use ul li e are re iewed at least at the end o accordance with the olicy stated under each re orting eriod ro erty lant and e ui ment u to the date o change in use hanges in the e ected use ul li e or the e ected attern o consum tion o uture economic ene its em odied in the asset are he rou as lessee has ro erties under considered to modi y the amortisation eriod or o erating leases that in accordance with AA method as a ro riate and are treated as n estment ro erty uali y or treatment as changes in accounting estimates and ad usted in estment ro erties nder this treatment or on a ros ecti e asis he amortisation each ro erty the resent alue o the e ense on intangi le assets with inite li es is minimum lease ayments is determined and recognised in the statement o ro it or loss as carried as a lease lia ility as i it were a inance
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 81
the e ense category that is consistent with the unction o the intangi le assets An im airment loss is recognised or the amount by which the asset’s carrying amount exceeds ntangi le assets with inde inite use ul li es such its reco era le amount he reco era le as goodwill are not amortised ut are tested or amount is the higher of an asset’s fair value less im airment at each re orting eriod either costs o dis osal and alue in use or the indi idually or at the le el he assessment ur oses o assessing im airment assets are o inde inite li e is re iewed at each re orting grou ed at the lowest le els or which there are eriod to determine whether the inde inite li e se arately identi ia le cash in lows which are continues to e su orta le not the change largely inde endent o the cash in lows rom in use ul li e rom inde inite to inite is made on a other assets or grou s o assets cash generating ros ecti e asis ains or losses arising rom units on inancial assets other than goodwill derecognition o an intangi le asset are that ha e een im aired in re ious eriods are measured as the di erence etween the net re iewed or ossi le re ersal o the im airment dis osal roceeds and the carrying amount o at the end o each re orting eriod the asset and are recognised in the statement o ro it or loss when the asset is derecognised
esearch costs are e ensed as incurred hese amounts re resent lia ilities or goods and e elo ment e enditure on an indi idual ser ices ro ided to the rou rior to the end ro ect is recognised as an intangi le asset o inancial year which are un aid he amounts when the rou can demonstrate are unsecured and are usually aid within days o recognition rade and other aya les he technical easi ility o com leting the are resented as current lia ilities unless intangi le asset so that the asset will e ayment is not due within months a ter the a aila le or use or sale re orting eriod hey are recognised initially at ts intention to com lete and its a ility and their air alue and su se uently measured at intention to use or sell the asset amortised cost using the e ecti e interest ow the asset will generate uture method economic ene its he a aila ility o resources to com lete the aya les to related arties are carried at the asset rinci al amount o interest is charged on he a ility to measure relia ly the these aya les e enditure during de elo ment ollowing initial recognition o the de elo ment e enditure as an asset the asset is carried at nterest earing loans and orrowings are cost less any accumulated amortisation and initially recognised at air alue net o accumulated im airment losses Amortisation o transaction costs incurred nterest earing loans the asset egins when de elo ment is and orrowings are su se uently measured at com lete and the asset is a aila le or use t is amortised cost Any di erence etween the amortised o er the eriod o e ected uture roceeds net o transaction costs and the ene it Amortisation is recorded in other redem tion amount is recognised in ro it or loss o erational e enses uring the eriod o o er the eriod o the interest earing loans and de elo ment the asset is tested or im airment orrowings using the e ecti e interest method annually ees aid on the esta lishment o loan acilities are recognised as transaction costs o the loan to the e tent that it is ro a le that some or all o the acility will e drawn down n this case oodwill and intangi le assets that ha e an the ee is de erred until the draw down occurs inde inite use ul li e are not su ect to o the e tent there is no e idence that it is amortisation and are tested annually or ro a le that some or all o the acility will e im airment or more re uently i e ents or drawn down the ee is ca italised as a changes in circumstances indicate that they re ayment or li uidity ser ices and amortised might e im aired ther assets are tested or o er the eriod o the acility to which it relates im airment whene er e ents or changes in circumstances indicate that the carrying nterest earing loans and orrowings are amount may not e reco era le remo ed rom the alance sheet when the
FINANCIAL STATEMENTS
obligation s ecified in the contract is n accordance with lease agreements the discharged cancelled or ex ired he onsolidated rou must restore the leased difference between the carrying amount of a remises in a number of leasehold remises to its financial liability that has been extinguished or original condition at lease ex iry rovision has transferred to another arty and the been recognised for the obligation to remove consideration aid including any non cash leasehold im rovements from the leased assets transferred or liabilities assumed is remises note recognised in rofit or loss as other income or finance costs he onsolidated rou has also recognised an onerous lease rovision related to future lease nterest bearing loans and borrowings are ayments ayable on former head office classified as current liabilities unless the grou remises no longer occu ied by the rou has an unconditional right to defer settlement of the liability for at least months after the re orting eriod iabilities for wages and salaries including non monetary benefits and accumulating annual orrowing costs are recognised as an ex ense leave which are ex ected to be settled within when incurred unless they relate to the months of the re orting date are recognised ac uisition construction or roduction of a in res ect of em loyees services u to the ualifying asset or to u front borrowing re orting date hey are measured at the establishment and arrangement costs which amounts ex ected to be aid when the are deferred and amortised as an ex ense over liabilities are settled the life of the facility orrowing costs incurred for the construction of any ualifying asset are ca italised during the eriod of time that is he rou does not ex ect its long service re uired to com lete and re are the asset for leave benefits to be settled wholly within its intended use or sale months of each re orting date he rou recognises a liability for long service leave measured as the resent value of ex ected future ayments to be made in res ect of rovisions are recognised when the rou has a services rovided by em loyees u to the resent obligation legal or constructive as a re orting date using the ro ected unit credit result of a ast event it is robable that an method onsideration is given to revious outflow of resources embodying economic ex erience of em loyee de artures and benefits will be re uired to settle the obligation eriods of service x ected future ayments and a reliable estimate can be made of the are discounted using mar et yields at the amount of the obligation hen the rou re orting date on the a licable cor orate ex ects some or all of a rovision to be bonds with terms to maturity and currencies that reimbursed the reimbursement is recognised as match as closely as ossible the estimated a se arate asset but only when the future cash outflows reimbursement is virtually certain rovisions are not recognised for future o erating losses ll em loyees can direct the rou to ma e rovisions are measured at the resent value of contributions to a defined contribution lan of management’s best estimate of the their choice ontributions to defined ex enditure re uired to settle the resent contribution su erannuation funds are obligation at the end of the re orting eriod recognised as an ex ense as they become he discount rate used to determine the resent ayable re aid contributions are recognised value is a re tax rate that reflects current as an asset to the extent that a cash refund or a mar et assessments of the time value of money reduction in the future ayments is available and the ris s s ecific to the liability he increase in the rovision due to the assage of time is recognised as interest ex ense ssued and aid u ca ital is recognised at the either the onsolidated rou nor the fair value of the consideration received by the rou have any rovision for legal claims onsolidated rou and the rou
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 83
ta e se ities a e assifie as e it a ising f om n se ta osses an n se ta n ementa osts i e t att ib tab e to the e its ass me f om ont o e entities in the iss e of se ities a e sho n in e it as a ta onso i ate g o e tion net of ta f om the o ee s he entities ha e a so ente e into a ta f n ing ag eement n e hi h the ho o ne entities f om ensate fo an ent ta a ab e ass me an a e om ensate b he onso i ate o an the o fo an ent ta e ei ab e an efe e e ognise a iabi it to ma e ash o non ash ta assets e ating to n se ta osses o n se ist ib tions to e it ho e s hen the ta e its that a e t ansfe e to n e the ist ib tion is a tho ise an is no onge at the ta onso i ation egis ation he f n ing is etion of the om an o the es onsib e amo nts a e ete mine b efe en e to the ntit o es on ing amo nt is e ognise amo nts e ognise in the ho o ne i e t in e it entities finan ia statements he amo nts e ei ab e a ab e n e the ta f n ing on ash ist ib tions a e meas e at the fai ag eement a e e on e ei t of the f n ing a e of the assets to be ist ib te ith fai a i e f om the hea entit he hea entit a e e meas ement e ognise i e t in ma a so e i e a ment of inte im f n ing e it n iffe en e bet een the a ing amo nts to assist ith its ob igations to a ta amo nt of the iabi it an the a ing amo nt insta ments of the assets ist ib te is e ognise in the statement of ofit o oss ssets o iabi ities a ising n e ta f n ing ag eements ith the ta onso i ate entities a e e ognise as ent amo nts e ei ab e f om o a ab e to othe entities in the he om an an a e of a in efe e to onso i ate o in o o ations o n ing in inan ia i e tors’ Reports) Instrument e ating to the ‘rounding off’ of amo nts in the finan ia statements mo nts in he onso i ate o an the o the finan ia statements ha e been o n e off meas e finan ia inst ments s h as to the nea est tho san o a s o in e tain e i ati es an non finan ia assets s h as ases the nea est o a in estment o e ties at fai a e at ea h ba an e sheet ate ai a e is the i e that o be e ei e to he finan ia info mation fo the a ent entities se an asset o ai to t ansfe a iabi it in an an is ose in note has been o e t ansa tion bet een ma et a ti i ants e a e on the same basis as the onso i ate at the meas ement ate he fai a e finan ia statements e e t as set o t be o meas ement is base on the es m tion that the t ansa tion to se the asset o t ansfe the iabi it ta es a e eithe n estments in s bsi ia ies a e a o nte fo at ost in the finan ia statements of an in the in i a ma et fo the asset o iabi it o in the absen e of a in i a ma et in the an its ho o ne entities ha e most a antageo s ma et fo the asset o im emente the ta onso i ation egis ation iabi it he hea entit an the ont o e entities that a e in the ta onso i ate g o a o nt he in i a o the most a antageo s ma et fo thei o n ent an efe e ta amo nts m st be a essib e b the g o hese ta amo nts a e meas e as if ea h entit in the ta onso i ate g o ontin es to he fai a e of an asset o iabi it is meas e be a stan a one ta a e in its o n ight sing the ass m tions that ma et a ti i ants n a ition to its o n ent an efe e ta o se hen i ing the asset o iabi it amo nts a so e ognises the ent ta ass ming that ma et a ti i ants a t in thei iabi ities o assets an the efe e ta assets e onomi best inte est fai a e
FINANCIAL STATEMENTS
