Annual Report (ESEF) • Apr 23, 2024
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Download Source FileNSI ANNUAL REPORT 2023 CONTENT ANNUAL REPORT INTRODUCTION NSI Highlights 3 NSI At a Glance 4 CEO comments 6 MANAGEMENT BOARD REPORT Purpose & sustainable long term value creation 8 Sustainability 12 Energy and Carbon 14 Future Proof Buildings 16 Climate Risks 18 Social Engagement 21 Income, Costs and Results 23 Dutch Property market overview 24 Real Estate Portfolio 25 Balance Sheet, NTA and Financing 30 Risk Management and Internal Control 34 A Great Place to Work 45 GOVERNANCE Corporate Governance 55 ESG Governance 60 Details Management Board 62 Report of the Supervisory Board 63 Details of the Supervisory Board 69 FINANCIAL STATEMENTS Consolidated Statement of Comprehensive Income 72 Consolidated Statement of financial position 73 Consolidated Cash Flow Statement 74 Consolidated Statement of changes in shareholder’s equity 75 Notes to the Consolidated Financial Statements 76 Company Balance Sheet 105 Company Income Statement 106 Notes to the Company Financial Statements 107 OTHER INFORMATION Statutory Provision in respect of profit appropriation 112 Independent Auditor’s report 114 Assurance report of the Independent Auditor 120 SUPPLEMENTARY INFORMATION Other Data 123 NSI Share 124 Property List 125 ESG (non-financial) Performance Measures 126 EU Taxonomy eligibility and alignment 132 EPRA Key Performance Measures 138 Five Year Overview 140 Glossary Key Performance Indicators 141 Glossary Sustainability Performance Measures 143 2 NSI ANNUAL REPORT 2023 MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION 3 NSI ANNUAL REPORT 20233 NSI ANNUAL REPORT 2023 NSI HIGHLIGHTS KEY FINANCIAL METRICS REVENUES AND EARNINGS 2023 2022 Change Net rental income 58,421 59,325 -1.5% Net rental income - like-for-like 58,014 55,461 4.6% Direct investment result 40,402 42,733 -5.5% Indirect investment result -182,772 -74,103 146.6% Total investment result -142,370 -31,370 353.8% EPRA earnings per share 2.01 2.15 -6.6% Weighted average number of ordinary shares outstanding 20,117,872 19,869,975 1.2% EPRA cost ratio (excl. direct vacancy costs) 29.1% 27.8% 1.3 pp BALANCE SHEET 31 December 2023 31 December 2022 Change Investment property 1,028,801 1,259,235 -18.3% Net debt -344,443 -365,480 -5.8% Other assets and liabilities 25,524 -6,746 -478.4% Equity 709,882 887,008 -20.0% EPRA NTA per share 35.30 44.17 -20.1% Number of ordinary shares outstanding 20,155,221 20,054,240 0.5% Net LTV 33.0% 28.7% 4.4 pp KEY ESG METRICS (NON-FINANCIAL) 2023 2022 Change CRREM building energy intensity (kWh/sqm/year) 1 130 136 -4.4% EPC-label (percentage operational portfolio with label A or better) 95.3% 88.0% 7.3 pp GRESB score 94 93 1 KEY PORTFOLIO METRICS 31 December 2023 31 December 2022 Change Amsterdam Other G4 Other NL TOTAL Number of properties 22 14 10 46 49 -6.1% Market value (€ m) 2 588 301 154 1,043 1,275 -18.2% Lettable area (sqm k) 160.7 125.0 64.9 350.7 382.1 -8.2% Annualised contractual rent (€ m) 3 39 26 12 77 78 -0.9% Estimated rental value (€ m) 44 27 13 84 88 -5.4% EPRA net initial yield 5.2% 5.7% 5.0% 5.3% 4.6% 0.8 pp Gross initial yield 7.4% 8.6% 8.1% 7.9% 6.4% 1.5 pp EPRA vacancy 5.8% 6.0% 1.5% 5.2% 6.2% -1.1 pp 1 2022 figure has been restated to reflect accurate number of square meters. This figure excludes sold assets and developments. 2 Reported in the balance sheet at book value including right of use leasehold (IFRS 16), excluding lease incentives and part of NSI HQ (own use). 3 Before free rent and other lease incentives. MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION 4 NSI ANNUAL REPORT 2023 2023 94/100 4 NSI ANNUAL REPORT 2023 NSI AT A GLANCE GRESB SCORE ★ ★ ★ ★ ★ HIGHLIGHTS 2023 EPC ENERGY PERFORMANCE CERTIFICATES BY VALUE 2 GRESB 1 Excluding development 2 Based on value, excluding (re)developments during development period MAXIMUM SCORE IS 5 STARS INDUSTRY AVERAGE 2018 49/100 2019 71/100 2020 88/100 2022 93/100 2021 92/100 AVERAGE PORTFOLIO VALUE GROWTH 17.6% City # Assets Book Value % of total portfolio Gross Initial Yield Amsterdam 22 € 588m 56% 7.4% Other G4 14 € 301m 29% 8.6% Other NL 10 € 154m 15% 8.1% TOTAL 46 € 1,043m 100% 7.9% PORTFOLIO BY SEGMENT BREEAM BY SQM 1 NO LABEL ACCEPTABLE - PASS GOOD VERY GOOD EXCELLENT 9% 6% 13% 35% 38% PROFILE NSI is a leading Dutch stock-exchange listed commercial property investor with a focus on offices in Amsterdam and selective other growth locations. MISSION NSI enables its customers to achieve maximum productivity and growth, providing best-in-class, flexible, space solutions and an unparalleled level of services in modern, healthy, sustainable buildings in prime locations. A++ AA+ B C D E F & G 29% 23% 29% 7% 6% 6% 2017 44% 26% 15% 5% 6% 4% 2018 74% 12% 12% 2% 2020 80% 7% 10% 2% 2% 2021 2023 65% 8% 4% 10% 13% 2022 61% 16% 15% 3% 3% 2% 2019 0% 73% (LFL) OCCUPANCY 0.3% + (LFL) ERV GROWTH 1.9% + MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION 5 NSI ANNUAL REPORT 2023 NETHERLANDS AMSTERDAM NET PROMOTOR SCORE AMSTERDAM AS A PERCENTAGE OF MARKET VALUE PROMOTERS (9+) PASSIVES (7 - 8) DETRACTORS (6 OR LOWER) 10.3 2023 2022 Amsterdam Utrecht Rotterdam The Hague Leiden SLOTERDIJK ZUIDAS AMSTERDAM NON-AMSTERDAM 2016 2017 2018 2019 2020 2021 2022 2023 23% 77% 36% 64% 45% 55% 51% 49% 53% 47% 59% 41% 57% 43% 56% 44% ZUIDOOST 19.9 MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION 6 NSI ANNUAL REPORT 2023 CEO COMMENTS FROM CHALLENGES TO OPPORTUNITIES At the end of 2023 NSI, with a modest 5.2% vacancy rate, 95% of the portfolio EPC label A or better, a LTV of 31.5% (pro forma), an undemanding gross yield of 7.9%, no capital commitments, a port - folio still full of opportunities and an excellent team ready to drive performance, is very well placed. 2023 proved a robust year operationally, with healthy leasing activity driving record occupancy, like-for-like rental growth of 7.4% and new leases signed on average 2% ahead of ERV. Given the still muted economic outlook for 2024, we will first and foremost have to make sure that the portfolio continues to perform. Further asset pruning, to increase the focus on Amsterdam, will help drive the overall perfor - mance, as will additional targeted investments in sustainability and services. SUCCESSFUL SALE OF LAANDERPOORT PROJECT Following a period of intensive discussions, in January 2024 NSI agreed the sale of the existing Laanderpoort building, together with the plans, permits and agreements for its redevelopment, to ING for a total amount of €24m. We are pleased with this transaction. Not only is it testament to the quality of the development team (delivering a ‘ready to start’ project to ING), but it also has released NSI of a sizeable commitment, thereby allowing the pursuit of more profitable investment opportu - nities elsewhere. Given the sale of Laanderpoort in combination with the strong balance sheet position, we now feel comfortable to allocate €20m to a share buy-back programme. RESTRUCTURING TO PREPARE FOR FBI LEGISLATIVE CHANGES Legislation has now been passed such that as of 2025 FBI’s can no longer directly invest in Dutch real estate. NSI NV intends to remain an FBI at least up to the end of 2024. Yet, in 2023 NSI has executed the necessary restructuring to limit the negative impact of this legis - lative change. As a result of the restructuring NSI will start to pay some tax in 2023 (ca 2%) and in 2024 (ca 5-7%). The tax rate beyond 2024 may be higher, dependent on likely further changes to the tax law on interest deductibility for tax purposes, which are expected later this year. At the same time, as a result of the restructuring, a €38.7m deferred tax asset has been accounted for per December 2023. Meanwhile, we fully support the preliminary discussions by the Dutch Government to establish a new REIT regime, but as we say in Dutch: ‘flowers only at the finishing line’. BACK ON THE FRONT FOOT The past four years have generally been challenging for office inves- tors everywhere. Headwinds as Covid, WFH, rising interest rates, lower valuations, high construction costs, environmental require - ments and a consolidating, yet much more demanding, customer base have severely altered the business prospects for any office investor compared to the start of this decade. For NSI – and our shareholders in particular – this has also been a painful reset period, given the changes to the FBI tax regime as well. That being said, we are confident that all of the elements are now in place for NSI to be back on the front foot. The continued asset pruning and deleveraging in recent years, in combination with a strong focus on sustainability and services, whilst scaling back the development pipeline for now, coupled with the strategic review of the entire business in 2023, provide a sound basis for 2024 and beyond. OUTLOOK 2024 We continue to see the long term investment case for high quality, sustainable and amenitised offices in growth locations. The wider office market reset will increasingly drive new opportuni - ties as not all owner/operators have the stamina, knowledge, time or money to once again get ahead of the curve. This is particularly so for the brown-to-green conversions that are bound to be necessary to keep up with the rising trend in demand for the best product. There is a moment to put the balance sheet to work and we are coming nearer that point. Dutch office capital values are down substantially from the peak, with NSI’s own capital values down 21% over the same period, and we are starting to see deals emerge that exceed our implied cost of capital. Having said that, given prevailing market conditions we are in no rush to deploy capital at this stage. Whilst we have scaled back development in 2023, it remains a core competency to the business. The team will continue to explore opportunities still embedded in the portfolio but, as the sale of Laan - derpoort shows, we are and will remain flexible in how these oppor- tunities are eventually monetised. Whilst we appreciate liquidity in the market is limited at this stage, we expect the year 2024 to bring new opportunities for further asset rotation. We will also explore in more detail the possibilities to use private/JV capital for this purpose. In line with previous guidance, we will propose to the AGM a full year dividend of €1.52 per share, equating to a final dividend of €0.77 per share. This dividend will be payable in May. We forecast a post-tax EPRA EPS of € 1.85-2.00 per share for the full year 2024, subject to further asset rotation. Bernd Stahli 2023 proved a robust year operationally, with healthy leasing activity driving record occupancy 6 NSI ANNUAL REPORT 2023 MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION 7 NSI ANNUAL REPORT 20237 NSI ANNUAL REPORT 2023 Purpose & sustainable long term value creation 8 Sustainability 12 Energy and Carbon 14 Future Proof Buildings 16 Climate Risks 18 Social Engagement 21 Income, Costs and Results 23 Dutch Property market overview 24 Real Estate Portfolio 25 Balance Sheet, NTA and Financing 30 Risk Management and Internal Control 34 A Great Place to Work 45 MANAGEMENT BOARD REPORT CONTENT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 8 NSI ANNUAL REPORT 2023 PURPOSE AND SUSTAINABLE LONG TERM VALUE CREATION NSI’s stated purpose is: “We enable our customers to achieve maximum productivity and growth, providing best-in-class, flexible space solutions and an unparalleled level of services in modern, healthy, sustainable buildings in prime locations”. This purpose has served as a clear guide to all our decisions and initiatives in recent years, both with respect to real estate and services. We have consistently worked back from the customer’s needs to the real estate and services. Two years into the post-pandemic ‘return to office’ the features of the new workplace have become increasingly clear: : whilst t he necessity for a physical office Is no longer unquestioned, the desire for the right one remains undiminished. The workplace of the present and future is a place for collaboration, identity and culture, but also a way to attract talent by way of offering modern, healthy, high quality, sustainable space, in vibrant locations, with a good mix of workstations, meeting rooms, collaborative space and focus rooms, complemented by a variety of amenities. SUSTAINABLE LONG TERM VALUE CREATION Our long term value creation model is based on the above purpose. We strive to become the leading Dutch real estate company, by effec - tively and efficiently utilising the permanent capital entrusted to us to deliver on our strategy to invest in (and where possible create) vibrant multifunctional urban areas where people want to work, live and play, underpinned by sustainability, well-being and services. We generate long term attractive returns by investing in real estate in those specific locations. Our approach aligns with the prevailing trend of tenants upgrading to superior locations, placing a pronounced emphasis on sustainability, health, well-being, and a robust array of services. Success hinges on delivering the ideal space in precisely the right location, complemented by services that seamlessly meet the needs of our discerning tenants. We also genuinely believe that the real estate industry has a role to play in reducing the use of the earth’s limited resources and leaving a better world for the next generation, as the industry currently is known to make up over 30% of all CO 2 emissions. To acknowl- edge our responsibility here, we have positioned the environment and climate as a pre-eminent (albeit silent) stakeholder in our value creation model. As such, sustainability is deeply rooted in all our decision-making and activities. We constantly strive to improve the quality of our offering. We can only deliver this with an excellent team of ambitious professionals. We aim to be a great place to work, where our employees feel engaged and connected, and can help to set and exceed our joint ambitions. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 9 NSI ANNUAL REPORT 2023 CAPITAL - Financial capital from equity and debt investors LONG TERM TOTAL RETURN - Attractive long term total return by investing in Real Estate REAL ESTATE - High quality assets on strategic locations - Targeting growth clusters in vibrant cities VIBRANT URBAN MULTI-FUNCTIONAL AREAS - Offices where people like to come - Creating cohesive communities - Fostering innovativecollaboration OUR PEOPLE - Attracting best in class talents - Invest in training and development - Promoting diversity and inclusion EMPLOYEE ENGAGEMENT - High performance and entrepeneurial culture - Employee satisfaction RELATIONSHIPS - Customers - Real Estate Agencies - Suppliers - Governmental bodies CUSTOMER ENGAGEMENT - Customer satisfaction - Customer retention - Premium rents - Health and Wellbeing MATERIALS & ENERGY - Increase use of renewable energy - Using sustainable building materials - Focus on circularity in construction and exploitation FUTURE PROOF BUILDINGS - Adaptive and flexible buildings - Commitment to highest ESG standards (BREEAM, WELL, EPC) - Minimising environmenal impact INPUT OUTPUT P O R T F O L I O M A N A G E M E N T & D E V E L O P M E N T S E R V I C E S O P E R A T I O N A L E X C E L L E N C E C U S T O M E R E X C E L L E N C E INVESTORS PARTNERS & SUPPLIERS CUSTOMERS EMPLOYEES STAKEHOLDERS SOCIETY AND CLIMATE STAKEHOLDERS GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 10 NSI ANNUAL REPORT 2023 PORTFOLIO MANAGEMENT & (RE)DEVELOPMENT PROGRESS 2023 In 2023, NSI performed an integral strategic review of its portfolio and activities. The strategic review clarified that in light of the change in market conditions, a revision of the strategy was warranted. Covid has been the great accelerator of a series of secular trends for offices: location remains vital, but sustainability, well-being, and services are now paramount to asset class success. Key outcomes of the review Ie a sharpened focus on Amsterdam and an increased commitment to sustainability. A new €150m disposal programme was announced (depending on market conditions) to further align the portfolio with these strategic priorities. The liquidity in the market was severely restricted in 2023. Three assets were sold and no acquisitions were made in 2023. NSI is convinced that sustainability is increasingly becoming a driver of polarisation. Only those buildings with the right credentials in the right locations will be able to remain occupied and generate rental growth. Only in those locations where rent and capital value levels are sufficiently high enough, the economics for the necessary invest - ments in sustainability will be favorable. Everywhere else there is a clear risk of stranding. As such, sustainability will also remain a key criterion in defining our asset rotation / disposal strategy. The share of NSI's portfolio with Label A Energy Performance certificates increased to 95%, from 88% in 2023. The percentage Breeam ‘Very Good’ and ‘Excellent’ labels increased to 73% from 66% in 2023. In line with the prevailing difficult overall market conditions, NSI has revis- ited the risk/return prospects of its developments and decided to scale back its near-term initiatives. Laanderpoort was sold to ING in January 2024 inclusive of plans, permits, and redevelopment agreements. However, development remains a core competency to the business and the team will continue to explore opportunities still embedded in the portfolio. The sale of Laanderpoort in combination with the strong balance sheet position, has enabled NSI to allocate €20m to a share buy-back programme. SERVICES P O R T F O L I O M A N A G E M E N T & D E V E L O P M E N T S E R V I C E S O P E R A T I O N A L E X C E L L E N C E C U S T O M E R E X C E L L E N C E PORTFOLIO MANAGEMENT With its portfolio management, NSI pursues a long-term total return strategy, through active management, refurbs, asset repositionings and (re)developments, always with a clear focus on sustainability and underpinned by regular asset rotation. NSI is active in high-growth Dutch locations in selected key cities in the Netherlands, with its primary focus on Amsterdam, in line with the global trend of urban - isation. We have a strong emphasis on inner city locations and loca- tions at or near the main transport hubs, which are – or will become – vibrant multi-functional locations, where people want to work, live and play. We believe that this is where companies want to be, because of the proximity to their wider network and available talent pool. In addition to location, traditionally the most important driver to real estate returns, we see sustainability taking an increasingly prevalent role in determining the future attractiveness of assets, and conse - quently their value. We have now established a Paris-Aligned pathway and the outcome will significantly determine our investment plans and asset rotation from here. Our focus is on highly sustainable and adaptable buildings, with suffi - cient scale to be able to offer services on a profitable basis, but we may also own or acquire assets that in time can be redeveloped to offer all this (or can profitably be converted to alternative use). Going forward the primary focus will remain location: the future poten - tial and our ability to strengthen the attractiveness of locations. This may go beyond our main office activities, as we have identified several mixed-use and residential development opportunities in our portfolio. (RE)DEVELOPMENT NSI pursues selective (re-)development opportunities to expand its asset portfolio with the most sustainable, modern, Paris-aligned assets in the best locations, at better risk-adjusted returns relative to acquiring comparable assets in the open market. Our (re)development projects enable us to shape our buildings and portfolio around the changing needs of our customers. We anticipate changes in the way people work and the ever-growing importance of sustainability to ensure a future-proof design. Furthermore, we incorporate services and technology to create flexible and adaptable workspaces to maximise usability. P O R T F O L I O M A N A G E M E N T & D E V E L O P M E N T S E R V I C E S O P E R A T I O N A L E X C E L L E N C E C U S T O M E R E X C E L L E N C E Customer behaviour and demands are structurally shifting, with flex- ibility, hospitality, services and amenities increasingly becoming key considerations in the wider real estate industry. The focus on quality assets in attractive economic growth locations (and the asset rotation in recent years to achieve this) has resulted in a clear change in our tenant profile. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 11 NSI ANNUAL REPORT 2023 Tenants focus on being able to attract the right talent, productivity, sustainability and well-being, less so on costs. Providing the right mix of attractive spaces and services so that their businesses can thrive are therefore key to our success. Our in-house team regularly reviews every individual asset what level of services is appropriate and how these should be organised, based on location, size, (potential) tenant profile and market dynamics. For multi-tenant buildings where a smaller selection of services is deemed appropriate, we aim to start introducing NSI itself as a brand, with a clear promise as owner/operator of the building. HNK – OUR IN-HOUSE SERVICED OFFICE CONCEPT HNK is our in-house serviced office concept, currently operating a total of 7 buildings. The upgraded HNK concept, relaunched in 2022, has a strong focus on sustainability, well-being and comfort. The intended customer experience aims to make customers feel welcome, connected, truly supported and energized. One of our distinguishing strengths is our hospitality approach. Our staff is well trained to deliver the right customer experience. Another distinctive asset is our ability to genuinely incorporate sustainability in all our activities, as we are both operator and owner of the building. We can control all sustainability efforts and can proactively meet the increasing demands from our customers – a key differentiating feature that arguably very few other serviced-office operators can offer. PROGRESS IN 2023 Providing the right services is a key element in the recent rebranding strategy of HNK. Accessibility (location), sustainability, smart solu - tions, and hotel-like amenities and aesthetics are key. We opened HNK Sloterdijk In the fourth quarter of 2023, in which the HNK rebranding is fully Implemented. The proposition already proves its success; HNK Sloterdijk already reached an occupancy level of 96% as per year-end 2023. HNK Sloterdijk serves as a blueprint not only for our next HNK upgrades but also for the rollout of services to our wider multi-tenant portfolio, which should in turn be a driver to broader ERV growth. OPERATIONAL EXCELLENCE driven decisions. Furthermore, we have strong inhouse asset manage- ment and technical asset management teams being able to act closely to our customers and assets. Only with the right teams, culture, and processes we will be able to deliver outstanding results in an optimal and cost-efficient way. The right team is a diverse team that embraces an inclusive culture of open debates, professionalism, relevant exper - tise and the will to push boundaries. PROGRESS IN 2023 Our 2023 results show solid operational performance, showing healthy leasing activity driving record occupancy, solid like-for-like rental growth and new leases signed ahead of ERV. Being In control of our energy and waste data through the rollout of our sustainability data warehouse has been pivotal in moni- toring and improving our non-financial performance. NSI remains committed to staying below the CRREM reduction pathway for Dutch Offices. In 2023 NSI remained well below the Dutch average and reduced its energy intensity by ca 4% vs. 2022. CUSTOMER EXCELLENCE P O R T F O L I O M A N A G E M E N T & D E V E L O P M E N T S E R V I C E S O P E R A T I O N A L E X C E L L E N C E C U S T O M E R E X C E L L E N C E In our ambition to become the leading Dutch real estate company, operational excellence is a key enabler. We continuously explore how to make the best use of existing information technology solutions and introduce innovative applications. A best-in-class data warehouse and business intelligence system provides data-analytics and manage - ment information to support multi-functional collaboration and data- Customer Excellence is about putting the customer's perspective first, gaining a deep understanding of what our customers need to thrive, and how we can best support them. Our tenants' focus is shifting more towards productivity, meaning that providing the right mix of spaces, services and comfort is essential to helping their business grow. The customer journey is central to this. The customer excellence team constantly strives to develop and inno - vate on the overall offering to exceed customer expectations and works with the right partners to further strengthen the service. We consider all aspects that determine the intended experience, including the level of service and the layout, but also the personal approach of trained hosts. Results are measured regularly through NPS and customer satisfac - tion surveys, in our quest to continuously improve the experience we provide. PROGRESS IN 2023 NSI achieved a significant improvement in its Net Promoter Score (NPS) In 2023. This substantial improvement was the result of actively addressing feedback obtained from previous surveys. Sustainability emerged as a key concern among our tenants, prompting us to enhance our level of communication in this area. Moreover, we also Improved our communication and follow-up procedures regarding technical issues and other customer reports. P O R T F O L I O M A N A G E M E N T & D E V E L O P M E N T S E R V I C E S O P E R A T I O N A L E X C E L L E N C E C U S T O M E R E X C E L L E N C E GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 12 NSI ANNUAL REPORT 2023 SUSTAINABILITY Sustainability is an integral part of NSI’s long term value creation strategy. Our business model is geared towards decarbonising our portfolio by reducing energy usage, owning and developing flexible and adaptive buildings, and creating inspiring, flexible working environments articulated around the health and well- being of our occupants. We are pleased about our 5-star GRESB rating, for a fourth year running, and our second EPRA sBPR gold award. 2023 marked the first year in our journey towards aligning our portfolio with the 1.5c Paris Agreement and we are satisfied with our reduction in energy intensity over the year. We have also performed an analysis of our portfolio to determine its alignment with the EU Taxonomy for sustainable investments which we view as the key guideline for the inevitable alignment of economic and environmental interests. ‘The Future is here’ encapsulates our sustainability strategy which reflects the urgency to act now, our commitment to do what is necessary, and our appreciation for the challenges of today that will shape the industry tomorrow. In light of the secular changes brought on by the last couple of years, more convinced than ever that a robust, ambitious and comprehensive sustainability strategy will be a key differentiator for our business’ long term success. MATERIALITY MATRIX The success of our sustainability strategy and efforts depends on ongoing dialogue and engagement with internal and external stakeholders, through which NSI continuously validates and examines the relevance of the ESG topics on which NSI focuses. The basis for our strategy was an initial extensive assessment performed in 2018, which was recalibrated in 2020. To align with this timeframe, NSI has updated the materiality assessment again in 2022. The 2022 update of the materiality matrix included a revision of the topics assessed. As the field of climate change is ever-evolving, some topics might have become more urgent or significant to NSI as others. NSI has therefore updated the list of ESG topics in the 2022 revision, to better reflect the topics that are relevant, now and in the future. In the 2022 update, a survey was held amongst investors (external stakeholders, vertical axis) and NSI’s management and employees (internal stakeholders, horizontal axis). The resulting materiality matrix indicates the ranking of importance of the ESG topics, comparing the external and internal focus. The top-right corner of the materiality matrix indicates the ESG topics that are most material to both stakeholder groups, and will receive the additional focus from NSI. The assessed topics are categorised following NSI’s existing ESG strategy and corresponding themes: Future-proof investments, Energy & Carbon, Health & Wellbeing, and transcending topics (which focus on issues related to govern- ance). A notable result of the assessment is the high importance of the topic Net Zero Carbon according to both internal and external stakeholders. This underlines the urgency and importance of reducing our carbon footprint and to support the transition to a net zero carbon economy. The materiality matrix also shows a focus on the reduction of the carbon footprint – topics such as material use, our impact on natural systems, as well as climate change related risks, are considered material to both stakeholder groups. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 13 NSI ANNUAL REPORT 2023 In 2023 NSI started its CSRD readiness process. A double materiality matrix assessment has been initiated and its findings are expected to be published in the 2024 Annual Report. FUTURE-PROOF BUILDINGS HEALTH & WELL-BEING ENERGY & CARBON TRANSCENDING IMPORTANCE TO STAKEHOLDERS IMPORTANCE TO NSI OUR AMBITION In line with our revisited strategy, we have also sharpened our existing pillars ‘Energy and carbon’ and ‘Future-proof buildings’, while we have expanded and renamed our third pillar, ‘Social engagement’, to encompass a broader social component. This has allowed us to articulate our commitments more concretely: ENERGY AND CARBON FUTURE-PROOF BUILDINGS SOCIAL ENGAGEMENT We are committed to aligning our portfolio to a Paris-compliant decarbonisation trajectory and striving towards net-zero: We aim to own buildings that are resilient, adaptative and aligned with the EU Taxonomy, now or in time. We strive to be a long-term positive influence on our clients, employees and communities. OUR COMMITMENT We are committed to decreasing our energy intensity in line with the 1.5c scenario decarbonisation pathway. 100% of procured energy from renewable sources. Offset where not economically viable to reduce emissions through energy efficiency gains / renewable energy procurement. OUR COMMITMENT Own assets that are aligned with the EU Taxonomy, now or in time. Strive for a minimum BREEAM rating for assets is “Very Good”. Focus on Climate resilience: physical risk assessment with a mitigation plan for every asset. OUR COMMITMENT Make health and wellbeing a priority:for our employees: and for our clients Strive to have a diverse and inclusive workforce. Give back to our communities and respect our surroundings. 1 2 3 1 2 3 1 2 3 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 14 NSI ANNUAL REPORT 2023 We are committed to aligning our portfolio to a Paris-compliant decarbonisation trajectory and striving towards net-zero: We are committed to decreasing our energy intensity in line with the 1.5c scenario decarbonisation pathway (as per the CRREM methodology) All electricity procured by NSI is obtained from renewable sources We will offset remaining carbon emissions only after all other financially viable measures have been exhausted. 1 2 3 OUR COMMITMENT TO PORTFOLIO DECARBONISATION In 2023 we unveiled our roadmap to decarbonising our portfolio. While the decarbonisation process is unlikely to be linear, as incre - mental impact of improvements declines at higher efficiency levels, we aim to remain below the CRREM Dutch office average. The graph below shows NSI already is and is set to remain significantly below the sector and country target. 2023 marked the first year of the implementation and monitoring of our Paris-alignment investment plan, which has already translated into a decrease in energy usage: At year-end 2023 the total (tenant + building-related) average energy consumption of our portfolio was 113kWh/m 2 for 2023, down from117 kWh/m2 1 in 2022. For 2024, the planned sustainability CAPEX totals circa €8m. 1 NSI is using the Carbon Risk Real Estate Monitor’s (CRREM) decarbonisation pathways as a point of reference to set energy reduction targets for our portfolio. CRREM is the leading global initiative for operational decarbonisation of real estate assets in order to avoid stranding risk, address transition risk and comply with climate-science and Paris-aligned decarbonisation targets. CRREM establishes country and asset-specific energy and GHG reduction pathways. According to CRREM, for Dutch offices to be compliant with the 1.5c Paris scenario, buildings must achieve 85 kWh/m 2 /year by 2034, as per the pathway below. 1 This figure excludes the Leiden Biopark lab and lab adjacent offices, which have a much higher consumption profile, given the nature of the activities carried out there. Including these, the enegy intensity was 131 kWh/m2/year down from 137 kWh/m2/year . Given that our CRREM references is Dutch Offices, it is coherent to exclude non-office assets. ENERGY AND CARBON GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION GOING BEYOND EPC LABELS Formally the only sustainability regulatory requirement in the Netherlands for the renting out of commercial space is to have an EPC label of at least C as of 1 Jan 2023. At NSI we are already well ahead of that target (95% at label A, only 1% at C, no assets below C) and we consider a more ambitious goal to be necessary both from the perspective of climate urgency as well as from a client demand and, eventually, a regulatory point of view. Indeed, EPC does not sufficiently represent a Paris-aligned solution as it focuses on theoretical versus actual usage. Given the urgency in adopting a science-based solution to climate mitigation plus increased energy costs, we see more benefits in choosing a more complete approach. That said, the evolution of NSI’s portfolio accurately depicts part of NSI’s multi-year journey to sustainability. 0 50 150 100 200 2020 2025 2035 2030 kgCO 2 e/m 2 /year 173 164 155 128 116 112 85 0 10 40 2020 30 60 2025 2045 20502035 20402030 CRREM NSI ! ! "! #! $! %! &! '! #!#! !"#$%&'( ! ')&+ 20 50 kgCO 2 e/m 2 /year NSI VS. CRREM ENERGY INTENSITY PER YEAR 2 NSI VS. CRREM GREEN HOUSE GAS EMISSIONS PER YEAR 2 100% OF PROCURED ELECTRICITY SHOULD COME FROM RENEWABLE SOURCES All electricity procured by NSI is 100% green, procured from renewable sources (European wind) . The total average share of renewable energy used is 58.9% (European wind grid energy + solar panel generation of electricity + geothermal energy). WE WILL OFFSET REMAINING CARBON EMISSIONS ONLY AFTER ALL OTHER FINANCIALLY VIABLE MEASURES HAVE BEEN EXHAUSTED. We aim to reduce our carbon footprint through an increase in energy efficiency and the procurement, where possible, of energy from renewable sources. Offsets are therefore only a measure of last resort, after all other solutions have been exhausted. Currently, natural gas procurement is fully compensated using Gold Standards CO 2 . EPC LABELS 2023 3 CRREM A++ AA+NSI B C D E F & G 2017 2018 2020 2021 202320222019 29% 23% 29% 7% 6% 6% 44% 26% 15% 5% 6% 4% 61% 16% 15% 3% 3% 2% 74% 12% 12% 2% 80% 7% 10% 2% 2% 65% 8% 4% 10% 13% kgCO2e/m2/year kgCO2e/m2/year NL TAGET NSI ACTUEL NSI FORECAST 2 3 15 NSI ANNUAL REPORT 2023 2 Excluding development, sold assets and Leiden Bio Science Park 3 Excluding development GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 16 NSI ANNUAL REPORT 2023 FUTURE PROOF BUILDINGS We aim to own buildings that are resilient, adaptative and aligned with the EU Taxonomy Own assets that are aligned with the EU Taxonomy, now or in time Strive for a Minimum BREEAM “Very Good” rating for assets is Focus on Climate resilience: physical risk assessment with a mitigation plan for every asset. 