me surement of non fin n i sset t es into ount m r et p rti ip nt s i it to gener te e onomi enefits using the sset In the pro ess of pp ing the onso id ted in its highest nd est use or se ing it to roup’s and the NSPT Group’s ounting nother m r et p rti ip nt po i ies m n gement h s m de the fo o ing udgements hi h h e signifi nt effe t on he roup uses u tion te hni ues th t re the mounts re ognised in the onso id ted ppropri te in the ir umst n es nd for hi h fin n i st tements suffi ient d t is i e to me sure f ir ue m imising the use of re e nt o ser e inputs nd minimising the use of uno ser e inputs ssets nd i i ities for hi h f ir ue is uring the e r the roup uired me sured or dis osed in the fin n i interest in the und tor ge rust nd the st tements re tegorised ithin the f ir ue roup uired interest in the und hier r h sed on the o est e e input th t is ommer i rust hese in estments h e een signifi nt to the f ir ue me surement s ssified s oint enture s oth trusts re ho e su e t to e urit ho ders greement th t h s een ontr tu stru tured su h th t the e e — uoted un d usted) m r et p rties to the greement h e e u pri es in ti e m r ets for identi ssets represent tion on the d isor o rd or i i ities responsi e for the o er dire tion nd e e — u tion te hni ues for hi h super ision of e h trust the o est e e input th t is signifi nt to the f ir ue me surement is dire t or indire t o ser e eferred t ssets re re ognised the e e — u tion te hni ues for hi h onso id ted roup for unused t osses to the the o est e e input th t is signifi nt to e tent th t it is pro e th t t e profit i the f ir ue me surement is uno ser e e i e g inst hi h the osses n e uti ised ignifi nt m n gement udgement is or ssets nd i i ities th t re re ognised in re uired to determine the mount of deferred the fin n i st tements on re urring sis the t ssets th t n e re ognised sed upon roup determines hether tr nsfers h e the i e timing nd the e e of future t e o urred et een e e s in the hier r h re profits together ith future t p nning ssessing tegoris tion sed on the o est str tegies e e input th t is signifi nt to the f ir ue me surement s ho e) t the end of e h reporting period he e ssumptions on erning the future nd or further det i s on f ir ue refer to notes other e sour es of estim tion un ert int t nd the reporting d te th t h e signifi nt ris of using m teri d ustment to the rr ing mounts of ssets nd i i ities ithin the ne t fin n i e r re des ri ed e o ssumptions nd estim tes re sed on he prep r tion of the onso id ted roup’s p r meters i e hen the onso id ted and the NSPT Group’s onso id ted fin n i fin n i st tements ere prep red isting st tements re uires m n gement to m e ir umst n es nd ssumptions out the udgements estim tes nd ssumptions th t future de e opments m h nge due to ffe t the reported mounts of re enues m r et h nges or ir umst n es rising e penses ssets nd i i ities nd the e ond the ontro of the roup u h h nges omp n ing dis osures nd the dis osure re ref e ted in the ssumptions hen the of ontingent ssets nd i i ities n ert int o ur out these ssumptions nd estim tes ou d resu t in out omes th t re uire m teri d ustment to the rr ing mount of the ssets he onso id ted roup nd roup rries or i i ities ffe ted in future periods its in estment properties t f ir ue ith
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 85
han es n a r a ue e n re o n sed n the der ed ro the ud et or the ne t e ears state ent o pro t or oss under a r a ue and do not n ude restru tur n a t t es that ad ust ents a r a ues are deter ned a the onso dated Group s not et o tted to o nat on o ndependent a uat ons or s n ant uture n est ents that assessed on a rotat ona as s and re tor enhan e the per or an e o the G e n a uat ons deter ned us n the sa e tested The re o era e a ount s ost sens t e te hn ues and s ar est ates to those to the d s ount rate used or the d s ounted app ed the ndependent a uer The e ash o ode as e as the e pe ted uture assu pt ons used to deter ne the a r a ue o ash n o s and the ro th rate used or the propert es and the sens t t ana ses are e trapo at on purposes pro ded n note – The onso dated Group ap ta ses n pa r ent e sts hen the arr n a ue o de e op ent osts or a pro e t n a ordan e an asset or G e eeds ts re o era e th the Group’s a ount n po n t a a ount h h s the h her o ts a r a ue ess ap ta sat on o osts s ased on osts to se and ts a ue n use The a r a ue management’s judgement that e ono ess osts to se a u at on s ased on the a r eas t s on r ed usua hen a produ t a ue o the onso dated Group’s stap ed de e op ent pro e t has rea hed a de ned se ur t es as sted on the ustra an Se ur t es estone n deter n n the a ounts to e han e h h has een assessed as one ap ta sed ana e ent a es G ess osts o d sposa assu pt ons re ard n the e pe ted uture e ono ene ts o the pro e t The a ue n use a u at on s ased on a d s ounted ash o ode The ash o s are
FINANCIAL STATEMENTS
he onso dated Group has dent ed ts operat ng segments ased on the nterna management n ormat on used the Group’s executive management team the Consolidated Group’s chief decision ma ers
he onso dated Group operates ho th n one us ness segment e ng the operat on and management o storage entres n ustra a and e ea and he operat ng resu ts presented n the statements o pro t or oss represent the same segment n ormat on as reported to the Group’s executive management team The Group’s financing s managed on a Group as s and not a o ated to operat ng segments
ustra a e ea and
he re enue n ormat on a o e s ased on the o at on o storage entres
ustra a e ea and
on urrent assets or th s purpose ons sts o propert p ant and e u pment n estment propert es and ntang e assets
he onso dated Group has no nd dua ustomer h h represents greater than o tota re enue
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 87
n ugust ational torage perations t td a su sidiar of the Consolidated Group ac uired of the share capital of outhern Cross torage perations t td ational torage ropert Trust and ational torage outhern Trust su sidiaries of oth the Consolidated Group and T Group ac uired the investment properties of outhern Cross torage Trust
The assets and lia ilities assumed as part of this transaction constitute those of a usiness n this asis the Consolidated Group has determined that this transaction meets the definition of a usiness Com ination and accounted for this transaction follo ing the re uirements of
The ac uisition secured long term o nership of strategicall important assets hich ere complementar to the Consolidated Group and NSPT Group’s pre existing propert portfolio and alread integrated into the Consolidated Group’s operating platform.
rior to completion the Consolidated Group and T Group held a interest in the outhern Cross torage Group hich consisted of outhern Cross perations t td and outhern Cross torage Trust This resulted in a disposal of the investment in a oint venture see note
The fair value of the identifia le assets and lia ilities ac uired of the outhern Cross torage Group as at the date of ac uisition ere
nvestment properties Cash and cash e uivalents Trade and other receiva les nventories eferred tax asset ther current assets
Trade and other pa a les eferred revenue rovisions
Good ill arising on ac uisition
The good ill of m represents the premium attached to a portfolio purchase of investment properties and the expected s nergies arising from the ac uisition
rom the date of ac uisition outhern Cross torage perations t td contri uted m of revenue and m of profit efore tax to the Consolidated Group rom the date of ac uisition ational torage ropert Trust and ational torage outhern Trust received m of rental income from outhern Cross torage perations t td hich contri uted to revenue and profit efore tax of the Consolidated Group and T Group
FINANCIAL STATEMENTS
f the om ination had ta en pla e at the eginning of the period re enue for the Consolidated Group ould ha e een m. ue to the terms and onditions agreed at in eption of the enture on ind up the Group a hie ed a management performan e fee e ual to the profit of Southern Cross for the period ul to the date of a uisition. Therefore profit efore ta for the Consolidated Group ould ha e een un hanged.
Purchase consideration Cash and ash e ui alents
Transa tion osts of the a uisition in luded in ash flo s from in esting a ti ities Net ash a uired ith the su sidiar in luded in a uisition of su sidiar and propert portfolio net of ash a uired per statement of ashflo s
The a uisition had no elements of ontingent onsideration.
The Consolidated Group in urred transa tion osts of . m hi h ere e pensed and are in luded ithin usiness om ination osts in the in ome statement.
nterest re enue esign de elopment and pro e t management fees ther re enue
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 89
nsuran e Professional fees Communi ations osts nformation te hnolog osts an harges otor ehi le e penses epre iation of non urrent assets . mortisation of intangi le assets . ther
ages and salaries Post emplo ment enefits ther emplo ee osts
– .
an interest nterest in ome from related parties
nterest on interest earing loans and orro ings inan e harges on finan e leases
FINANCIAL STATEMENTS
nder urrent ustralian ta legislation NSPT is not lia le to pa in ome ta pro ided its ta a le in ome and taxable realised gains are fully distributed to unit holders. NSPT’s subsidiary National Storage New Zealand Property Trust (“NSNZPT”) is an Australian registered trust hi h o ns in estment propert in Ne ealand. or Ne ealand ta purposes NSN PT is lassed as a unit trust and is su e t to Ne ealand in ome ta at a rate of . uture distri utions from NSN PT to NSPT ma ha e atta hed oreign n ome Ta ffsets hi h hen su se uentl distri uted NSPT ma e laimed an ustralian ta resident depending on their personal ir umstan es.
The ma or omponents of in ome ta e pense enefit for the ears ended une and une are
Current ta eferred ta Total in ome ta e pense enefit
Net gain loss on re aluation of ash flo hedges eferred ta harged to other omprehensi e in ome
accounting profit multiplied by Australia’s Profit from ontinuing operations edu t profit efore ta from Trusts o ning ustralian propert ounting profit loss efore in ome ta
Ta at the ustralian ta rate of –
Non assessa le in ome d ustments in respe t of pre ious ears ther non dedu ti le e penses ere ognition of pre iousl re ognised ta losses ffe t of lo er ta rates in Ne ealand
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 91
onsolidated roup roup eferred ta e pense included in income ta e pense benefit comprises ( n rease) de rease in deferred tax assets ( ) ( ) ( ) n rease in deferred tax liabilities eferred tax assets a uired in business o binations o e ent of deferred tax asset on arry forward losses shown in urrent tax expense ( ) x hange ariations o e ent in deferred tax asset re ognised in other o prehensi e in o e ( ) ( ) otal deferred ta e pense benefit ( )
eferred ta assets and liabilities
Deferred tax assets ease liability ployee benefits A rued expenses arry forward losses or ation expenses a e good pro ision e aluation of ash flow hedges ther Total deferred tax assets
Deferred tax liabilities Prepay ents ther re ei ables e aluations of in est ent properties nrealised foreign ex hange losses Total deferred tax liabilities
et deferred ta liability asset ( ) ( ) ( )
econciliation to statement of financial position eferred tax asset eferred tax liability ( ) ( ) ( ) et deferred ta liability asset ( ) ( ) ( )
The onsolidated roup offsets tax assets and liabilities if it has a legally enfor eable right to set off urrent tax assets and urrent tax liabilities and the deferred tax asset and deferred tax liabilities relate to in o e taxes le ied by the sa e tax authority.
The onsolidated roup has total gross tax losses whi h arose in Australia of ( ). These losses are a ailable for offsetting against future taxable profits of the NS Australian tax group. These losses are sub e t to the satisfa tion of the sa e business test and a redu ed rate of utilisation under the a ailable fra tion rules. The onsolidated roup has assessed the expe ted utilisation profile of these tax losses and has re ognised a deferred tax asset of on NS Australian group tax losses of on the basis it is probable that there will be suffi ient future
FINANCIAL STATEMENTS
taxable profits in the roup against whi h this deferred tax asset will be re o ered. The NS Australian group also has gross tax losses of for whi h a deferred tax asset has not been re ognised as the future utilisation of these losses is ore un ertain.