1 2 3 Of the 6 environmental objectives, EPRA’s analysis indicates that only the objectives of the ‘Climate Change Mitigation’, ‘Climate Change Adaptation’ and ‘Transition to a Circular Economy’ have a focus on the Real Estate sector. Only Climate change mitigation and Climate Change adaptation have been in force since 2022. The other four remaining objectives were adopted by Commission Delegated Regulation (not in force until publication in the Official Journal) of 27 June 2023 of the European Parliament and are in force since 2024. NSI’S TAXONOMY ELIGIBILITY AND ALIGNMENT • Eligibility: An analysis was performed on NSI’s portfolio based on the Taxonomy-recognised activity of “Acquisition and Owner - ship of buildings” as defined by the EU taxonomy of sustainable activities. • The objective to which this activity contributes is “Climate change mitigation” defined as “contributing to the stabilisation of greenhouse gas emissions by avoiding or reducing them or by enhancing greenhouse gas removals”. To prove this, the activity must comply with specific Technical Screening Criteria (TSC) - a set of conditions specific to this activity. AIM TO OWN ASSETS THAT ARE ALIGNED WITH THE EU TAXONOMY OF SUSTAINABLE ACTIVITIES, NOW OR IN TIME We aim to own assets that are aligned, now or in time, with the EU taxonomy, the classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes. In order to determine alignment to the EU Taxonomy, the economic activity of the company must first be eligible. If the activity is not defined in the screening criteria, it is not eligible under the EU Taxonomy and therefore, it cannot be considered as environmentally sustainable. Second, once the economic activity has been deemed eligible, it must be determined that it makes a substantial contribution to at least one of the EU’s climate and environmental objectives, while at the same time not significantly harming (DNSH – do no significant harm) any of the other objectives and meeting minimum social safeguards. The taxonomy defines 6 environmental objectives. • Climate change mitigation • Climate change adaptation • The sustainable use and protection of water and marine resources • The transition to a circular economy • Pollution prevention and control • The protection and restoration of biodiversity and ecosystem 1 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION • The TSC for substantial contribution for the economic activity “Acquisition and ownership of buildings”, largely depend on the type of buildings in scope (residential vs non-residential), the date in which the building was built (different conditions for buildings built before or after 31 December 2020) and on the energy perfor - mance certificates. • In order to ensure that the activity does no significantly harm to the other objectives, it should be verified that adaptation solutions are put in place to tackle the climate risk hazards which have been assessed as “material”. • The analysis was performed on each individual asset based on the TSC for the acquisition and ownership of buildings as defined by the EU taxonomy. Through a climate risk hazard and mitiga - tion plan the DNSH condition was assessed. The Do No Significant Harm (DNSH) criteria were evaluated through two assessments. This examination involved a comprehensive assessment of climate risk and vulnerability at the asset level. Based on these outcomes, a tailored climate adaptation strategy was developed to mitigate each asset identified as being at risk. Implementation of the adap - tation plans is scheduled to be executed over the next five years. • In this analysis, all our assets were assessed against the activity “acquisition and ownership of buildings”. As a result, investment properties under construction and renovations are not aligned with the EU taxonomy based on this activity. We will explore in 2024 alignment against other EU taxonomy-eligible relevant activities for these buildings. • NSI adheres to international standards for human rights as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Funda - mental Principles and Rights at Work and the International Bill of Human Rights. • Based on this, the proportion of the portfolio would be EU taxonomy aligned based on the Climate Change Mitigaton: 2023 eligibility 2023 alignment 2023 alignment 4 Turnover 100% 0% 93.3% Capex 100% 0% 95.5% Opex 100% 0% 90.4% The EU Taxonomy guidelines expect a bundle of coherent processes aimed at identifying negative impacts on the four pillars of minimum social safeguards (human rights & labour rights, bribery and corrup - tion, taxation and fair competition), identifying how these can be prevented or reduced, the implementation of these actions, the monitoring of the results and the method of communicating how negative impacts are addressed in relation to the company's own operations, the value chain and other business relationships. NSI does not have all these process steps in place to meet the require - ments of the minimum social safeguards. Additional efforts will be made in 2024 and beyond to ensure to meet these conditions for alignment. NSI made subsequent progress on EU Taxonomy alignment throughout 2023. Alignment based on the technical assessment points increased compared to last year on Revenue, Capex and Opex. Progress was also realized with respect to minimum social safeguard requirements including the adoption of relevant policies. Additional steps will be made in 2024 and beyond to ensure compli- ance with the minimum social safeguard requirements can be verified. The extensive EPRA taxonomy eligibility and alignment analysis and the associated table can be found on page 132-137. STRIVE FOR A MINIMUM BREEAM “VERY GOOD” RATING FOR ASSETS We value BREEAM’s multifaceted contribution to the definition of sustainability and consider the label to be a recognizable sign of validation in terms of sustainability. BREEAM seeks to improve the operational performance of buildings through sustainable improve - ments, which should ultimately help drive value at the asset level. The BREEAM assessment method involves nine areas: manage - ment, health, energy, transport, water, materials, waste, land use, ecology and pollution. In 2023 NSI continued to make progress in its ambition to obtain an at least “Very good” label for its standing assets: a majority of our assets (73%, up from 66% in 2022) now have either a Very Good or Excellent Label. BREEAM BY SQM 5 NO LABEL ACCEPTABLE PASS GOOD VERY GOOD EXCELLENT 9% 6% 13% 35% 38% 0% 73% FOCUS ON CLIMATE RESILIENCE: PHYSICAL RISK ASSESS- MENT WITH A MITIGATION PLAN FOR EVERY ASSET. Assessing and mitigating climate change and the associated risks are an integral part of our approach towards a future-proof portfolio. A further analysis was not only required in view of complying with the EU taxonomy (DNSH assessment), it also increasingly weighs on invest - ment and portfolio decisions. NSI performed an assessment of the net risks of climate change related heat stress and flooding of its port - folio, also taking individual asset characteristics into consideration. The assessment included which measures can be taken to mitigate these risks. This assessment was performed in 2022 and it identified that from NSI’s 49 assets at the times 9 assets are potentially exposed to a higher risk of heat stress and 12 assets to a higher risk of flooding. Following disposals, of the 46 assets owned at end 2023 9 assets are potentially exposed to higher risk of heat stress and 11 to higher flooding risks. Measures to mitigate these risks have been integrated in the asset plans and will be executed in the coming 4 years. More details on climate risk analyses can be found on page 18-19. 17 NSI ANNUAL REPORT 2023 2 3 5 Excluding development 4 Alignment if minimal social safeguards would have been fully met. See page 132 for more information GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 18 NSI ANNUAL REPORT 2023 CLIMATE RISKS Both physical- and transitional risk analyses provide additional insight into the overall risk profile of NSI’s portfolio. We are using Carbon Risk Real Estate Monitor (CRREM) for assessing and addressing transitional risk. More details about our plans to decrease our energy intensity in line with the 1.5c scenario decarbonisation pathway can be find on page 14 -15. A detailed climate risk assessment was undertaken in recent years, focusing on the most apparent climate-related physical risks in the Netherlands (pluvial flooding, flooding, drought and heat) as well as taking socio-economic consequences and tran- sitional risks (related to the transition to a low-carbon economy) into account. CLIMATE RISKS ANALYSIS DROUGHT Drought is measured according to the potential lack of rainfall over a longer period. As our climate changes, the Netherlands is expected to experience longer periods of warmer weather and a lack of precipitation. While increased droughts can greatly affect the Dutch ecosystem and the agricultural sector, buildings can also be severely affected through land subsidence and rotting of wooden pile foundations as groundwater levels decrease. HEAT Heat stress is commonly defined as a physiological condition provoked by extreme heat, causing humans and animals to be unable to shed their heat and thereby overheating. There are several methods to approximate heat stress using geographic modelling. One such method is describing heat using the number of tropical days (≥ 30ºC) experienced per year. By 2050, the Netherlands is likely to experience temperatures higher than 35ºC at least once or twice a year. Since people spend on average 90% of their time indoors, managing the impact of these heatwaves on the indoor environment and a building’s ability to retain a productive working climate and temperature will be crucial. PLUVIAL FLOODING (HEAVY RAINFALL) It is expected that the amount of rainfall and the intensity of rainfall events in the Netherlands will increase significantly in the coming 30 years. Increase in heavy rainfall increases the risk of pluvial flooding. Pluvial flooding causes risks because of inflow of water to buildings as well as potential problems with accessibility of buildings. SOCIO-ECONOMIC RISKS The physical hazards that result from climate change, can and will continue to have a significant effect on the quality of human life. In addition to the physical hazards which could potentially affect the resilience and accessibility of assets, there are related socio-economic issues that need to be taken into consideration which could have an impact on an asset’s value. NSI can mitigate and adapt to these impacts through ensuring their assets are well connected and surrounded by green (space) and blue infrastructure (water elements). These meas- ures can not only enhance the workability and usability of their assets but can also help reduce their vulnerability to the physical impacts of climate change. These measures should be taken in cooperation with local governments whenever possible. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 19 NSI ANNUAL REPORT 2023 3 - 4 4 - 5 5 - 6 1 - 2 2 - 3 AMOUNT OF DAYS WITH ≥ 25 MM OF PRECIPITATION DROUGHT 2023 DROUGHT 2050 HEAT 2023 HEAT 2050 NUISANCE BY PRECIPITATION 2050 3 - 4 4 - 5 5 - 6 1 - 2 2 - 3 AMOUNT OF DAYS WITH ≥ 25 MM OF PRECIPITATION 180 - 210 210 - 240 240 - 270 270 - 300 120 - 150 150 - 180 POTENTIAL MAXIMUM PRECIPITATION DEFECT (IN MM) 180 - 210 210 - 240 240 - 270 270 - 300 120 - 150 150 - 180 POTENTIAL MAXIMUM PRECIPITATION DEFECT (IN MM) 6 - 9 9 - 12 12 - 15 15 - 18 0 - 3 3 - 6 AMOUNT OF TROPICAL DAYS (MAX ≥ 30 0 C) > 18 6 - 9 9 - 12 12 - 15 15 - 18 0 - 3 3 - 6 AMOUNT OF TROPICAL DAYS (MAX ≥ 30 0 C) > 18 NUISANCE BY PRECIPITATION 2023 PHYSICAL CLIMATE RISKS IN MORE DETAIL GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 20 NSI ANNUAL REPORT 2023 ENERGY EFFICIENCY Solar panels Roof and facade insulation Automatic blinds Sensor controlled LED-lighting Insulating and solar control glass Energy-efficient equipment Charging for electric cars and e-bikes Procurement European wind Energy-saving installations / ATES or air heat pump Gas free Ground floor insulation 1 2 3 4 5 6 7 8 9 11 10 WATER EFFICIENCY Water-saving sanitary Reuse of rainwater Water buffertank 1 2 3 WASTE MANAGEMENT Sustainable sourcing and materials Informing tenants Recycling waste Seperate waste collection Reduce, reuse, recycle Monitoring waste 1 2 3 4 5 6 HEALTH AND WELLBEING Active work stations Greening Measuring quality of indoor climate Green roofs Adaptable lighting and climate systems Healthy food & beverage AEDs Optimising daylight Centrally located staircase Access to public transport Bicycle facilities 1 2 3 4 5 6 7 8 9 11 10 THE SUSTAINABLE OFFICE GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 21 NSI ANNUAL REPORT 2023 We strive to have a long-term positive influence on our clients, employees and communities . Make health and wellbeing a priority for our customers and for our employees Strive to have a diverse and inclusive workforce. Give back to our communities and respect our surroundings. SOCIAL ENGAGEMENT 1 2 3 MAKE HEALTH AND WELLBEING A PRIORITY FOR OUR EMPLOYEES We believe that the well-being of our employees plays a critical role in fostering a productive and thriving work environment. We provide a nutritious and healthy lunch for our employees and offer fresh fruit throughout the day. In addition, we actively encourage our employees to participate in sports events and adopt a lifestyle that promotes fitness. Read more on page 45-46 (Great Place to Work) about our employee engagement activities. MAKE HEALTH AND WELLBEING A PRIORITY FOR OUR CUSTOMERS ENGAGE ACTIVELY WITH CUSTOMERS THROUGH A YEARLY CUSTOMER SATISFACTION SURVEY In 2023 NSI achieved a Net Promoter Score (NPS) of + 19.9 from its tenants, significantly up from + 10.3 a year ago. HNK’s NPS was 23.9 vs 19.9 in 2022. The NPS is calculated using the answer to a key question, using a 0-10 scale e.g. How likely is it that you would recommend NSI to a friend or colleague? 6 In NSI’s case + 19.9 is a positive score which means more promoters than detractors. This significant improvement was achieved by following up the feedback from previous surveys. Sustainability appeared to be an important topic to our clients as well and we have intensified our communication on this by creating a brochure per asset in which we explain general and asset-specific sustainability initiatives. In addi - tion, we have improved the communication and follow-up regarding technical issues or other customer reports. Furthermore, we addressed some of the general customer feedback, like increasing greenery and adding charging stations. 1A 1B 6 Respondents are grouped as follows: Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth; Passives (score 7-8) are satisfied but unenthusi - astic customers who are vulnerable to competitive offerings; Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 22 NSI ANNUAL REPORT 2023 STRIVE TO HAVE A DIVERSE AND INCLUSIVE WORKFORCE NSI is committed to fostering a fair and inclusive working environ- ment. NSI aims to foster a culture where people are respected and appreciated, and perceive equality and fairness of opportuni- ties in their workplace. NSI recognises the benefits of diversity and inclusion, and is fully committed to providing equal opportu- nities and treatment when it comes to recruitment and selection, training and development, performance reviews and promotion. Our culture is based on the principles of mutual respect and non- discrimination irrespective of nationality, age, disability, gender, religion or sexual orientation. At NSI we currently have 42% male and 58% female workforce. NSI established a Diversity and Inclusion policy in 2023 (see page 56 for more information). NSI has set diversity targets for the Management Board, the Supervisory Board and Senior Manage - ment (see page 56 for more information in Corporate Governance). These target were met in 2023 (or did not apply due to vacancy). GIVING BACK TO OUR COMMUNITIES Creating a positive socio-economic impact in local communities in and around our assets is important to us. We aim to play an active role in our communities by building lasting relationships with local stakeholders and by supporting organizations with a social purpose. A non-exhaustive list of initiatives we support include: JINC Jinc is an organisation that aims to give children a better starting position in the labour market. They particularly focus on children growing up in an environment with high levels of poverty and unemployment. NSI supports this initiative, among other things by giving lectures and offering insight into what working in different areas of expertise in real estate entails. WELCOMING HIGH SCHOOL STUDENTS NSI welcomed second grade students from Open School Community Bijlmer in 2023, a high school located in the imme- diate vicinity of NSI’s headquarters, for company visit. NSI employees gave tours and master classes on working in in the field and asset- and leasing management, and the importance of sustainability and safety in property management. PHILIPS INNOVATION AWARDS | SPONSORSHIP TO STIMULATE INNOVATION AMONG STUDENTS It is important to NSI to promote innovation and contribute to Dutch society. That is why HNK is a partner of the Philips Innova- tion Award since 2017. The Philips Innovation Award is an entre- preneurship prize awarded to students with an innovative start-up concept. DONATION TO RONALD MCDONALD KINDERFONDS NSI made a donation to the Ronald McDonald Children's Fund. One of the Ronald Mc Donald locations, where hospitalised chil- dren and their families can be close to each other, is in Amsterdam Southeast, close to NSI’s head office. NSI donates one euro for every completed survey of the customer satisfaction survey. GREEN BUSINESS CLUB ZUIDAS NSI participates in the Green Business Club Zuidas. This network organization creates impact by initiating sustainable projects in the Amsterdam Zuidas area and aspires to make the Zuidas the most sustainable, livable and workable area in the Netherlands. The network aims to realize this by collaborating in partnerships and sharing best practices and knowledge. ZUIDAS BUSINESS RIDE The Zuidas Businessride consists of several bicycle racing distances, with the start and finish of the ride at the business district Zuidas (South Axis). The ride is organized by Werel- dOuders, non-profit organization aimed at breaking the cycle of poverty in Latin America. In 2023, proceeds from this event went to healthy food for families living in poverty. A team of NSI partici- pated in this race and raised money for this charity. UPTOWN SLOTERDIJK NSI participates with nine other parties in UPTown Sloterdijk to help promote the transformation of this area into an attrac- tive urban district. All participants (APG, BPD, CBRE, EDGE, the municipality of Amsterdam, Heijmans, Synchroon and TMG) are actively linked to the area and have an interest in the development of the neighbourhood. One of the initiatives worked on in 2023 is placemaking; strength- ening the connections between people and places. For example, promoting routes through greenery or suggesting a route passing retail or cafes. ONDERNEMERSFONDS UTRECHT NSI made a donation to Ondernemersfonds Utrecht (Entrepre- neurs Fund Utrecht). This fund connects local entrepreneurs, various sectors and organizations with the aim of promoting the quality of business in Utrecht. 2 3 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 23 NSI ANNUAL REPORT 202323 NSI ANNUAL REPORT 2023 INCOME, COSTS AND RESULT INTRODUCTION EPRA earnings in 2023 amount to € 40.4m compared to € 42.7m in 2022 (- 5.5%). The decrease in EPRA earnings is the result of lower net rental income, higher administrative and financing costs, and corporate income tax as a result of the restructuring in preparation of the legislative changes in the FBI regime as from 2025. EPRA EPS is € 2.01, 6.6% lower than last year. EPRA NTA is at € 35.30, down 20.1% or € 8.87 per share compared to the end of 2022, primarily due to the negative revaluation of the investment portfolio in 2023. RENTAL INCOME Compared to last year gross rental income is flat, at € 71.2m. The positive effect of indexation was offset by the effect of disposals in the past two years (- € 2.7m) and the transfer of Laanderpoort to the development portfolio in February 2023 (- € 2.2m). On a like-for-like basis gross rental income increased by € 4.9m (7.4%), mainly due to lease indexation in H2 2022 and 2023. Non-recoverable service costs are € 0.6m higher than in the same period last year, which is the result of higher vacancy in the first half of 2023 and of caps on charges to some tenants. Operating costs are € 0.2m (1.8%) higher compared to 2022, with lower letting costs (- € 0.2m) and lower costs for technical consul- tancy (- € 0.4m) being offset by higher property taxes (+ € 0.2m) and maintenance (+ € 0.5m) costs. Net rental income amounts to € 58.4m, down € 0.9m (- 1.8%) versus 2022. The NRI margin is 82.1%, down 1.1 bps versus last year. Net rental income increased by 4.6% on a like-for-like basis; the increases in Amsterdam, Other G4 and Other Netherlands were respectively 3.8%, 6.0% and 4.3%. ADMINISTRATIVE COSTS Administrative expenses are € 0.6m higher compared to 2022, entirely due to one-off costs in relation to the announced change in tax regime. NET FINANCING COSTS The direct net financing costs increased by 4.0% (€ 0.3m) compared to last year, caused by higher interest costs (€ 1.3m), reflecting higher interest rates, and higher capitalised interest related to development projects (€ 1.0m). INDIRECT RESULT The investment portfolio incurred a negative revaluation of € 224.0m (- 17.4% at market value) compared to the end of 2022. The result on sales concluded in 2023 amounts to € 5.4m.A nega- tive mark-to-market effect on interest rate swaps (- € 2.8m) and other indirect costs (- € 0.1m) result in an indirect result before tax of - € 226.7m. CORPORATE INCOME TAX To limit the negative impact of the changes to the FBI-regime per 2025, NSI has restructured the business in 2023. As a result € 0.6m in tax will be paid on the direct result of 2023. The tax on the indirect result amounts to € 38.7m, which has been added to deferred tax assets in the balance sheet. The total indi- rect result amounts to € 182.8m negative. POST-CLOSING EVENTS On 24 January the sale and transfer of Laanderpoort to ING was completed, for a total amount of € 24.0m. This is in line with the year-end valuation of the asset. INCOME SEGMENT SPLIT 2023 2022Amsterdam Other G4 Other Netherlands Corporate TOTAL Gross rental income 35,600 24,185 11,415 71,199 71,309 Service costs not recharged -1,083 -864 21 -1,926 -1,322 Operating costs -5,182 -3,966 -1,704 -10,852 -10,663 Net rental income 29,335 19,355 9,731 58,421 59,325 Administrative costs -9,120 -9,120 -8,566 Earnings before interest and taxes 29,335 19,355 9,731 -9,120 49,301 50,759 Net financing result -8,349 -8,349 -8,024 Direct investment result before tax 29,335 19,355 9,731 -17,469 40,953 42,735 Corporate income tax -550 -550 -2 Direct investment result / EPRA earnings 29,335 19,355 9,731 -18,019 40,402 42,733 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 24 NSI ANNUAL REPORT 2023 DUTCH PROPERTY MARKET OVERVIEW ECONOMIC CONDITIONS Following two years of strong growth (6.2 % in 2021 and 4.3 percent in 2022), Dutch GDP growth was flat at 0.1% in 2023. Following a frantic 12 months in 2022, Dutch inflation (CPI) stabi- lised at 3.8% (6.5% excluding energy) in 2023 and is expected to decrease in 2024 and 2025. Whilst in 2022 inflation was mainly led by an increase in energy prices, in 2023, the lion’s share of inflation was owed to another essential good, food, resulting in further ramifications on households and a dent on consumer confidence. While unemployment remains at close to historical lows at 3.6%, the marked deterioration in purchasing power, tighter credit conditions and the ongoing geopolitical tensions have contrib- uted to a subdued but still resilient economic climate. OCCUPATIONAL MARKET Two years into the post-pandemic era the “office vs WFH” debate has fully transitioned into a hybrid working model, the conse- quences of which are slowly becoming visible. While factors such as labour market shortages, the economic outlook, sustainability credentials of buildings and the scarcity of Grade A space, in general, inject nuance into the debate, the reality is that in 2023, take-up of office space for the overall market was around half of the volume of the pre-pandemic years 2018 and 2019. Having said that, bifurcation is now a confirmed reality: due to the tight market situation in prime office locations, prime rents are rising for the best space, especially in Amsterdam, whilst secondary assets in secondary locations are increasingly falling by the wayside. Dutch office take-up in 2023 was 24% lower compared to the same period in 2022, confirming the adjustment. The vacancy rate for the overall market has remained stable at 8.4% (2022: 8.2%). Though this trend could lead to reduced office occupancy rates in certain cities, the broader national outlook would rather suggest a shift in demand towards specific types of offices: high-quality, sustainable buildings in prime city center locations, with a strong emphasis on amenities and well-being. It goes beyond a space- reducing exercise; there is also a focus on utilising that space differently and concentrating on better locations. AMSTERDAM Office take-up in Amsterdam in 2023 was circa 211.000 m 2 (vs same period 2022: 234.000 m2), confirming the trend of limited grade A space availability and a sluggish economy. The office vacancy rate in Amsterdam as of Q4 2023 was 8.3%, up 120bps from 2022. The vacancy in the prime South-axis market is up 70bps to 3.2%, Southeast saw the biggest increase at 10.6% (was 8.4% in 2022, surpassing the Dutch average of 8.4%). The vacancy in Sloterdijk is up by 160 bps to 8.0%. The bifurcation is clearly visible, with prime office rents on the South-axis reaching a new record at €555/m 2 , even with significant availability in the wider Amsterdam market. OTHER G4 In 2022 take-up in Utrecht was flat at around 60.000 m2, in line with the period 2020 - 2022. Vacancy decreased by 30bps to 4.7% in 2023, while prime rents increased to €325/m2 (2022: €305/m2). In Rotterdam prime rents remained flat at 300/m2 and the vacancy was flat at 7.6% (2022: 7.4%). In The Hague, where Government is the largest occupier, the overall vacancy remains 4.5% (2022: 4.5%). OTHER NETHERLANDS The vacancy rate in Eindhoven increased to 8.0% from 6.6%. Take up decreased by 9.1% from 2022. Vacancy at the Bio Science Park in Leiden remains at 0%. INVESTMENT MARKET The magnitude of the interest rate hikes has dramatically impacted market valuations, as the investment market effectively came to a standstill. According to CBRE, the total transacted of €1.3 billion marks a decrease of c70%% compared to 2022. They cite a 40% average decline in values since the peak. The move has been swift and severe as appraisers take a conservative stance to the rise in rates and heightened economic uncertainty. They expect 2024 to be another difficult investment year for office real estate, with an expected volume of €1.6 billion. That said, opportunities may be present as anticipated forced sales finally occur. Fund redemptions brought on by pressure on return requirements and the more stringent credit conditions have yet to materialise. CBRE estimates that out of some 100 properties trans- acted between 2017 and 2020, of over €20m, circa 10-15 of these may encounter challenges. This is likely to bring €500 to €750 million worth of office real estate to the market in 2024. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 25 NSI ANNUAL REPORT 202325 NSI ANNUAL REPORT 2023 REAL ESTATE PORTFOLIO Three assets were sold during 2023: HNK Den Bosch, HNK Ede and Donauweg, Amsterdam. The combined proceeds of these disposals were € 33.9m (before transaction costs) reflecting on average a 19.8% premium over December 2022 book values. No acquisitions were made in 2023. PORTFOLIO BREAKDOWN – 31 DECEMBER 2023 # Assets Market value (€ m) Market value (%) Amsterdam 22 588 56% Other G4 14 301 29% Other Netherlands 10 154 15% TOTAL 46 1,043 100% VACANCY The EPRA vacancy at the end of 2023 is 5.2%, down from 6.2% at the end of 2022. On a like-for-like basis the vacancy decrease was -0.3%. The vacancy rate at year-end includes 0.7% strategic vacancy for Alexanderpoort, Rotterdam, part of which is being kept vacant ahead of a refurbishment. Adjusted for this, the vacancy rate at year-end of 2023 is 4.5%. The total tenant retention rate for 2023 was lower than usual, at circa 57%. EPRA VACANCY 31 Dec. 2022 L-f-l Other 31 Dec. 2023 Amsterdam 7.0% 0.1% -1.3% 5.8% Other G4 6.1% -0.2% 0.0% 6.0% Other Netherlands 4.1% -2.0% -0.5% 1.5% TOTAL 6.2% -0.3% -0.7% 5.2% RENTS On a like-for-like basis, gross rents are up by 7.4% in 2023. Indexation accounted for most of the increase (6.4%). LIKE-FOR-LIKE GROWTH GROSS RENTAL INCOME 2023 2022 L-f-l Amsterdam 35.5 33.3 6.8% Other G4 24.0 22.1 8.3% Other Netherlands 11.3 10.5 7.2% TOTAL 70.8 65.9 7.4% Net rents increased by 4.6% on a like-for-like basis in 2023. The more limited increase was mainly a result of higher scheduled maintenance costs in 2023. 5.2% 2019 2020 0.8% 2021 3.0% 2022 7.4% 2023 4.6% CHANGE IN NET RENTS (LIKE-FOR-LIKE)EPRA VACANCY RATE TOTAL PORTFOLIO 2018 13.8 21.4 2016 18.4 2017 2019 7.1 2021 5.9 2020 7.0 2022 6.2 2023 5.2 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 26 NSI ANNUAL REPORT 2023 LIKE-FOR-LIKE GROWTH NET RENTAL INCOME 2023 2022 L-f-l Amsterdam 29.8 28.7 3.8% Other G4 19.0 17.9 6.0% Other Netherlands 9.2 8.8 4.3% TOTAL 58.0 55.5 4.6% REVERSIONARY POTENTIAL / ERV BRIDGE In 2023 ERVs increased by 1.9%. In Amsterdam the highest increase in ERVs was recorded in the more inner city locations (2.5%). In Other G4, Utrecht had the highest increase with 2.5% and in Other NL, Leiden ERV’s were up most at 5%. LIKE-FOR-LIKE GROWTH ERV (€M) 31 Dec. 2023 31 Dec. 2022 L-f-l Amsterdam 44 43 1.4% Other G4 26 26 2.1% Other NL 13 13 3.2% TOTAL 83 81 1.9% As per 2023 the investment portfolio is 2.4% reversionary, down from 6.1% at year-end 2022. This is mainly the result of higher contract rent levels, mostly attributable to indexation. Amsterdam remains the most reversionary segment (5.2%). New lease contracts were signed on average at approximately 2% above ERV in 2023. REVERSIONARY POTENTIAL 31 Dec. 2023 31 Dec. 2022 Amsterdam 5.2% 11.0% Other G4 -3.0% -0.6% Other NL 4.1% 3.6% TOTAL 2.4% 6.1% The WAULT of the portfolio is 3.7 years. Contracts representing an annualised rental income of € 12.2m (16% of total annualised rental income) are set to expire in 2024. This includes €3.8m in flexible lease contracts with maturities of one to three months, which typically are just rolled over. EPRA YIELDS The EPRA net initial yield is up by 70bps to 5.3% in 2023. This reflects both yield expansion and the impact of higher rents. The higher interest rate environment has resulted in a dearth of liquidity in the investment market prompting appraisers to take a more conservative stance to reflect this. PORTFOLIO YIELDS EPRA net initial yield Gross initial yield Reversionary yield Dec. 2023 Dec. 2022 Dec. 2023 Dec. 2022 Dec. 2023 Dec. 2022 Amsterdam 5.2% 4.4% 7.4% 5.9% 8.3% 7.0% Other G4 5.7% 4.9% 8.6% 7.2% 8.9% 7.6% Other NL 5.0% 4.6% 8.1% 7.0% 8.6% 7.5% TOTAL 5.3% 4.6% 7.9% 6.4% 8.5% 7.3% 60 65 70 75 80 85 Net Effective Rent Rent incentives Contracted rent Positive reversion Negative reversion ERV Vacant space Total ERV Contracted rent Reversion ERV 72 6 77 4 -3 4 84 BRIDGE CONTRACTED RENT TO ERV - 31 DECEMBER 2023 2019 6.4% 7.1% 2018 2020 6.7% 2022 6.4% 2021 5.9% 2023 7.9% GROSS INITIAL YIELD GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 27 NSI ANNUAL REPORT 2023 VALUATIONS The portfolio valuation is down by 17.4% over the 12-month period (-16.9% excluding development properties.). H1 saw a revaluation of -9.1%, with H2 seeing the remainder of the decline to reflect deteriorated market conditions and continued lack of liquidity. The valuation decline is almost entirely attributable to yield expan- sion as a result of higher interest rates and the collapse in invest- ment volumes. The largest capital value decline was seen in Amsterdam (-20.7%), given the lower starting yields. The weakness in the investment market extends beyond offices, as our Leiden Bio-Science Park assets contributed most to the valuation decline in “Other G4”, with a 13% decline in capital values in 2023. REVALUATION Market value (€ m) Revaluation Positive Negative TOTAL % Amsterdam 588 -154 -154 -20.7% Other G4 301 -45 -45 -13.1% Other NL 154 -26 -26 -12.8% TOTAL 1,043 -225 -225 -17.4% CAPITAL EXPENDITURE Capex is € 19.5m of which € 2.4m is defensive. The € 15m of offensive capex includes € 5.5m for the development projects. CAPITAL EXPENDITURE Offensive Defensive TOTAL Amsterdam 12.3 2.7 15.1 Other G4 3.1 1.0 4.1 Other NL 0.2 0.2 0.3 TOTAL 15.6 3.8 19.5 AMSTERDAM Vacancy decreased from 7.0% to 5.8% as a result of the disposal of Donauweg in Q3 2023, which was entirely vacant, as well as occupancy gains in HNK Zuidoost and Centerpoint II. The tenant retention rate during 2023 was 57%. KEY METRICS AMSTERDAM 2023 2022 Change Number of properties 22 23 -4.3% Market value (€ m) 588 730 -19.5% Market value asset (€ m) 27 32 -15.9% Lettable area (sqm k) 161 178 -9.7% Ann. contract rent (€ m) 39 40 -1.7% Average rent / sqm 259 243 6.7% ERV (€ m) 44 47 -8.1% EPRA vacancy 5.8% 7.0% -1.2 pp EPRA net initial yield 5.2% 4.4% 0.8 pp Gross initial yield 7.4% 6.0% 1.5 pp WAULT 4.1 4.1 -0,5 pp 0.0 20.0 40.0 60.0 80.0 100.0 2024 2025 2026 2027 2028 >2028 Total Contract rent 12.2 14.3 14.4 10.8 5.5 18.8 76.1 ERV 12.4 15.0 14.4 11.1 5.5 19.5 77.9 # Contracts 239 63 60 76 45 56 539 Rev. Potential 1.4% 5.4% -0.1% 2.0% -0.7% 3.7% 2.4% ANNUAL EXPIRATIONS AND REVERSIONARY POTENTIAL TOTAL PORTFOLIO 0.0 5.0 10.0 15.0 25.0 30.0 35.0 45.0 2024 2025 2026 2027 2028 >2028 Total Contract rent 4.8 5.8 9.4 5.0 3.7 9.8 38.7 ERV 4.8 6.8 9.3 5.3 3.8 10.8 40.7 # Contracts 68 19 20 40 19 25 191 Reversion -0.8% 16.2% -1.1% 4.8% 1.3% 9.4% 5.2% 40.0 20.0 ANNUAL EXPIRATIONS AND REVERSIONARY POTENTIAL AMSTERDAM GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 28 NSI ANNUAL REPORT 2023 OTHER G4 The EPRA vacancy rate for Other G4 is 6.0%, down from 6.1% at year-end 2022. The vacancy includes 2.2% in strategic vacancy for Alexanderpoort, where several floors are being held vacant as part of a major refurbishment. Alexanderhof was let to the Rotterdam Municipality in 2023 and is now reclassified as investment property. The retention rate for 2023 amounts to 42.7%. KEY METRICS OTHER G4 2023 2022 Change Number of properties 14 14 Market value (€ m) 301 342 -12.0% Market value asset (€ m) 21 24 -12.0% Lettable area (sqm k) 125 122 2.6% Ann. contract rent (€ m) 26 24 6.9% Average rent / sqm 220 213 3.6% ERV (€ m) 27 26 4.4% EPRA vacancy 6.0% 6.1% -0.1 pp EPRA net initial yield 5.7% 4.9% 0.8 pp Gross initial yield 8.6% 7.2% 1.5 pp WAULT 3.5 4.0 -13.5% OTHER NETHERLANDS The vacancy rate was 1.5%, down from 4.1% at year-end 2022. The vacancy in Life Sciences assets in Leiden remains 0%. The retention rate in this segment is 83.7%. KEY METRICS OTHER NETHERLANDS Dec. 2023 Dec. 2022 Change Number of properties 10 12 -16.7% Market value (€ m) 154 203 -24.1% Market value asset (€ m) 15 17 -8.9% Lettable area (sqm k) 65 82 -21.0% Ann. contract rent (€ m) 12 14 -11.9% Average rent / sqm 195 180 8.6% ERV (€ m) 13 15 -13.7% EPRA vacancy 1.5% 4.1% -2.5 pp EPRA net initial yield 5.0% 4.6% 0.4 pp Gross initial yield 8.1% 7.0% 1.1 pp WAULT 2.9 3.3 -11.5% 0.0 5.0 15.0 25.0 30.0 2024 2025 2026 2027 2028 >2028 Total Contract rent 3.7 7.0 3.1 3.6 0.8 6.9 25.1 ERV 3.5 6.8 3.0 3.5 0.7 6.8 24.3 # Contracts 161 36 33 28 11 22 291 Reversion -5.3% -2.6% -2.9% -3.2% -4.6% -1.8% -3.0% 10.0 20.0 ANNUAL EXPIRATIONS AND REVERSIONARY POTENTIAL OTHER G4 0.0 2.0 8.0 12.0 14.0 2024 2025 2026 2027 2028 >2028 Total Contract rent 3.7 1.5 2.0 2.2 1.0 2.0 12.4 ERV 4.1 1.5 2.1 2.3 1.0 1.9 12.9 # Contracts 10 8 7 8 15 9 57 Reversion 10.7% 0.1% 9.1% 4.1% -5.0% -5.4% 4.1% 4.0 10.0 6.0 ANNUAL EXPIRATIONS AND REVERSIONARY POTENTIAL OTHER NL GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 29 NSI ANNUAL REPORT 2023 DEVELOPMENT AND RENOVATIONS In line with the prevailing difficult overall market conditions, NSI has revisited the risk/return prospects of its developments and decided to scale back its near-term initiatives. Laanderpoort was sold to ING in January 2024 for € 24m, which is the price for the existing Laanderpoort buildings, along with the plans, permits and agreements for its redevelopment. Vitrum has been leased on a flexible basis to generate some rental income, whilst the legal process to obtain permits for the redevel- opment continues to be pursued. The decision to postpone the Well House project was made in late 2022 and the project remains suspended until further notice. At year-end 2023 both the Laanderpoort and Vitrum assets were included in IPUC, as well as the accumulated capitalised costs for Well House. MOVEMENT TABLE INVESTMENT PROPERTY UNDER CONSTRUCTION TOTAL Balance 1 January 2023 59.1 Capital expenditure (Investments) 5.5 Capitalised interest 2.4 Revaluation -31.2 Transfer from / to operation 23.5 Balance 31 December 2023 59.2 Market value 31 December 2023 59.0 SUSTAINABILITY The share of Label A Energy Performance certificates increased to 95%, from 88% in 2023. The percentage Breeam ‘Very Good’ and ‘Excellent’ labels increased to 73% from 66% in 2023. NSI was awarded 5 stars in the GRESB sustainability assessment for the third year running and achieved 94 points, its best score to date, making it ‘sector leader at the Global and Regional levels’. NSI also obtained EPRA’s sBPR Gold award. NSI remains committed to staying below the CRREM reduction pathway for Dutch Offices. In 2023 NSI remained well below the Dutch average and reduced its energy intensity by ca 3% vs. 2022. As higher levels of efficiency are approached, marginal reductions become more difficult to achieve. 