The onsolidated roup has gross tax losses of NZ (A ) ( NZ (A )) These losses are a ailable indefinitely for offsetting against future taxable profits of National Storage i ited whi h arose in New Zealand. The roup has assessed the expe ted utilisation profile of these tax losses and has re ognised a deferred tax asset of NZ (A ) ( NZ ) (A )). The NSPT roup has no tax losses that are a ailable for offsetting against future taxable profits of the NSPT roup ( none).
A A A A A A A
This note pro ides infor ation about the onsolidated Group’s and the NSPT Group’s urrent and non urrent finan ial instru ents in luding
an o er iew of all finan ial instru ents held by both groups spe ifi infor ation about ea h type of finan ial instru ent infor ation about deter ining the fair alue of the instru ents in luding areas of udge ent esti ates and other assu ptions.
The onsolidated roup and the NSPT roup hold the following finan ial instru ents
onsolidated roup roup otes inancial assets ash and ash e ui alents . Trade and other re ei ables . ther assets . eri ati es used for hedging – at fair alue through other o prehensi e in o e ther assets .
Total financial assets
inancial liabilities Trade and other payables . nterest bearing loans and borrowings . inan e leases . eri ati es used for hedging – at fair alue through other o prehensi e in o e ther liabilities .
Total financial liabilities
x luding prepay ents
ther liabilities for the onsolidated roup and NSPT roup in lude a distribution payable of . ( . ) not in luded in the table abo e.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 93
The onso dated Group and NSPT Group’s approa h to nan a r s ana e ent s d s ussed n note The a u e posure to red t r s at the end o the report n per od s the arr n a ount o ea h ass o nan a asset ent oned a o e
10.1. as and cas e ui alents
onsolidated roup roup urrent assets ash on hand ash at an otal cas and cas e ui alents
ash at an earns nterest at oat n rates ased on da an depos t rates
as flo reconciliation of net profit after ta to net cas flo s from operations
onsolidated roup roup
Pro t a ter n o e ta n o e ta e pense ene t Pro t e ore ta
epre at on and a ort sat on ort sat on o ntan e assets pa r ent o assets n uded th n restru tur n and other non re urr n osts a r a ue ad ust ent to n est ent propert es Share o pro t o o nt enture nan e n o e nan e osts us ness o nat on osts
n rease n re e a es n rease n n entor es n rease de rease n other assets n rease n pa a es n rease n de erred re enue n rease n pro s ons as flo s from operating acti ities
nterest re e ed n o e ta pa d
et cas flo s from operating acti ities
FINANCIAL STATEMENTS
rade and ot er recei ables
onsolidated roup roup otes urrent
on current
otal current and non current
lassification as trade and ot er recei ables
mpairment of recei ables
At uly At une
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 95
t er assets
onsolidated roup roup urrent on current
otal current and non current
rade and ot er payables
onsolidated roup roup otes urrent
otal
. nterest bearing loans and borro ings
onsolidated roup roup on current
otal interest bearing loans and borro ings
Dollars (“AUD”) and New Zealand Dollars (“NZD”).
FINANCIAL STATEMENTS
e a l l s are AUD ( ) and NZD (AUD . ) ( NZD (AUD ) o w AUD . ( . ) and NZD . (AUD . ) ( NZD (AUD )) was drawn a e ear end. a r da es on e a l es ran e ro De e er o De e er ( De e er o l ). All a l es are n eres onl a l es w an drawn alan es a a le a a r . e r as een ran ed o er e onsol da ed ro s owned and leased s ora e en re ro er es.
e onsol da ed ro as a an o erdra a l w a l o a was ndrawn a ne and ne . D r n e ear e onsol da ed ro and N ro re nan ed ar o e e s n de or ol o a an ns onal er loan.
e onsol da ed ro and e N ro a e o l ed w e nan al o enan s o e r orrow n a l es d r n e and re or n er ods (see no e ). e a r al e o n eres ear n loans and orrow n s a ro a es arr n al e. De a ls o e e os re o r s ar s n ro rren and non rren n eres ear n loans and orrow n s are se o n no e .
nterest rate s aps e onsol da ed ro and N ro a e AUD ( ) and NZD . (AUD . ) ( NZD . (AUD . )) o rren and re n eres ra e ed es n la e as a e end o e re or n er od w a r da es ran n ro De e er o e e er ( De e er o De e er ).
Under s arran e en e onsol da ed ro and e N ro a a ed ra e o n eres o . ( . ) and re e e n eres a a ar a le ra e e al o l s a ar n on e no onal a o n . e swa s are sed o ed e e e os re o an es n as lows ar s n ro s se red ar a le n eres ra e loan and as een des na ed as a as low ed e re o n sed ro o er o re ens e n o e.
edge of net in estments in foreign operations n l ded n n eres ear n loans and orrow n s a ne was a orrow n o NZD . (AUD ) w as een des na ed as a ed e o e ne n es en s a a ns e al e o n es en ro er eld n New Zealand ( NZD (AUD . )). s orrow n s e n sed o ed e e Group’s exposure to e NZD ore n e an e r s on ese n es en s. a ns or losses on e re ransla on o s orrow n are rans erred o o er o re ens e n o e o o se an a ns or losses on ransla on o e ne n es en s n e s s d ar es. ere s no ne e eness n e ears ended ne or ne .
t er liabilities
onsolidated roup roup otes $’000 $’000 $’000 $’000 urrent D s r on a a le nan al l a l es (der a es) . otal current
on current nan al l a l es (der a es) .
otal current and non current
or de a ls on e lass a on o der a es see no e . .
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 97
0
e o so te Group s e e ses or est e t ese e ses e ter s o re e ut o pur se opt o s e e s re t t e opt o o t e spe e t t t t o s t e e se uture u e se p e ts u er e e se o tr ts to et er t t e prese t ue o t e et u e se p e ts re s o o s
0 0 $ 000 $ 000 $ 000 $ 000 t o e e r ter o e e r ut ot ore t e e rs ore t e e rs u e se p e ts uture e r es
e Group’s investment properties are leased to entities within the NSH Group under long ter e e ses see ote
0
s ote exp s t e u e e ts est tes e eter t e r ues o t e stru e ts re o se t e st te e ts s et e otes to o pro e t o out t e re t o t e puts use eter r ue stru e ts re ss e to t e o o t ree e e s
e r ue o stru e ts tr e t e r ets su s pu tr e er t es tr e or s e se ur t es s se o uote r et pr es t t e e o t e report per o e uote r et pr e use or ssets e s t e urre t pr e ese stru e ts re u e e e
e r ue o stru e ts t t re ot tr e t e r et or ex p e o er t e ou ter er t es s eter e us u t o te ues x se t e use o o ser e r et t re s tt e s poss e o e t t spe est tes s t puts re u re to r ue stru e t re o ser e t e stru e t s u e e e
o e or ore o t e s t puts s ot se o o ser e r et t t e stru e t s u e e e
pe r u t o te ues use to eter e r ues u e
e r ue o terest r te s ps s u te s t e prese t ue o t e est te uture s o s se o o ser e e ur es uste or ou terp rt or o re t r s
e resu t r ue est tes or terest r te s ps re u e e e
FINANCIAL STATEMENTS
$ 000 $ 000 $ 000 $ 000 0 0 Non urrent inan ial assets urrent inan ial lia ilities Non urrent inan ial lia ilities
0 0 Non urrent inan ial lia ilities
here were no trans ers etween levels o air value hierar h during the ear ended une
This note provides information about the Consolidated Group’s and the NSPT Group’s non inan ial assets and lia ilities in luding
an overview o all non inan ial assets and lia ilities held oth groups spe i i in ormation a out ea h t pe o non inan ial asset and non inan ial lia ilit in ormation a out determining the air value o the non inan ial assets and lia ilities in luding areas o udgement estimates and other assumptions
0 0 0 0 $’000 $’000 $’000 $’000
0 0 0 0 $ 000 $ 000 $ 000 $ 000
pening alan e at ul tems re lassi ied rom reehold investment propert
n to er the onsolidated Group and NS Group entered into a ontra tual agreement or the sale o the land and uildings o the ro don sel storage entre or m less ost o sale o m
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 99
This has resulted in an unrealised ain of m from the assets’ carrying value within freehold investment propert at une This has been in luded ithin fair value ad ustments in the statement of profit or loss The transa tion is e pe ted to settle in ebruar
s a result of the transa tion the asset has been re lassified from investment propert to urrent assets held for sale
0 0 0 0 $ 000 $ 000 $ 000 $ 000
t ost umulated depre iation
e on iliation of the arr in amounts for ea h lass of propert plant and e uipment at the be innin and end of the urrent finan ial period are sho n belo
0 0 0 0 $ 000 $ 000 $ 000 $ 000 Carr in amount at be innin of the ear dditions tems re lassified as investment propert epre iation mpairment of assets on restru turin ffe t of movement in forei n e han e
Plant and e uipment under finan e lease arran ements in luded in the totals noted above are as follo s 0 0 0 0 $ 000 $ 000 $ 000 $ 000
easehold plant and e uipment at ost umulated depre iation Carr in amount
FINANCIAL STATEMENTS
0 0 0 0 $ 000 $ 000 $ 000 $ 000 easehold investment ro erties reehold investment ro erties reehold investment ro erty under construction otal investment ro erties
ening alance at uly ro erty ac uired through usiness com inations ther ro erty ac uisitions m rovements to investment ro erties tems reclassified from freehold investment ro erties tems reclassified to freehold investment ro erties eassessment of lease terms inance lease diminution resented as fair value ad ustments ther fair value ad ustments 0
ening alance at uly ro erty ac uired through usiness com inations ther ro erty ac uisitions ro erty dis osals m rovements to investment ro erties tems reclassified to leasehold investment ro erties tems reclassified from leasehold investment ro erties tems reclassified from ro erty lant and e ui ment tems reclassified to assets held for sale et gain from fair value ad ustments ffect of movement in foreign e change 0
ening alance at uly ro erty ac uisitions 0
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 101
0 0 0 0 $ 000 $ 000 $ 000 $ 000 ealised gains nrealised gains
ncluded within net gain from fair value ad ustment for freehold investment ro erties is a realised gain of and an unrealised gain of relating to the contracted divestment of self storage centres during the eriod s a result of this divestment one investment ro erty has een reclassified to assets held for sale and is recorded at fair value within current assets see note
easehold and freehold investment ro erties are held for lease to customers re uiring self storage facilities and are carried at fair value hese are largely leased to customers under a short term lease with most rentals aya le monthly in advance ost leases can e terminated y either arty giving not less than seven days’ notice hanges in fair value are resented in rofit or loss under fair value ad ustments nformation a out the valuation of leasehold investment ro erties is rovided in note
The NSPT Group’s investment properties are leased to entities within the rou under long term finance leases with rentals aya le monthly inimum lease ayments receiva le on leases of investment ro erties are as follows
0 0 $ 000 $ 000 ithin one year ater than one year ut not later than five years ater than five years
0 0 0 0 $ 000 $ 000 $ 000 $ 000 ening net oo value rising through usiness com inations losing net oo value
ening net oo value dditions mortisation m airment
losing net oo value
FINANCIAL STATEMENTS
Good ill is an asset a uired throu h usiness om inations s des ri ed in note durin the period the onsolidated Group re o nised m o ood ill on the a uisition o Southern ross Stora e Group
Good ill has een allo ated to the listed roup NS ana ement have determined that the listed roup hi h is onsidered one operatin se ment see note is the appropriate G a ainst hi h to allo ate these intan i le assets o in to the s ner ies arisin rom om inin the port olios o the NS Group NSPT Group and Southern ross Stora e Group
The re overa le amount o the listed roup has een determined ased on the air value less osts o disposal method usin the air value uoted on an a tive mar et s at une NS had stapled se urities uoted on the ustralian Se urities han e at per se urit providin a mar et apitalisation o m This amount is in e ess o the arr in amount o the Consolidated Group’s net assets. Had the se urit pri e de reased the mar et apitalisation ould still have een in e ess o the arr in amount
0 0 0 0 $ 000 $ 000 $ 000 $ 000
n the onsolidated Group de erred rent revenue represents unds re eived in advan e rom ustomers or rental stora e n the NSPT Group de erred rent revenue relates to rental in ome re eived in advan e rom su tenants ithin investment properties
0 0 0 0 $ 000 $ 000 $ 000 $ 000 nerous operatin lease nnual leave on servi e leave a e ood provision nerous operatin lease on servi e leave
penin alan e risin on usiness om ination risin on a uisition o leasehold investment properties Provision raised n indin o dis ount and han es in dis ount rates
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 103
e Consolidated Group as re o nised an onerous lease pro ision related to uture operatin lease pa ents pa a le on or er ead o i e pre ises no lon er o upied t e Group
e Consolidated Group is re uired to restore t e leased pre ises in a nu er o lease old properties to t eir ori inal ondition at t e end o lease ter . pro ision as een re o nised or t e present alue o t e esti ated e penditure re uired to re o e an lease old i pro e ents.
e roup as lassi ied its non inan ial assets into t e t ree le els pres ri ed in note . to pro ide an indi ation a out t e relia ilit o inputs used to deter ine air alue.
$ 000 $ 000 $ 000 $ 000 0 0 ssets eld or sale . ease old in est ent properties . ree old in est ent properties . 0 0 ease old in est ent properties . ree old in est ent properties . 0 0 ssets eld or sale . ease old in est ent properties . ree old in est ent properties . 0 0 ease old in est ent properties . ree old in est ent properties .
e Consolidated Group’s and t e Group’s poli is to re o nise trans ers into and out o air alue ierar le els at t e end o t e reportin period. ere ere no trans ers et een le els and or re urrin air alue easure ents durin t e ear. urin t e ear ended une t e Consolidated Group and Group trans erred . ro le el to le el ollo in t e re lassi i ation o an asset ro ree old in est ent properties to assets eld or sale as detailed in note . .
n t e ear ended une t ere ere no trans ers in and out o le el .
e air alue o assets eld or sale is deter ined usin aluation te ni ues i a i ise t e use o o ser a le ar et data. or t e ear ended une t e Consolidated Group and as alued assets lassi ied at eld or sale at t e ontra tuall a reed sales pri e less esti ated ost o sale.
n est ent properties prin ipall stora e uildin s are eld or rental to usto ers re uirin sel stora e a ilities. e are arried at air alue. C an es in air alues are presented in pro it or loss as air alue ad ust ents.
FINANCIAL STATEMENTS
r u s r r o o o p u o s r or u o s p u o s r p r or r p u r s prop r s r p u o ro o s s r r rs u ss u r r u r s or r u u o or prop r s su o p u o r por r ors r or pu s o u o r r su s p u r r or u o s r o p Group o r u o s r r us s u s s r s s o os pp p u r
pr ous rs p u o s r o o r u r por p r o s or r o so Group Group o o p u o s or propor o o por o o u r s s o s s u o pp o r r s s rus s
The Directors’ valuations are applied to all investment properties which have no u p u r pr o s rr u o s prop r s p u s s p u o u ss r s o p r
o s p r o u r o s prop r s su o r r u o s ur urr o p r r por p r o s
0 0 s o r o
0 0 s o r o
o so Group Group so o r u o s o r o s prop r s s o prop r u r ur r por p r o s r u o s pro s s o r ors u o s pp o s prop r s u u s u o s o r o s prop r s o s o prop r s r su o r u o s ur r
0 0 0 0
s p s o r r p s o r o o prop r s o o r p s o r o o s o us o up o o s r
s p s o r r p s o r o o prop r s o o r p s o r o o r o us o up o o s r
Under the income capitalisation method, a property’s fair value is estimated based on the s s r r s or r s pr o or s o “ ” r
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 105
property, which is divided by the capitalisation rate the investor s re uired rate of return The capitalisation rate is derived from recent sales of similar properties
The primary capitalisation rate is used to discount future cashflows to present value based upon an investment property’s current occupancy and TD The secondary capitalisation rate is used to discount to present value additional cashflows enerated at sustainable occupancy and stabilised avera e TD The secondary capitalisation rate is typically hi her than the primary capitalisation rate to reflect the additional ris associated with these cashflows
The capitalisation rate adopted reflects the inherent ris associated with the property or e ample, if the lease e piry profile of a particular property is short, the capitalisation rate is li ely to be hi her to reflect additional ris to income The hi her capitalisation rate then reduces the valuation of the property
The stabilised avera e TD is derived from a property’s revenues less property operatin e penses ad usted for items such as avera e lease up costs, lon term vacancy rates, forecast non recoverable capital e penditures, mana ement fees, strai ht line rents and other non recurrin items enerally, an increase in stabilised avera e TD will result in an increase in fair value of an investment property n increase in the vacancy rate will result in a reduction of the stabilised avera e TD
nvestment properties are valued on a hi hest and best use basis The current use of all of the investment properties self stora e is considered to be the hi hest and best use
The followin tables present the sensitivity of the fair values of investment property to chan es in input assumptions
$’000 $’000
rimary capitalisation rate , , , , econdary capitalisation , , , , rate ustainable occupancy , , , , tabilised avera e TD , , , ,
$’000 $’000
rimary capitalisation rate , , , , econdary capitalisation , , , , rate ustainable occupancy , , , , tabilised avera e TD , , , ,
FINANCIAL STATEMENTS
e t ate o o pa y o t e ro p s at o a tora e o s te e o e t ty o t e ro p s at o a tora e roperty r st ese t o e t t es are o e stra a a t ro a stap a ree e t are o t y ote o t e
e o so ate a a state e ts o t e ro p as at e e 0 0 at o a tora e perat o s ty t stra a at o a tora e a a er es te stra a e r ty t stra a o t er ross tora e perat o s ty t stra a at o a tora e est e ts ty t stra a at o a tora e te e ea a
e o so ate a a state e ts o t e ro p e 0 0 at o a tora e est e t r st stra a at o a tora e tor a roperty r st stra a at o a tora e e ea a roperty r st stra a at o a tora e o t er r st stra a r st stra a
e ro p o s a terest t e stra a r e tora e e ro p o s a terest t e a o er a r st e ro p o s a terest t e a tora e r st
0 0 0 0 $ 000 $ 000 $ 000 $ 000
pe a a e at y ap ta o tr t o a s t o o s are o asso ate s t o o s are o o t e t re are o pro t ro asso ate a o t e t res et r o ap ta o sso t o o o t e t re 0
The Consolidated Group holds a 24.9% holding in the Australia Prime Storage Fund (“APSF”). APSF is a part ers p t ersa e tora e to a tate t e e e op e t a o ers p o t p e pre
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 107
grade sel storage entres in sele t ities around Australia. uring the ear the Consolidated Group in ested a urther .4m in units o APSF as part o a apital raise ondu ted the und to inan e further development opportunities. As a result of this investment the Consolidated Group’s holding remained at 24.9%.
APSF is in the pro ess o de eloping multiple storage entres in Australia the irst t o o hi h opened during the inan ial ear ended une 2 . n e open the storage entres operate under the ational Storage rand and are managed ational Storage ( perations) Pt td. n the ear ended une 2 ational Storage ( perations) Pt td earned ees o 9 rom APSF asso iated ith the design de elopment inan ing o the onstru tion pro ess and ongoing management o entres (see note ).
The asso iate had no ontingent lia ilities or apital ommitments at une 2 or une 2 .
As des ri ed in note on August 2 the Consolidated Group pur hased the share apital o Southern Cross Storage perations Pt td and the in estment properties o Southern Cross Storage Trust. Prior to ompletion the Consolidated Group and SPT Group held a % interest in the Southern Cross Storage Group hi h onsisted o Southern Cross Storage perations Pt td and Southern Cross Storage Trust. This resulted in a disposal o the in estment in the oint enture.
uring the ear the SPT Group a uired a 2 % interest in the undall Storage Trust and the S Group a uired a 2 % interest in the undall Commer ial Trust. Follo ing this in estment the undall Storage Trust and undall Commer ial Trust pur hased land in the Gold Coast ueensland. The land is proposed to e de eloped or the onstru tion o a storage entre and upgrade to e isting ommer ial units. either the undall Storage Trust and undall Commer ial Trust are listed on an pu li e hange. These in estments ha e een lassi ied as a oint enture as oth trusts are su e t to a Se urit holders Agreement that has een ontra tuall stru tured su h that the parties to the agreement ha e e ual representation on the ad isor oard responsi le or the o erall dire tion and super ision o ea h trust.
The undall Storage Trust and undall Commer ial Trust had no ontingent lia ilities or apital ommitments at une 2 .
0 0 0 0 $ 000 $ 000 $ 000 $ 000 rdinar shares 9 4 nits 4 4 299 9 4 4 4 299
0 0 0 0 422 4 4 4 4 9 422 4 4 4 4 9 nstitutional and retail pla ement 4 4 2 4 4 2 istri ution rein estment plan 44 9 4 44 9 4 S rip issue on in estment propert a uisition 9 9 0 2 9 9 4 422 4 2 9 9 4 422 4
FINANCIAL STATEMENTS 9
As at une and une the num er of stapled se urities on issue ere e uivalent to the num er of issued shares and units. he issued units of are not o ned and therefore are sho n under non ontrolling interest in the statement of finan ial position.
uring the ear the Consolidated Group undertoo a full under ritten m e uit raising omprising a m institutional pla ement and a m pro rata a elerated non renoun ea le entitlement offer of ne stapled se urities in . his resulted in the issue of ne stapled se urities.
uring the ear stapled se urities ere issued to se urit holders parti ipating in the Consolidated Group’s Distribution Reinvestment Plan for consideration of m . m . he stapled se urities ere issued at the volume eighted average mar et pri e of the Group s stapled se urities over a period of trading da s ommen ing on and in luding the th trading da prior to the distri ution pa ment date less a dis ount.
uring the ear stapled se urities ere issued as part of the onsideration pa a le for the a uisition of freehold investment propert . he amount of onsideration that as paid the a of stapled se urities as . m. he stapled se urities ere issued at the volume eighted average mar et pri e of the Consolidated Group s stapled se urities over a period of trading da s ommen ing on une less a . dis ount.