0 50 150 100 200 2020 2025 2035 2030 NL target NSI Actual NSI Forecast kgCO 2 e/m 2 /year 173 164 155 128 116 112 85 STAYING BELOW THE CRREM PATHWAY 85 KWH/M2/YEAR BY 2035 38% Excellent Very good Good Acceptable Pass No label 35% 13% 6% 0% 9% EPC ENERGY PERFORMANCE CERTIFICATES BY VALUE A++ AA+ B C D E F & G 29% 23% 29% 7% 6% 6% 2017 44% 26% 15% 5% 6% 4% 2018 74% 12% 12% 2% 2020 80% 7% 10% 2% 2% 2021 2023 65% 8% 4% 10% 13% 2022 61% 16% 15% 3% 3% 2% 2019 BREEAM BY SQM GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 30 NSI ANNUAL REPORT 2023 Net debt is down by € 21.0m compared to the end of December 2022. This is primarily due to disposals totalling € 33.9m (net of transaction costs) and partly offset by investments totalling € 19.5m. At the end of 2023 NSI has circa € 290m of committed undrawn credit facilities at its disposal. The average loan maturity is 4.5 years (December 2022: 4.7 years), with no loans maturing until 2026. This ensures sufficient flexibility and capacity. At year-end 83.6% of debt drawn is unsecured (91.2% of avail- able debt) due to a repayment of ca € 10m at the extension of the secured loan in June (from € 65m to € 55m). The average cost of debt has increased from 2.0% to 3.2% in 2023 due to the expiration of swaps and the closing of new swap contracts, and increased (short term) interest rates. LEVERAGE AND HEDGING The LTV is 33.0% at the end of 2023, 4.3 percentage points higher compared to December 2022 (28.7%), driven by negative revalua- tions of assets in 2023 and partly offset by lower net debt. The ICR stands at 5.5x at the end December 2023, compared to 6.3x at the end of December 2022. This is the result of higher net financing expenses and a slightly lower NRI during 2023, due to disposals. The ICR remains firmly above the 2.0x covenant. COVENANTS Covenant Dec. 19 Dec. 20 Dec. 21 Dec. 22 Dec. 23 LTV ≤ 60.0% 27.4% 29.2% 28.2% 28.7% 33.0% ICR ≥ 2.0x 6.8x 7.2x 6.5x 6.3x 5.5x NSI is using swaps to hedge interest rate risk on variable rate loans. Due to the expiration of € 148m of swaps and closing only € 55m of new swaps, the volume hedge ratio has decreased to 82.1% (target range: 70-100%) from 104.0% in December 2022. The weighted average maturity for the derivatives and fixed rate loans is 4.9 years at the end of December 2023. The maturity hedge ratio is 107.7% (target range 70-120%) BALANCE SHEET, NTA AND FINANCING In 2023 NSI has executed a necessary restructuring to limit the nega- tive impact of the forthcoming changes in the applicable corporate tax legislation in 2025. As a result NSI has transferred assets into (wholly-owned) separate legal entities in order to operate a model whereby NSI NV acts as an FBI with indirect investments in property. The various property owning subsidiaries are subject to normal corporation tax as per 2023. The capital structures of the subsidiaries are comparable with the financing structure of the group. Moreover, following IFRS guidelines, the balance sheet now includes a €38.7m deferred tax asset reflecting temporary differences between the book value of assets and liabilities and their values for tax purposes. NET TANGIBLE ASSETS EPRA NTA per end of December 2023 is € 711m, down 19.7% compared to the end of 2022 (€ 886m), largely as a result of a negative revaluation of the investment portfolio. Due to a small rise in the number of shares following the issuance of the stock dividend, EPRA NTA per share decreased by 20.1% from € 44.17 at the end of 2022 to € 35.30 at the end of 2023. FUNDING During the first half of 2023, NSI renewed its secured loan with Berlin Hyp for an amount of € 55m, whereby the maturity has been extended by four years from June 2023 to June 2027. An interest rate swap matching the maturity and outstanding amount on the loan has been closed at 3.3%, impacting the cost of debt. NET DEBT 31 Dec 2023 31 Dec. 2022 Change Debt outstanding 335.0 353.2 -18.2 Amortisation costs -1.4 -1.6 0.2 Book value of debt 333.6 351.6 -18.0 Cash and cash equivalents -0.2 -0.2 0.0 Debts to credit institutions 11.0 14.0 -3.0 Net debt 344.4 365.5 -21.0 46.0 42.0 38.0 36.0 34.0 32.0 30.0 44.17 44.0 2.01 -11.13 31 Dec. 2022 Dividend EPRA Earnings Revaluation Result on sales Corporate income tax Other Effect stock div. 31 Dec. 2023 40.0 -1.87 0.27 1.92 0.00 -0.06 35.30 BRIDGE EPRA NTA PER SHARE (IN €) GROSS INITIAL YIELD 50 40 50 40 50 40 55 290 2023 2024 2025 2026 2027 2028 2029 2030 2031 10 RCF undrawn RCF Term Loan BerlinHyp Athene Athene (2) Metlife Barings Pricoa GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 31 NSI ANNUAL REPORT 2023 CREATING A LANDMARK BUILDING TOGETHER WITH ITS FUTURE OCCUPIER Over the past years, NSI has worked closely with ING to design a future-proof office that meets the changing needs and demands of their organisation and its employees. The current Laanderpoort building will be redeveloped into a new, state-of-the-art and sustainable multi-purpose building, as part of an increasingly vibrant mixed-use submarket of Amsterdam. From the initial collaboration and lease agree- ments to the ultimate sale of the building, the entire process has been marked by a spirit of cooperation and innovation between the parties involved. Towards the end of 2019 NSI signed a cooperation agreement and lease agreement with ING for the redevelopment of Laanderpoort in Amsterdam Southeast.. Positioned adjacent to ING's recently estab - lished headquarters and strategically located near the Amsterdam Bijlmer Arena train station, Laanderpoort forms an integral part of the Amsterdam South East area—an emerging collaborative innovation district with ambitious growth prospects in the years ahead. BREEAM AND WELL AS BUILDING BLOCKS FOR THE DESIGN The design for the building emerged from an integrated design process, with NSI overseeing a multidisciplinary team responsible for the overall design. From the early start, there was an ambitious aim to create a highly sustainable building. Guided by the princi- ples of BREEAM and WELL, these frameworks not only provided direction but also served as a wellspring of inspiration. The focus extended beyond mere energy efficiency, encompassing the broader spectrum of the building's technical excellence, the well- being of its eventual occupants, and the construction process. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION EMBEDDING SUSTAINABILITY AND FUTURE-PROOF FACILITIES The outcome is a structure that achieves Paris-Proof status, demonstrating resilience to climate challenges while adhering to the most stringent sustainability standards in its design .It will have an energy label A++++, BREEAM Outstanding label, Combined Heat and Power installation (CHP), climate ceiling, climate class A, and PV panels. To collect rainwater, retention crates have been placed on the site, linked to an irrigation system. This also helps in capturing large amounts of water during large rainfall events to be climate resilient and better cope with changing weather conditions. The building will feature an accessible, transparent plinth with a restaurant and sports facility. The facilities can be visited by ING employees, local residents and students from neighbouring schools. In addition, much attention has been paid to the public space. The surrounding park will be extended from ING's head office Cedar and decorated with special planting to enhance biodiversity in the area. CLOSE COOPERATION LED TO RESULTS In close collaboration with ING and the Municipality of Amsterdam, NSI has obtained the irrevocable building permit, finalised the leasehold agreement and successfully concluded the tender phase for construction in 2023. With this, NSI has completed the development phase and prepared the building for the construc- tion phase. Sustainable demolition and construction choices, like circular demolition of the current building, were made in the process to minimise the negative impact of the works on the envi- ronment. 32 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 33 NSI ANNUAL REPORT 2023 SALE OF BUILDING Early 2024, NSI announced the sale of the current building, inclu- sive of plans, permits, and redevelopment agreements, to ING for a total consideration of €24 million. This transaction ensures the construction of this iconic building by its future occupier The redevelopment of Laanderpoort attests to the soundness of NSI’s development vision, wherein development initiatives provide exceptional opportunities to enhance office quality for our clients. The delivery of a 'ready to start' project, not only underscores the credentials of NSI's development team but also aligns seamlessly with NSI’s commitment to capital discipline. Whilst NSI has scaled back development in response to the distinctive and challenging circumstances that unfolded in 2023 development remains a core competency to the business. The team will continue to explore opportunities still embedded in the portfolio to add value and increase the overall quality and attrac- tiveness of the NSI portfolio. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION RISK AND CONTROL FRAMEWORK POLICY AND PROCEDURES RISK ACCEPTANCE RISK SECTORS STRATEGY STRATEGIC – Macro-economic environment – Market value of property – Changes in tenant demand – Cost of capital – Concentration – Competition – Sustainability - Transition – Sustainability - Physical risk of climate change OPERATIONAL – Quality of employees – Fraudulent transactions – Execution development projects – Maintenance – Supply chain – Tenant satisfaction – Data and cyber security – Calamities – Pandemic diseases COMPLIANCE – Integrity code and rules – Fraudulent transactions – Sustainability / health and safety legislation – Fiscal regulations FINANCIAL – Reporting – Liquidity – Interest rate volatility – Credit / counterparty RISK ASSESSMENT AND MONITORING GOVERNANCE The Management Board is responsible for the organisation, imple- mentation and functioning of the internal risk management and control systems that are geared to NSI’s business activities. NSI has an adequate risk management and internal control system in place. The Board is however aware that risk management and control systems cannot provide an absolute guarantee with respect to achieving the business objectives and preventing signi- ficant errors, losses, fraud or the violation of laws or regulations. RISK MANAGEMENT AND INTERNAL CONTROL The scope of the Supervisory Board’s supervision includes the design and operation of the internal risk management and control systems. The Audit Committee supports the Supervisory Board in the performance of this supervision. The Management Board and the Supervisory Board consider effective risk management to be a critical success factor whereby the ‘tone at the top’ is crucial. Ownership and management of all (identified) risks is assigned to the Management Board and is managed and monitored during the year in cooperation with senior management. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 34 NSI ANNUAL REPORT 2023 STRATEGY NSI has a long-term investment strategy for its real estate invest- ments and monitors the risks associated with its investment policy. Control measures have been implemented with regard to this policy and the monitoring of the ensuing results and effects. A system safeguarding the policy, guidelines, reporting systems and segregation of duties has been set up and put into opera- tion in order to execute these control measures. The organisa- tional structure and corporate strategy are focused on maximising shareholder returns with a conservative risk appetite. Sustainability is an integral part of NSI’s long term value creation strategy. Our business model is geared towards minimising our carbon footprint, offering and developing future-proof buildings and create healthy, inspiring and flexible working environments for our clients and employees RISK ACCEPTANCE AND RISK APPETITE In general, the total risk appetite of NSI is low to medium, in line with the company’s objective to generate consistent long-term results for its shareholders and other stakeholders such as its employees, tenants and suppliers. NSI has a clear strategy whereby it is active in high-growth Dutch locations in selected key cities in The Netherlands, with its primary focus on Amsterdam, in line with the global trend of urbanisation, with a well-defined asset strategy using clear acquisition and divest - ment criteria. During the past years, NSI increased investments in development of properties, which lead to a change in its risk profile. Inevitably, the implementation of the strategy involves incurring risk. Within this framework NSI is prepared to accept risks associated with doing business in the currently changing property market environment in a responsible and well-considered way, as well as in line with the interests of its stakeholders. Operational risks must be kept under control as well as possible, and NSI regu- larly reviews the effectiveness and efficiency of its operational processes for this purpose. The risk appetite regarding financial risks is low. NSI’s financial policy can be described as conservative, as evidenced by the conservative financing objectives stated in the strategy chapter. With regard to the risks associated with its assets and cash flows, NSI aims to be insured in a conservative way and in line with market practice where possible and financially responsible. The risk appetite in terms of compliance is zero, meaning that all laws and regulations must be adhered to. NSI and its employees must act with integrity, honesty and in compliance with laws and regulations. NSI has also formulated clear principles for this which are laid down in various codes and regulations. RISK AND CONTROL FRAMEWORK The NSI risk and control framework is based on the Enterprise Risk Management (ERM) model and the related COSO frame- work (developed by the Committee of Sponsoring Organizations of the Treadway Commission). The risk and control framework is assessed regularly; changes are made if required. NSI has an adequate risk management and internal control system In place. An important element of the internal control system is a management structure that enables effective deci- sion-making. Strict procedures are followed for the preparation of monthly, quarterly and annual reporting of results based on the company’s accounting principles. Annual and quarterly budgets and forecasts are prepared and set by the Management Board and approved by the Supervisory Board. Based on an integrated ERP system combined with a data warehouse, Business Intel- ligence tools and other applications, the internal management reporting system is designed to track developments in all relevant parts of the financial and operational results, as well as monitoring company performance using key performance indicators. A back-up and recovery plan is in place, making use of external data centres, to ensure that data is not lost in the event of a cala- mity or cyberattack. The Audit Committee discusses the findings of the external auditor regarding the company’s internal control environment with the Management Board and the external auditor, and moni- tors compliance with recommendations and follow-up action on comments made by the external auditor. Throughout the year, the findings of the internal audits were also discussed with the Audit Committee. In the year under review all important decisions with regard to the acquisition, redevelopment and divestment of properties were discussed and assessed during regular meetings of the Super- visory Board. Real estate transactions valued below € 20.0m may be entered into by the Management Board without the prior approval of the Supervisory Board. Transactions valued above € 20.0m require approval from the Supervisory Board. In 2023 the risk and control framework was reviewed by the Management Board. Based on this review, the assessment of impact and likelihood was adjusted in some instances. Other risks have been redefined to better reflect the actual risk. The completeness of the identified risks was discussed with the Audit Committee. RISK ASSESSMENT AND MONITORING NSI measures and assesses risks using tools including scenario analysis models in which the impact of variables can be set. The outcome of these models results in more awareness of the sensi- tivity of our business model and strategy. In addition, budgets and the periodically updated forecasts are based on the actual state of affairs in order to generate scenarios containing the most up-to- date information. High-impact risks are risks that could have a material impact on NSI’s income statement and / or the balance sheet, the compa- ny’s financing covenants or its reputation. Low impact risks have a limited impact on the company’s results or financial position. Risks that have an average impact could have a large enough impact to require an explanation should they occur, although not large enough to have a material impact on results. The likelihood of a risk occurring may be low but the possible impact may be high, as may be the case in the event of a large GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 35 NSI ANNUAL REPORT 2023 calamity. For this reason, NSI attaches equal importance to risks that are less and more likely to occur. NSI monitors the high- impact risks more frequent. By monitoring throughout the year, NSI assesses whether the estimated impact of all identified risks is still in line with the actual situation. RISK MANAGEMENT AND CONTROL IN 2023 As a result of changed market conditions and lack of liquidity in the market, the valuation of NSI’s properties was significantly adjusted downwards in 2023. At the same time, borrowing costs went up. Balance sheet management is however well installed. In 2023 NSI scaled back developments by pausing the Well House project. After closing date, in January 2024, the development project Laanderpoort, Amsterdam, was sold to ING. In June 2023, NSI renewed its secured loan with BerlinHyp, whereby maturity has been extended to June 2027. The first loan set to expire is now in January 2026, the average loan maturity is 4.5 years at 31 December 2023. At the end of 2023 NSI reported an LTV of 33.0% (31.5% after the sale of Laanderpoort in 2024) and an ICR of 5.5x, well within the covenants of respectively maximum 60.0% for LTV and higher than 2.0x for ICR. In 2023 a strategic review was done, of which the outcome was presented in the H1 results. Key elements of the revised strategy were: • Increased focus on the Amsterdam market; • Increased commitment to sustainability • A disposal programme to support further concentration of our capital where it can work best for shareholders; • Exploring partnerships where beneficial; and • Utilising retained earnings as a balance sheet management tool. During 2024 this strategy will be further rolled-out. INTERNAL AUDIT NSI appointed a third party for a three-year period to assist (co-sourcing) in fulfilling the internal audit function. The Company has not appointed an internal auditor as specified in best practice provision 1.3.1 of the Dutch Corporate Governance Code. At the end of 2021 a new internal audit plan was drawn for the period 2022 to 2024. The plan is based on a high-level risk assessment of NSI’s primary and supporting processes. The risk factors applied are based on qualitative factors like sensitivity to fraud, manual input, nature of the process, possible impact and number of transactions. This internal audit plan was discussed with and approved by the Audit Committee. For key and / or high-risk processes, this was a full scope review, aimed at the effectiveness of the design of the process as well as the effectiveness of the control measures. For a full scope audit, extensive testing of control measures and transactions took place. For medium or low risk processes a limited scope review was done, with a focus on reviewing the design of the control measures with limited testing of these measures. Based on the outcome, an action plan was made to make adjust- ments or improvements to the internal control procedures. Follow- up audits were performed on an annual basis to review whether prior year management actions were indeed taken. In 2023, the following processes were reviewed: • Real estate rental (full scope); • IT (full scope); • Valuation of investment property (limited scope); • Financing and liquidity management (limited scope). Overall, no significant findings were found in the audit of the design, implementation and operational effectiveness of the internal controls of the respective processes. Furthermore, a review of fraud risks in relation to the above-mentioned processes is also in scope of these audits. Also, no significant findings came out of this review process. A follow-up audit on the findings and recommendations of the processes which were reviewed in 2021 and 2022 was also performed. The progress with respect to the follow-up of the prior year audits was: 74% of the recommendations were completed, 18% is in progress, whereas for 8% follow-up still needs to be started. None of the recommendations that are still pending are considered significant. The results and findings of the audits were discussed with the Audit Committee, after which the outcome was assessed by and shared with the external auditor. FRAUD RISK ASSESSMENT The management of fraud risks is an integral part of NSI's risk management. In 2023, NSI has conducted a separate fraud risk analysis in order to assess whether potential fraud risks are adequately mitigated or controlled within NSI's internal control environment, to identify if there are any risks that are not (yet) adequately mitigated, and if there are shortcomings for which additional measures should be taken. Amongst others, for the fraud risk analysis, NSI used the information as presented in the publication by IVBN ‘Beheersing van frauderisico’s in de vast- goedsector’ (February 2018). For each process/activity, the potential fraud risks that could apply, and the control measures that are already in place, were identified. Activities were categorized in three main categories for this purpose; • General: Culture and Governance • Primary processes/activities (including acquisitions and dispo- sitions of assets, commercial and technical asset management and development of real estate); • Supporting activities. The main potential fraud risks related to our business are: anti- bribery and corruption (e.g. money laundering), transactions with fraudulent parties, self-enrichment and manipulation risk. This fraud risk analysis shows that, to the best of our knowledge, adequate mitigating measures are in place with respect to several fraud risks. The deeply implemented separation of duties and the way in which decision-making and power of attorney are embedded in a small organisation like NSI contribute significantly to this. Furthermore, the assignment of external appraisers in GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 36 NSI ANNUAL REPORT 2023 the valuation process and the standardisation of processes and formats in general are also important mitigating measures in this regard. The outcome and conclusions of the fraud risk assessment have been discussed in both the management board as the audit committee. As a result of this fraud risk assessment no major issues were observed. INTEGRITY CODE AND RULES In 2022, the existing Code of Conduct (based on the Code of Conduct published by the IVBN) was updated. All new employees receive the Code of Conduct, for which they have to sign-off. All employees need to (re-)confirm the integrity code and rules on an annual basis. The Code of Conduct of NSI is also applicable to suppliers with respect to chain responsibility. There have been no known incidents in relation to fraud or inte- grity in 2023. SUSTAINABILITY, HEALTH AND SAFETY Sustainability is an integral part of NSI’s long term value crea- tion strategy. As a real estate company, our business is exposed to both transition and physical risks and opportunities related to climate change. NSI deems that both climate change risks could become more material due to rapidly changing (compliance and reporting) legislation. As part of our risk assessment process these climate risks are fully integrated and NSI has identified the possible mitigating measures to implement to control the climate and financial consequences of those risks. Our sustainability ambitions are geared towards minimising our carbon footprint, offering and developing future-proof buildings and create healthy, inspiring and flexible working environments for our clients and employees. TRANSITION RISKS For each individual asset the level of sustainability has been assessed, including the identification of further required impro- vements (including the financial impact) in line with our ambition. This also applies to all transformation and renovation projects. We have improved the BREEAM credentials of our existing assets over the past years; as per yearend 2023 already more than 73% of the portfolio has a BREEAM score of ‘Excellent’ or ‘Very Good’. We aim to achieve at least BREEAM ‘Very Good’ for all existing assets by 2025 and where viable we will upgrade assets to BREEAM ‘Excellent’. NSI's portfolio is fully compliant with the energy label C obliga- tion which has become effective as from 1 January 2023. As per yearend 2023 95% of NSI's portfolio has energy label A or better. PHYSICAL RISKS Based on the risk assessment on property level done in prior years, existing mitigating measures were mapped and measures that are needed additionally to mitigate the risks were determined and prioritised. Additional costs needed are included in the finan- cial planning for the coming years. Further detailed information on sustainability can be found on pages 12 to 17 on environmental, social and governance performance. REPORTING Similar to in 2021 and 2022, NSI’s auditor PwC has provided a limited assurance opinion (page 120-121) on the reported sustainability and non-financial KPIs (pages 126 to 130) for the financial year 2023. This limited assurance is an intermediate step in the transition to an inte - grated annual report, in which the full sustainability information will be in scope in line with the Corporate Sustainability Reporting Directive (CSRD), which is applicable for NSI as from reporting year 2025. After having performed a high level gap analysis on CSRD readi- ness in 2022, NSI started with the double materiality assessment to determine its material ESG-topics in 2023. During 2024 this process is expected to be finalised, after which an in detail gap analysis will be performed and a planning will be made to close the gaps. Further details of the outcome of this analysis will be published in the 2024 annual report. DATA AND CYBER SECURITY The key applications supporting our business operation activities are SaaS solutions. The outcome of our review is that the risk of business interruption due to system failures is considered as very low. Given the upgrade to a full cloud based IT-environment and the absence of any local servers, the added value to perform a penetration test again is very low. Therefore, at the end of 2022, NSI selected a SOC / SIEM-provider (Security Information and Event Management / Security Opera- tions Center) as a preventive monitoring control for detecting and reporting any possible ransomware attacks or cyber security breaches. In 2023 no major issues were reported. DUTCH REAL ESTATE TAX REGIME - FBI Legislation has now been passed such that as of 2025 FBI’s can no longer directly invest in Dutch real estate. In 2023 NSI has executed a necessary restructuring to limit the negative impact of this change. NSI N.V. is set to remain an FBI up to the end of 2024, yet as a result of the restructuring the group will already start to pay tax in 2023 and in 2024. At the same time, a deferred tax asset has been accounted for as per December 2023. Throughout 2024 the implementation of the restructuring has to be completed by a.o. completing the transfer pricing framework, strengthening corporate housekeeping. NSI will keep in contact with tax authorities on further implementation and fiscal regulations. Losing the FBI regime is perhaps not all negative, as it opens up new opportunities for NSI to explore. For example, we could potentially sell development projects; we could set up JVs more easily to manage our overall capital / risk allocation more effecti- vely; we could explore fund management; and we could start to provide more types of services to our customers and potentially offer these directly (and make a margin). Currently, preliminary discussions by the Dutch Government to establish a new REIT regime are ongoing. NSI will closely monitor further developments in 2024 in relation to this subject. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 37 NSI ANNUAL REPORT 2023 STRATEGIC RISK Appetite: NSI pursues focus and growth (in defined locations) with a well-defined portfolio strategy by applying clear acquisition and divestment criteria. Within the framework, NSI is prepared to take risk inherent in the chosen strategy in a responsible way and in line with the interests of its stakeholders. Risk category Description of risk Mitigating measure Assessment Impact Probability Macro-economic environment Executive responsible: CEO The wider macro-economic and geo-political landscape and outlook has structural and cyclical implications for overall business activity in the country. Real estate is a cyclical industry that is impacted by these changes in business activity, potentially impacting tenant demand and investment demand. In turn this may impact property valuations and so our balance sheet. It may also impact our occupancy rates and thereby also our earnings and cashflow position. A structural or temporary imbalance between global supply and demand dynamics at the macro level in general could result in high levels of inflation, with a possible impact on revenues and level of costs. NSI invests only in the Netherlands, which historically has been politically and economically stable, and within the Netherlands NSI invests mostly in the G4 cities (Amsterdam, Utrecht, Rotterdam and The Hague), Eind - hoven and Leiden (life sciences real estate). These cities are seen as most robust in terms of economic outlook and tenant demand and generally have the best levels of transparency and liquidity in the transaction market. Most of NSI's rental contracts include an indexation clause. With respect to expenses NSI has fixed price contracts for electricity and gas. Below average High Market value of properties Executive responsible: CFO The market value of properties is fundamental to a capital intensive business as NSI, in particular in the calculation of NAV. There is an inherent risk that the properties in the portfolio are incorrectly valued, which may result in a misstated equity position, misstated indirect results, reputational damage and the potential for claims due to false expectations being generated among stakeholders. In the markets in which NSI operates property yields are lower as a result of which valuations have become more sensitive to yield shifts. Appraisals currently hardly reflect any transition costs (sustainability capex) to Paris-proof. The risk is that this will increasingly happen the coming years, which for certain assets may lead to lower valuations. The NSI property portfolio is externally appraised twice a year (on 30 June and 31 December) in line with the RICS valuation standards. NSI uses only a select number of reputable valuers to appraise its assets. NSI is focusing predominantly on high-quality proper - ties in the G4, Eindhoven and Leiden which are the most liquid markets, so that relevant and up to date compa - rable transaction evidence generally exists. NSI also ensures its internal asset data information is up to date so that all the relevant data is available to support the valuation process. NSI uses an internal LTV target range of between 35% - 40%, which is lower than the LTV debt covenant of 60%. This ensures that NSI has the capacity to absorb sudden adverse movements in asset valuations. For every asset in its portfolio NSI has calculated the (financial) impact and has set a realistic timeline to stay below the CRREM-pathway. This is incorporated in a long term capex and maintenance plan. The effects are also included in asset business plans and buy/hold decisions as part of regular asset rotation. In the underwriting of potential new property acquisi - tions, as part of the due diligence, NSI will perform an impact analysis of costs and benefits to upgrade the respective property to Paris proof. Above average High Change in tenant demand Executive responsible: CEO Our clients recognise that in addition to facilitating, where appropriate, working from home, a high quality and healthy workplace environment is key to attracting and retaining talent. As a result, the focus is increasingly on better locations, better services, more flexibility and adherence to the highest ESG standards. Working from home may also result in our clients selec - tively using less space overall. Furthermore, continued urbanisation will see tenant demand structurally concentrate in fewer locations. Not being able to meet future tenant demand may result in structurally high vacancy levels, resulting in lower financial results and lower valuations of NSI's properties. NSI is constantly evaluating whether its properties continue to meet the need of (potential) clients and whether changes are needed. NSI is focusing on high-quality, larger, efficient and sustainable properties in vibrant inner-city locations or near transport hubs, mainly in the G4. We believe this is where our potential customers want to be located and can find the relevant talent to run their businesses and where NSI, because of the multi-functional, vibrant location and size of the properties is able to provide relevant services on a profitable basis. Below average Above average Cost of capital / stock exchange listing Executive responsible: CEO Any listed company, in particular in real estate, is to a certain extent dependent on its shareholders to provide it with an attractive cost of capital. There is a risk that elements of the business are deemed structurally unat - tractive or that any small cap discount might be appli- cable resulting in a structurally high overall cost of capital, which could impair the ability of the business to be further developed. NSI has a clear strategy focussed on long term value creation for all stakeholders. NSI runs a focussed high quality portfolio on a cost efficient basis that should result in an attractive stable dividend. Furthermore NSI looks to generate value by active asset management, interesting acquisitions and by pursuing , value-add opportunities and a pipeline of profitable (re-) development opportunities. Furthermore, NSI follows an active Investor Relations strategy and focuses to provide transparency to contribute to an optimized cost of capital. High High 38 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION Competition Executive responsible: CEO By focussing on selective high-demand economic growth markets there is a risk that other investors see the same attractiveness of these locations and that competition for assets can be fierce. NSI offers a mix of space and services in locations where other landlords and serviced office operators are active. The risk is that the space / product of competi - tors is better, or more attractively priced. NSI has built up an extensive local network in the industry. This, in combination with our execution power and strong financing capacity, means we see most to market opportunities. NSI believes property is about location, sustainability and services. We pursue leading positions in all of these, to make sure our product offering is competi - tive. NSI also pursues a strong relationship with its customers and tracks its NPS score to understand if it still meets customer needs. Below average Above average Concentration Executive responsible: CEO A concentration of assets or activities in one market segment may result in a high correlation in the perfor - mance of these assets or activities. Whilst concentration can have a significantly adverse impact on the overall business in certain unforeseen circumstances, NSI takes the view that concentra- tion does not have to be a negative. it is better to be good in a few things in the most promising locations and develop regional market knowledge than being moderate in lots of markets. Whilst NSI’s portfolio has become more concentrated in terms of location in recent years, there is still plenty of diversity in terms of micro-locations, tenant profile, size, lease terms and lease conditions. Low Low Sustainability - Transition Executive responsible: CEO The risk whether a property is and will continue to be aligned to current and future sustainability require - ments, be it customer-led or regulatory-led. NSI will have to be able to anticipate and respond to changing legislation and changing needs and expecta - tions of our stakeholders with regard to sustainability standards, although these have not yet crystallised out. The risk of not being able to meet sustainability require - ments could reduce the attractiveness of our properties (and as such the demand for and value of our proper - ties) and impact our reputation, as well as the ability to attract new employees and the attractiveness of NSI's shares to (potential) shareholders. Worst case this could (for specific properties) result in the loss of our ‘license to operate’. The cost of sustainability and the transition to Paris proof is not solely a risk to the business, it is as much an opportunity. We identified this opportunity some time ago and sustainability has since been an integral part of our long-term value creation strategy. Sustainability is an opportunity for NSI as not all investors will have the knowledge, team or the capital to successfully transi - tion their assets to Paris-aligned, in a way that we have prepared for this. Sustainability has many perspectives. Our efforts are geared towards minimising the energy intensity of our portfolio andour carbon footprint. NSI actively tracks the status of its portfolio with respect to (new) codes and rules in the field of sustainability. For potential acquisitions (and for all new developments), the due diligence process includes an assessment of whether the asset complies with all the relevant codes and rules. We operate all properties in line with our ISO 50001 Energy Management system ensuring we measure, manage and monitor our energy performance. NSI is has established a roadmap for each individual property, to stay below the Dutch office CRREM path - ways, to reach our ambition of being Paris-aligned by 2035. NSI uses external parties to set-up and review its ESG reporting requirements. The external auditor provides limited assurance on the reported ESG data. High High Sustainability - Physical risk of climate change Executive responsible: CEO Due to unfavourable climate changes there is an increasing risk of physical damage to our properties (which cannot be fully covered by insurance) and the inability to offer the required quality and comfort level to the occupiers of the properties. The risk of not being able to meet the climate chal - lenges could reduce the competitiveness and as such the demand for our properties, which could have a negative impact on asset valuations and could result in reputational damage. NSI regularly performs an assessment of the current and future impact of the four relevant physical risks with respect to our real estate portfolio (on an individual asset level) and the health and wellbeing of the occu - piers of these properties. These physical risks consist of heavy rainfall and surface level flooding, river flooding and coastal surges, drought and heat stress. Based on this assessment to ensure risk mitigation, we redefine (improve) the building specifications & requirements (like quality of climate systems and water management systems) for both all refurbishments and new developments. Below average Below average Risk category Description of risk Mitigating measure Assessment Impact Probability 39 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 40 NSI ANNUAL REPORT 2023 OPERATIONAL RISK Appetite: NSI is actively managing its real estate portfolio, driving returns for shareholders through income generation and the pursuit of long term value-add. This comes in a mix of a stable pool of income-generating assets, in combination with asset rotation and the acquisition of potential (re-)development opportunities to provide potential growth. This implies an average risk appetite. Risk category Description of risk Mitigating measure Assessment Impact Probability Quality of employees Executive responsible: CEO An active real estate company relies on highly skilled employees to execute its strategic objectives. The risk is that NSI is unable to attract and retain talent (in particular key personnel) to further the business, due to the business strategy or wider reputation of NSI, but also due