A stapled se urit represents one share in and one unit in . tapled se urit holders have the right to re eive de lared dividends from and distri utions from and are entitled to one vote per stapled security at securityholders’ meetings. olders of stapled se urities an vote their shares and units in a ordan e ith the Corporations A t either in person or pro at a meeting of either or . he stapled se urities have no par value.
n the event of the inding up of and stapled se urit holders have the right to parti ipate in the pro eeds from the sale of all surplus assets in proportion to the num er of and amounts paid up on stapled se urities held. rdinar stapled se urit holders ran after all reditors in repa ment of apital.
a h unit represents a right to an individual unit in per the Constitution. here are no separate lasses of units and ea h unit has the same rights atta hing to it as all other units in the .
here is no urrent on or off mar et u a .
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 109
0 0 0 0 $ 000 $ 000 $ 000 $ 000 pening balance at uly et nvestment hedging oreign e change translation differences losing balance at une
pening balance at uly Revaluation of derivates a ation impact on revaluation losing balance at une
a ation impact on revaluation applies only to cash flo hedges held in P a sub trust of P hich is sub ect to e ealand ta legislation. Deferred ta does not apply to any other cash flo hedges held in the P Group under current ustralian ta legislation.
he hedging reserve is used to record gains or losses on derivatives that are designated as cash flo hedges and recognised in other comprehensive income as described in note m . mounts are reclassified to profit or loss in the period hen the associated hedged transaction ta es place.
he cash flo hedge is included in non controlling interest in the onsolidated Group and is not classified ithin other reserves.
his note outlines the Consolidated Group’s and NSPT Group’s e posure to financial ris s and ho these ris s could affect future financial performance.
The Consolidated Group’s and the NSPT Group’s overall ris management program focuses on the unpredictability of financial mar ets and see s to minimise potential adverse effects on the financial performance of the business. oth Groups use derivative financial instruments such as interest rate s aps to hedge certain mar et ris e posures.
Ris management for the onsolidated Group and the P Group is carried out by the oard and ey management personnel of . he oard of Directors of analyses on behalf of the onsolidated Group and P Group interest rate e posure and evaluates treasury management strategies in the conte t of the most recent economic conditions and forecasts.
FINANCIAL STATEMENTS
eri ati es are onl used or e ono i hed in purposes and not as tradin or spe ulati e instru ents The Consolidated Group and the NSPT Group ha e the ollo in deri ati e inan ial instru ents
0 0 0 0 $ 000 $ 000 $ 000 $ 000 Non urrent assets Current lia ilities Non urrent lia ilities Net lia ilit
ll deri ati es ha e een desi nated as ash hed es The are presented as urrent assets or lia ilities i the are e pe ted to e settled ithin onths a ter the end o the reportin period
The Consolidated Group’s and NSPT Group’s accounting policy for cash flow hed es is set out in note or hed ed ore ast transa tions that result in the re o nition o a non inan ial asset the Groups ha e ele ted to in lude related hed in ains and losses in the initial easure ent o the ost o the asset
or in or ation a out the ethods and assu ptions used in deter inin air alues o deri ati es re er to note
ar et ris is the ris that the air alue o uture ash lo s o a inan ial instru ent ill lu tuate e ause o han es in ar et pri es ar et ris o prises o three t pes o ris interest rate ris urren ris and other pri e ris su h as e uit pri e and o odit ris inan ial instru ents a e ted ar et ris in lude loans and orro in s deposits a aila le or sale in est ents and deri ati e inan ial instru ents
The sensiti it anal sis in the ollo in se tions relate to the position as at une in and une The sensiti it anal sis has een prepared on the asis that the a ount o net de t the ratio o i ed to loatin interest rates o de t and deri ati es and the proportion o inan ial instru ents in orei n urren ies are all onstant on the asis o hed e desi nations in pla e at une
The anal sis e ludes the i pa t o o e ents in ar et aria les on pro isions and the non inan ial assets and lia ilities o orei n operations
The ollo in assu ptions ha e een ade in al ulatin sensiti it anal sis
The sensiti it o the rele ant state ent o pro it or loss ite is the e e t o the assu ed han es in respe ti e ar et ris s This is ased on the inan ial assets held at une and une in ludin the e e t o hed e a ountin The sensiti it o e uit is al ulated onsiderin the e e t o an asso iated ash lo hed es and hed es o a net in est ent in a orei n su sidiar at une or the e e ts o the assu ed han es o the underl in ris
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 111
nterest rate ris is the ris that the fair alue or future cash flows of a financial instru ent will fluctuate because of changes in market interest rates. The Consolidated Group’s and the NSPT Group’s e posure to the ris of changes in ar et interest rates relate pri arily to their long ter de t o ligations with floating interest rates
The Consolidated Group and the NSPT Group anages its interest rate ris y ha ing a alanced portfolio of fi ed and aria le rate loans and orrowings To anage this the Group enter into interest rate swaps in which it agrees to e change at specified inter als the difference etween fi ed and aria le rate interest a ounts calculated y reference to an agreed upon notional principal a ount t une after ta ing into account the effect of interest rate swaps of the Consolidated Group’s and of the NSPT Group’s borrowings are at a fi ed rate of interest The following ta le de onstrates the sensiti ity to a possi le change in interest rates on the portion of loans and orrowings affected after the i pact of hedge accounting ith all other aria les held constant the Consolidated Group’s and the NSPT Group’s profit efore ta is affected through the i pact on floating rate orrowings as follows $ 000 $ 000 0 ustralian dollar do inated de t New ealand dollar do inated de t
ustralian dollar do inated de t New ealand dollar do inated de t
0 ustralian dollar do inated de t New ealand dollar do inated de t
ustralian dollar do inated de t New ealand dollar do inated de t
The assu ed o e ent in asis points for the interest rate sensiti ity analysis is ased on the currently o ser a le ar et en iron ent
oreign currency ris is the ris that the fair alue of future cash flows of an e posure will fluctuate ecause of changes in foreign e change rates The Consolidated Group’s exposure to the risk of changes in foreign e change rates relates pri arily to the Group’s operating activities when re enue or e pense is deno inated in a foreign currency , and the Group’s net investment in foreign su sidiaries The NSPT exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s net in est ent in foreign su sidiaries
The Consolidated Group and the NSPT Group hedges its e posure to fluctuations on the translation into ustralian dollars of its foreign operations y holding net orrowings in foreign currencies
FINANCIAL STATEMENTS
The following tables demonstrate the sensitivity to a reasonably possible change in New ealand ollar exchange rate with all other variables held constant. The impact on the Consolidated Group’s and the NSPT Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The impact on the Consolidated Group’s and the NSPT Group’s pre tax e uity is due to net investment hedges.
$ 000 $ 000 $ 000 $ 000 0
0
The movement in the pre tax effect is a result of a change in the fair value of the monetary assets and liabilities denominated in N , where the functional currency of the entity is a currency other than N .
The movement in pre tax e uity arises from changes in N borrowings net of cash and cash e uivalents in the hedge of net investments in New ealand operations and cash flow hedges. These movements will offset the translation of New ealand operations’ net assets into .
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 Consolidated 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. The NSPT Group has the same risk as the Consolidated Group except that trade receivables predominantly relate to the Consolidated Group entities, National Storage perations Pty td and National Storage imited.
The exposure to credit risk for trade and other receivables is influenced mainly by the individual characteristics of each customer. The Consolidated Group’s customer credit risk is managed by re uiring customers to pay monthly rentals in advance. The irectors are of the opinion that customer credit risk is reduced through a contractual lien over the contents stored in the rented units. The terms of the storage agreement provide for the auction of the customer’s stored contents to recover any unpaid amounts. utstanding customer receivables are regularly monitored and any credit concerns highlighted to senior management.
t une and une the Consolidated Group has no significant concentrations of credit risk with respect to trade receivables, whether through exposure to individual customers, specific industry sectors and or regions within ustralia and New ealand. s at une a provision of , has been recognised relating to the increased credit risk associated with customer balances ac uired via the ac uisition of investment properties which were not sub ect to the same terms and conditions as the Consolidated Group’s storage agreement.
The NSPT Group’s customer credit risk is managed by renting the ma ority of properties to the NS Group entities National Storage perations Pty td, Southern Cross Storage perations Pty td, and National Storage imited. ther non related parties also have rented facilities at some NSPT investment properties. These rental revenues are not significant compared with related party rental revenues and overall credit risk is considered low.
The Consolidated Group’s and the NSPT Group’s maximum exposure to credit risk, is the carrying amount of those assets as indicated in the statement of financial position. or a summary of the exposure to credit risk relating to receivables at the end of the financial year refer to note . .
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 113
The Consolidated Group’s and the NSPT Group’s credit risk on cash and cash e uivalents is limited because the counterparties are banks ith high credit ratings assigned by international credit rating agencies. The maximum exposure to credit risk for the components of the statement of financial position at une and une is the carrying amounts as indicated in the statement of financial position.
Credit risk also arises in relation to financial guarantees given to certain parties refer to notes , , and . Such guarantees are only provided in exceptional circumstances and are sub ect to specific oard approval.
i uidity risk is the risk that the group ill not be able to meet its financial obligations as they fall due. The ob ective of managing li uidity risk is to ensure, as far as possible, the group ill al ays have sufficient li uidity to meet its liabilities hen they fall due, under both normal and stressed conditions. NS on behalf of the Consolidated Group and the NSPT Group has established a number of policies and processes for managing li uidity risk. These include
Continuously monitoring cash flo s on a daily basis as ell as forecasting cash flo s on a medium and long term basis. onitoring the maturity profiles of financial assets and liabilities in order to match inflo s and outflo s. aintaining ade uate reserves and support facilities. onitoring li uidity ratios and all constituent elements of orking capital. aintaining ade uate borro ing and finance facilities.
The Consolidated Group and the NSPT Group had access to the follo ing undra n borro ing facilities at the end of the reporting period
0 0 0 0 $ 000 $ 000 $ 000 $ 000 xpiring ithin one year bank overdraft , , , , xpiring ithin one year loans xpiring beyond one year loans , , , , , , , ,
The bank overdraft facilities may be dra n at any time and may be terminated by the bank ithout notice. ll other secured bank loans may be dra n at any time and is sub ect to an annual revie . urther details of the bank loans are detailed in note . and note .
The tables belo summarises the maturity profile of the Consolidated Group and NSPT Group’s financial liabilities based on contractual undiscounted payments.
s amounts disclosed in the table are the contractual undiscounted cash flo s including future interest payments, these balances ill not necessarily agree ith the amounts disclosed on the statement of financial position.