to shortages of qualified employees. A high employee satisfaction level and a good mental health of employees is key to the durable success of NSI. NSI management recognises recruiting and retaining the right employees is of the utmost importance. Management constantly evaluates the level and compo - sition of staff in light of its strategy and execution thereof and takes action if / when needed. NSI encourages employees to invest in themselves, offering both in-house and external training programs, providing regular feedback on performance, and offering competitive levels of remuneration. On a regular basis, NSI performs an employee satisfac - tion survey to obtain insight on how employees expe- rience the working environment and culture. Based on the outcomes, actions for improvement are identified and rolled-out. NSI recognises that a healthy work-life balance and having a meaningful role is the basis to having happy and productive employees. NSI recognises that selec - tive work from home can contribute to this. Above average Above average Supply chain / project sourcing Executive responsible: CEO During execution of development and maintenance activi- ties, unexpected circumstances in the supply chain may occur like scarcity of materials, lack of resources (e.g. labour, advisors and contractors) and increasing market prices. Supply chain disruption may also result in the default of financially weaker (sub)contractors. This may have a negative consequence in terms of timing and profitability of these activities. External advisors / specialists are regularly consulted to monitor (changing) market conditions. The financial standing and quality of references of contractors and subcontractors is reviewed prior to awarding contract(s). Within reason NSI aims to build in sufficient margin to absorb possible price changes or delays in projects or maintenance. Above average Below average Execution development projects Executive responsible: CFO This is the risk that NSI may not be able to success - fully turn the development plans into profitable, attrac- tive investment assets on completion related to factors like project management, stakeholder management, timing of activities, unidentified issues and / or inap - propriate product and service offering to meet evolving occupier needs (including sustainability expectations and requirements). This may result in weak leasing performance, reduced or delayed property returns and below target asset values at completion. NSI has established an internal development depart - ment to ensure adequate project development skills, know-how and experiences. Before any (re-)development project is started, all potential project risks are identified and assessed and - where possible - quantified in a risk budget. This risk assessment is periodically updated at the end of each project phase. External advisors / specialists are consulted as part of this risk assessment. When the return prospect of a project meets the internal hurdle rate, taking into account all costs (including a risk provision) and planning timelines, a project will receive approval for proceeding to the next phase. NSI could also decide to pause or to terminate a project before construction start based on the risk assessment. For each phase, NSI is evaluating whether the planning has to be adjusted and what the consequences may be on quality, timing, execution and profitability of the project. During construction, NSI will use an external party for construction management to monitor timing, quality and costs of the development project against the planning. Finally, NSI regularly reviews the medium and long term development pipeline and prioritises planning and execution of potential projects based on potential prof - itability, complexity and current market circumstances. Above average Below average 40 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION Maintenance Executive responsible: CEO Real estate requires regular maintenance and needs to be kept up to modern standards to remain attractive for potential tenants or buyers. Potentially there is a trade-off between delaying main - tenance to drive short term profits and long term value creation at a short term cost to results, with the risk that necessary maintenance is delayed. NSI prepares a multi-year maintenance planning for all assets. This is based on the input of tenants, suppliers, inspections (by third parties) and NSI's own technical department, taking into account NSI’s sustainability ambi - tions. A minimum precondition is that all properties have to comply with all prevailing laws and regulations. NSI complies with the minimum C-label EPC requirement as per January 2023. NSI is using suppliers with a good reputation in order to safeguard the quality and reliability of the building works. Below average Below average Tenant satisfaction Executive responsible: CEO The risk that rental income is impacted as a result of tenants not extending their contracts upon expiry, or by not signing leases to begin with, as a result of a low tenant satisfaction score that is widely acknowledged in the industry, increasing the vacancy ratio. To mitigate vacancy risk, NSI pursues a multi-tenant strategy, aiming for long term contracts and a stag - gering of lease maturities to reduce vacancy risk. NSI is actively engaging with its customers and timely anticipates maturing lease contracts, whilst regularly moni - toring tenant satisfaction. NSI is investing in its assets and its services in order to attract, retain and satisfy clients. When tenants do not renew their lease contract, NSI aims to have exit interviews to get valuable insights in the reasons why tenants are leaving. Below average Below average Data integrity / cyber security Executive responsible: CFO Professionally managing and controlling risks associ - ated with the continuity, availability, functioning and security (including compliance with prevailing privacy legislation) of the internal and external IT infrastructure and applications is of vital importance to NSI. T he implication of not fully controlling IT risks (such as disruptions due to cybercrime) is that systems supporting the primary business processes may not be available and lead to the loss of relevant information or unauthorised access to information by third parties, with damage to reputation and image as a consequence. One conse - quence is that NSI may not be able to report internally or externally in a timely or correct way, which may have a negative impact on the decision-making process. NSI focuses extensively on the security, continuity, quality, and availability of its information systems and data whereby it is advised by external parties. In the unlikely event of a calamity, there are procedures in place outlining regularly tested fallback and recovery scenarios, minimising the impact of disruption on the organisation. Business continuity and security are further supported by all core applications being cloud based. Below average Below average Calamities Executive responsible: CEO The risk of a calamity giving rise to extensive damage to one or more properties or to personal injury of people in the property, resulting in the potential loss of rental income, a lower direct and indirect result, and claims and legal proceedings by tenants. Reputational damage is also a risk. Internal processes and procedures have been set up by NSI which are firstly aimed at preventing calamities. Regular checks of the processes and procedures by internal and external experts ensure constant improve - ment and reducing the probability of calamities. Fire protection and access / security procedures are in place in all of our properties. Furthermore NSI is insured against damage to its real estate, liability and loss of rent during periods of recon - struction and rental lease terms common in the industry. Coverage against terrorism, floods and earthquakes is limited due to current market practice. The cover of risks is compared against the premium cost on an annual basis. Local insurance policies on a property are covered by an overall uniform umbrella insurance policy. Below average Low Pandemic diseases Executive responsible: CEO Pandemic diseases, such as the Covid-19 outbreak, could lead to economic recession and affects both people and assets. The above risk can threaten the safe operation of NSI’s properties, cause disruption of business activities and impact the well-being of our tenants as well as our staff. This may negatively impact the demand for office space, or the ability of our tenants to meet their rental obligations and may also result in a delay in the execu - tion of development projects. As such the risk can have a material adverse effect on our earnings, cash flow and financial condition. We seek to obtain the best possible information to enable us to assess the impact of such threats and risks. We conduct assessments for all our properties and activities, and implement appropriate measures to avoid, detect and respond to such risks. Below average Above average Risk category Description of risk Mitigating measure Assessment Impact Probability 41 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION COMPLIANCE RISK Appetite: NSI strives to fully comply with laws and regulations, meaning the risk appetite is zero. Risk category Description of risk Mitigating measure Assessment Impact Probability Integrity code and rules Executive responsible: CEO Unethical behaviour and breaches of applicable legis - lation and regulations, both by NSI staff as well as in NSI's supply chain, could result in reputational damage, claims and legal proceedings, leading to higher costs and a lower result. NSI has a general Code of Conduct and related regula - tions in place. NSI complies with the Dutch Corporate Governance Code and the Financial Supervision Act (Wet op het financieel toezicht). The Internal codes are updated regularly in line with new legislation or other relevant changes in the market place. All employees are regularly trained in the appli - cable rules, including the Code of Conduct, the Compli- ance Code, the regulations applying to the Management Board and the regulations applying to the Supervisory Board and its committees. Procedures have been set up to ensure compliance, including signing an attestation by all employees on an annual basis. Below average Low Fraudulent transactions Executive responsible: CEO The risk of NSI doing business with parties that are found not to operate in good faith, are fraudulent or have a bad reputation. It also concerns the risk of our employees being part of a fraudulent transaction. Both can have a negative impact on the results and reputation of NSI. NSI only wishes to do business with parties of good standing and reputation. A KYC check is a fixed element in the due diligence process for acquisitions and divest - ments, as well as for new lease contracts, new suppliers or for entering into new partnerships. NSI has a Code of Conduct, which periodically has to be signed by each individual employee. Furthermore NSI has a whistle-blowers' policy to enable employees to report any activity that he / she considers dishonest or illegal. High Low Sustainability / health and safety legislation Executive responsible: CEO The risk that the portfolio does not comply with prevailing laws and regulations in the field of Sustain - ability and Health and Safety. This could result in a situation in which properties can no longer be used (occupied) and/or fines are imposed resulting in a negative impact on the value and market - ability of the real estate properties. It could also result in reputational damage. NSI is continuously checking the status of its current property portfolio with respect to (new) codes and rules in the field of Sustainability and Health and Safety. In the case of new acquisitions or developments, the due diligence process also includes an assessment of whether the asset complies with all the relevant codes and rules. NSI includes a standard provision in its lease contracts that tenants must obtain owner’s approval before embarking on internal renovations (so that NSI can assess if the plans allow it to meet its own obligations such as fire safety). Lease contracts also stipulate that the tenant is responsible for any consequences as a result of these renovation works. Above average Below average Fiscal regulations Executive responsible: CFO NSI has the status of a Dutch REIT (known in The Neth- erlands as an FBI) in accordance with section 28 of the Dutch Corporate Income Tax Act 1969 (Wet op de Vennootschapsbelasting 1969). This means that NSI is subject to corporate income tax at a rate of 0%, provided that certain conditions are met. Failure to meet these requirements or a material change in the FBI regime could have a significant adverse effect on NSI, its results or financial position. In September 2023 Government published draft legisla - tion to abolish the FBI regime for direct investments in real estate per 1 January 2025. If this draft legislation becomes law NSI’s real estate assets would become subject to a normal corporate income tax rate. Meeting the requirements of the FBI regime has been a continuous area of focus for the Management Board over the years. In 2023 the FBI focus shifted towards pro-actively analysing, optimising and preparing a variety of meas - ures to be as ready as possible for 2025. This resulted in a significant internal restructuring in Q4 2023, with external advisors supporting this process. Pending the outcome of the final legislation or potential mitigating measures that may still be enacted in 2024, NSI will continue to monitor the situation and use the flexibility as provided by the Q4 2023 restructuring to adjust where necessary in its pursuit of an optimal business and fiscal model as per 2025. It is possible that NSI may exit the FBI regime early if it is deemed in the best interest of the company and its shareholders. That said, it is also still a possibility that NSI NV, the listed holding company, can and will remain an FBI per 2025 if that is deemed best and appropriate. High Very high 42 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 43 NSI ANNUAL REPORT 2023 FINANCIAL RISK Appetite: NSI has a conservative financial policy, meaning the risk appetite is low. Risk category Description of risk Mitigating measure Assessment Impact Probability Reporting Executive responsible: CFO The reporting risk relates to the impact of incorrect, incomplete or untimely available information (internal and external), amongst others caused by constantly evolving requirement and legislation, which may impact decision making or lead to reputational damage and potential claims due to late or misleading statements to stakeholders. NSI prepares and monitors a budget, investment budget and liquidity forecast, all of which are compared and updated with actual results on a quarterly basis. Reports are reviewed by management, as well as by finance and operational teams. Systems have been devised in such a way that checks can be performed on the data to safeguard the consistency and reliability of information. The half-year results are assessed by an external auditor prior and the full annual accounts are audited by the independent auditor. NSI employees regularly attend courses and meetings to be informed of all relevant laws and regulations so that all information produced by NSI complies with prevailing laws and regulations. Low Below average Liquidity Executive responsible: CFO Debt financing carries refinancing risks. The risk is that there is insufficient liquidity in place to meet the compa - ny’s obligations at the moment of interest payment or repayment, meaning that the company suffers repu - tational damage or is subject to potential additional financing costs, which may lead to a lower direct result. In the worst case, such a situation may lead to the default of one or more loans, or bankruptcy of the company. Risks related to not meeting financial covenants appli - cable to the various debt arrangements. The risk is also a lack of (re)financing availability due to increased ESG-requirements as a condition for providing funding by our financing partners, which NSI may not be able to meet. Furthermore the limited depth of the local Dutch finan - cial industry in terms of number of actors in connection with NSI's own relatively small size potentially limits the possibility to attract new unsecured funding. To limit liquidity risk, NSI has a strategy to diversify its external financing in terms of loan types, types of lenders, the maturity profile of its loans and repayment dates. NSI also has access to a flexible revolving credit facility (under which penalty-free redemption and draw - down of funds to agreed amounts are permitted). NSI addresses upcoming (re)financing maturities timely in order to decrease the risk associated with (re)financing and maintains a good and transparent working relation - ship with its financiers. NSI prepares a liquidity forecast at least on a quar - terly basis, in which it performs stress tests and uses scenario analyses to closely monitor its performance and financial indicators in relation to its financial and non-financial covenants and reports on this by means of compliance certificates. In extreme cases additional equity may be issued to deal with impending liquidity issues. Below average Below average Interest rate volatility Executive responsible: CFO Interest rate risks result from fluctuations in market interest rates. These fluctuations could potentially affect the interest expense in its financial reports and the market value of its derivative financial instruments. NSI, as a long term investor in real estate, is aiming to secure debt financing on similarly long maturities. NSI is using hedging instruments to manage the interest rate risks on variable rate debt. NSI does not intend to speculate on interest rates. Above average Above average Credit / counterparty Executive responsible: CFO Credit/counterparty risk exists when parties which have a debt to NSI are unable to meet their obligations to the company. In general, the risk is mitigated by the fact that NSI has a large number of tenants throughout a variety of sectors. For every tenant NSI performs a creditworthiness check before entering into a lease. NSI is pro-actively moni - toring its current tenant roster based on external infor- mation, on a regular basis, to assess whether changing circumstances have an impact on the overall tenant risk profile. NSI is pro-actively managing its debtor outstanding balances. In the case of financial counterparty risk, NSI only works with reputable financial institutions for its funding and hedging. In the case of suppliers a credit check is done in advance and furthermore NSI only works with reputable partners. Low Below average 43 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION INTERNATIONAL FINANCIAL REPORTING STAND- ARDS (IFRS) In accordance with European and Dutch laws and regulations NSI has prepared its financial statements for the 2023 financial year based on EU-IFRS. The EU-IFRS result after tax includes unrea- lised movements in the value of real estate as well as changes in the fair value of derivatives. NSI has decided to continue to report both its direct and indirect investment results in addition to its EU-IFRS result as it believes that these figures provide an important distinction. In the view of the Management Board the direct investment result is relevant information for investors and shareholders which provides a better insight into structural, underlying results than the EU-IFRS result which also includes unrealised movements. Furthermore, NSI reports figures and indicators based on the guidelines published by the European Public Listed Real Estate Association (EPRA). These results are included in the overview that is not a part of the EU-IFRS statements. MANAGEMENT STATEMENT The effectiveness and functioning of the internal risk manage- ment and control systems are discussed each year with the Audit Committee and the Supervisory Board. Taking into account the aforementioned risks and the measures designed to manage them, and in accordance with the best practice provision I.4.3. of the Dutch Corporate Governance Code, the Management Board declares that to the best of its knowledge: • the report provides sufficient insights in the effectiveness of the internal risk management and control systems and into any failings thereof; • the aforementioned systems provide reasonable assurance that the financial reporting does not contain any material inac- curacies; • based on the current state of affairs, it is justified that the finan- cial reporting is prepared on a going concern basis; and • the section on risk management in the report states those material risks and uncertainties that are relevant to the expec- tation of the company’s continuity for the period of twelve months after the preparation of the report.” With reference to Section 5.25c(2c) of the Financial Supervision Act (Wft), the Management Board declares that to the best of its knowledge: • the financial statements give a true and fair view of the assets, liabilities, financial position and profit of NSI and the companies included in the consolidation; • the management report gives a true and fair view of the situ- ation on 31 December 2023, the state of affairs at NSI and its affiliated companies during 2023, the details of which are presented in the financial statements, and that the management report describes the fundamental risks facing the company. 44 NSI ANNUAL REPORT 2023 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 45 NSI ANNUAL REPORT 2023 GREAT PLACE TO WORK NSI aspires to be a great place to work. We want our people to enjoy the best work environment, excellent training, fulfilling and diverse career opportunities, and all the support they need to develop to their full potential. NSI CULTURE AND MINDSET NSI has an open and inclusive culture in which diversity is consid- ered to be an added value. NSI aims to be a transparent, disci- plined, responsible organisation that thinks in terms of oppor- tunities. Furthermore, we like to keep it simple. We have clearly defined our core values, as can be found on page 45. Adhering to these core values will help NSI realise the full potential of its employees, shareholder investments and assets it acquires and operates. NSI incorporates these core values into its organ- isation and processes by hiring the best talent and by holding itself to the highest standards in an atmosphere of dedicated hard work, team spirit and fun. NSI encourages its employees to give feedback and urges the whole organisation to actively contribute to our ambition of becoming the leading Dutch real estate company. Safeguarding our corporate culture has management’s ongoing attention and is consistently a significant point of attention in internal meetings. Our ability to live up to these core values is included in our assessment and appraisal methodology and discussed in regular and year-end reviews. Moreover, our core values are integrated in job descriptions and NSI has an onboarding programme in place to familiarise new hires with the company’s cultural values. ORGANISATION STRUCTURE NSI has a lean and mean organisation in place, aligned with its focused strategy. The organisation is headed by a board consisting of the CEO and CFO (vacancy) and supported by a management team. The disci- plines represented in the management team are Asset Manage- ment, Investment Management, Development, Customer Excel- lence/HNK and Finance & Control. NSI is characterised by decentralised responsibilities, allowing the organisation to operate efficiently and empowering individuals to develop in their role, supported by a robust IT infrastructure and effective management information systems. The number of employees (headcount) increased to 67 at 31 December 2023 (NSI: 43, HNK: 24, 2022: 65, NSI: 48, HNK:17). For the company’s legal structure please refer to ‘The principles of consolidation’ on page 77: HEALTHY WORKPLACE The health and well-being of our employees and tenants is also one of the important pillars of NSI’s sustainability strategy. NSI’s efforts and ambitions in this respect are reported in more detail in the Sustainability chapter ‘The future is here’ (on page 12). NSI’s culture and mindset, in which employees are used to having a great deal of flexibility with regard to how they perform their tasks and taking on responsibilities, is proving to be supportive in the health and well-being of our employees. The sickness rate at NSI was 4.2% in 2023 (2022: 3.5%). NSI’s culture and its commitment to providing a healthy and inspiring working environment to its employees are reflected in NSI’s head office; offering a modern, healthy, flexible interior that perfectly matches the experience we want to offer to our tenants, including our employees. A workplace risk analysis was carried out in 2023. Based on this, improvements were made in lighting, office chairs and in adding more greenery. How to increase employee’s health and promote healthy habits in the workplace will be a key theme in 2024. EMPLOYEE ENGAGEMENT To keep employees informed and engaged, the Management Board regularly hosts sessions to inform the staff on the company’s performance and to highlight specific topics and projects. These sessions are being held after each quarter to elaborate on the quarterly results, and every mid-quarter to discuss other subjects. In 2023, specific attention was paid to “Shape your office space sustainable”, “Cybersecurity Awareness” and “AI & Real Estate”. Internal communications is supported by an active use of the intranet, where weekly new articles are being released and new employees are being introduced. HRM LEGAL CORPORATE SECRETARY MARKETING INVESTOR RELATIONS CFOCEO TREASURY ICT BUSINESS ANALYTICS ASSET INVESTMENT PROJECT DEVELOPMENT FINANCE & CONTROL CUSTOMER EXCELLENCE MANAGEMENT TEAM GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION AGE BREAKDOWN NSI EMPLOYEES 0% 5% 10% 15% 20% 25% <30 31-40 41-50 >50 YE 2023 YE 2022 YE 2021 YE 2020 YE 2019 46 NSI ANNUAL REPORT 2023 OUR VALUES We believe that a clear set of values creates a common feeling of identity. Our values set out the common beha- viours that support our purpose and define our culture: WE ARE TRANSPARENT We recognise that mutual trust can only really exist in an envi- ronment of openness, clear communication and consistent actions. Our success as a long-term investor hinges on us gaining and maintaining the trust of all stakeholders and we constantly focus on this. WE ARE DISCIPLINED Our internal and external procedures are befitting of a small and flexible organisation. The procedures provide clarity on how we act and operate. We only make promises we can keep. WE TAKE RESPONSIBILITY Our intrinsic motivation at NSI is to always do the right thing. We recognise and fully embrace the high level of responsibility that rests upon our shoulders as a publicly-listed company. As employees we are fully aware of the need to support our customers, colleagues and other stakeholders and we treat them with the utmost respect. We acknowledge and correct any mistakes we make and we learn from them. WE THINK IN TERMS OF OPPORTUNITIES We have a positive mindset and are always seeking solutions and new opportunities. This makes us versatile and enables us to add value for our customers, whilst we continue to develop ourselves. We will always address the risks associ- ated with an opportunity to come up with well-considered solutions. WE LIKE TO KEEP IT SIMPLE Complexity often confuses, creates uncertainty, a fuzzy demarcation of responsibilities and generally results in slow- downs and delays which in turn lead to inefficiency and high costs. We take decisions after thorough and substantiated deliberation, making sure our choice of structure, process and responsibilities are as clear and concise as possible for us and our stakeholders. WE ARE HERE TO STAY Our focus at NSI is on sustainability and the long term, both when it comes to the relationship with our customer, the perspective of the building, the location and the ever changing needs of users, and, but also with regard to the structure of our organisation and the interests of our share- holders. We are fully aware of short-term interests but will always favour the long term. TRAINING AND DEVELOPMENT Each individual employee is expected to develop, supported by HR and their manager, their personal development plan, to guide training needs and career perspectives. NSI provides ample training and development opportunities for all our employees. Employees are encouraged to take externally recognised courses by granting annual individual training budgets. NSI offers an online training platform offering all employees the possibility to strengthen their, mainly soft skills. In total employees spent 55 hours on this platform in 2023 (2022: 83). Employees are being encouraged to further exploit the training opportunities and to increase the hours of training. A campaign to highlight the importance of self-development will be launched in 2024. NSI uses the methodology of Profile Dynamics ® to further develop teams into even more effective teams. The analysis is a tool to assess if the profile match the type of work of an individual or (the composition of) a team, and can serve as starting point for coaching. A Profile Dynamics ® chart is also part of the onboarding tool kit for new employees. GENDER BREAKDOWN NSI AT 31 DECEMBER 2023 MALE 41.8% FEMALE 58.2% Female Male # % # % Management Board 1 100.0% Senior Management 4 33.3% 8 66.7% Operations 29 74.4% 10 25.6% Support Staff 6 40.0% 9 60.0% TOTAL 39 58.2% 28 41.8% Supervisory Board 2 50.0% 2 50.0% GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 47 NSI ANNUAL REPORT 2023 NSI TEAM HNK TEAM GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 48 NSI ANNUAL REPORT 2023 Successful grand opening of HNK Amsterdam Sloterdijk You're Welcome to a new way of working In September 2023, HNK Amsterdam Sloterdijk was unveiled, marking the inaugural HNK location that embodies NSI's refreshed vision for the flexible office concept. Centered on principles of hospitality, sustainability, well-being, and convenience, it sets the standard for the workspace of the present and future. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 49 NSI ANNUAL REPORT 2023 This new location has been developed in line with HNK's renewed vision: crafting workspaces singularly dedicated to fostering optimal growth for individuals and organizations. At the core of HNK's philosophy is the belief that enhanced well- being translates into improved work performance. This principle is reflected in the interior design of this location, where sustainability and comfort take centre stage. Space at your service Robert Sparreboom, Head of HNK: 'The landscape of the office market has undergone a profound transformation in recent years. In a time when you can work anywhere, he expectations placed upon a workplace have evolved significantly. Elements such as sustainability, flexibility, and individual preferences have assumed greater significance for employees, while organizations are avidly striving to maintain consistently engaged, motivated, and productive workforce. In today’s environment, we might not need an office, but that doesn't mean we don't want one. It is crucial to cultivate a demand that transcends the conventional, and in doing so, provide a level of hospitality that transcends expectations, delivering an experience that is truly unforgettable. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 50 NSI ANNUAL REPORT 2023 The focal point of the office is the lush greenery-filled lobby, reminiscent of a hotel entrance adorned with a towering 5-meter-high tree. The design, featuring natural and organic shapes, provides tenants and their guests with inviting spaces for both casual gatherings and quiet retreats. By contrasting the zones in a soft and colourful manner, the design provides an intuitive experience. The concept is activity-based, with each zone possessing its own identity. In 2023, new leases at HNK Amsterdam Sloterdijk were signed 13% above ERV. The building is now 96% let. In March 2024, the very first HNK location, dating back to 2012, HNK Rotterdam Scheepvaartkwartier, will be delivered to the new blueprint, following a comprehensive interior redesign, integrating all additional facilities that align with HNK's innovative vision. In response to these discerning insights, we proudly introduce HNK Amsterdam Sloterdijk – a location that integrates all the elements we deem essential and aligns perfectly with the evolving needs of forward-thinking organizations. It is a place where you instantly feel welcome and can work in a way that suits you. By facilitating all forms of work and interaction, HNK Sloterdijk establishes itself as an ideal flexible framework for modern organisations.' Enhancements have been made to facilitate and promote diverse working styles, including the introduction of a co- working space equipped with curved screens and revamped Herman Miller chairs, a library featuring a fireplace, a dedicated podcast studio, a wellness area, and a comprehensive restaurant with a bar. The meeting rooms are thoughtfully designed to cater to various purposes, whether it's a creative brainstorm, a board meeting, or an unforgettable event. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 51 NSI ANNUAL REPORT 2023 Our design approach is people-centered to ensure our buildings and spaces not only support office activities, but also support the well-being of its users and allow people to thrive. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 52 NSI ANNUAL REPORT 2023 In all HNK locations, music is played to suit the space and time of day, and a special fragrance has been developed to fit the HNK brand. Music stimulates our brain, including areas associated with emotions, it reduces stress and induces a feeling of relaxation. It has been demonstrated that the subtle presence of music has a positive impact on creativity and productivity. Smell has a significant impact on the perception and memory of a place. This is because smell is the only sense directly connected to the limbic system, the part of the brain responsible for motivation, emotion, and long-term memory. Scent can enhance productivity and creativity while reducing absenteeism. it is not wonder that scent marketing which has been increasingly utilised by hotels, in retail has found its way to the office industry. The meeting rooms are thoughtfully designed to cater to various purposes, whether it's a creative brainstorm, a board meeting, or an unforgettable event. The focal point of the office is the lush greenery- filled lobby, reminiscent of a hotel entrance adorned with a towering 5-meter-high tree. GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 53 NSI ANNUAL REPORT 2023 The food & beverage concept ‘The Social’ is offering great hospitality with a focus on sustainability, well-being and comfort. Let’s get social GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONMANAGEMENT BOARD REPORTINTRODUCTION 54 NSI ANNUAL REPORT 202354 NSI ANNUAL REPORT 2023 GOVERNANCE CONTENT Corporate Governance 55 ESG Governance 60 Details Management Board 62 Report of the Supervisory Board 63 Details of the Supervisory Board 69 FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 55 NSI ANNUAL REPORT 202355 NSI ANNUAL REPORT 2023 CORPORATE GOVERNANCE INTRODUCTION In this section NSI sets out a broad outline of the company’s corpo- rate governance and publishes detailed information about the matters specified in Article 10 section 1 a- k of the EU Takeover Directive. CORPORATE GOVERNANCE CODE As a public limited liability company in the Netherlands, NSI is subject to the Dutch Corporate Governance Code. The current Code was published on December 20 th , 2022. A detailed overview of the manner in which NSI complies with the provisions of the Dutch Corporate Governance Code and an expla - nation why or where NSI derogates from best practice provisions is published on the company website. NSI complies with all best practice provisions of the Dutch Corporate Governance Code, apart from best practice provision 1.3.1. The following section gives a broad outline of the company’s corpo - rate governance following the principles stated in the Dutch Corpo- rate Governance Code. OUTLINE OF NSI’S CORPORATE GOVERNANCE NSI N.V. is a Dutch public limited liability company listed on Euronext Amsterdam and has its registered seat in Amsterdam, the Nether - lands. NSI has a two-tier structure, with a Management Board and a non-executive Supervisory Board. The company’s highest authority is the General Meeting of Shareholders which is held at least once a year. 1. SUSTAINABLE LONG-TERM VALUE CREATION 1.1 SUSTAINABLE LONG-TERM VALUE CREATION The management board is responsible for the continuity of the company and its affiliated enterprise and for sustainable long-term value creation by the company and its affiliated enterprise. The management board takes into account the impact the actions of the company and its affiliated enterprise have on people and the environment and to that end weighs the stakeholder interests that are relevant in this context. The supervisory board monitors the management board in this regard. In the management report, the management board gives a more detailed explanation of its view on sustainable long-term value crea - tion and the strategy for its realisation, as well as describing which contributions were made to sustainable long-term value creation in the past financial year. 1.2 RISK MANAGEMENT The company has adequate internal risk management and control systems in place which are described in more detail in the chapter Risk management and control. The Management Board is respon - sible for complying with relevant laws and regulations, for identifying and managing the risks associated with the company’s strategy and activities and for financing the company. The Management Board reports to the Supervisory Board and the General meeting of Shareholders. 