FINANCIAL STATEMENTS
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 0 0 Trade and other paya les nterest earin loans and orro in s inance leases 0 0 istri ution paya le 0
nflo s 0 utflo s
0 0 0 Trade and other paya les nterest earin loans and orro in s inance leases istri ution paya le 0 0
nflo s utflo s
0
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 0 0 Trade and other paya les nterest earin loans and orro in s istri ution paya le 0
nflo s 0 utflo s
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 115
0 0 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Trade and other paya les 0 nterest earin loans and orro in s istri ution paya le 0
nflo s utflo s
The Consolidated Group’s and the NSPT Group’s o ecti es hen mana in capital are to safe uard its a ility to continue as a oin concern so that it can continue to pro ide returns to securityholders and to maintain an optimal structure to reduce the cost of capital The primary o ecti e of the Group’s capital mana ement is to ma imise alue for the securityholder The esponsi le ntity has outsourced capital mana ement for the NSPT Group to NS under a mana ement a reement
n order to achie e this o ecti e the Consolidated Group’s and the NSPT Group’s capital mana ement strate y aims to ensure that they meet financial co enants attached to interest earin loans and orro in s reaches in meetin a financial co enant ould permit the lender to immediately call loans and orro in s There ha e een no reaches in the financial co enants of any interest earin loans and orro in s in the current period
The Consolidated Group and the NSPT Group mana e their capital structure and ma e ad ustments in li ht of chan es in economic conditions and the re uirements of the financial co enants To maintain or ad ust the capital structure the Consolidated Group and the NSPT Group may ad ust the distri ution payment to securityholders return capital to securityholders or issue ne securities
The Consolidated Group and the NSPT Group monitor capital usin a earin ratio represented y net de t di ided y total assets less cash and short term deposits and finance lease lia ilities The Consolidated Group’s tar et is to eep the earin ratio et een and Net de t includes interest earin loans and orro in s less cash and short term deposits
0 0 0 0 $ 000 $ 000 $ 000 $ 000
nterest earin loans ess cash and short term deposits Net e t
Total assets ess cash and short term deposits ess finance lease lia ilities
FINANCIAL STATEMENTS
Loan covenants inancial co enants under the ter s o the orro in a ree ent re uires the Consolidated Group to ensure that the earin ratio does not e ceed and the ratio o operatin earnin s e ore interest ta depreciation and a ortisation to inance costs ust e ceed a ultiple o t o The Consolidated Group has co plied ith these co enants throu hout the reportin period
istri utions ha e een ade and declared as noted elo
0 0 $ 000 $ 000 T interi distri ution o cents per unit paid on e ruar cents per unit
T inal distri ution o cents per unit pa a le on u ust cents per unit
There are no proposed distri utions not reco nised as a lia ilit or the ear ended une
The irectors o ha e not declared an interi or inal di idend or the ear endin une
0 0 $ 000 $ 000 ran in credits a aila le or su se uent inancial ears ased on a ta rate o
The a o e a ounts are calculated ro the alance o the ran in account at the end o the reportin period
The T Group does not ha e ran in credits as distri utions are paid ro T hich is not lia le to pa inco e ta pro ided all ta a le inco e is distri uted
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 117
The ollo in ta les pro ide the total a ount o transactions that ha e een entered into ith related parties or the rele ant inancial ears
– $ $ $ $ outhern Cross tora e perations t td
outhern Cross tora e Trust
ustralia ri e tora e und
undall Co ercial Trust
undall tora e Trust
– $ $ $ $ ational tora e oldin s i ited
ational tora e perations t td
outhern Cross tora e perations t td
ational tora e inancial er ices i ited
ational tora e i ited
The sales to and purchases ro related parties are ade on ter s e ui alent to those that pre ail in arm’s length transactions.
s at une ational tora e n est ents t td a su sidiar o had recei a les outstandin o ith the undall Co ercial Trust and ith the undall tora e Trust relatin to
FINANCIAL STATEMENTS
amo nts ra n o n n er a acilit agreement et een the entities. he acilit agreement has a term o ears an is interest earing on commercial rates. he recei a les ha e een classe as a c rrent recei a le in the statement o inancial osition as this recei a le is e ecte to e re ai ithin months o ne . s at ne ational torage n estments t t also recognise recei a les o ith the n all ommercial r st an relating to other ees an accr e interest o tstan ing at the ear en .
ll other o tstan ing alances at the ear en are nsec re an interest ree. here ha e een no g arantees ro i e or recei e or an relate art recei a les or a a les. or the ears en e ne an ne the onsoli ate ro has not recor e an im airment o recei a les relating to amo nts o e relate arties.
hort term em lo ee ene its ost em lo ment ene its ong term ene its
he amo nts isclose in the ta le are the amo nts recognise as an e ense ring the re orting erio relating to e management ersonnel. etaile rem neration isclos res are ro i e in the remuneration report which is included in the Directors’ Report.
s at ne the onsoli ate ro an the ro hel a commitment to rchase the reehol o an in estment ro ert in erth estern stralia or . m. his commitment is s ect to the l illment o a n m er o contract al con itions the ro ert en or.
s at ne the onsoli ate ro an the ro also hel a commitment to rchase a commercial storage acilit c rrentl n er constr ction in el o rne ictoria or . m.
here as no other ca ital e en it re contracte or at the en o the re orting erio t not recognise as lia ilities.
he ro leases o ices an other e i ment ith terms e iring n er ario s time erio s. he ro oes not ha e an o erating lease commitments.
ommitments or minim m lease a ments in relation to non cancella le o erating leases are a a le as ollo s $’000 $’000 ithin one ear ater than one ear t not later than i e ears ater than i e ears
or etails o inance lease commitments see note . .
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 119
or in ormation a out uarantees i en entities within the roup includin the parent entit see notes and .
0 “ ”
asic earnin s per stapled securit is calculated as net pro it attri uta le to stapled securit holders ad usted to e clude costs o ser icin e uit other than distri utions di ided the wei hted a era e num er o stapled securities on issue durin the period under re iew.
Diluted earnin s per stapled securit ad ust the i ures used in the determination o asic earnin s per share to ta e into account
he a ter ta e ect o interest and other inancin costs associated with diluti e potential stapled securities and he wei hted a era e num er o additional stapled securities that would ha e een outstandin assumin the con ersion o all diluti e potential stapled securities.
0 0 0 0 . . . .
$’000 $’000 $’000 $’000
et pro it attri uta le to mem ers
ei hted a era e num er o securities or asic and diluted earnin s per stapled securit
he wei hted a era e num er o securities units or the ear endin une used to calculate asic and diluted earnin s per share has een restated or the e ect o stapled securities units issued in the current ear endin une under the institutional and retail placement distri ution rein estment plan and endor scrip issue.
FINANCIAL STATEMENTS
’
he auditor o the onsolidated roup and roup is rnst oun ustralia.
mounts recei ed or due and recei a le rnst oun ustralia or 0 0 0 0 $ $ $ $ n audit or re iew o the inancial report o the entit and an other roup entit
ther ser ices in relation to the entit and an other roup entit a compliance ssurance related ther Total auditors’ remuneration
he indi idual inancial statements or and the parent entities show the ollowin a re ate amounts
0 0 0 0 $’000 $’000 $’000 $’000
urrent assets otal assets urrent lia ilities otal lia ilities et assets
ssued capital ash low hed e reser e orei n currenc translation reser e Retained earnin s
oss pro it a ter ta otal comprehensi e income Distri utions pro ided or or paid
he onsolidated roup and NSPT Group’s parent entities ha e pro ided inancial uarantees in respect o an o erdra ts and loans o su sidiaries amountin to . m . m secured re istered mort a es o er the reehold and leasehold in estment properties o the su sidiaries.
he onsolidated roup’s parent entit has also pro ided an uarantees o . m m in the e ent o lease pa ment de ault to third part lessors.
n addition there are cross uarantees i en ational tora e oldin s imited ational tora e perations t td and ational tora e t td as descri ed in note . o de iciencies o assets e ist in an o these companies.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 121
ontin ent lia ilities o t e arent entities T par n n o on o da d Group and NSPT Group d d no a an on n n a a a un or un
ontra tual ommitments a un NSPT d a o n o pur a r o d o an n n prop r n P r rn u ra a or T o n u o u n o a nu r o on ra ua ond on prop r ndor
a un NSPT a o d a o n o pur a a o r a ora a urr n und r on ru on n ourn or a or
un NS ad no on ra ua o n no r o n d a a n S a n o nan a Po on
T
Na ona S ora o d n d Na ona S ora p ra on P d and Na ona S ora P d ar par o a d d o ro uaran und r a o pan uaran d o o r n r n n o d d o o n d n a n r d ro r u r n o pr par a nan a r por and r or ’ report under Class Order 98/1418 (as amended) issued by the u ra an S ur and n n o on
S ou o a on o da d a n o o pr n n o and a n o nan a po on o n a ar r o o d Group
onsolidated statement o om re ensi e in ome 0 0 $ 000 $ 000 Pro o ro on nu n op ra on or n o a n o a p n n Pro o a r a a n d arn n a nn n o ar etained earnin s at t e end o t e ear
onsolidated statement o inan ial osition 0 0 $ 000 $ 000 urrent assets a and a u a n Trad and o r r a n n or r urr n a To a urr n a
on urrent assets Trad and o r r a Prop r p an and u p n n n prop r n n n an To a non urr n a
Total assets
FINANCIAL STATEMENTS
2017 2016 $'000 $'000 Liabilities Current liabilities Trade and other payables 96,499 9,444 Finance lease liability 4,338 4,376 Deferred revenue 8,175 7,405 Provisions 1,772 1,728 Total current liabilities 110,784 22,953
Non-current liabilities Interest bearing loans and borrowings 1,250 19,800 Finance lease liability 363,930 354,583 Provisions 947 1,316 Deferred tax liability 3,057 142 Total non-current liabilities 369,184 375,841
Total Liabilities 479,968 398,794
Net Assets 64,781 32,876
Equity Contributed equity 59,154 31,707 Retained profits 5,627 1,169 Total equity 64,781 32,876 24. EVENTS AFTER REPORTING PERIOD
No subsequent events have occurred since the reporting date and the issue date of the annual report which require disclosure in the financial statements.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 123
124
T ’ DECLARATION
n a ordan e ith a resolution o the ire tors o ational tora e oldin s imited the ire tors state that
1 n the opinion o the ire tors
(a) the inan ial statements and notes o the Consolidated roup or the year ended une 1 are in a ordan e ith the in ludin
i i in a true and air ie o the onsolidated entity’s financial position as at une 1 and o its per orman e or the year ended on that date and ii omplyin ith ountin tandards and the
(b) the inan ial statements and notes also omply ith nternational inan ial eportin tandards as dis losed in note (b) and
( ) ith re eren e to note (a) in the inan ial statements there are reasonable rounds to belie e that the Consolidated roup ill be able to pay its debts as and hen they be ome due and payable
(d) as at the date o this de laration there are reasonable rounds to belie e that the members o the Closed roup identi ied in ote ill be able to meet any obli ations or liabilities to hi h they are or may be ome sub e t by irtue o the eed o Cross uarantee
his de laration has been made a ter re ei in the de larations re uired to be made to the ire tors by the Chie e uti e O i er and Chie inan ial O i er in a ordan e ith se tion 9 o the or the inan ial year ended une 1
On behal o the oard
auren e rindle ndre Catsoulis ire tor ana in ire tor u ust 1 risbane
FINANCIAL STATEMENTS
1
DIRECTOR ’ DECLARATION
n acco anc it a sol tion of t i cto s of ational to a inancial ic s i it t sponsi l ntity stat s t at
n t opinion of t sponsi l ntity
a t financial stat nts an not s of t o p fo t y a n n a in acco anc it t incl in
i i in a t an fai i of t Group’s financial position as at n an of its p fo anc fo t y a n on t at at an ii co plyin it cco ntin tan a s an t o po ations lations
t financial stat nts an not s also co ply it nt national inancial po tin tan a s as isclos in not an
c it f nc to not a in t financial stat nts t a asona l o n s to li t at ill a l to pay its ts as an n t y co an paya l
is cla ation as n a aft c i in t cla ations i to a to t i cto s of ational to a inancial ic s i it y t i f c ti ffic an i f inancial ffic of t o p in acco anc it s ction of t fo t financial y a n n
n alf of t sponsi l ntity
a nc in l n atso lis ai an ana in i cto st is an
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 125
Ernst & Young Tel: +61 7 3011 3333 111 Eagle Street Fax: +61 7 3011 3100 Brisbane QLD 4000 Australia ey.com/au GPO Box 7878 Brisbane QLD 4001
Independent Auditor's Report to the Members of National Storage REIT
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of National Storage REIT comprising National Storage Holdings Limited and National Storage Property Trust and the entities they controlled during the year (collectively National Storage REIT), which comprises:
the consolidated statements of financial position as at 30 June 2017;
the consolidated statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended;
notes to the financial statements, including a summary of significant accounting policies; and
the directors' declaration;
of National Storage Holdings Limited and National Storage Property Trust.
In our opinion, the accompanying financial report of National Storage REIT is in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of National Storage Holdings Limited’s and National Storage Property Trust’s financial positions as at 30 June 2017 and of their financial performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of National Storage REIT in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
FINANCIAL STATEMENTS
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
Key Audit Matters
e audit atters are those atters that in our rofessional udg ent ere of ost significance in our audit of the financial re ort of the current ear hese atters ere addressed in the conte t of our audit of the financial re ort as a hole and in for ing our o inion thereon ut e do not ro ide a se arate o inion on these atters or each atter elo our descri tion of ho our audit addressed the atter is ro ided in that conte t
e ha e fulfilled the res onsi ilities descri ed in the Auditor’s Responsibilities for the Audit of the Financial Report section of our re ort including in relation to these atters Accordingl our audit included the erfor ance of rocedures designed to res ond to our assess ent of the ris s of aterial isstate ent of the financial re ort he results of our audit rocedures including the rocedures erfor ed to address the atters elo ro ide the asis for our audit o inion on the acco an ing financial re ort
1. Acquisition of Southern Cross (applicable to both National Storage Holdings Limited and National Storage Property Trust)
Why significant How our audit addressed the key audit matter
he ac uisition of Southern ross Storage e erfor ed the follo ing audit rocedures Operations Pty Ltd (‘Southern Cross’) e read and assessed the urchase re resented the largest single ac uisition of agreements and the Group’s position paper storage centres underta en ational Storage on the urchase rice allocation and REIT (‘NSR’) during the ear resulting in the deter ination of the consideration aid ac uisition of ne centres at a total cost of e assessed hether the accounting for the ac uisition co lied ith Australian or this ac uisition S ade a urchase rice Accounting Standard AASB usiness allocation in hich the consideration as o binations allocated to the arious assets and lia ilities of the ac uired co an his is outlined in note ith res ect to our audit rocedures on the to the financial re ort he audit of the urchase fair alue of the in est ent ro erties rice allocation is a e audit atter gi en the ac uired e refer to e audit atter – agnitude of the ac uisition a ount as ell as “ n est ent ro ert aluation” gi en significant udg ent is re uired to e e aluated the suita ilit of the aluation deter ine the allocation of the urchase rice to ethodolog and assessed the in uts to in est ent ro erties deferred ta assets and calculate the recognition and reco era ilit good ill of the Group’s deferred tax assets ith in ol e ent fro our ta ation s ecialists e assessed the ade uac of the rou s disclosures relating to the ac uisition of Southern ross and ith res ect to our audit rocedures on good ill e refer to e audit atter – “ arr ing alue of good ill”.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 127
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
2. Investment property valuation (applicable to both National Storage Holdings Limited and National Storage Property Trust)
Why significant How our audit addressed the key audit matter
Approximately 96% of the Group’s total assets is e o tained and e a uated a samp e of oth the omprised of in estment properties. These externa independent a uations and the a uations assets are arried at fair a ue hi h is assessed prepared y the Group. e performed the fo o ing y the dire tors ith referen e to either externa pro edures ith in o ement from our rea estate independent property a uations or interna a uation spe ia ists a uations and ased on mar et onditions existing at reporting date. e assessed the a uation methodo ogies the ompeten e of the a uers the independen e This is onsidered a ey audit matter due to the of the externa a uers and the assumptions num er of udgments re uired in determining fair used in the a uations a ue. These udgments in ude assessing the e tested a samp e of the sour e data used in apita isation rates dis ount rates mar et rent the a uations y agreeing the sour e data to rates and fore ast o upan y e e s. supporting tenan y s hedu es is osure of in estment properties and the e performed testing of the eri a a ura y re ated signifi ant udgments are in uded in and a u ation methodo ogy of the interna notes (o) . and . to the finan ia a uation mode in uding assessing ey report. a uation inputs ith referen e to those app ied y the externa a uation experts and urrent period mar et transa tions as e as performing sensiti ity ana ysis and e onsidered the ade ua y of the a uation methods and prin ip es dis osed in Note (o) In estment Properties Note . ‘In estment Properties’ and Note 11.8 ‘Non finan ia assets fair value measurement’.
FINANCIAL STATEMENTS
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
3. Carrying value of goodwill (applicable to National Storage Holdings Limited)
Why significant How our audit addressed the key audit matter
he ood ill alan e of . million relates to n performin our pro edures the a uisition of portfolios of investment properties pur hased in the previous and urrent e o tained and understood the Group’s periods. he ood ill is tested for impairment y impairment testin and assessed that it as an annual impairment revie . No impairment in omplian e ith the re uirements of har e has een re orded a ainst these alan es Australian A ountin tandard AA 1 6 in the urrent finan ial year as dis losed in Note p ir ent of Assets 11. . he fair value less ost of disposal We assessed the Group’s appropriateness in assessment used to support the ontinued respe t of the determination of G s to arryin amount of ood ill involves the hi h the ood ill is allo ated appli ation of su e tive ud ment a out future usiness performan e and the appli ation of e evaluated the suita ility of the valuation valuation methodolo ies in a ordan e ith methodolo y and validated the inputs to Australian A ountin tandards. al ulate the fair value less osts of disposal
e performed a sensitivity analysis over the si nifi ant inputs of the valuation model dis losed in note 11. and
e onsidered the ade ua y of the dis losures in note 11. to the finan ial report.
Information Other than the Financial Report and Auditor’s Report
he dire tors are responsi le for the other information. he other information omprises the information in luded in the National tora e 1 Annual eport ut does not in lude the financial report and our auditor’s report thereon.
ur opinion on the finan ial report does not over the other information and a ordin ly e do not express any form of assuran e on lusion thereon.
n onne tion ith our audit of the finan ial report our responsi ility is to read the other information and in doin so onsider hether the other information is materially in onsistent ith the finan ial report or our no led e o tained in the audit or other ise appears to e materially misstated.
f ased on the or e have performed e on lude that there is a material misstatement of this other information e are re uired to report that fa t. e have nothin to report in this re ard.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 129
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
Responsi i ities o t e ire tors or t e inan ia Report Responsi i ities o t e ire tors or t e inan ia Report he directors of ational tora e are responsi le for the preparation of the financial report that i es he directors a true and of fair ational ie tora ein accordance are ith responsi le ustralian for ccountin the preparati tandardson of the and financial the orpor tions report that A t i esResponsi i ities a true and and for fair such o ie internalt e in accordance ire tors control as ith or the t e ustralian directors inan ia deter ine ccountin Report is tandardsnecessar andto ena le the orpor tions the A tpreparation and of for the such financial internal rep ortcontrol that as i es the adirectors true and deter ine fair ie and is necessar is free fro to aterialena le the isstate ent preparation he directors of of hetherthe ational financial due tora e repto fraudort that or areerror. i es responsi le a true and for fair the ie preparati and is freeon of fro the financial aterial report that isstate ent i es a true and hether fair ie due in toaccordance fraud or error. ith ustralian ccountin tandards and the orpor tions A t n preparin and the for financial such internal report control the directors as the directors are responsi le deter ine for assessin is necessar National to ena le Storage the REIT’s a ilit preparation n preparin to continue ofthe the financial asfinancial a oin report rep concern ort the that directors disclosin i es a aretrue as responsi le and applica le fair ie for atters and assessin is free relatin fro National to aterial oin Storage concern REIT’s and usin a ilit isstate ent the to continue oin hether concern as a oin due asis to concern offraud accountin or disclosin error. unless as the applica le directors atters either intend relatin to toli uidate oin concern ational and usin tora e the oin or concern to cease asis operations of accountin or ha e unless no realistic the directors alternati e either ut intend to do so.to li uidate ational tora e n preparin the or tofinancial cease operations report the directorsor ha e no are realistic responsi le alternati e for assessin ut to do National so. Storage REIT’s a ilit to continue as a oin concern disclosin as applica le atters relatin to oin concern and usin Auditor s the oin Responsi i ities concern asis of oraccountin t e Audit unless o thet e directors inan ia either Report intend to li uidate ational tora eAuditor s Responsi i ities or to cease operations or t e or ha e Audit no realistico t e inan ia alternati e Report ut to do so. ur o ecti es are to o tain reasona le assurance a out hether the financial report as a hole is urfree o ecti esfro aterial are to isstate ent o tain reasona le hether assurance due to fraud a out or hether error and the to financial issue an report auditor’s as a report hole thatis includesfreeAuditor s fro our aterial Responsi i ities opinion. isstate ent easona le or assurance hether t e Audit due is ato hi ho fraud t e le el or inan ia error of assurance and Reportto issue ut is an not aud a itor’s uarantee report that that an includesaudit conducted our opinion. in accordance easona le ith assurance the ustralian is a hi h uditin le el of tandards assurance ill ut al a s is not detect a uarantee a aterial that an audit isstate ent ur o ecti es conducted hen are in toaccordance it o tain e ists. reasona le isst ithate ents the ustralianassurance can arise uditin a out fro hether fraud tandards orthe error financial ill andal a s are report detectconsidered as a hole aterial aterial is isstate entif free indi iduall fro aterial henor in isstate ent the it e ists. a re ate isst hether ate entsthe could due can reasona l to arise fraud fro or e error fraud e pected andor error to to issue influence and an are aud considered theitor’s econo ic report aterial that if decisionsincludes indi iduall our of usersopinion. or in ta en the easona le a re ate on the asis assurance the of thiscould financialis reasona l a hi h report.le el e of e pectedassurance to utinfluence is not athe uarantee econo ic that an decisionsaudit conducted of users in ta en accordance on the ith asis the of this ustralian financial uditin report. tandards ill al a s detect a aterial isstate ent s part of an audit hen in it acco e ists.rdance isst ithate ents the ustralian can arise uditin fro fraud tandards or error eand e ercise are considered professional aterial if s ud ent indi iduall part of andan audit aintainor in inthe acco a re ate professionalrdance ith the scepticis the could ustralian reasona l throu hout uditin e the e pected tandards audit. We to influence also e e ercise the professionalecono ic decisions ud ent ofand users aintain ta en professional on the asis scepticis of this financial throu hout report. the audit. We also dentif and assess the ris s of aterial isstate ent of the financial report hether due to s partfraud of an or audit error in desi naccordance and perfor ith the audit ustralian procedures uditin responsi e tandards to those e e ercise ris s and professional o tain audit dentif and assess the ris s of aterial isstate ent of the financial report hether due to ud ent and aintain professional scepticis throu hout the audit. We also fraude idence or error that is desi n sufficient and andperfor appropriate audit procedures to pro ide responsi e a asis for toour those opinion. ris s he and ris o tain of not audit
e idencedetectin thata aterial is sufficient isstate ent and appropriate resultin to fro pro ide fraud a asisis hi her for ourthan opinion. for one he resultin ris of fro not error dentif detectin as and fraud a aterial assess a thein ol e isstate ent ris s collusion of aterial resultin for er isstate ent fro intentional fraud of is the hi hero issions financial than isrepresentations forreport one hetherresultin due fro or to the error o erridefraud oras error offraud internal desi n a control.in ol e and perfor collusion audit for er procedures intentional responsi e o issions to those isrepresentations ris s and o tain oraudit the o erridee idence ofthat internal is sufficient control. and appropriate to pro ide a asis for our opinion. he ris of not detectin tain an aunderstandin aterial isstate ent of internal resultin control rele antfro fraud to theis hi her audit thanin order for toone desi n resultin audit fro error as fraud a in ol e collusion for er intentional o issions isrepresentations or the tainprocedures an understandin that are appropriate of internal in the control circu stances rele ant to ut the not audit for in the order purpose to desi n of e pressin audit an o erride of internal control. proceduresopinion on the that effecti eness are appropriate of the in theGroup circu stances ’s internal control. ut not for the purpose of e pressin an
opinion on the effecti eness of the Group’s internal control. tain aluate an the understandin appropriateness of internal of accountin control rele antpolicies usedto the and audit the in reasona leness order to desi n of audit accountin procedures that are appropriate in the circu stances ut not for the purpose of e pressin an aluateesti ates the and appropriateness related disclosures of accountin ade the policies directors. used and the reasona leness of accountin opinion on the effecti eness of the Group’s internal control. esti ates and related disclosures ade the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting aluate the appropriateness of accountin policies used and the reasona leness of accountin Concludeand ased on on the the appropriateness audit e idence o tained of the directors’ hether use a aterialof the going uncertaint concern e istsbasis ofrelated accounting to esti ates and related disclosures ade the directors. and e ents ased or conditions on the audit that e idence a cast o tained si nificant hether dou t aon aterial the Group uncertaint ’s ability to e ists continue related as ato going
e entsconcern. or f conditions e conclude that that a a cast aterial si nificant uncertaint dou t e ists on the e Group are ’sre uired ability to to continue dra attention as a going in Concludeconcern.our auditor’s fon e thereport conclude appropriateness to the that related a aterial of disclosures the uncertaint directors’ in the use e ists financial of the e going report are re uired concern or, if such tobasis dra discl of attention osuresaccounting are in and ourinade uate auditor’s ased on to report the odif audit to ourthe e idence opinion.related o tained disclosures ur conclusions hether in the are afinancial aterial ased report on uncertaint the or, audit if such e idencee ists discl relatedosures o tained to are up e entsinade uate to the date or conditions of to our odif auditor’s that our a opinion. report. cast However,si nificant ur conclusions future dou t are eventson the ased orGroup conditionson the’s ability audit may toe idence continue cause theo tained as Group a going up toconcern. thecease date to f eofcontinue ourconclude auditor’s as athat oin report. a aterial concern. However, uncertaint future e ists events eor conditionsare re uired may to dra cause attention the Group in toour cease auditor’s to continue report to as the a oin related concern. disclosures in the financial report or, if such disclosures are inade uate aluate the to o erall odif presentation our opinion. structure ur conclusions and content are ased of the on financial the audit report e idence includin o tained the up to the date of our auditor’s report. However, future events or conditions may cause the Group aluatedisclosures the and o erall hether presentation the financial structure report and represents content theof the underl in financial transactions report includin and e ents the to cease to continue as a oin concern. disclosures in a anner thatand hetherachie es the fair financial presentation. report represents the underl in transactions and e ents
in a anner that achie es fair presentation. aluate the o erall presentation structure and content of the financial report includin the A memberdisclosures firm of Ernst & andYoung hether Global Limited the financial report represents the underl in transactions and e ents Liability limitedin a anner by a scheme that approved achie es under fair Professional presentation. Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation FINANCIAL STATEMENTS A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
btain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the roup to e press an opinion on the financial report. e are responsible for the direction, supervision and performance of the roup audit. e remain solely responsible for our audit opinion.
e communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
e also provide the directors with a statement that we have complied with relevant ethical re uirements 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, related safeguards.
rom 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 ey audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in e tremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse conse uences of doing so would reasonably be e pected to outweigh the public interest benefits of such communication.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 131
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
Report on the Audit of the Remuneration Report
pinion on t e Re uneration Report
We ha e audited the emuneration eport included in pages to within the directors report or the ear ended une .
n our opinion the emuneration eport o ational torage or the ear ended une complies with section o the orpor tions A t
Responsi i ities
he directors o ational torage are responsible or the preparation and presentation o the emuneration eport in accordance with section o the orpor tions A t . ur responsibilit is to e press an opinion on the emuneration eport based on our audit conducted in accordance with ustralian uditing tandards.
rnst oung
ic oach artner risbane ugust
FINANCIAL STATEMENTS
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 133
o or o r u r us r o o s o s r s r por s s o o s or o s urr s u u ss s o
s s o u rs o or r u p s p s ur o rs s o o
o r o
r r o rs o ss r p r o s p s ur s r pr s u s
s o r s o rs o uo u s ur s r s o
us o o s us r or o s us r orp o s o o s r s o s s o s s us r r s or r sou s r s o s or o o s rop r o r r r Gr r p us ss r o s orp o s o o rs o or sou s op r us r o s us o o s us r – G r s o s o or sou s us o o s us r – r up r r up r u Gr rr r r o u uo s ur s
FINANCIAL STATEMENTS
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 135
INVESTOR RELATIONS
National Storage REIT is listed on the Australian SECURITIES REGISTRY Securities Exchange under the code NSR. Computershare Investor Services Pty Limited NATIONAL STORAGE REIT SECURITIES GPO Box 2975 Melbourne VIC 3001 Australia A stapled security comprises: Telephone: 1300 850 505 (Australia only) • one share in National Storage Holdings Limited; International: +61 3 9946 4471 and Facsimile: +61 3 9473 2500 • one unit in the National Storage Property Trust; Email: [email protected] stapled and traded together as one stapled security.
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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.
INVESTOR RELATIONS ONLINE UNPRESENTED CHEQUES You can access your securityholding information via If you believe you have unpresented cheques, link in the Investor Centre section of the corporate please contact the registry and request a search to website, www.nationalstorageinvest.com.au, or via assist in recovering your funds. the Investor Centre link on registry website at www. If you wish to register for direct credit or update your computershare.com.au. payment details, log in to your holding online or To view your securityholding, you will need your telephone the registry on 1300 850 505 for assistance. SRN/HIN and will be asked to verify your registered postcode (inside Australia) or your country of residence (outside Australia). ANNUAL TAXATION STATEMENT AND TAX GUIDE The Annual Taxation Statement and Tax Guide are dispatched to securityholders in August each PHONE year. A copy of the Tax Guide is available at www. You can confirm your holding balance, request nationalstorageinvest.com.au. forms and access distribution and trading information by phoning: 1300 850 505 (Australia only) or calling +61 3 9946 4471 (outside Australia). INVESTOR FEEDBACK If you have any fund specific queries or feedback please telephone NSR Investor Relations on 1800 DISTRIBUTION DETAILS 683 290. Please direct any complaints in writing Distributions are expected to be paid within 8 weeks to NSR Company Secretary at GPO Box 3239, following the end of each semi-annual distribution Brisbane QLD 4001, Australia. period, which occur in June and December each year. To ensure timely receipt of your distributions, please NSR CALENDAR consider the following: Direct Credit FEBRUARY Half Year Results released NSR encourages securityholders to receive Distribution paid for six months ended 31 December distribution payments by direct credit. AUGUST If you wish to register for direct credit or update your Full Year Results and Annual Report released payment details, log in to your holding online or Distribution paid for the six months ended 30 June telephone the registry on 1300 850 505 for assistance. Annual tax statements released OCTOBER TAX FILE NUMBER (TFN) Notice of Annual General Meeting released You are not required by law to provide your TFN, NOVEMBER Australian Business Number (ABN) or exemption Annual General Meeting status. However, if you do not provide your TFN, ABN or exemption, withholding tax at the highest The dates listed above are indicative only and marginal rate for Australian resident members may subject to change. 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.
NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 137 CORPORATE DIRECTORY
National Storage Holdings Limited ACN 166 572 845 (“NSH” or the “Company”) National Storage Property Trust ARSN 101 227 712 (“NSPT”) together form the stapled entity National Storage REIT (“NSR” or the “Consolidated Group”)
RESPONSIBLE ENTITY OF NSPT National Storage Financial Services Limited (NSFL) ACN 600 787 246 AFSL 475 228 Level 23, 71 Eagle Street, Brisbane QLD 4000
DIRECTORS REGISTERED OFFICE Laurence Brindle Level 23, 71 Eagle Street Anthony Keane Brisbane QLD 4000 Howard Brenchley Steven Leigh Andrew Catsoulis PRINCIPAL PLACE OF BUSINESS Claire Fidler Level 23, 71 Eagle Street Brisbane QLD 4000
COMPANY SECRETARY Claire Fidler SHARE REGISTRY Patrick Rogers 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
CORPORATE DIRECTORY NATIONAL STORAGE REIT ANNUAL REPORT 2016/2017 139