1.3 INTERNAL AUDIT FUNCTION The task of the internal audit function is to assess the design and the operation of the internal risk management and control systems. The management board is responsible for the internal audit function. The supervisory board oversees the internal audit function and maintains regular contact with the persons fulfilling this function. NSI has a comprehensive Internal Audit program and yearly executes several Internal Audits that are conducted by BDO accountants and reported to and discussed with the Audit committee. As is the case with many small, listed companies in the Netherlands, NSI has no separate department for the internal auditor function as specified in best practice provision 1.3.1. The Supervisory Board assesses annually whether the alternative set up and measures that have been taken by the Company are adequate, partly on the basis of a recommendation issued by the audit committee and considers whether it is necessary to estab- lish an internal audit department and includes the conclusions, along with any resulting recommendations and alternative meas- ures, in the report of the Supervisory Board. 1.4 RISK MANAGEMENT ACCOUNTABILITY The management board discusses the effectiveness of the design and operation of the internal risk management and control systems with the Audit committee and renders account of this to the Supervisory Board. 1.5 ROLE OF THE SUPERVISORY BOARD The primary duty of the Supervisory Board is to supervise the policies carried out by the management board and the general affairs of the company and its affiliated enterprise, as well as to advise the Management Board. In the performance of its duties, the Supervisory Board focuses on the interests of the company and its affiliated enterprise and on the effectiveness of the compa- ny’s internal risk management and control systems and the integ- rity and quality of the financial reporting. 1.6 APPOINTMENT AND ASSESSMENT OF THE FUNCTIONING OF THE EXTERNAL AUDITOR The external auditor is appointed by the General Meeting of Shareholders and attends the meeting of the Supervisory Board at which the financial statements are discussed and adopted in the presence of the Management Board. With respect to the financial year 2023 NSI publishes audited annual figures and reviewed semi-annual figures. NSI publishes a trading update for the first and third quarters, neither of which is reviewed or audited by the external auditor. PricewaterhouseCoopers Accountants N.V. was appointed as NSI’s external auditor in 2016. 1.7 PERFORMANCE OF THE EXTERNAL AUDITOR’S WORK The audit committee and the external auditor discuss the audit plan and the findings of the external auditor based on the work the external auditor has undertaken. The management board and the supervisory board maintain regular contact with the external auditor. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 56 NSI ANNUAL REPORT 2023 2. EFFECTIVE MANAGEMENT AND SUPERVISION 2.0 POLICY ON DIVERSITY & INCLUSION (D&I) The company has a D&I policy for the enterprise. The D&I policy sets targets in order to achieve a good balance in gender diver- sity and the other D&I aspects of relevance to the company with regard to the composition of the management board, the supervi- sory board, and senior management. For the degree of diversity in gender and gender identity in the Management Board, NSI applies a target of 50%. The target is that at least 50% of the Management Board consists of women or persons who identify themselves as women in terms of gender and that at least 50% of the Management Board consists of men or persons who identify themselves as men in terms of gender. This target is based on the current target size of the Executive Board of two people. In the event of a vacancy in the Management Board, when the Management Board consists of one person, the target figure does not apply. From January 1 st , 2023, until November 15 th , 2023, the target was achieved because the management board was 50% female and 50% male. As from November 15 th , 2023, there is a vacancy for the CFO position and the Management Board consists of one member only. Therefore the target figure currently does not apply. During the search process the Supervisory Board has been specifically looking for female candidates for the CFO position with the aim of again achieving the target in the first half year of 2024. For the degree of diversity in gender and gender identity in the Supervisory Board, NSI applies a target of 33.3%. The target is that at least 33.3% of the Supervisory Board consists of women or persons who identify themselves as women in terms of gender and that at least 33.3% of the Supervisory Board consists of men or persons who identify themselves as men in terms of gender. This target is achieved. From January 1 st , 2023, until June 16 th , 2023, the supervisory board was 40% female and 60% male. Since June 19 th , 2023, the supervisory board is 50% female and 50% male. For the degree of diversity in gender and gender identity in Senior Management, NSI applies a target of 25%. The target is that at least 25% of Senior Management consists of women or persons who identify themselves as women in terms of gender and that at least 25% of Senior Management consists of men or persons who identify themselves as men in terms of gender. This target is achieved. As per 31 st December 2023 Senior management was 33.3% female and 66.6% male. 2.1 MANAGEMENT BOARD COMPOSITION, SIZE AND DIVISION OF DUTIES The Management Board consists of two directors: a CEO and a CFO. Since 15 November 2023 there is a vacancy for the CFO position. Directors are appointed by the General Meeting. The procedure for appointment and reappointment is specified in section (h) below. The division of duties within the Management Board as well as the Board’s operating procedures are set out in the Articles of Association and the Management Board regulations which are made available on the company’s website. The functioning of the Management Board as a collective and the functioning of indi- vidual members is evaluated yearly. 2.2 SUPERVISORY BOARD COMPOSITION AND SIZE In accordance with the company’s Articles of Association, the Supervisory Board consists of at least three members. Members are appointed by the General Meeting of Shareholders. The Supervisory Board currently comprises four members. The proce- dure for appointment and reappointment is specified in section (h) below. The profile of the Supervisory Board specifies the size, diver- sity and independence of the board and the desired expertise and background of the Supervisory Board members and which competencies should be represented in the Board. The profile is published on the company’s website. The Supervisory Board strives to achieve a situation in which the experience and exper- tise of its members are appropriate in relation to the strategy and business activities of NSI, and cover specific areas of expertise, like financial management, sustainability and IT. The experience and expertise of the individual Supervisory Board members is detailed on pages 69 and 70 of this annual report. The Supervisory Board is composed in such a way that its members can operate independently and critically with regard to each other, the Management Board and any interests involved. All Supervisory Board members are currently independent within the meaning of best practice provisions 2.1.7 and 2.1.8 of the Dutch Corporate Governance Code. 2.3 SUPERVISORY BOARD ORGANISATION AND DIVISION OF DUTIES The division of duties within the Supervisory Board as well as its operating procedures are laid down in the company’s Articles of Association and the Supervisory Board regulations, both of which are made available on the company’s website. The Super- visory Board has appointed an Audit Committee, a Remuneration Committee and a Selection and Appointment Committee from within its ranks. The regulations of these committees can also be accessed via the website. 2.4 DECISION-MAKING AND FUNCTIONING In its monitoring, the Supervisory Board focuses on the strategy for realizing sustainable long-term value creation which has been established for this purpose, as well as on the targets derived from this strategy. The Supervisory Board also monitors the process of acquiring, divesting, and investing in real estate, the financial reporting process, and compliance with laws and regulations. The Supervisory Board monitors the internal control structure and procedures and the assessment of the risks faced by the company and its subsidiaries. During 2023 the systems and procedures functioned in accordance with their intended purpose and there were no issues that raised doubt as to whether the internal control structure and procedures functioned adequately. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 57 NSI ANNUAL REPORT 2023 The Supervisory Board reports to the General meeting of Share- holders. The functioning of the Supervisory Board as a collective and the functioning of theindividual members is evaluated yearly. 2.5 CULTURE NSI has a mature, open culture that encourages employees to speak up. The culture is aimed at sustainable long-term value creation for the company and its affiliated enterprise. The NSI Code of Conduct outlines the core values, the main integrity risks NSI may encounter in its business and the way it wishes to deal with these risks. The Code of conduct is published on the company’s website. 2.6 COMPLIANCE The Code of Conduct contains a procedure for reporting actual or suspicion of misconduct or irregularities. The management board monitors the effectiveness and compliance with the Code and reports about this in every meeting with the Audit Committee. 2.7 PREVENTING CONFLICTS OF INTEREST In accordance with its regulations, the Supervisory Board is responsible for decision-making in dealing with existing or poten- tial conflicts of interest between Management Board members, Supervisory Board members and the external auditor, on the one hand, and the company, on the other. Under the provisions of the Dutch Financial Supervision Act (Wet op het financieel toezicht or Wft) and EU-IFRS, the item ‘related parties’ in the annual finan- cial statements specifies transactions between the company and related parties, including members of the Management Board and the Supervisory Board, as well as transactions involving one or more related parties. The item also states to what extent such transactions were entered into at market conditions. No such transactions between the company and related parties took place in the 2023 financial year. 3. REMUNERATION 3.1 REMUNERATION POLICY – MANAGEMENT BOARD The General Meeting determines the remuneration policy for the Management Board, in accordance with the relevant statutory provisions. The Supervisory Board makes a proposal to that end. The remuneration policy focusses on sustainable long-term value creation for the company and its affiliated enterprise and takes into account the internal pay ratios within the enterprise. The ‘Remuneration Policy for Members of the Management Board of NSI’ is published on the website. 3.2 DETERMINATION OF MANAGEMENT BOARD REMUNERATION The Supervisory Board establishes the remuneration and other terms of service for members of the Management Board in accord - ance with the remuneration policy for the Management Board. 3.3 REMUNERATION – SUPERVISORY BOARD The Supervisory Board members receive a remuneration in accordance with the ‘Remuneration Policy for Members of the Supervisory Board of NSI’ which is published on the company’s website. The General Meeting determines the remuneration policy for the Supervisory Board, in accordance with the relevant statu- tory provisions. 3.4 ACCOUNTABILITY FOR IMPLEMENTATION OF REMUNERA- TION POLICY In the remuneration report, the Supervisory Board renders account of the implementation of the remuneration policy. The report is posted on the company’s website. 4. THE GENERAL MEETING At least one General Meeting is held every year within six months of the end of the company’s financial year. General Meetings of Shareholders are convened by the Management Board or the Supervisory Board. A legal term of at least 42 days applies between the convocation date of a General Meeting of Shareholders and the actual date of the meeting. The agenda of the general meeting shall list which items are up for discussion and which items are to be voted on. Listed items that are mentioned in best practice provi - sion 4.1.3 of the Governance Code shall be dealt with as separate agenda items. The topics mentioned in article 23 section 3 of the Articles of Association are discussed when applicable. Extraordinary General Meetings are held as often as the Manage- ment Board or the Supervisory Board deems necessary. Extraordi- nary General Meetings will also be held if the Management Board or the Supervisory Board is requested to that effect in writing by one or more holders of shares individually or jointly representing one-tenth or more of the issued capital, specifying in detail the subjects to be discussed. The 2023 Annual General Meeting of Shareholders took place on 21 April. The agenda specifying the topics addressed by this meeting, the explanatory notes and the minutes of this meeting are published on the company’s website. INFORMATION SPECIFIED IN ARTICLE 10 SECTION 1 A - K OF THE EU TAKEOVER DIRECTIVE EU Directive 2004/25/EC of 21 April 2004 (Takeover Directive) requires that companies the securities of which are admitted to trading on a regulated market publish detailed information in their annual report about the matters listed in paragraph 1 of Article 10 of the Directive. The following section contains this information about NSI. a Capital structure, classes of shares, rights and obligations attached to shares The authorised capital of the company is EUR 99,568,556.46 and is divided into 27,056,673 ordinary shares, each with a nominal value of EUR 3.68). At 31 December 2023, 20,155,221 shares were issued and fully paid up. The capital does not include secu- rities which are not admitted to trading on a regulated market in a Member State. Classes of shares There are no different classes of shares. All shares have equal en- titlement to the company’s profit and reserves. Shareholders have the right to cast one vote for each ordinary share held; Rights attached to shares The rights vested in the shares are laid down in the Company’s Articles of Association, which may be inspected on NSI’s website. All shareholders shall be authorised – either in person or through a person with a written proxy – to attend the General Meeting, speak at the meeting and vote at the meeting. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 58 NSI ANNUAL REPORT 2023 Shareholders who individually or jointly represent at least three percent (3%) of the company’s issued share capital may request that items be added to the agenda of the General Meeting of Share - holders. Such a request is granted if it is received in writing at least 60 days before the meeting, stating the reasons for said request. Obligations attached to shares Unless the provisions of article 2:80 of the Dutch Civil Code apply, the nominal amount shall be paid on a share when subscribing for that share, as well as the difference between the nominal amount and a higher amount if the share is subscribed for that higher amount. Payments on shares must be made in cash unless an alternative contribution has been agreed upon. Payments in another curren- cy than in which the nominal value of the shares is denominated can only be made upon approval by the company. b Restrictions on the transfer of shares NSI has not placed any restrictions on the transfer of its shares. c Significant shareholdings Notifications pursuant to the Dutch Disclosure of Major Holdings and Capital Interests in Securities-Issuing Institutions Act were received from holders of ordinary shares representing more than 3% of the company’s capital. According to the most recent notifi- cations, these interests were as follows: 31 December 2023 31 December 2022 ICAMAP Investments SARL 10.0% 10.0% BlackRock, Inc. 5.6% 5.8% Clearance Capital Ltd. 5.1% 3.1% Ameriprise Financial < 3.0% 5.1% d Securities with special control rights No securities with special control rights have been issued e The system of control of employee share schemes There is no employee share scheme granting rights to employees to acquire shares in the company or any of its subsidiaries. f Restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the company’s cooperation, the financial rights attaching to securities are separated from the holding of securities; Shareholders may cast their votes in person or by proxy. All reso- lutions of the General Meeting of Shareholders are passed with an absolute majority of the votes cast, unless a larger majority is required by law or under the Articles of Association. Deadlines for attending and exercising voting rights in General Meetings of Shareholders Shareholders – and those deriving their right to attend or to attend and vote from shares for other reasons – shall notify the Manage- ment Board of their intention to attend no later than the date stated in the notice convening the meeting and in the manner stated in that notice in order to be allowed to attend the General Meeting and (to the extent that they have a vote) to be allowed to participate in voting. The notice convening the meeting shall state the date by which the Management Board must have received the notification and the manner in which this notification must be given; this date may not be earlier than on the seventh day before the day of the General Meeting. NSI does not cooperate with the issuance of depositary receipts for its shares. g Shareholder agreements resulting in transfer or voting restrictions The company is not aware of any agreements between shareholders that may result in restrictions on the transfer of shares or restric - tions on the exercise of voting rights within the meaning of Directive 2001/34/EC. h The rules governing the appointment and replacement of board members and the amendment of the articles of association; Appointment and replacement of management board members The company is managed by a Management Board consisting of two members. The General Meeting shall appoint and dismiss the members of the Management Board. Each member of the Management Board will be appointed for a term of not more than four (4) years, and shall be eligible for re-election. The General Meeting may suspend or dismiss a member of the Man - agement Board at any time, providing the resolution to that effect is passed with a majority of at least two thirds of the votes cast that also represents more than half of the issued capital. The Supervisory Board shall be authorised to suspend any member of the Management Board at any time. Appointment and replacement of supervisory board members The members of the Supervisory Board shall be appointed by the General Meeting. A supervisory board member is appointed for a period of four years and may then be reappointed once for another four-year period. The supervisory board member may then be reap - pointed again for a period of two years, which appointment may be extended by at most two years. At the General Meeting only candidates whose names are stated on the agenda of the meeting can be voted on for appointment as member of the Supervisory Board. Each member of the Supervisory Board can at all times be suspended or removed from office by the General Meeting. A reso - lution to suspend or remove a member of the Supervisory Board requires a majority of two thirds of the votes cast, representing more than one half of the issued capital of the company. Amendment of the articles of association If a proposal to amend the Articles of Association is put to the Gen - eral Meeting, that proposal shall always be stated in the notice con- vening the General Meeting. The shareholders shall be given the opportunity to obtain a copy of the proposal, from the day when the proposal is filed at the com - pany’s offices until the day of the General Meeting. These copies shall be provided free of charge. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 59 NSI ANNUAL REPORT 2023 A resolution to amend the Articles of Association may only be passed by a simple majority of the votes cast at a General Meeting. i The powers of board members, and in particular the power to issue or buy back shares The Management Board is tasked with managing the company, in accordance with the law and the articles of association which may require the management board to obtain prior approval of the general meeting or of the Supervisory Board before making a decision or perform legal actions. The Management Board shall represent the company, unless Dutch law provides otherwise. Issuing of shares in general Shares can only be issued pursuant to a resolution of the General Meeting if the General Meeting has not designated this author- ity to another corporate body of the company for a period not exceeding five years. Unless otherwise decided, the designation cannot be revoked. The designation may be extended from time to time, for periods not exceeding five years. A resolution of the General Meeting to issue shares or to designate another corpo- rate body of the company authorised to do so can only take place at the proposal of the Management Board and after prior approval of the Supervisory Board. The resolution to issue shares shall stipulate the price and further conditions of the issue of the relevant shares. Upon the issue of shares, each holder of shares shall have a pref- erential right to subscribe for shares being issued in proportion to the aggregate nominal amount of his existing shares, unless such right is withheld by mandatory provisions of the law. The preferential right can be limited or excluded by the General Meeting subject to the formalities prescribed by law or by the corporate body of the company authorised to issue shares if it has been given this authority. Buyback of shares in general The company may acquire shares in its own share capital for no consideration. The company may also acquire shares in its own share capital for valuable consideration if and in so far as: a its shareholders equity less the purchase price for these shares is not less than the aggregate amount of the paid up and called up capital and the reserves which must be maintained pursuant to the law; b the aggregate par value of the shares in its capital which the company acquires, already holds or on which it holds a right of pledge, or which are held by a subsidiary company, amounts to no more than one-tenth of the aggregate par value of the issued share capital; and c the General Meeting has authorized the Management Board to acquire such shares, which authorization may be given for no more than eighteen months on each occasion, Any acquisition by the company of partly paid-up shares in its own capital or depositary receipts for those shares shall be null and void, notwithstanding the provisions of article 2:98 paragraph 6 of the Dutch Civil Code. Powers of board members, to issue or buy back shares In the General Meeting of Shareholders of 21 April 2023 the Man- agement Board was authorized to: • issue ordinary shares including the granting of rights to acquire ordinary shares after having obtained approval from the Super - visory Board limited to a maximum of 10% of the outstanding number of shares on the date of issue. This authorisation was limited to a period of 18 months, which period can be extended at a meeting of shareholders at the request of the Management Board and Supervisory Board. the Management Board was also designated as the body authorised to limit or exclude the pre- emptive rights that take effect upon the issue of ordinary shares or granting of rights to acquire ordinary shares (after having obtained approval to do so from the Supervisory Board). • buy back the company’s own shares on the stock market or otherwise, up to a maximum of 10% of the outstanding number of shares, on condition that the company may not hold more than 10% of the issued capital (after having obtained approval for this from the Supervisory Board). Ordinary shares can be acquired for a price that lies between the nominal value of a share and 10% above the average closing price of the share calculated over five trading days prior to the day of purchase. This authorisation was limited to a period of 18 months, which period can be extended at a meeting of shareholders at the request of the Management Board and Supervisory Board. j Change of control agreements The agreements that NSI has with its financiers include the provision that in the event of a change in the control of NSI, the financiers have the possibility of demanding that the loans be redeemed early. This could for instance come into effect after a successful public offer for the NSI shares. k Agreements between the company and its board members or employees providing for compensation if they resign or are made redundant without valid reason or if their employment ceases because of a takeover bid. The Company has made no agreements with members of the Executive Board or employees that provide for remuneration upon termination of employment resulting from a public bid within the meaning of Article 5:70 of the Financial Supervision Act. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 60 NSI ANNUAL REPORT 2023 ESG – GOVERNANCE The oversight of ESG matters is critical. ESG is overseen princi- pally by the Management Board. Our strategy and targets for energy consumption and carbon emis- sions are set and monitored by the Management Board. The respon- sibility for overseeing the day-to-day management is delegated to the management team. NSI has formed a dedicated sustainability committee who meets twice a month to address targets, imple - mentation and reporting of our ESG strategy. We have created an ESG coordinator role which is entrusted to the Investor Relations officer. Both members of the Management Board are part of this committee as well as key personnel from different disciplines in (technical) asset management, finance and reporting. For 2023 the focus of the ESG committee was: • Monitor progress ESG strategy and improve where necessary • Monitor the implementation of the Paris aligned investment plan • Completing ESG accounting manual • Monitoring non-Financial KPIs • EU taxonomy analysis and implementation • Advancing readiness for implementation CSRD ALIGNMENT OF PERFORMANCE TARGETS NSI aims to continuously improve our internal sustainability governance. This standard will help NSI implement a holistic envi- ronmental management system and improve our general sustain- ability performance. ESG ASSURANCE NSI’s independent auditor PricewaterhouseCoopers Accountants N.V. has provided a limited assurance on a selection of the reported sustainability and non- financial KPIs for the financial year 2023. In scope are 19 KPI’s in the field of Energy, Water, Waste, Greenhouse Gas Emissions, Certification and Social (full list outlined in the glos - sary on page 143-144). This limited assurance is an intermediate step in the transition to an integrated annual report, in which the full sustainability information will be in scope in line with the Corpo - rate Sustainability Reporting Directive (CSRD), which will come into effect for NSI on 1 January 2025. NSI started with the CSRD double materiality assessment in 2023, which will be finalised in 2024. Based on the outcome, a gap anal - ysis will be performed and further actions will be planned in prepa- ration to implementation during 2025. OTHER NON-FINANCIAL DISCLOSURE DIVERSITY AND INCLUSION NSI established a diversity and inclusion policy in 2023. See page 57 for more information. COGNITIVE DIVERSITY NSI welcomes diverse talents and is keen on including multiple perspectives, thereby leveraging inclusion on a cognitive level. NSI strongly believes that collaboration between people with different thinking styles, habits and perspectives brings about better outcomes. NSI has incorporated the ‘Profile Dynamics’ methodology to measure how different perspectives, competences and value systems are repre - sented in the organization. The Profile Dynamics ® tool is also being used as a reference point in appointments and recruitment activities. EQUAL PAY NSI aims for a balanced gender breakdown and is committed to provide equal pay for equal work. The current gender pay gap is largely driven by the structure of our workforce, including the higher representation of men in senior management roles and a higher repre - sentation of women in operations (HNK hosts), varieties in tenure, job level and specific expertise. NSI aims to improve the gender balance at all levels of the organisation, and the related gender pay ratio, and explicitly takes this into account when filling vacancies. Female Male Gender pay ratio # % # % Management Board 1 100.0% 1.18 Senior Management 4 33.3% 8 66.7% 1.33 Operations 29 74.4% 10 25.6% 2.44 Support Staff 6 40.0% 9 60.0% 1.17 TOTAL 39 58.2% 28 41.8% 2.03 Supervisory Board 2 50.0% 2 50.0% * Male average pay/ Female average pay Management board ESG committee (drives policy) Execution in all operations Personal and corporate sustainability targets are embedded into the annual performance goals of each employee at NSI. The board of directors also have these annual performance ESG goals. Some of the sustainability goals include further improvement of ESG knowledge of our employees. NSI also encourages employees to contribute and share knowledge through specific knowledge sharing events. DISCLOSURE AND REPORTING Progress on sustainability is fully disclosed to all stakeholders in the Annual Report and online in our sustainability report. NSI’s non-financial performance is measured and communicated considering the following standards, regulation and bench- marking tools: • GHG Protocol Corporate Standard • GRI Standards • EPRA • GRESB methodology • CRREM • EU Taxonomy The gender split is calculated as per year end. The gender pay ratio is based on all employees who were employed at NSI for more than 6 months in the reporting period. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 61 NSI ANNUAL REPORT 2023 HUMAN RIGHTS NSI supports the principles laid down in the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises. We believe that human rights, as defined by the United Nations in its Universal Declaration of Human Rights, are a common standard that all employers should uphold, and we encourage our employees as well as our contrac- tors and suppliers to respect these rights by committing to our Code of Conduct and business integrity principles as part of our general terms and conditions. No issues involving human rights were reported in 2023. ANTI-CORRUPTION NSI and its employees must act with integrity, honesty and in compliance with the laws, as stipulated in the company’s Code of Conduct. The Code of Conduct also defines how employees should act when presented with gifts and provides guidance on how to prevent conflicts of interest. The Code of Conduct is available on the company website. NSI’s whistle-blower procedure allows employees to report suspected irregularities of various kinds within NSI without jeop- ardising their employment. There were no issues reported in 2023. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 62 NSI ANNUAL REPORT 2023 DETAILS MANAGEMENT BOARD Mr B.A. Stahli (1971) CEO of NSI Nationality Dutch Previous positions Head of European Real Estate and member of the Management Team at Kempen & Co Securities, Head of European Real Estate Research at Merrill Lynch London, Head of Global Real Estate Securities Fund at Aegon, Analyst US and Portfolio Manager Asia Real Estate Securities at APG Education Economics at the Vrije University Amsterdam, CFA Charterholder, CFA Institute First appointment 1 September 2016 Current term To 31 August 2024 Mrs A.A. de Jong (1975) CFO of NSI (until 15 November 2023) First appointment 15 September 2017 Current term Mrs de Jong resigned as per 15 November 2023 FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 63 NSI ANNUAL REPORT 2023 REPORT OF THE SUPERVISORY BOARD TO THE GENERAL MEETING OF SHAREHOLDERS We, the Supervisory Board of NSI N.V. (NSI), hereby present you with the annual report prepared by the Management Board for the 2023 financial year. PricewaterhouseCoopers Accountants N.V. has audited the financial statements and has issued an unquali- fied opinion (page 113-119. We will recommend that the financial statements be adopted at the General Meeting of Shareholders on Friday 19 April 2024. The discharge of the Management Board in respect of the policy pursued in 2023 and of the Supervisory Board from the supervision it provided in 2023 will be addressed as separate agenda items at this General Meeting of Share- holders. COMPOSITION OF THE SUPERVISORY BOARD At the start of 2023 the Supervisory Board consisted of five members. On June 19th 2023 Mr Harm Meijer has stepped back from his position as Supervisory Board member. The Supervisory Board is very grateful for Mr. Meijer’s support and for the many contributions he has made to the transformation of NSI since 2016. From 19th June until 31 December 2023 the Supervisory Board consisted of four members. A search for a new member was initiated which has resulted in the appointment of Mrs. Marlies Janssen in the EGM of 28 February 2024. From 28 February until 19 April 2024 the Supervisory Board will temporarily consist of five members. At the AGM of that day Mrs. Karin Koks will have served two terms as member of the Supervisory Board and will rotate off as member of the Supervisory Board. The Supervisory Board intends to propose to the AGM of 19 April 2024 to decrease the number of members of the Supervisory Board from five to four. INDEPENDENCE In the opinion of the Supervisory Board the independence require- ments referred to in best practice provisions 2.1.7 to 2.1.9 of the Dutch Corporate Governance Code have been fulfilled. In relation to best practice provision 2.1.8.vi it is noted that Mr. Meijer is a shareholder in ICAMAP Investments SARL, which is holding more than 10% of the shares in NSI. Mr. Meijer has decided to step back from his position as Supervisory Board member as per June 19th 2023 to ensure that his positions as Supervisory Board member of NSI and managing director of NSI’s largest shareholder would not give cause for any potential or perceived conflict of interest. RESIGNATION ROTA FOR SUPERVISORY BOARD MEMBERS First appointment End of current term End of Second term Jan Willem de Geus 2021 2025 2029 Karin Koks- Van der Sluijs 2016 2024 2024 Margreet Haandrikman 2017 2025 2025 Jan Willem Dockheer 2020 2024 2028 Marlies Janssen 2024 2028 2032 DUTIES The role and responsibilities of the Supervisory Board, its compo- sition and how it carries out its duties are specified in the Super- visory Board regulations which are posted on the company’s website. A summary of the duties of the Supervisory Board can be found in the Corporate Governance section (pages 55-59). MEETINGS AND ATTENDANCE The Supervisory Board physically met on ten occasions during the year under review and held four calls. The attendance (rate) at these meetings and calls was as follows: Attendance during 2023 De Geus Koks Haandrikman Meijer Dockheer Supervisory Board meetings 88,1% 88,1% 100% 100% 97,6% Committee meetings 100% 100% 100% 100% 100% The 2023 Attendance percentage of Mr Meijer was calculated on the basis of the meetings during which he was a member. REPORT OF THE ACTIVITIES OF THE SUPERVISORY BOARD Ten meetings were regular Supervisory Board meetings which commence with a preparatory meeting which is held without the Management Board being present, after which the members of the Management Board attend the rest of the meeting. During these regular meetings the general state of affairs and the compa- ny’s financial position were discussed. STRATEGY The Supervisory Board engaged on several occasions in discus- sions with the Management Board regarding the implementa- tion of the sustainable long-term value creation strategy. These discussions encompassed various aspects, such as the ambi- tion to reduce the actual energy intensity of all our buildings in line with the aims of the Paris agreement, the implementation of the business plan, the budget and targets, shareholder relations, proposals for acquisitions and disposals, development projects and the main risks associated with the company and the meas- ures taken to mitigate them. Market developments and the effects on the composition of the real estate portfolio as well as the occupancy rate were frequently discussed and assessed. Matters including the value of real estate and valuation methodologies, the system of internal controls and risk control procedures, and corporate governance also had the Supervisory Board’s constant attention. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 64 NSI ANNUAL REPORT 2023 During meetings on 24 January, 17 and 18 April, 12 July and 11 October as well as during calls on 25 January, 19 April, 13 July and 12 October , the Supervisory Board convened to monitor the implementation of the company’s strategy, to approve the quar- terly, half year or full year results and (interim)dividends and to discuss the pertaining press releases, making sure our share- holders and the broader market were adequately informed about the state of affairs and financial position of the company and about its outlook. STRATEGIC REVIEW The Supervisory Board has been closely involved in the strategic review process that was initiated In Q4 2022 in view of the poten- tially significant implications of the likely forthcoming FBI abolish- ment and of several other important changes in the market condi- tions. A range of strategic options that had been identified by the Management Board as well as the outcome of feasibility studies and expert advice about the various options have been presented to the Supervisory Board and subsequently discussed in various meetings during the year. The Supervisory Board appreciates the careful process that the management Board has followed during this review in which major investors and other important stakeholders were given the opportunity to give their view. The revised strategy that has been developed for realising sustain- able long-term value creation has our full support. EVALUATIONS; CONCLUSIONS AND ACTIONS On 24 January 2023 the Supervisory Board convened to discuss the functioning of the Management Board as a whole and of the individual members of the Management Board. The conclusions drawn from these evaluations were shared with the Management Board, used to assess the attainment of personal targets under the Short-Term Incentive for the CEO and CFO and used as input for setting targets for the Management Board for 2023 under the Short-Term Incentive plan. On 10 October the Supervisory Board evaluated the functioning of the management board as a whole and that of the individual management board members in light of the succession planning of the Management Board and the search for a new CFO. On 12 July the Supervisory Board conducted an evaluation of its own performance, along with the functioning of the various committees of the Supervisory Board, in particular the supervi- sion of Real Estate matters and the functioning of the Real Estate Committee. The following points were taken into consideration: • Historically – especially during the execution of the asset rota- tion programme between 2017 and 2021 - a significant portion of the Real Estate Committees activities consisted in evalua- ting and approving numerous small and medium sized divest- ment and reinvestment decisions. • The regulations of the Real Estate Committee delegated Supervisory Board decisions about divestments, acquisitions and investments with a value between €5mio and €20mio to the Real Estate Committee. • Moving into 2022 the committees agenda shifted more towards the advisory role on large scale development projects and on NSI’s strategy, especially with regards to the composition of the portfolio and the transformation thereof to become fully aligned with the Paris Agreement in 2035. • Consequently, in March 2022 the Supervisory Board had already decided to extend the size of the Real Estate Committee from two to three persons by appointing the chairman of the Super- visory Board as an additional member. • Throughout the remainder of 2022 and the first HY of 2023, there were hardly any small (<€20 million) purchase and sale transactions that fell within the delegated jurisdiction of the Real Estate Committee. • During this period, it became increasingly clear that not only Real Estate Committee members needed continuous access to the state of affairs of the portfolio and the large and complex Development projects but other Supervisory Members also needed this information on a continuous basis to fulfill their supervisory responsibilities effectively On 8 June 2023 the Meetings of the Real Estate Committee and the Supervisory Board had already been combined for this reason. The Supervisory Board concluded that following the resignation of Harm Meijer as a member of the Supervisory Board and as chair of the Real Estate Committee in June merely filling his vacancy would not be adequate but that in fact the size of the Real Estate Committee would have to be increased further to the size of the entire Supervisory Board. Instead, to reduce complexity, the Supervisory Board has decided to dissolve the Real Estate Committee and let the tasks of the Real Estate Committee flow back to the (full) Supervisory Board. This also allowed for a decrease in remuneration fees for separate Committee memberships. The regulations of the Real Estate Committee further charged this Committee with annually discussing a portfolio strategy and investment plan submitted by Management Board based on the Asset Business Plans for each asset, as a preparation for the Business Plan and Budget. This task has been taken up by the Supervisory Board. To properly redistribute the role and responsibilities of the Real Estate Committee to the Supervisory Board and the Management Board the Supervisory Board meeting of 29 September adopted revised Regulations thereby increasing the mandate of the Management Board for individual transactions and investments. The annual discussion of the Asset Business Plans, portfolio strategy and investment plan with the Management Board now takes place in the Supervisory Board, with the partici- pation of the relevant members of the Asset Management, Development and Investment Teams. In this meeting, the Management Board discusses and agrees with the Super- visory Board on plans for the investment portfolio including preferred investments in sustainability, required maintenance and options for property divestments. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 65 NSI ANNUAL REPORT 2023 On 3 November 2023 a separate Supervisory Board meeting was held for this purpose. In its meeting of 12 July, the Supervisory Board also looked into its succession planning in view of current and future vacancies and eval - uated the existing and required composition, competencies exper- tise, experience and diversity of the Board as defied in its profile. Based upon this evaluation a profile for a new Supervisory Board member was drawn up that would allow the Supervisory Board to propose to the AGM of 19 April 2024 to decrease the number of members of the Supervisory Board from currently five to four. At the meeting of 8 December 2023, the Supervisory Board discussed any other positions held by the members of the Management Board and Supervisory Board. DUTCH CORPORATE GOVERNANCE CODE 2022 The Supervisory Board and the Management Board have discussed the new Dutch Corporate Governance Code 2022 and assessed where, compared with the Code adopted in 2016, the principles and best practice provisions in the new Code required changes to rules, regulations, procedures or other written records. On 8 December 2023 the Supervisory Board adopted revised regulations specifying the role and responsibilities of the Supervi- sory Board, the Audit Committee, the Remuneration Committee and the Selection and Appointment Committee. On 8 December 2023 the Supervisory Board and the Manage- ment Board jointly adopted an updated Diversity & Inclusion Policy for the Company. On 8 December 2023 the Supervisory Board approved, and the Management Board adopted a revised regulation specifying the role and responsibilities of the Management Board. All regulations are posted on the company's website. In accordance with the recommendation of the Monitoring Committee Corporate Governance Code the chapter in the Report of the Management Board broadly outlining the corporate governance structure and compliance with this Code (see pages 55-59) will be submitted as a separate agenda item to the General Meeting of Shareholders of 19 April 2024. FBI & CORPORATE RESTRUCTURING On several occasions the Supervisory Board has discussed with management the announced intent of Government to exclude Real Estate from the Dutch Investment Trust regime (FBI) as per 1 January 2025. Given the uncertainty surrounding the implementation of this measure the discussions centred on both management’s efforts to lobby for a reversal, and on preparations in case the exclu- sion would materialize. Meanwhile legislation has been enacted such that, as of 2025, FBI’s can no longer directly invest in Dutch real estate. The Management Board has executed the necessary restructuring to mitigate the negative impact of this legislative change with the approval of the Supervisory Board. As a result, the number of subsidiaries has substantially increased as each asset is now owned by a separate legal entity. BUSINESS PLAN & BUDGET On 3 November the Supervisory Board discussed the Asset Business Plans of the Company, and the Portfolio Strategy put forward by management. These discussions lead to an update of the five-year Business plan (period 2024-2028) and the Budget for the following year (2024) which were discussed in the meeting of 8 December of the Supervisory Board. In these discussions about the strategy the Board focussed on the implementation of the strategy and feasibility of different scenario’s, the company’s operational, financial and ESG goals and their impact on NSI’s future position in the real estate market, the interests of stakeholders and other aspects important to the company, such as sustainability and integrity. In the meeting of 8 December of the Supervisory Board has approved the 2024 – 2028 Business plan and the Budget 2024. The Business plan is based on a total return and cost efficiency approach, focusing on the “as-is” real estate portfolio, on the (re)- Development of existing locations and on the implementation of the Paris Aligned investment roadmap. The budget for 2024 is in accordance with this plan. RISK MANAGEMENT, INTERNAL AND EXTERNAL AUDITING Throughout 2023 the Supervisory Board maintained regular contact with the external auditor, primarily during the meetings of the Audit Committee. In the meeting of 8 December 2023, the Audit Committee reported on the draft 2023 management letter of the external auditor and the Risk-and Control framework of the company, in particular the analysis of the identified risks associated with the strategy and activities of the company, the risk appetite and the mitigating measures that have been put in place to manage the risks. In the same meeting the audit committee reported on the func- tioning of, and the developments in the relationship with the external auditor. The discussion of the effectiveness of the internal risk management and control systems during the year was post- poned and took place on 22 January 2024. INTERNAL AUDIT FUNCTION The Internal Audit Function is established by, and positioned independently under, the Management Board. The Internal Audit Function is part of the portfolio of the Chief Financial Officer, the execution of the Internal Audit Function is outsourced to a qualified service provider. The Management Board reviews the services provided by the external service provider and appoints the external service provider after obtaining advice from the Audit Committee The Chief Financial Officer is the delegated principal for the Internal Audit Function on behalf of the Management Board. The Internal Audit Function (external service provider as executor of the Internal Audit Function) has a functional (escala- tion) reporting line towards the Audit Committee. NSI has no separate department to perform the internal audit function. The Supervisory Board assesses annually whether adequate alternative measures have been taken and whether it is necessary to establish an internal audit department. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 66 NSI ANNUAL REPORT 2023 In the Supervisory Board meeting of 8 December 2023, the Audit Committee reported about the effectiveness of the internal and external audit function. In line with a recommendation by the Audit Committee issued in consultation with the external auditor and the Management Board, the Supervisory Board has considered that NSI has a compact organization, no activities outside the Nether - lands, and operates in a very limited number of market segments. Given the fact that NSI uses external expertise to conduct internal audits based on an internal audit plan that is composed in consul - tation with the Audit Committee, the Supervisory Board is of the opinion that adequate alternative measures have been taken and that there is therefore no need to establish an internal audit depart - ment for this purpose. In accordance with an internal audit plan approved by the Supervisory Board a number of internal audits will be conducted under the supervision of the CFO in 2024. PRIOR APPROVAL OF DECISIONS BY THE MANAGEMENT BOARD Important decisions above a certain threshold require prior approval from the Supervisory Board. Decisions on acquisitions, investments and disposals up to a threshold of €20 million are made solely by the Management Board. During the approval process the Supervisory Board assesses whether the proposed decision contributes to the implementation of the strategy including the ESG ambitions and criteria. In various meetings during the year the Supervisory Board dealt with acqui- sition opportunities of offices and with various development and redevelopment opportunities. DEVELOPMENT In 2023 the Development projects moved further towards reali- sation and entered the phase of building permit applications, tendering and contract negotiations. Several Supervisory Board meetings this year focussed exclusively on the Development projects to allow a broader, more holistic reflection and control. These concerned both the construction cost and land price development of the projects themselves, the impact of general market developments (e.g. yields and rent levels) and consequences for the balance sheet and effective leverage. “Phase”-documents prepared by the Development department were submitted for discussion and approval of the budgets by the Supervisory Board, and functioned as a basis for entering into the next phase of the specific Development project. LAANDERPOORT The status and progress of the Laanderpoort project has been extensively discussed during several Supervisory Board meetings during the year. In the meeting of 24 January, the Supervisory Board gave approval to the DO design and the financial business case, as well as the budget for the application of a building permit and the selection of a contractor. In the meeting of 8 March, the Supervisory Board was briefed on the status of the selection process. During meetings in June and July the Management Board and Supervisory Board reviewed the business case of the project and ways for optimization in view of declining end of project valuation due to yield expansion. In all our meetings during the second HY the Supervisory Board has discussed the progress of the project towards final design and realisation as well as the status of the efforts to optimize and derisk the project. These efforts have ultimately led to a sale of the project to ING in January 2024. VITRUM The status and progress of the Vitrum project has also been exten- sively discussed during several Supervisory Board meetings during the year, especially after the The Dutch High Court ruled in Q1 – in a case not related to Vitrum - that owner-associations need a 100% vote in favour to ratify certain decisions also relevant for the Vitrum project. During the remainder of 2023 the Supervisory Board has discussed on several occasions how to deal with the new situation and have evaluated together with Management several possible measures and alternatives. The Supervisory Board supported the decision of the Manage- ment Board to partner temporarily with a dedicated operator to generate income for the asset until all the approvals are obtained and the project is deemed economically feasible. EDUCATION In a number of meetings during the year the Supervisory Board has been instructed about the new Corporate Governance Code. On 29 September the Supervisory Board attended a presentation about various topics of company law. During 2023 the members of the Supervisory Board further attended individual trainings in the context of their permanent education on matters such as governance, finance, and real estate. DIVIDEND POLICY The current dividend policy, adopted by the General Meeting of Shareholders in 2014, stipulates that: • at least 75% of the direct result is distributed. • for practical reasons a dividend is distributed twice a year: an interim divided after the first six months and a final dividend following adoption by the General Meeting of Shareholders. On 19 April 2023 the Supervisory Board authorised the issuance of shares for those shareholders who opted for distribution of the final dividend for 2022 in shares. The General Meeting of Shareholders approved the final dividend for 2022 on 21 April 2023. On 12 July 2023 the Supervisory Board approved the interim divi- dend for 2023. 2023 FINAL DIVIDEND PROPOSAL In line with the applicable dividend policy (i.e. a pay-out of at least 75% of the direct result), NSI is proposing a final dividend for 2023 of € 0.77 per share. That brings the total dividend for 2023 to € 1.52 per share, of which € 0.75 per share was distributed as an interim dividend in August 2023. Provided that the General Meeting of Shareholders approves this dividend proposal, the final dividend will be payable in May 2024. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 67 NSI ANNUAL REPORT 2023 SUPERVISORY BOARD COMMITTEES From 1 January to until 12 July 2023 the Supervisory Board had four committees in place to optimise the operation of the Board: a Remuneration Committee, a Selection and Appointment Committee, an Audit Committee and a Real Estate Committee. The Real Estate Committee was abolished on 12 July 2023. REMUNERATION COMMITTEE During 2023 the Remuneration Committee consisted of Jan Willem Dockheer (Chair) and Jan Willem de Geus (member). The role and responsibilities of the Remuneration Committee, its composition and how it carries out its duties are specified in the Remuneration Committee regulations which are posted on the company's website. The Remuneration Committee had one joint meeting with the Selection and Appointment Committee in the year under review to discuss the performance of the members of the Management Board with respect to their individual targets for 2022 under the Short-Term Incentive for the CEO and CFO. The Remuneration Committee had one joint meeting with the Selection and Appointment Committee in the year under review to discuss the establishment of collective and individual targets for 2023 linked to the Short-Term Incentive of the members of the Management Board. The applicable performance measures were set to foster short-term results needed for sustainable value creation with respect to the most important achievement areas of the company. The targets and the performance levels were based on the business plan and budget and included a mix of financial and nonfinancial KPI’s including ESG related targets. The targets were aligned with the targets set for the employees and fixed after scenario planning’s had been carried out to ensure a proper rela- tion between performance and remuneration levels. REMUNERATION POLICY The Remuneration Committee had two joint meetings with the Selection and Appointment Committee to review the Remunera- tion Policy of the Management Board. Following the implementation of the EU SRD-2 Directive into Dutch law, companies are required to submit their remuneration policy for a binding vote at least every four years. The current Policy was proposed to and adopted by the General Meeting of Shareholders of 24 April 2020. This means the Policy is set for a renewal of the binding vote in the 2024 AGM. During 2023 the Remuneration Committee has continued the review of the policy. This has led to a number of changes that will be put forward in the 2024 AGM. REMUNERATION REPORT For a detailed overview of the Remuneration Policy and the way this has been executed in the year under review please refer to the separate Remuneration Report 2023. The remuneration report (dated 7 March 2024) is posted on the company’s website. The report will be presented to the AGM of 19 April 2024 for an advisory vote. SELECTION AND APPOINTMENT COMMITTEE During 2023 the Selection and Appointment Committee consisted of Jan Willem Dockheer (Chair) and Jan Willem de Geus (member). The role and responsibilities of the Selection and Appointment Committee, its composition and how it carries out its duties are specified in the Selection and Appointment Committee regula- tions which are posted on the company's website. The Selection and Appointment Committee had four joint meet- ings with the Remuneration Committee in the year under review. During these meetings the committees discussed the Remunera- tion Policy of the Management Board, the achievement of the 2022 individual targets of the members of the Management Board linked to their Long-Term Incentive and Short-Term Incentive Plan, the establishment of the 2023 individual targets for the members of the Management Board linked to their Long-Term Incentive and Short-Term Incentive and a revision of the Remuneration Policy of the Management Board. On 13 July 2023 it was announced that Alianne de Jong had tendered her resignation as CFO and as Board Member of NSI NV to take up a new role. The Supervisory Board is very grateful for the many contributions Alianne de Jong has made to the further professionalization of the Company and its Finance function since she joined the Management Board in 2017. She has stayed on until 15 November to facilitate a smooth transition of her responsibilities. Per 23 October 2023 the services of an interim CFO were secured. During 2023 the Selection and Appointment Committee had several selection meetings and calls. The main topics discussed during these meetings and on sepa- rate conference calls were drafting a profile for the recruitment and selection procedure of a new Supervisory Board member, the prog - ress made in the recruitment and selection process with regard to the longlist and shortlist of candidates drafted by the executive search firm and speaking to individual candidates. The focus here was on finding a candidate who could help maintain the compa - ny’s level of diversity and complement the existing members of the Supervisory Board. This search has resulted in the appointment of Marlies Janssen by the EGM of 28 February 2024. The Selection and Appointment Committee further discussed the profile for the recruitment and selection for a new CFO, discussing the progress made in the recruitment and selection procedure and with regard to the longlist and shortlist of candidates drafted by the executive search firm, and spoke to individual candidates. The focus here too was on finding a candidate who could help main- tain the company’s level of diversity and complement the existing member of the Management Board. This search has resulted in the selection of a candidate that will be proposed for appoint- ment in the AGM of 19 April 2024. . We refer to the Agenda and Explanatory Notes of this AGM for further details. AUDIT COMMITTEE During 2023 the Audit Committee consisted of Margreet Haan- drikman (Chair) and Karin Koks-Van der Sluijs (member). The Audit Committee met on five occasions in the year under review. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 68 NSI ANNUAL REPORT 2023 The role and responsibilities of the Audit Committee, its compo- sition and how it carries out its duties are specified in the Audit Committee regulations which are posted on the company’s website. Audit Committee meetings pay special attention to the opportuni- ties and risks that the company faces. The Audit Committee regularly conferred with the external auditor, of which once without the presence of the Management Board. The Audit Committee made a recommendation to the Supervisory Board to enable the supervisory board to assess – as there is no separate department for the internal audit function- whether adequate alternative measures have been taken and whether it is necessary to establish an internal audit department. In 2023 the Audit Committee discussed and was particularly involved in the assessment and/or monitoring of: a the operation and effectiveness of the internal risk management and control systems, as well as the probability and impact of certain risks; b risk and reporting requirements in relation to development activities; c the fraud risk analysis; d compliance with relevant legislation and regulations as well as compliance with the internal regulations; e the provision of financial information by the company, including the discussion of position papers on the proper application of accounting standards; f ESG reporting, in particular reporting on Sustainability KPI’s and the preparation of the implementation of the CSRD; g the yearly evaluation of the internal audit charter, the evaluation of the internal audit plan for 2023 which was approved in the Supervisory Board meeting of 8 March 2023 and the internal audit findings; in 2023 the internal audits focussed on IT and Treasury; h evaluation of the functioning of the external accountant and the relationship with the external auditor, reporting the results of the evaluation to the Supervisory Board and informing the external auditor about the main topics of the evaluation; i the selection of a new partner of PWC to lead the audit engage- ment team. As a result, Anke Meijer has succeeded Sidney Herwig who had reached the end of the maximum allowed term; j discussions with the external auditor about the 2023 audit plan, the audit report and the management letter of the external auditor, compliance with recommendations from and the follow-up of remarks by the external auditor, also with regard to ICT systems; k the application of information and communication technology and measures to improve cybersecurity; l the extension of the secured Financing with BerlinHyp for a 4-year period. REAL ESTATE COMMITTEE From 1 January to 19 June 2023 the Real Estate Committee consisted of Harm Meijer (Chair), Jan Willem de Geus (member) and Karin Koks-Van der Sluijs (member). From 19 June to 12 July 2023 the Real Estate Committee consisted of Willem de Geus (member) and Karin Koks-Van der Sluijs (member). On 12 July the Supervisory Board dissolved the Real Estate Committee. The reasoning for this decision is detailed in the section about Evaluations. The role and responsibilities of the Real Estate Committee, its composition and how it carries out its duties were specified in the Real Estate Committee regulations. Real Estate Committee meet- ings paid special attention to the feasibility of the strategy, the implementation of the business model, and the real estate market. In 2023 the Real Estate Committee was particularly involved in: a meeting with management to discuss the portfolio strategy, hold/sell analyses, market updates, occupancy, retention and new leases; b evaluating proposed management decisions, specifically with regard to real estate transactions (acquisitions, disposals and investments); c deciding on or advising the Supervisory Board on real estate transactions and Development projects; d discussing the status and progress of the Development projects, in particular the Laanderpoort development in Amsterdam South East and the Vitrum development in the Amsterdam Southaxis area; e improvement of the portfolio with regard to sustainability. The Real Estate Committee had two regular meetings with the Management Board. During the first meeting which took place in April 2023 the Real Estate Committee discussed the status and a detailed action Plan for the Vitrum project, the status of the other development projects, the sustainability of the Portfolio and a reporting tool for energy intensity and other sustainability KPI’s and attended a presentation by the Investment Department about the Life Science Real Estate Asset Class. The second meeting took place in June. This was a joint meeting with the full Supervisory Board. IN CONCLUSION 2023 was in many ways a challenging year for the Management Board and employees of NSI requiring creativity, hard work and resilience. The Supervisory Board wishes to express its gratitude for the efforts the entire team has made and the successes they realised in the year under review. Amsterdam, 7 March 2024 The Supervisory Board Jan Willem de Geus, Chair Karin Koks-Van der Sluijs, Vice Chair Margreet Haandrikman Jan Willem Dockheer Marlies Janssen FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 69 NSI ANNUAL REPORT 2023 DETAILS OF THE SUPERVISORY BOARD Mr J.W.A. de Geus (1966) Chairman Nationality Dutch Current position Senior Advisor Proprium Capital Partners Additional positions Non-Executive Board member of AVID Property Group First appointment 2021 Current term To 2025 Mrs K.M. Koks - Van der Sluijs (1968) Vice Chairman Nationality Dutch Current position Managing Director, Portfolio Management Greystar Europe Additional positions Member of the Supervisory Board of Annexum – Super Winkel Fonds NV First appointment 2016 Current term To 2024 Mr J.W. Dockheer (1973) Nationality Dutch Current position Managing Director BMN Groep Netherlands Additional positions Member of the Supervisory Board of 2theLoo First appointment 2020 Current term To 2024 FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 70 NSI ANNUAL REPORT 2023 Mrs G.M. Haandrikman (1965) Nationality Dutch Current position Independent supervisory board member and advisor Additional positions Chair of the Supervisory Board of Onderlinge van 1719 UA, Chair of the Supervisory Board of Lemonade NV., , Member of the Supervisory Board NV Schade, Member of the Supervisory Board Monuta Holding and Monuta Verzekeringen NV, Member of the Supervisory Board and chair of the Audit Committee Stichting RADAR Inc, Member of the Board Stichting for the holding and administration of shares under the RDS employee shareplans, External member of the audit committee of the Dutch Ministry of Justice and Security. First appointment 2017 Current term To 2025 Mrs M. Janssen (1973) Nationality Dutch Current position Director Finance & Control at Royal Van Oord Additional positions Member of the Supervisory Board of Erasmus Q Intelligence BV First appointment 2024 Current term To 2028 * Appointed in the EGM of 28 February 2024 FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE 71 NSI ANNUAL REPORT 2023 FINANCIAL STATEMENTS CONTENT Consolidated Statement of Comprehensive Income 72 Consolidated Statement of financial position 73 Consolidated Cash Flow Statement 74 Consolidated Statement of changes in shareholder’s equity 75 Notes to the Consolidated Financial Statements 76 Company Balance Sheet 105 Company Income Statement 106 Notes to the Company Financial Statements 107 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 72 NSI ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 ( x € 1,000) Note 2023 2022 Gross rental income 2 71,199 71,309 Service costs recharged to tenants 13,475 11,020 Service costs -15,402 -12,343 Service costs not recharged 2 -1,926 -1,322 Operating costs 2, 3 -10,852 -10,663 Net rental income 58,421 59,325 Revaluation of investment property 4 -223,959 -76,826 Net result on sale of investment property 5 5,388 32 Net result from investments -160,150 -17,470 Administrative costs 6 -9,120 -8,566 Other income and costs 7 -81 -210 Financing income 37 278 Financing costs -8,385 -8,302 Movement in market value of financial derivatives -2,771 2,902 Net financing result 8 -11,120 -5,122 Result before tax -180,471 -31,368 Corporate income tax 9 38,101 -2 Total result for the year -142,370 -31,370 Other comprehensive income / expense 0 Total comprehensive income / expense for the year -142,370 -31,370 Total comprehensive income / expense attributable to: Shareholders -142,370 -31,370 Total comprehensive income / expense for the year -142,370 -31,370 Data per average outstanding share: Diluted as well as non-diluted result after tax (€) 17 -7.08 -1.58 The notes on pages 76 to 104 form an integral part of these consolidated financial statements. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 73 NSI ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2023 ( x € 1,000) Note 31 December 2023 31 December 2022 Assets Investment property 10 1,028,801 1,259,235 Intangible fixed assets 11 32 72 Tangible fixed assets 12 3,835 4,063 Financial fixed assets 0 0 Deferred tax assets 13 38,654 Other non-current assets 14 12,069 13,659 Non-current assets 1,083,389 1,277,027 Debtors and other receivables 15 3,963 1,403 Derivative financial instruments 22 1,163 Deferred tax assets 13 70 Cash and cash equivalents 16 202 196 Current assets 4,235 2,763 Total assets 1,087,625 1,279,790 Shareholders' equity Issued share capital 17 74,171 73,800 Share premium reserve 17 915,068 915,447 Other reserves 17 -136,988 -70,868 Total result for the year -142,370 -31,370 Shareholders' equity 709,882 887,008 Liabilities Interest bearing loans 18 333,632 285,984 Derivative financial instruments 22 1,608 0 Deferred tax liabilities 13 2 Other non-current liabilities 19 4,533 3,744 Non-current liabilities 339,775 289,727 Redemption requirement interest bearing loans 18 65,656 Debts to credit institutions 20 11,012 14,037 Creditors and other payables 21 26,956 23,361 Current liabilities 37,968 103,054 Total liabilities 377,743 392,782 Total shareholders' equity and liabilities 1,087,625 1,279,790 The notes on pages 76 to 104 form an integral part of these consolidated financial statements. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 74 NSI ANNUAL REPORT 2023 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2023 ( x € 1,000) Notes 2023 2022 Result from operations after tax -142,370 -31,370 Adjusted for: Revaluation of investment property 4 223,959 76,826 Net result on sale of investment property 5 -5,388 -32 Net financing result 8 11,120 5,122 Corporate income tax 9 -38,101 2 Depreciation and amortisation 6 638 739 192,228 82,658 Movements in working capital: Debtors and other receivables -626 1,667 Creditors and other payables 3,403 -1,894 2,777 -228 Cash flow from operations 52,635 51,061 Financing income received 37 278 Financing costs paid -11,012 -8,545 Tax paid -15 6 Cash flow from operating activities 41,645 42,800 Purchases of investment property and subsequent expenditure 10 -19,469 -12,682 Proceeds from sale of investment property 10 34,052 17,067 Investments in intangible fixed assets 11 0 -31 Investments in tangible fixed assets 12 -104 Disinvestments in tangible fixed assets 12 4 Cash flow from investment activities 14,583 4,255 Dividend paid to the company's shareholders 17 -34,757 -30,078 Proceeds from interest bearing loans 18 10,000 5,000 Transaction costs interest bearing loans paid -242 -339 Repayment of interest bearing loans 18 -28,200 -43,200 Cash flow from financing activities -53,199 -68,617 Net cash flow 3,030 -21,563 Cash and cash equivalents and debts to credit institutions - balance as per 1 January -13,840 7,723 Cash and cash equivalents and debts to credit institutions - balance as per 31 December -10,810 -13,840 The notes on pages 76 to 104 form an integral part of these consolidated financial statements. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 75 NSI ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 ( x € 1,000) 2023 Issued share capital Share premium reserve Other reserves Result for the year Shareholders' equity Balance as per 1 January 2023 73,800 915,447 -70,868 -31,370 887,008 Total result for the year -142,370 -142,370 Total comprehensive income / expense for the year -142,370 -142,370 Profit appropriation - 2022 -31,370 31,370 Distribution final dividend - 2022 372 -379 -19,633 -19,640 Interim dividend - 2023 -15,116 -15,116 Contributions from and to shareholders 372 -379 -66,120 31,370 -34,757 Balance as per 31 December 2023 74,171 915,068 -136,988 -142,370 709,882 2022 Issued share capital Share premium reserve Other reserves Result for the year Shareholders' equity Balance as per 1 January 2022 72,489 916,768 -161,762 120,961 948,457 Total result for the year -31,370 -31,370 Total comprehensive income / expense for the year -31,370 -31,370 Profit appropriation - 2021 120,961 -120,961 Distribution final dividend - 2021 398 -403 -17,464 -17,470 Interim dividend - 2022 913 -918 -12,603 -12,608 Contributions from and to shareholders 1,310 -1,321 90,894 -120,961 -30,078 Balance as per 31 December 2022 73,800 915,447 -70,868 -31,370 887,008 The notes on pages 76 to 104 form an integral part of these consolidated financial statements. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 76 NSI ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS REPORTING ENTITY NSI N.V. (registration number Chamber of Commerce: 36040044; hereinafter ‘NSI’, or the ‘company’), with its principal place of business in Hoogoorddreef 62, 1101 BE Amsterdam, the Nether- lands and its registered office in Amsterdam, the Netherlands is a real estate company, primarily focussing on offices. These consolidated financial statements are presented for the company and its subsidiaries (together referred to as the ‘Group’). The company is licensed pursuant to the Dutch Financial Super- vision Act (Wet op het financiële toezicht). NSI N.V. is listed on Euronext Amsterdam. BASIS OF PREPARATION SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of the consol- idated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for 2022. STATEMENT OF COMPLIANCE The financial statements have been prepared in accordance with International Reporting Standards (IFRS), as endorsed by the European Union (EU-IFRS) and with Title 9 of Book 2 of the Dutch Civil Code. The financial statements were prepared by the Company’s Management and approved by the Supervisory Board on 7 March 2024. The financial statements will be submitted to the General Meeting of Shareholders on 19 April 2024 for adoption. Unless stated otherwise, all amounts in the financial statements are in thousands of euros, the euro being the company’s func- tional currency, and are rounded off to the nearest thousand. There could be minor rounding off differences between in the figures presented. The statement of comprehensive income, the statement of financial position, the cash flow statement and the statement of changes in shareholders’ equity make reference to the notes in the financial statements to provide more information. The financial year of NSI presents the period from 1 January until 31 December. ASSUMPTIONS AND ESTIMATION UNCERTAINTIES The preparation of the financial statements requires that the Management Board forms opinions, estimates and assumptions that affect the application of accounting principles and reported figures for assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements made by management in applying the Group’s accounting policies and the key sources of esti- mation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2022. The most significant assumption relates to the unobservable information used in the valuation of the investment property. Other judgements are made relating to the deferred tax assets, the feasibility of the investment properties under construc- tion and timing of capitalisation of interest for the development projects, determination of ground lease terms and principle versus agent considerations for services provided to tenants. VALUATION PRINCIPLES The financial statements have been prepared on the basis of historical cost except for investment property, investment prop- erty under construction and derivative financial instruments, which are subsequently measured at fair value. The accounting principles applied to the valuation of assets and liabilities and the determination of results in financial statements are based on the assumption of continuity (going concern) of the company. These financial statements are drawn up based on a going concern whereby the assumption of continuity is, amongst others, based upon the overall financial position, the cashflow forecast and the availability of funding under the committed credit facility (refer- ence is made to note 17 and 22). MEASUREMENT AT FAIR VALUE A number of accounting policies and disclosures require the measurement of fair value for both financial and non-financial assets and liabilities. Significant valuation issues are reported to the company’s audit committee. In measuring the fair value of an asset or a liability, the company uses observable market data as much as possible. Fair value measurements are categorized into different levels of a fair value hierarchy based on the inputs applied to the valuation techniques. The different levels are defined as follows: • Level 1: valuation on the basis of quoted prices in active markets for identical assets or liabilities; • Level 2: valuation of assets or liabilities based on (external) observable information; • Level 3: valuation of assets or liabilities based wholly or partially on (external) unobservable information. If the input parameters used to measure the fair value of an asset or a liability may be categorised into different levels of the fair value hierarchy, the fair value measurement is categorised entirely in the level of the lowest level input that is significant to the entire measurement. The company recognises reclassifications between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. The company has established a control framework with regard to the measurement of fair values. This includes a valuation team SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 77 NSI ANNUAL REPORT 2023 that has overall responsibility for overseeing all significant fair value measurements, including level 3 fair values. The valuation process is supervised by the Management Board. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third-party information is used to measure fair value, NSI assesses and documents the third-party data to verify that the valuations and their classification into different levels of the fair value hierarchy comply with IFRS, including their level in the fair value hierarchy. Further information about the assumptions made in measuring fair value is included in the following notes: • Note 10 - Investment property; • Note 22 - Financial instruments; • Note 24 - Remuneration Management Board MAIN PRINCIPLES FOR FINANCIAL REPORTING PRINCIPLES FOR CONSOLIDATION SUBSIDIARIES Subsidiaries are entities over which NSI has decisive control. There is a situation of control if the company’s involvement in the entity exposes or entitles it to variable returns and the company has the ability to influence such returns using its control in the entity. In 2023 the legal structure of NSI was adjusted in order to limit the effects of the forthcoming abolishment of the corporate tax regime for fiscal investment funds in 2025. As a result NSI has transferred its properties into separate legal entities whereby NSI N.V. acts as an FBI with indirect investments in property. The results of subsidiaries are included in the consolidated finan- cial statements from the date of commencement of control until the date on which the control ends. A full list of subsidiaries included in the consolidated financial statements can be found in note 25. ELIMINATION OF INTRAGROUP TRANSACTIONS Intragroup balances and transactions as well as any unrealised profits and losses on intragroup transactions are eliminated, except where there are indications for impairment. FOREIGN CURRENCY FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in foreign currency are converted into euros using the exchange rate prevailing on the balance sheet date. Transactions in foreign currency are converted into euros at the exchange rate prevailing on the transaction date. Exchange rate differences arising from conversion are recognised in the consolidated statement of comprehensive income. INVESTMENT PROPERTY Investment property consists of investment property in operation and investment property under construction. INVESTMENT PROPERTY IN OPERATION Investment property in operation consists of real estate that is held to generate rental income or value, or a combination of both, but that is not intended for sale in the ordinary course of business. Investment property is initially recognised as from the date of transfer of the legal title at cost (including all costs relating to the purchase, such as legal costs, transfer tax, estate agent fees, costs of due diligence and other transaction costs). Subsequent measurement of investment property is at fair value. The fair value of the right of use of leasehold is added to the fair value of the investment property and as such included in the balance sheet value of investment property in operation. Future leasehold obligations are valued at net present value of the future lease payments. For all properties in the portfolio the fair value of the investment property is appraised by external registered appraisers twice a year. In principle, valuations may only be performed and provided by appraisers registered with the Dutch register of property appraisers (Nederlands Register van Vastgoed Taxateurs). Valu- ations are performed on the basis of the guidance of the RICS Red Book. NSI works with at least two valuation firms. The valu- ation firms for individual properties are changed every three years in accordance with the RICS guidelines. The valuations are assessed and analysed by the Management Board and by asset management considering the methods and assumptions applied, as well as the outcome. The fair value is based on the market value (adjusted for purchase costs such as transfer tax). This means that the estimated price on the date of valuation at which a property could be traded between a seller and a purchaser willing to enter into an objective, arm’s length transaction preceded by sound negotiations between both well- informed parties. The fair value is calculated using primarily the capitalisation method, on the basis of a gross initial yield and the therefrom derived net initial yield calculation, whereby the net market rent prices are capitalised, and is subsequently validated by the DCF calculation method, based on the present value of the future cash flows for the next ten year including an exit value at the end of the tenth year. The respective outcomes of both methods are compared. The returns applied are specified for the property type, location, maintenance condition and letting potential of each property, and are based on comparable transactions, along with market-specific and property-specific data. Key assumptions in the valuations are yields. Market rent, future capital expenditure (investments), ground lease and maintenance assumptions are also taken into account in the valuations. Further, assumptions are made for each tenant and for each vacant unit with regard to the probability of letting and (re)letting, the number of months of vacancy, incentives and letting costs. Adjustments are made to the present value of differences between the market rent prices and the rent price contractually agreed. The valuation is made after deduction of transaction expenses borne by buyers. Subsequent expenditures are only included in the value of the property if it is probable that future economic benefits related to these investments or expenses would benefit the company. All other costs of maintenance and repairs are recognised as costs at the moment that they are incurred. No depreciation is made on investment properties, given that they are recognised at fair value. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 78 NSI ANNUAL REPORT 2023 Changes to the fair value of investment properties are included in the consolidated statement of comprehensive income in the period in which they occur. Profits or losses on the sale of an investment property are recog- nised in the period in which the sale occurs as the difference between the net sales proceeds and the fair value most recently determined by NSI. If an investment property is sold, the cumula- tive positive revaluation, if any, is transferred from the revaluation reserve to retained earnings. Investment property is derecognised when it has been sold and control has been transferred. If the use of a property becomes owner occupied and a reclas- sification as a tangible fixed asset is required, the fair value at the date of reclassification becomes the cost price for administrative processing purposes. INVESTMENT PROPERTY UNDER CONSTRUCTION Investment property under construction is referred to as ‘invest- ment property under construction’ for the purpose of future lease activity. A property is considered as investment property under construction either if NSI is developing a new property or if NSI considers that for continued future use of an existing property a major (re-)development is required and the property is no longer available for letting. At that moment the investment property in operation is transferred to investment property under construc- tion. Capitalisation of costs related to the development project commences as soon as it is probable that future economic bene- fits associated with the development of the property will flow to the entity and the cost of the project can be measured reliably. The costs associated with investment property under construction consists of all the directly attributable costs required to complete the project, including internal costs of employee benefits arising directly from the development project and borrowing costs. The borrowing costs concern capitalised interest and the financing component of leasehold agreements, which are charged as from the date capitalisation of costs commences until the date of delivery, and is calculated based on the average cost of debt of NSI. The cost of debt includes interest and all other costs associ- ated with NSI raising funds. If the fair value can be measured reliable, investment property under construction is valued at fair value. In order to evaluate whether the fair value of a property under construction can be measured reliably, management considers amongst others the following criteria: • The status of the required construction; • The status of the construction contract; • Level of reliability of cash inflows after completion. If the fair value cannot be measured reliable, investment property under construction is valued at cost, including capitalised interest. At the date of delivery the investment property under construction is transferred to investment property in operation. INTANGIBLE FIXED ASSETS Intangible assets only consist of software. Development and implementation costs relating to purchased and/or developed software are capitalised based on the costs of acquiring the software and taking it into operation. The capital- ised costs are reduced by cumulative amortisation and cumula- tive impairment losses. Amortisation is calculated to write off the costs of intangible fixed assets less their estimated residual value on a straight-lined basis over their estimated useful life. Amortisation is recognised in the statement of comprehensive income. The estimated useful economic lives of capitalised software is 3 years. TANGIBLE FIXED ASSETS Tangible fixed assets consist of real estate (office building) fully or partly used by the company, its furniture and fixtures and office equipment (hardware). These assets are valued at cost, less cumulative depreciation and any cumulative impairment losses. Furthermore, the value of the right of use of lease cars is included under tangible fixed assets following the IFRS 16 standard. The right of use of car leases are valued at net present value of the future lease payments at the time of capitalisation, less cumula- tive depreciation. If a property used by the company changes into an investment property, the property is revalued on the basis of fair value and reclassified as an investment property. Any gain arising from this revaluation is recognised in the result insofar as the gain results in a reversal of a previously recognised impairment loss for that specific property. Any residual gain is recognised in the unreal- ised results and is reported in the revaluation reserve. Any loss is recognised in the result. Depreciation of tangible fixed assets is charged to the consoli- dated statement of comprehensive income under administrative costs and is calculated using the straight-line method based on the estimated useful life and residual value of the asset concerned. Land is not depreciated. The estimated useful life is as follows: • Real estate in own use: 25 years; • Furniture and fixtures: 4 years; • Hardware: 3 years. Depreciation of right of use lease cars is calculated using the straight-line method over the contractual lease period of the asset concerned. The applied methodology of calculating depreciation, useful life and residual value is assessed at the end of every book year and adjusted if necessary. IMPAIRMENT NON-FINANCIAL FIXED ASSETS The carrying value of the non-financial assets of the Group, excluding the market value of investment properties corrected for lease incentives, are reviewed at each reporting date to determine whether there are indications for impairment. If any such indica- tion exists, an estimate is made of the recoverable amount of the asset. The recoverable amount of an asset or cash-generating unit is the highest of the value in use or the fair value less costs of disposal. In assessing value in use, the present value of the estimated future cash flows is calculated using a pre-tax discount rate that reflects current market assessments of the time value of money SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 79 NSI ANNUAL REPORT 2023 as well as the risks specific to the asset or cash-generating unit. An impairment loss is recognised if the book value of the asset or cash-generating unit to which the asset belongs is higher than the estimated recoverable value. Impairment losses are recognised in profit or loss. They are deducted on a pro rata basis from the book value of each asset in the cash-generating unit. Impairment losses are reversed only to the extent that the asset's book value does not exceed its book value, net of any depre- ciation or amortisation that would have been determined had no impairment loss been recognised. FINANCIAL INSTRUMENTS NSI classifies non-derivative financial assets in the categories: • Tenant loans (non-current); • Debtors and other receivables; • Cash and cash equivalents. NSI has the following non-derivative financial liabilities: • Interest bearing loans; • Creditors and other payables; • Amounts owed to credit institutions. NON-DERIVATIVE FINANCIAL ASSETS AND LIABILITIES - RECOGNITION NSI initially recognises financial assets and financial liabilities at the transaction date. NSI no longer recognises a financial asset in the balance sheet if the contractual rights to the cash flows from the asset expire, or if NSI transfers the contractual rights to receive cash flows from the financial asset through a transaction in which substantially all the risks and benefits related to the ownership of the asset are trans- ferred, or if NSI neither transfers or retains the risks and benefits related to ownership of the asset, nor has control over the trans- ferred asset. If NSI retains or creates an interest in the transferred financial assets, the interest is recognised as a separate asset or liability. NSI no longer recognises a financial liability in the balance sheet if the contractual obligations are waived or cancelled or have expired. Financial assets and liabilities are only offset and the resulting net amount is only presented in the balance sheet if NSI has a legally enforceable right to offset and if it intends to offset on a net basis or to realise the asset and the liability simultaneously. NON-DERIVATIVE FINANCIAL ASSETS - MEASUREMENT LOANS AND DEBTORS AND OTHER RECEIVABLES Loans and debtors and other receivables, excluding taxes and prepayments, are measured at initial recognition at fair value plus any directly attributable transaction costs. After initial recognition, loans and receivables are measured at amortised cost using the effective interest method. For loans and debtors and other receivables the Group applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables. CASH AND CASH EQUIVALENTS Cash and cash equivalents are recognised and subsequently valued at amortised costs and consist of cash and bank balances. Current account overdrafts that are payable on demand and which form an integral part of NSI’s cash management are included in cash and cash equivalents and amounts owed to credit institu- tions in the consolidated statement of financial position and the consolidated cash flow statement. NON-DERIVATIVE FINANCIAL LIABILITIES - MEASUREMENT INTEREST BEARING LOANS Interest-bearing loans are initially recognised at fair value, after deduction of attributable transaction costs. After initial recogni- tion, the interest-bearing loans are measured at amortised cost using the effective interest method. Interest-bearing loans include both fixed-rate and variable-rate loans. In principle, the fair value of the variable-rate loans is equal to their amortised cost. Part of the interest risk on the variable- rate loans is hedged through interest-rate swaps. In principle, the fair value of the fixed-rate loans is not equal to their amortised cost. The fair value of the fixed-rate loans is calcu- lated using the net present value method at the market interest rates prevailing on 31 December 2023 (including margin). Any redemption of interest-bearing debt within one year is recog- nised as current liabilities. An interest-bearing debt is derecognised from the balance sheet when the interest-bearing debt is settled, annulled or cancelled. If an existing interest-bearing debt is exchanged by another from the same lender at substantially different terms or the terms of an existing interest-bearing debt substantially change, this will be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The differ- ence between the carrying book value of the financial liability extinguished and the consideration paid is then recognised in the profit and loss account. If the conditions of the interest-bearing debts are adjusted, but this does not result in the annulment of the interest-bearing debt, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modi- fied liability. CREDITORS AND OTHER PAYABLES Creditors and other payables, excluding taxes and deferred income, are at initial recognition measured at fair value plus any directly attributable transaction costs. After initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. DERIVATIVE FINANCIAL INSTRUMENTS NSI uses derivative financial instruments to hedge (in full or in part) the interest rate risks associated with its finance activities. These derivatives are not held or issued for trading purposes. Derivatives are initially recognised at cost, after which they are recognised at fair value. Profits or losses arising from changes in the fair value of derivative financial instruments are immedi- SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 80 NSI ANNUAL REPORT 2023 ately recognised in the consolidated statement of comprehen- sive income. In 2022 and 2023 hedge accounting has not been applied. The fair value of the financial instruments is the amount the Group would expect to pay or receive if the financial derivative were to be liquidated at balance sheet date, taking into account the interest rate on the balance sheet date and the current credit risk of the counterparties concerned as well as the credit risk of the Group. The interest payable on derivatives is incorporated in other payables. A derivative financial instrument is reported as a current asset or current liability if its remaining term to maturity is less than one year or if it is expected that it will be liquidated or settled within one year. PREPAYMENTS AND DEFERRED INCOME Prepayments and deferred income are measured at costs. EQUITY Ordinary shares are classified as shareholders’ equity. External costs that can be attributed directly to the issuance of new shares are deducted from the earnings reserve. The increase in the paid-up and called-up capital relating to a stock dividend programme is deducted from the share premium reserve as well as the expenses relating to the stock dividend. When repurchasing NSI shares, the amount of the considera- tion paid including directly attributable costs, is recognised as a change in shareholders’ equity. Cash dividends are deducted from the other reserves in the period in which the dividends are set. CORPORATE INCOME TAX TAX STATUS Up to end of 2022, NSI and most of its subsidiaries had the status of a fiscal investment institution within the context of Article 28 of the Dutch Corporate Income Tax Act 1969 (Wet op de Vennootsc- hapsbelasting 1969. This means no corporate income tax is owed under certain conditions. The main conditions relate to the investment requirement, the distribution of taxable earnings as dividend, limitations on the financing of investments with debt capital and the composition of the shareholder base. Profits from the disposal of investments and fair value adjustment results on investment property are not included in the distributable earnings. In addition, there are legal restrictions on the activities that may be undertaken by a Dutch Real Estate Investment Trust (FBI). Since 1 January 2014, ‘associated business activities’ attributable to the main task of letting and managing of investment properties may be performed, within certain limits, by a normal taxable subsidiary. To the best of the Management Board’s knowledge the Group meets the legal requirements. Due to a change in legislation, as from 2025 FBI’s can no longer directly invest in Dutch real estate. In 2023, NSI has undergone a restructuring in which most of the properties are now in sepa- rate entities, which are subject to corporate income tax. NSI N.V. intends to remain an FBI at least to the end of 2024. CORPORATE INCOME TAX Corporate income tax consists of taxes currently payable and receivable and movements in deferred tax assets and deferred tax liabilities. Current tax consists of the sum of the expected tax payable or receivable on the taxable results for the year, taking into account earnings elements exempt from tax and non-deductible costs whereby the tax rates applied are those prevailing on the balance sheet date or changed tax rates already known on the balance sheet date. The tax payable also includes any changes to tax payments made in previous years. Deferred tax assets are recognised as income tax to be reclaimed in future periods relating to offsetable temporary differences between book value and the fiscal value of assets and liabilities. They also relate to the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that future taxable benefits will be available against which unused tax losses and tax credits can be utilised. Deferred tax assets are only recognised if it is likely that the temporary differences will be settled in the near future and sufficient taxable profit will be available for settlement. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer prob- able that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Deferred tax liabilities are recognised for income tax payable in future periods on taxable temporary differences between the book value of assets and liabilities and their fiscal book value. Deferred tax recognised in the statement of comprehensive income is the is the movement in deferred tax assets and deferred tax liabilities during the period. Deferred tax assets and liabilities are netted if there is a legally enforceable right to offset the tax assets and liabilities and when the deferred assets and liabilities concern the same tax regime. INCOME RENTAL INCOME The rental income from investment property let on the basis of operating lease agreements is recognised in the consolidated statement of comprehensive income on a straight-line basis for the duration of the lease agreement. Rent-free periods, rent reductions and other lease incentives are reported as an integral part of total net rental income. These lease incentives are allocated over the term of the lease agreement until the first moment at which the lease agreement may be terminated. The resulting accrued income is included in the fair value of the respective investment properties by the external appraisers and is separated in the balance sheet for reporting purposes. Compensations received or paid for leases terminated early are immediately recognised in the consolidated statement of compre- hensive income in the period in which the contractual require- ments are met. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 81 NSI ANNUAL REPORT 2023 SERVICE COSTS RECHARGED TO TENANTS Service costs can be charged on to the tenants. These charges mainly relate to gas, water, electricity, cleaning and security, etc., costs which can be recharged to tenants based on the lease agreement. NSI acts as principal with respect to service costs, whereby the costs incurred are recharged to the tenants, including an administrative fee. NET RESULT ON SALE OF INVESTMENT PROPERTY Proceeds from the sale of investment properties are recognised when the control of the property is transferred to the purchaser. The profits or losses on the sale of investment properties are identified as the difference between the net proceeds of the sale and the carrying value of the investment properties in NSI’s most recently published (interim) balance sheet. COSTS SERVICE COSTS NOT RECHARGED Service costs not recharged to tenants mainly relate to vacant properties, in which situation these costs cannot be recharged to tenants and / or to other irrecoverable service costs as a result of contractual limitations or service costs. OPERATING COSTS Operating costs consist of costs directly related to the opera- tion of the investment properties, such as property management, municipal taxes, insurance premiums, maintenance costs, letting costs and other business expenses. Except for letting fees, these costs are charged to the result when they occur. Letting fees are straight-lined over the remaining lease term of the related contract until the first possible moment of termination by the tenant. The resulting accrued income is included in the fair value of the respective investment properties by the external appraisers and is separated in the balance sheet for reporting purposes. ADMINISTRATIVE COSTS Administrative expenses include staff costs, office expenses, consultancy fees, remuneration of Supervisory Board members and the costs of fund management. Costs relating to the commercial, technical and administrative management of investment properties are included in the oper- ating costs. Costs relating to the supervision and monitoring of investment projects are capitalised on the basis of hours spent. FINANCING INCOME AND COSTS Financing income and expenses consist of interest expenses on loans and debts, and interest income on outstanding loans and receivables attributable to the period, including interest income and expenses based on interest rate swaps and divi- dends received. As a result of the valuation of interest-bearing debt based on amortised cost, financing expenses also include interest accrued on the interest-bearing debt. Financing expenses directly attributable to the purchase, renova- tion or expansion of an investment property are capitalised as part of the integral cost of the property involved. The interest applied is the average interest paid by the Group in the respective currency. Net financing income and expenses also include the profits and losses arising from changes in the fair value of the derivative financial instruments. EMPLOYEE BENEFITS DEFINED CONTRIBUTION PENSION PLAN Liabilities relating to contributions to defined contribution pension plans are recognised as costs in the period in which they occur. Prepayments are recognised as an asset insofar as a cash refund or a reduction in future payments is available. The pension arrangements are insured externally. MANAGEMENT BOARD VARIABLE REMUNERATION The variable remuneration component for the Management Board consists of a long-term incentive (LTI) and a short-term incentive (STI). At the end of 2023, the total obligation was calculated and recog- nised as an expense with a corresponding increase in liabilities. SHAREHOLDING REQUIREMENT To further stimulate long-term value creation, NSI applies a share- holding requirement to align the interests of the members of the Management Board with the interests of the company’s share- holders. The CEO is required to hold NSI shares with a value of at least 125% of the applicable annual (gross) base salary; a require- ment of at least 75% of the applicable annual (gross) base salary applies to the CFO. The Board members are required to invest respectively one-third and two-thirds of the net payments resulting from the short-term and long-term incentive schemes to acquire NSI shares until the shareholding requirement has been met. Before reaching the required value in shares, members of the Management Board are not allowed to sell any of the NSI shares they have acquired by investing these net payments. This shareholding requirement continues to be applicable during one year after the end of the membership of the Management Board of NSI. The Supervisory Board will evaluate at the end of each financial year the extent to which the shareholding requirement is met. CASH FLOW STATEMENT Operating cash flows are reported on the basis of the indirect method. Cash and cash equivalents and debts to credit institu- tions also include overdraft facilities which are part of NSI's cash management policy. SEGMENT INFORMATION All operating results of an operating segment are assessed peri- odically by the Management Board in order to decide on the allo- cation of resources to the segment and to assess performance, based on the confidential financial information available. The Management considers the business from the nature of the investment property and assesses performance for “Amsterdam”, “Other G4”, and “Other Netherlands”. A segment consists of assets and activities with specific risks and results, differing from other sectors. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 82 NSI ANNUAL REPORT 2023 NEW AND AMENDED STANDARDS NOT APPLIED A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2023. These standards and amendments did not have an impact on these consolidated financial statements: • Amendments to IFRS 17, “Insurance Contracts“; • Amendments to IAS 1 and IFRS practice statement 2, “Disclo- sure of accounting policies”; • Amendments to IAS 8 ‘’Definition of accounting estimates’; • Amendments to IAS 12, “Deferred tax related to assets and liabilities arising from a single transaction”. There are no IFRS or IFRIC interpretations that are not yet effec- tive which are expected to have a significant impact financial statements of NSI. 1. SEGMENT INFORMATION 2023 STATEMENT OF COMPREHENSIVE INCOME Amsterdam Other G4 Other NL Corporate TOTALGross rental income 35,600 24,185 11,415 71,199Service costs recharged to tenants 5,706 5,782 1,987 13,475Service costs -6,789 -6,646 -1,966 -15,402Service costs not recharged -1,083 -864 21 -1,926Operating costs -5,182 -3,966 -1,704 -10,852Net rental income 29,335 19,355 9,731 58,421Revaluation of investment property -153,754 -44,623 -25,583 -223,959Net result on sale of investment property 5,282 -1 106 5,388Net result from investment -119,136 -25,269 -15,745 -160,150Administrative costs -9,120 -9,120Other income and costs -81 -81Net financing result -11,120 -11,120Result before tax -119,136 -25,269 -15,745 -20,321 -180,471Corporate income tax 38,101 38,101Total result for the year -119,136 -25,269 -15,745 17,780 -142,370Other comprehensive income / expenseTotal comprehensive income / expense for the year -119,136 -25,269 -15,745 17,780 -142,370Attributable to shareholders-119,136 -25,269 -15,745 17,780 -142,370 STATEMENT OF FINANCIAL POSITION AS PER 31 DECEMBER Amsterdam Other G4 Other NL Corporate TOTALInvestment property 579,683 296,245 152,873 1,028,801Other assets 6,461 4,615 992 46,756 58,824Total assets 586,144 300,860 153,865 46,756 1,087,625Non-current liabilities 3,128 932 198 335,517 339,775Current liabilities 1,781 1,461 724 34,002 37,968Total liabilities 4,908 2,393 922 369,520 377,743Purchases of investment property and subsequent expenditures15,056 4,102 311 19,469 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 83 NSI ANNUAL REPORT 2023 2022 STATEMENT OF COMPREHENSIVE INCOME Amsterdam Other G4 Other NL Corporate TOTALGross rental income 35,855 22,315 13,139 71,309Service costs recharged to tenants 4,667 4,129 2,225 11,020Service costs -5,188 -4,541 -2,613 -12,343Service costs not recharged -521 -412 -389 -1,322Operating costs -4,527 -3,774 -2,361 -10,663Net rental income 30,807 18,129 10,389 59,325Revaluation of investment property -74,631 -12,105 9,909 -76,826Net result on sale of investment property 1,187 -1,156 32Net result from investment -43,824 7,211 19,143 -17,470Administrative costs -8,566 -8,566Other income and costs -210 -210Net financing result -5,122 -5,122Result before tax -43,824 7,211 19,143 -13,898 -31,368Corporate income tax -2 -2Total result for the year -43,824 7,211 19,143 -13,900 -31,370Other comprehensive income / expenseTotal comprehensive income / expense for the year -43,824 7,211 19,143 -13,900 -31,370Attributable to shareholders-43,824 7,211 19,143 -13,900 -31,370 STATEMENT OF FINANCIAL POSITION AS PER 31 DECEMBER Amsterdam Other G4 Other NL Corporate TOTALInvestment property 721,552 336,766 200,917 1,259,235Other assets 6,589 5,284 1,786 6,897 20,556Total assets 728,140 342,050 202,703 6,897 1,279,790Non-current liabilities 2,411 820 361 286,135 289,727Current liabilities 2,458 785 575 99,235 103,054Total liabilities 4,870 1,606 936 385,370 392,782Purchases of investment property and subsequent expenditures10,543 1,561 578 12,682 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 84 NSI ANNUAL REPORT 2023 2. NET RENTAL INCOME Gross rental income Service costs not Operating costs Net rental incomerecharged2023 2022 2023 2022 2023 2022 2023 2022Amsterdam 35,600 35,855 -1,083 -521 -5,182 -4,527 29,335 30,807Other G4 24,185 22,315 -864 -412 -3,966 -3,774 19,355 18,129Other Netherlands 11,415 13,139 21 -389 -1,704 -2,361 9,731 10,389Net rental income 71,199 71,309 -1,926 -1,322 -10,852 -10,663 58,421 59,325 Gross rental income can be specified in the following components: 2023 2022Gross rental income - offices / HNK / other 69,852 70,501Turnover rent / variable parking income 524 173Indemnities received 524 153HNK - meeting rooms 563 521HNK - hospitality services 91 84Other rental income / loss -356 -123Other gross rental income / loss 1,347 808Gross rental income 71,199 71,309 Gross rental income includes an amount of € 6.2m (2022: € 6.6m) for lease incentives. NSI leases its investment properties on the basis of operating leases with various maturities. Each lease contract specifies the space, rent and rights and obligations of the landlord and the tenant, including notice periods, options to extend the rental period and provisions related to service costs. In general, the rent is indexed during the life of the rental agreement on an annual basis. The total annual rent to be received from operating lease agreements, until the first moment the tenant can cancel the rental agreement, is specified as follows: 31 December 2023 31 December 2022First year 63,709 69,434Second to fourth year 120,892 148,675As of fifth year 68,131 82,632 3. OPERATING COSTS 2023 2022Leasehold 0 -3Municipal taxes -2,960 -2,770Insurance premiums -741 -602Maintenance costs -2,254 -1,784Property management costs -3,473 -3,489Letting costs -1,018 -1,184Contribution to owner association -114 -109Doubtful debt costs -19 19Other operating costs -273 -740Operating costs -10,852 -10,663 Property management costs include administrative costs charged to operations for an amount of € 3.0m (2022: € 3.2m). Letting costs includes an amount of - € 0.1m (2022: - € 0.1m) for straight-lined letting investments and commissions. An amount of € 0.0m (2022: € 0.3m) relates to operating costs of fully vacant properties. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 85 NSI ANNUAL REPORT 2023 4. REVALUATION OF INVESTMENT PROPERTY 2023 2022Positive Negative Total Positive Negative TotalInvestment property in operation -193,937 -193,937 40,453 -104,803 -64,350Investment property under construction -31,147 -31,147 -11,515 -11,515Revaluation - market value -225,084 -225,084 40,453 -116,318 -75,865Movement in right of use leasehold -68 -66Movement in lease incentives 1,192 -896Revaluation of investment property -223,959 -76,826 Further details on revaluation can be found in note 10. 5. NET RESULT ON SALE OF INVESTMENT PROPERTY 2023 2022Proceeds on sale of investment property 34,164 17,145Transaction costs on sale of investment property -112 -78Sale of investment property 34,052 17,067Book value at the time of sale (excl. right of use leasehold) -28,665 -17,036Net result on sale of investment property 5,388 32 During 2023 3 properties have been sold of which one in Amsterdam, one in Den Bosch and one in Ede (last two segment ‘Other Neth- erlands’; 2022: three properties have been sold of which one in the segment ‘Other G4’ and two in the segment ‘Other Netherlands’). The net result on sale of investment property includes an amount of -€ 0.2m (2022: - € 0.1m) related to prior years’ sales. Transaction costs on sale include the costs of real estate agents and legal fees. 6. ADMINISTRATIVE COSTS 2023 2022Salaries and wages -6,011 -5,648Social security -771 -704Pensions -413 -365Depreciation right of use tangible fixed assets -290 -295Other staff costs -1,327 -1,217Staff costs -8,813 -8,229Compensation supervisory board -252 -251Depreciation and amortisation -348 -445Other office costs -1,373 -1,476Office costs -1,721 -1,920Audit, consultancy and valuation costs -1,818 -1,269Other administrative costs -1,057 -1,333Administrative costs -13,661 -13,002Allocated administrative costs 4,541 4,436Administrative costs -9,120 -8,566 Administrative costs directly related to the operation of the investment property portfolio (€ 3.0m; 2022: € 3.2m) are recharged to oper- ating costs. Directly attributable costs related to development project are capitalised as part of the respective project (€ 0.7m; 2022: € 0.6m). The staff costs concerning the daily operation of the HNK-properties (€ 0.8m; 2022: € 0.6m) are part of service costs and as such are allocated to the respective properties. The total of these costs is reported as “Allocated administrative costs”. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 86 NSI ANNUAL REPORT 2023 EMPLOYEES On average 67 employees (61 FTE), including the appointed Management Board, were employed by NSI and HNK during the reporting year (2022: 61 employees (57 FTE)). As per 31 December 2023 the number of employees amounted to 67 (61 FTE). All employees are working in the Netherlands. 7. OTHER INCOME AND COSTS 2023 2022Other costs -81 -210Other income and costs -81 -210 Other costs in 2023 concern feasibility costs for projects, mainly related to Bio Science Park, Leiden. Other costs in 2022 mainly concern feasibility costs for potential projects (mainly related to Centerpoint, Amsterdam and Alexanderhof, Rotterdam) and costs of cancelled projects. 8. NET FINANCING RESULT 2023 2022Interest income 37 278Financing income 37 278Interest costs -10,211 -9,118Capitalised interest 2,368 1,328Bank costs -46 -63Amortisation costs interest bearing loans -434 -383Other financing costs -62 -66Financing costs -8,385 -8,302Movement in market value of financial derivatives -2,771 2,902Net financing result -11,120 -5,122 During 2023, borrowing costs for the development projects Laanderpoort and Vitrum are capitalised. In 2022 this was also the case for Well House, which is paused for the moment. For Vitrum, the financing component for the leasehold agreement is also capitalised. Capitalised interest in connection with developments is based on the weighted average cost of debt. During 2023, the range of weighted average interest rates used was: 1.9% - 3.2% (2022: 2.0% - 2.2%). 9. CORPORATE INCOME TAX 2023 2022Current tax -621 -2Deferred tax 38,722Corporate income tax 38,101 -2 After the restructuring in 2023, only NSI N.V., NSI Real Estate B.V., NSI Kantoren B.V., NSI Vastgoed B.V., NSI Flexoffices B.V. and HNK Vastgoed B.V. have the status of a Dutch real estate investment trust (FBI) within the context of Article 28 of the Dutch Corporate Income Tax Act 1969 (Wet op de Vennootschapsbelasting 1969). This means that no corporate income tax is owed under certain conditions. The main conditions relate to the investment requirement, the distribution of taxable earnings as dividend, limitations on the financing of investments with debt capital and the composition of the shareholder base. Profits from the disposal of investments are not included in the distributable earnings. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 87 NSI ANNUAL REPORT 2023 In addition, there are legal restrictions on the activities that may be undertaken by a FBI, as stated under the main principles for financial reporting. Since 1 January 2014, ‘associated business activities’ attributable to the main task of letting and managing of investment properties may be performed, within certain limits, by a normal taxable subsidiary. All other subsidiaries are not part of the fiscal real estate investment trust for tax purposes and are as such liable to pay corporate income tax as from 2023. 2023 2022Result before tax -180,471 -31,368Tax at Dutch tax rate (high rate) 25.8% 46,562 25.80% 8,093Exempt due to fiscal status -1,978 -8,097Differences IFRS - fiscal result 1,898Non-deductible expenses -2,094Different tax rate (low rate - 19.0%) -6,285Other -1 2Corporate income tax 21.1% 38,101 -0.0% -2 LTV AND DUTCH REIT-STATUS A number of requirements must be met to achieve and maintain the status of a Dutch real estate investment trust (FBI). One such require- ment relates to the maximum LTV (norm: ≤ 60%). The basis for calculating this LTV differs fundamentally from the basis used for financial institutions. For the latter NSI uses its commer- cial figures. The figures for tax purposes are used to calculate the LTV to assess the Dutch FBI status. NSI complied with this requirement in both 2022 and 2023. 10. INVESTMENT PROPERTY Investment property consists of investment property in operation and investment property under construction: 31 December 2023 31 December 2022Investment property in operation 969,591 1,200,153Investment property under construction 59,210 59,082Investment property 1,028,801 1,259,235 Investment property in operation and investment property under construction are recognised at fair value. The fair value is determined on the basis of level 3 of the fair value hierarchy. At 31 December 2023 100% (2022: 100%) of investment property were externally appraised by external appraisers. Both in 2022 and 2023 the appraisers were JLL, Colliers and Cushman & Wakefield. The fair value is based on the market value (including buyer’s costs, i.e. adjusted for purchase costs such as transfer tax). That means the estimated price on the date of valuation at which a property can be traded between a seller and a purchaser willing to enter into an objective, arm’s length transaction preceded by sound negotiations between both well-informed parties. The valuations are determined on the basis of a capitalisation method, on the basis of a gross initial yield and the therefrom derived net initial yield calculation, whereby the net market rent prices are capitalised, and is subsequently validated by the DCF calculation method, based on the present value of the future cash flows for the next ten year including an exit value at the end of the tenth year. The respective outcomes of both methods are compared. The returns applied are specified for the type of investment property, location, maintenance condition and letting potential of each property, and are based on comparable transactions, along with market-specific and property-specific knowledge. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 88 NSI ANNUAL REPORT 2023 The table below summarises both valuation techniques used to determine the fair value of investment property, as well as the significant unobservable inputs used primarily for the capitalisation method. The respective outcomes of both methods are compared: Valuation technique Unobservable inputs Relationship between significant unobservable inputs and the fair value measurement Capitalisation method and net discounted cash flow calculation. The estimated fair value increases (decreases) if: The capitalisation method consists of a net initial yield calculation, whereby the net market rent prices are capitalised by a yield percentage. Significant: • Gross initial yield / net initial yield • The gross / net yield is lower (higher) The DCF valuation method is based on the present value of net future cash flows to be generated by the property, taking into account the expected increases in rent levels, periods of vacancy, costs of letting incentives such as rent free periods and other costs not covered by the tenant and the estimated oper- ating costs and capital expenditure. Other: • Market rent (Estimated Rental Value) • Rent free periods and other lease incentives and periods of vacancy following expirations of a lease • Operating expenses, capital expenditure and ground lease expenses • The estimated market rent levels are higher (lower) • The periods of vacancy are shorter (longer) • The rent free periods are shorter (longer) • The operating costs and capital are lower (higher) The expected net cash flows are discounted using a risk adjusted discount rate. The discount rate is estimated based on factors including the quality and location of the property, the creditworthiness of the tenant and the lease conditions. The fair value is the outcome of the (theoretical) rent divided by the net initial yield (expressed as a percentage) of the investment prop- erty. The yields applied are specific to the type of property, location, maintenance condition and letting potential of each asset. The yields are determined based on comparable transactions, as well as on market and asset-specific knowledge. Assumptions are made for each property, tenant and vacant unit based on the likelihood of letting (and reletting), the expected duration of vacancy (in months), incentives, capital expenditure and operating costs. The most important assumptions and input parameters used in the valuations are: 2023 2022Average effective contractual rent per sqm (€):Amsterdam 259 243Other G4 220 213Other Netherlands 195 180Average market rent per sqm (€):Amsterdam 271 266Other G4 214 210Other Netherlands 203 186Average gross initial yield (%):Amsterdam 7.4% 5.9%Other G4 8.6% 7.2%Other Netherlands 8.1% 7.0% SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 89 NSI ANNUAL REPORT 2023 INVESTMENT PROPERTY IN OPERATION The movement in investment property in operation per segment was as follows: 2023 Amsterdam Other G4 Other Netherlands TOTALBalance as per 1 January 2023 665,530 333,706 200,917 1,200,153AcquisitionsInvestments 9,546 4,102 311 13,959Revaluation -122,598 -44,623 -25,583 -192,804Transfer from/ to real estate in own use -26,510 3,060 -23,450Disposals -5,494 -22,772 -28,267Balance as per 31 December 2023 520,474 296,245 152,873 969,591Right of use leasehold as per 31 December 2023 -620 -30 -649Lease incentives as per 31 December 2023 6,461 4,615 992 12,069Market value as per 31 December 2023 526,315 300,860 153,835 981,010 2022 Amsterdam Other G4 Other Netherlands TOTALBalance as per 1 January 2022 725,852 346,699 203,436 1,275,988Acquisitions 124 -228 -3 -107Investments 3,275 1,789 587 5,651Revaluation -63,721 -11,490 9,909 -65,302Transfer from/ to real estate in own use 573 573Disposals -3,064 -13,586 -16,650Balance as per 31 December 2022 665,530 333,706 200,917 1,200,153Right of use leasehold as per 31 December 2022 -680 -58 -738Lease incentives as per 31 December 2022 6,589 5,284 1,786 13,659Market value as per 31 December 2022 671,439 338,990 202,645 1,213,074 COLLATERAL On 31 December 2023, properties with a market value of € 172.4m (31 December 2022: € 230.0m) were mortgaged as security for loans drawn at banks amounting to € 55.0m (31 December 2022: € 65.7m). SENSITIVITIES TO YIELD FLUCTUATIONS The value of investment property implies an average gross initial yield of 7.9% (31 December 2022: 6.4%). Valuations can be affected by the general macro-economic and market environment, but also by local factors. For this reason NSI has performed a sensitivity analysis. If, on 31 December 2023, the yields applied for the valuation of investment property had been 50 basis points lower than the yields currently applied, the value of investment property would increase by 6.4% (31 December 2022: 8.0%). In that case NSI’s equity would be € 66m (31 December 2022: € 103m) higher due to a higher result for the year. The loan-to-value would then decrease from 33.0% (31 December 2022: 28.7%) to 31.1% (31 December 2022: 26.5%). If, on 31 December 2023, the yields applied for the valuation of investment property had been 50 basis points higher than those currently applied, the value of investment property would decrease by 5.6% (31 December 2022: 6.9%). In that case NSI’s equity would be € 58m (31 December 2022: € 88m) lower due to a lower result for the year. The loan-to-value would then increase from 33.0% to 35.0%. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 90 NSI ANNUAL REPORT 2023 INVESTMENT PROPERTY UNDER CONSTRUCTION The movement in investment property under construction per segment was as follows: 2023 Amsterdam Other G4 Other Netherlands TOTALBalance as per 1 January 2023 56,022 3,060 59,082Investments 5,466 5,466Capitalised interest 2,368 2,368Revaluation -31,155 -31,155Transfer from / to inv. property in operation 26,510 -3,060 23,450Balance as per 31 December 2023 59,210 59,210Right of use leasehold as per 31 December 2023 -179 -179Market value as per 31 December 2023 59,030 59,030 2022 Amsterdam Other G4 Other Netherlands TOTALBalance as per 1 January 2022 58,371 3,675 62,046Investments 7,233 7,233Capitalised interest 1,328 1,328Revaluation -10,910 -615 -11,525Balance as per 31 December 2022 56,022 3,060 59,082Right of use leasehold as per 31 December 2022 -204 -204Market value as per 31 December 2022 55,818 3,060 58,878 As per 31 December 2023 investment property under construction consists of Laanderpoort and Vitrum and capitalised project costs of Well House, all located in Amsterdam. 11. INTANGIBLE FIXED ASSETS Intangible fixed assets consist of capitalised software. The movement in intangible fixed assets during 2023 and 2022 was as follows: 2023 2022Balance as per 1 January 72 134Investments 31Amortisation -40 -93Balance as per 31 December 32 72Gross book value 1,316 1,316Cumulative amortisation -1,285 -1,245Intangible fixed assets 32 72 Investments in 2022 concern costs made related to robotic process automation. No investments were done in 2023. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 91 NSI ANNUAL REPORT 2023 12. TANGIBLE FIXED ASSETS Tangible fixed assets relate to the furniture and office equipment, as well as part of the offices of the company at Hoogoorddreef 62 (Centerpoint) in Amsterdam. Furthermore, the right of use of lease cars has been included under tangible fixed assets. The movement in tangible fixed assets during 2023 and 2022 was as follows: 2023 2022Balance as per 1 January 4,063 5,165Investments 429 186Depreciation -598 -646Transfer from / to investment property -573Disposals -59 -70Balance as per 31 December 3,835 4,063Gross book value 5,263 5,366Cumulative depreciation -1,428 -1,303Tangible fixed assets 3,835 4,063 13. DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets are attributable to the following items in 2023: 1 January 2023 Movement profit and loss account 31 December 2023Investment property 38,654 38,654Other temporary differences 70 70Deferred tax assets 38,724 38,724 Deferred tax liabilities are attributable to the following items in 2023: 1 January 2023 Movement profit and loss account 31 December 2023Investment property -2 -2Deferred tax liabilities -2 -2 All deferred tax assets and liabilities relate to the newly founded entities as part of the restructuring undergone in 2023. These entities are no longer part of the fiscal real estate investment trust for tax purposes and are as such liable to pay corporate income tax as from 2023. 14. OTHER NON-CURRENT ASSETS 31 December 2023 31 December 2022Lease incentives 12,069 13,659Other non-current assets 12,069 13,659 Lease incentives are straight-lined over the remaining lease terms until the first possible moment of termination by the tenants. Lease incentives contain an amount of € 2.1m to be settled in 2024 (2022: € 2.0m to be settled in 2023). SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 92 NSI ANNUAL REPORT 2023 15. DEBTORS AND OTHER RECEIVABLES 31 December 2023 31 December 2022Gross debtors 1,734 904Provision for doubtful debts -353 -349Debtors 1,381 555Tenant loans 0 0Taxes 781 40Prepayments 1,295 511Other current receivables 506 297Debtors and other receivables 3,963 1,403 The largest item recognised under debtors and other accounts receivable concerns debtors (€ 1.7m), mainly tenants who are overdue, which are reported after deduction of a provision for expected credit losses over the term of the receivables. The provision for doubtful debts has been determined based on IFRS 9 guidelines, in line with prior year’s calculations. 16. CASH AND CASH EQUIVALENTS 31 December 2023 31 December 2022Bank balances 202 196Cash and cash equivalents 202 196 The full amount of cash and cash equivalents is freely available. 17. EQUITY ATTRIBUTABLE TO SHAREHOLDERS ISSUED SHARE CAPITAL As per 31 December 2022 the authorised share capital consisted of 20,054,240 issued and fully paid shares (€ 73.8m). The issued shares have a par value of € 3.68 each. In May 2023 100,981 shares were issued as stock dividend, relating to the final dividend distribution for 2022. This resulted in 20,155,221 issued shares (€74,2m) as per 31 December 2023. 2023 2022Balance as per 1 January 73,800 72,489Stock dividend - final distribution prior year 372 398Stock dividend - interim 913Balance as per 31 December 74,171 73,800 The movement in the number of shares issued in 2022 and 2023 was as follows: 2023 2022Balance as per 1 January 20,054,240 19,698,207Stock dividend - final distribution prior year 100,981 108,025Stock dividend - interim 248,008Balance as per 31 December 20,155,221 20,054,240 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 93 NSI ANNUAL REPORT 2023 The holders of ordinary shares are entitled to receive the dividend declared by the company and to exercise one vote per share at the General Meeting of Shareholders. SHARE PREMIUM RESERVE 2023 2022Balance as per 1 January 915,447 916,768Stock dividend - final distribution prior year -379 -403Stock dividend - interim -918Balance as per 31 December 915,068 915,447 The share premium reserve consists of the paid-up capital for ordinary shares in excess of the nominal value. The share premium reserve qualifies as fiscally recognised paid-up capital for Dutch tax purposes. In the movement of the share premium reserve 2023, € 7k transaction costs on the issue of stock dividend is included. OTHER RESERVES 2023 2022Balance as per 1 January -70,868 -161,762Profit appropriation -31,370 120,961Cash dividend - final distribution prior year -19,633 -17,464Cash dividend - interim -15,116 -12,603Balance as per 31 December -136,988 -70,868 DIVIDEND AND EARNINGS PER SHARE The final dividend for 2023 is to be distributed in the form of cash, shares or a combination of both as proposed by the Management Board and subject to approval by the General Meeting of Shareholders on 19 April 2024. This proposal was not included as a liability in the balance sheet at 31 December 2023. NUMBER OF SHARES 31 December 2023 31 December 2022Weighted average number of ordinary shares 20,117,872 19,869,975Number of ordinary shares entitled to dividend 20,155,221 20,054,241 DIVIDEND 2023 2022Per share (€) Total Per share (€) TotalInterim dividend paid 0.75 15,116 1.04 20,598Proposed final dividend 0.77 15,520 1.12 22,461Total dividend 1.52 30,636 2.16 43,059 EARNINGS PER SHARE 2023 2022Total result (€) -7.08 -1.58 The calculation of earnings per share at 31 December 2023 is based on the result attributable to ordinary shareholders of € 142.4m negative (2022: € 31.4m negative) and a weighted average number of outstanding ordinary shares during 2023 of 20,117,872 (2022: 19,869,975). SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 94 NSI ANNUAL REPORT 2023 The proposed distribution of the final dividend complies with the fiscal distribution obligation and is in line with the current dividend policy to distribute at least 75% of the direct result. CAPITAL MANAGEMENT NSI manages equity attributable to shareholders as its capital. NSI prefers to work with a conservative capital structure to underpin its real estate activities, to secure the group’s continuity in the long run. The aim is to have at any point in time sufficient balance sheet capacity to pay out dividends, honour all capital commitments and absorb a material fall in appraisal values, be able to fund investment opportunities and stay well within all loan covenants and so not having to resort to asset disposals or equity issue to restore the balance sheet. NSI prefers to finance itself mostly through unsecured financing to maintain optimal flexibility. It will also look to manage its balance sheet risk in relation to the other risks inherent to the business (economic cycle risk, leasing risk, development risk etc.). NSI also consistently monitors its fiscal capital base to make sure it meets and continues to meet all the requirements related to its FBI- status. Management seeks to achieve a balance between a higher return that could be achieved through a higher level of debt capital, on the one hand, and the benefits of a healthy financial position, on the other. In addition, management safeguards capital by monitoring the loan-to- value ratio and the debt owed to credit institutions / equity ratio. The ratio of debt owed to credit institutions / property invest- ments was 33.0% on 31 December 2023 (31 December 2022: 28.7%). The ratio of debt owed to credit institutions / equity was 32.7% / 67.3% on 31 December 2023 (31 December 2022: 29.2% / 70.8%). All bank covenants are monitored proactively and periodically. The key covenants for NSI relate to: • Loan-to-value; • The interest coverage ratio; • Solvency. Furthermore, loans differ in the use or non-use of security, (public) transferability and other possible characteristics such as convertibility, affiliations with indices and inflation. LOAN-TO-VALUE NSI has two covenants relating to loan-to-value (LTV): • LTV of a pool of NSI’s properties regarding a secured financing arrangement. The maximum individual LTV relating to this specific security must be below 60%; • LTV regarding NSI’s entire portfolio. The maximum LTV must not exceed 60%. The following table provides an overview of the LTV at group level: LTV (%) as per 31 December Individual LTV's are compliant2023 2022 2023 2022NSI - group-level 33.0% 28.7% Yes Yes In 2023 NSI and its subsidiaries complied with the LTV requirements agreed with banks on both an individual and consolidated level. Furthermore, a number of requirements must be met to achieve and maintain the status of a Dutch real estate investment trust (FBI). One such requirement relates to the maximum LTV (norm: ≤ 60%). The basis for calculating this LTV differs fundamentally from the basis used for financial institutions. For the latter group NSI uses its commercial figures. The figures for tax purposes are used to calculate the LTV to assess the Dutch FBI status. NSI complied with this requirement in 2022. INTEREST COVERAGE RATIO NSI has two covenants relating to the interest coverage ratio (ICR): • The interest coverage ratio for the abovementioned secured pool of properties must be at least 2.0; • Interest coverage ratio for NSI’s entire portfolio must be at least 2.0. The table below shows the interest coverage ratio (ICR): ICR as per 31 December Individual ICR's are compliant2023 2022 2023 2022NSI - group-level 5.5 6.3 Yes Yes SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 95 NSI ANNUAL REPORT 2023 In 2023 NSI and its subsidiaries complied with the independent and consolidated interest coverage ratio requirements agreed with the banks. Based on our ICR debt covenant of 2.0, NSI could absorb a net rental income decline of ca. 63% before breaching this covenant. SOLVENCY Based on the covenants, adjusted shareholders’ equity at group level must be at least 40%. As per 31 December 2023 this was 68.1% (31 December 2022: 69.6%) in line with the covenants. Other than the requirements ensuing from its status as a fiscal investment institution, the company nor its subsidiaries are subject to any externally imposed capital requirements. 18. INTEREST BEARING LOANS The development of the interest bearing loans in 2022 and 2023 was as follows: 2023 2022Balance as per 1 January 351,640 389,796Drawn interest bearing loans 10,000 5,000Transaction costs paid -242 -339Amortisation transaction costs 434 383Repayment of interest bearing loans -28,200 -43,200Balance as per 31 December 333,632 351,640Redemption requirement interest bearing loans 65,656Balance as per 31 December 333,632 285,984 The maturities of the loans at 31 December 2022 and 31 December 2023 were as follows: 31 December 2023 31 December 2022FixedVariable interest TOTAL FixedVariable interest TOTALinterestinterestUp to 1 year 65,656 65,656From 1 to 2 yearsFrom 2 to 5 years 89,781 113,935 203,717 39,928 66,359 106,287From 5 to 10 years 129,916 129,916 179,697 179,697Total 219,697 113,935 333,632 219,624 132,016 351,640Average interest rate (excl. interest-rate swaps) 2.0% 5.7% 2.0% 4.0% In 2023 € 65.7m of financing expired and an amended secured loan agreement for a new four year term was agreed. No financing will expire in 2024. Loans outstanding have a remaining average maturity of 4.5 years (31 December 2022: 4.7 years) The weighted average annual interest rate on the loans and interest-rate swaps at the end of 2023 was 3.2% (31 December 2022: 2.0%). These include margin, utilisation fees and amortised costs and exclude commitment fees. 31 December 2023 31 December 2022SecuredUnsecuredTOTAL SecuredUnsecuredTOTALloansloansloansloansInterest bearing loans - nominal value 55,000 280,000 335,000 65,700 287,500 353,200Amortised costs -213 -1,155 -1,368 -44 -1,516 -1,560Total 54,787 278,845 333,632 65,656 285,984 351,640 During 2023 € 0.2m of financing costs were capitalised (2022: € 0.3m). The financing costs are recognised in the profit and loss account using the effective interest method. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 96 NSI ANNUAL REPORT 2023 As security for loans (up to € 55.0m), mortgages were pledged against investment property valued at € 172.4m (31 December 2022: € 230.0m), combined with pledges on rental income and maximum LTV requirements. On 31 December 2023 loans and borrowings include a drawn amount of € 10.0m of a € 300.0m revolving credit facility (31 December 2022: € 17.5m of € 300.0m drawn). The fair value of the loans on 31 December 2023 was € 311.0m (31 December 2022: € 322.1m). 19. OTHER NON-CURRENT LIABILITIES 31 December 2023 31 December 2022Security deposits 3,540 2,764Lease liabilities 992 980Other non-current accounts payable 4,533 3,744 The average term of the leases relating to the security deposits is 2.0 years (31 December 2022: 2.3 years). The net present value of non-current future lease obligations amounts to € 1.0m, consisting of leasehold obligations (€ 0.7m) and car lease obligations (€ 0.3m). 20. DEBTS TO CREDIT INSTITUTIONS The item Debts to credit institutions concerns cash loans and current account overdrafts with banks. NSI has concluded credit arrange- ments with a number of banks, of which a part is available as overdraft facility. In the case of cash-pool arrangements, cash and cash equivalents and debts to credit institutions are offset if allowed under IFRS9. The weighted average interest on available credit facilities as per yearend 2023 was 1.3% (yearend 2022: 1.3%) per annum including margin. 31 December 2023 31 December 2022Credit facilities 25,000 25,000Unused 13,988 10,963Debts to credit institutions 11,012 14,037 21. CREDITORS AND OTHER PAYABLES 2023 2022Creditors 3,971 3,178Taxes 3,074 1,918Interest 603 1,357Security deposits 1,770 1,994Lease liabilities 325 373Deferred income 7,158 6,129Accruals 10,020 8,254Other current payables 35 158Creditors and other payables 26,956 23,361 As per 31 December 2023, the net present value included for leasehold obligations amounts to € 0.1m and for car lease obligations € 0.2m. 22. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT RECOGNITION CATEGORIES AND FAIR VALUES The table on the next page summarises the book values and fair values of financial assets and liabilities, as well as their applicable level within the fair value hierarchy. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 97 NSI ANNUAL REPORT 2023 FAIR VALUE HIERARCHY Fair value measurements are categorised into different levels in the fair value hierarchy depending on the input that formed the basis of the valuation techniques applied. The different levels are defined as follows: • Level 1: valuation based on quoted prices in active markets for identical assets or liabilities; • Level 2: valuation of assets or liabilities based on (external) observable information; • Level 3: valuation of assets or liabilities based wholly or partially on (external) unobservable information. Level 2 applies to all financial instruments; a model in which fair value is determined based on directly or indirectly observable market data. In level 2 fair values for over-the-counter derivatives is calculated as the present value of the estimated future cash flows based on observable yield curves obtained by external data sources (e.g. Bloomberg) and valuation statements received from our counterparties These quotes are regularly tested for adequacy by discounting cash flows using the market interest rate for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments that take into account the credit risk of the group entity and the counterparty, when appropriate. 31 December 2023 31 December 2022NoteFair value Amortised Fair value Fair value Amortised Fair valuelevelcost pricelevelcost priceFinancial assets valued at fair value through profit or lossDerivative financial instruments 2 2 1,163Financial assets valued at amortised cost priceFinancial fixed assets 3 0 3 0Debtors and other receivables 15 2 1,887 2 852Cash and cash equivalents 16 1 202 1 196Financial liabilities valued at fair value through profit or lossDerivative financial instruments 2 1,608 2Financial liabilities valued at amortised cost priceInterest bearing loans 18 2 333,632 2 351,640Other non-current liabilities 19 2 4,533 2 3,744Debts to credit institutions 20 1 11,012 1 14,037Creditors and other payables 21 2 16,724 2 15,314 FAIR VALUE HIERARCHY The categories of financial instruments are: • AC: Amortised Cost; • FVPL: Fair Value through Profit or Loss; • FVOCI: Fair Value through Other Comprehensive Income. The book value of the financial instruments in the balance sheet and the fair values are as follows: NoteCategory31 December 2023 31 December 2022IAS39Book value Fair value Book value Fair valueFinancial fixed assets AC 0 0 0 0Derivative financial instruments FVPL 1,163 1,163Debtors and other receivables 15 AC 1,887 1,887 852 852Cash and cash equivalents 16 AC 202 202 196 196Financial assets 2,089 2,089 2,211 2,211Interest bearing loans 18 AC 333,632 310,986 351,640 322,124Derivative financial instruments FVPL 1,608 1,608Other non-current liabilities 19 AC 4,533 4,533 3,744 3,744Debts to credit institutions 20 AC 11,012 11,012 14,037 14,037Creditors and other payables 21 AC 16,724 16,724 15,314 15,314Financial liabilities 367,509 344,863 384,735 355,219 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 98 NSI ANNUAL REPORT 2023 On the balance sheet date the derivative financial instruments had the following maturity: 31 December 2023 31 December 2022# contracts NominalFair valueFair value# contracts NominalFair valueFair valuevalueassetsliabilitiesvalueassetsliabilitiesUp to 1 year 9 147,500 1,163From 1 to 5 years 1 55,000 1,608Total 1 55,000 1,608 9 147,500 1,163 NSI minimises its interest rate risk by swapping the variable interest it pays on part of its loans for a fixed interest rate by means of a contract with a fixed interest rate of 3.31% (2022: nine contracts with an interest rate varying from -0.11% to 0.73%) with a maturity date in 2027 (2022: 2023). The remaining maturity of the derivative is 3.5 years (2022: 0.4 years). NSI is hedged at an interest rate of 3.3% (2022: 0.4%), excluding margin, 17.9% of the total outstanding variable interest loans are now under hedged (2022: over hedged 4.0%), 82.1% of the total volume is hedged (2022: 104.0%). FINANCIAL RISK MANAGEMENT In the normal conduct of business, the group is subject to liquidity risk, including financing and refinancing risk, market risk and credit risk. Overall risk management is focused on the unpredictability of the financial markets and is designed to minimise any negative effects on the group’s business performance. The group closely monitors the financial risks associated with its business and financial instru- ments. The group is a long-term investor in real estate and therefore applies the principle that the financing of these investments should also be planned for the long term, in accordance with the risk profile of its business. The policy and monitoring of risks are reviewed regularly and adjusted if necessary to reflect changes in market conditions and the group’s operations. LIQUIDITY RISK Investing in property is a capital-intensive activity. The property portfolio is financed partly with equity and partly with debt. Funding with debt carries refinancing risks. The potential impact is that there is insufficient liquidity available to meet the company’s obligations at the moment of the interest payment or repayment. Liquidity risk involves the risk of the group having problems fulfilling its financial obliga- tions. The basic principle of liquidity risk management is that sufficient resources should be kept available, if possible, for the group to fulfil its current and future financial obligations under normal and difficult circumstances and without incurring unacceptable losses or harming the reputation of the group. Liquidity risk management involves ensuring the availability of adequate credit facilities. To spread its liquidity risk, the group has funded its operations with various loans and shareholders’ equity. Furthermore, measures have been taken to ensure a higher occupancy rate and to prevent financial losses resulting from the bankruptcies of tenants. Fluctuations in the company’s liquidity needs are absorbed by undrawn parts of committed credit facilities of € 290.0m (maturity: 2.9 years; 2022: € 282.5m, maturity: 3.9 years). The interest and repayment obligations were safeguarded for 2023 based on the undrawn parts of committed credit facilities, extensions on loans and lease agreements. Maturity dates are spread over time to minimise liquidity risk. The average remaining maturity of loans is 4.5 years (2022: 4.7 years). At year-end 2023 NSI had € 25.0m of current account committed credit facilities with banks at its disposal, which is part of a total committed credit facility of € 300.0m. Of the current account committed credit facility € 11.0m was drawn on 31 December 2023 (31 December 2022: € 14.5m of € 25.0m drawn). The total undrawn committed credit facilities of the interest-bearing loans and current account credit facilities amounted to € 279.0m at 31 December 2023. Furthermore, cash and cash equivalents amounted to € 0.2m at 31 December 2023. This brings the total of unused credit facilities and cash and cash equivalents to € 279.2m at 31 December 2023. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 99 NSI ANNUAL REPORT 2023 The contractual periods of the financial liabilities, including the estimated interest payments are stated below: 2023 Contractual cash flowBook valueTOTAL < 6 months 6 - 12 1 - 2 years 2 - 5 years > 5 yearsmonthsLoans 333,632 376,124 5,233 5,291 10,525 222,181 132,894Other non-current liabilities 4,533 4,946 689 2,835 1,422Debts to credit institutions 11,012 11,012 11,012Creditors and other payables 16,724 16,733 16,276 457Non-derivative financial liabilities 365,901 408,816 32,522 5,748 11,213 225,016 134,317Derivative financial instruments 1,608 1,249 178 180 357 534Total 367,509 410,064 32,700 5,928 11,570 225,550 134,317 2022 Contractual cash flowBook valueTOTAL < 6 months 6 - 12 1 - 2 years 2 - 5 years > 5 yearsmonthsLoans 351,640 390,124 69,955 3,232 7,680 123,316 185,941Other non-current liabilities 3,744 4,154 1,144 1,562 1,448Debts to credit institutions 14,037 14,037 14,037Creditors and other payables 15,314 15,324 14,812 511Non-derivative financial liabilities 384,735 423,639 98,804 3,743 8,825 124,878 187,389Derivative financial instrumentsTotal 384,735 423,639 98,804 3,743 8,825 124,878 187,389 The gross inflow / outflow reflected in these table shows the non-discounted contractual cash flows related to the derivative financial liabilities held for risk management purposes that are generally not terminated before the end of the contractual period. The information shows the net cash flow amounts for derivatives settled net in cash and the gross cash inflows and outflows for derivatives that are simultaneously settled gross in cash. The interest payments on the loans in the above table with variable interest rates and interest rate swaps used for hedging purposes are based on market interest rates at the end of the reporting period. The amounts may change due to changes in market interest rates. It is not expected that the cash flows assumed in the maturity analysis will occur significantly earlier or with significantly different amounts. MARKET RISK Market risk exists because of price changes. The purpose of market risk management is to manage and control market risk exposures within acceptable limits while simultaneously optimising returns. Market risk consists of interest rate risk and foreign currency risk. The group uses derivatives to manage the market risk of volatility of interest rates. Such transactions take place within the guidelines laid down in the treasury policy. There is no currency risk exposure at the end of December 2023. INTEREST RATE RISK NSI must at all times meet its obligations under the loans drawn and the interest coverage ratio shows the company’s ability to do so. The interest coverage ratio is calculated as the net rental income divided by the net financing costs. The financing covenants stipulate that the interest coverage ratio may not fall below 2.0. In addition, NSI must comply with the requirements set in terms of its loan-to-value ratio (debts to credit institutions divided by its investments). The financing covenants stipulate that the total amount of loans drawn may not exceed 60% of the value of the underlying investment property. The applicable interest rates on loans are partly dependent on the loan-to-value ratio at the moment the interest rate is being set. If the loan-to-value ratio increases, the interest costs will therefore rise. The ratios to which the company has committed itself in the loan agreements are monitored on a regular basis, at least once every six months. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 100 NSI ANNUAL REPORT 2023 If NSI were not able to meet these criteria and were not able to reach an agreement about this with the banks involved, this could result in the financing arrangements being renegotiated, terminated or prematurely repaid. If NSI does not have sufficient cash or alternative funding sources of funding to meet its obligations, any "default" or "cross-default" situation can occur. At the end of 2023 the interest coverage ratio was 5.5 (31 December 2022: 6.3), which is higher than the level of 2.0 agreed with the banks. Variable-interest rate loans expose NSI to uncertainty about interest expenses. Derivatives are used to manage interest rate risk. NSI's policy regarding the hedging of interest rate risk is defensive by nature, NSI does not take speculative positions. NSI aims to hedge the majority of the outstanding loans for the medium to long term. On 31 December 2023 NSI held financial derivatives with a nominal value of € 55m (31 December 2022: € 147.5m) for the purpose of managing the interest rate risk on its loans. SENSITIVITY OF INTEREST RATE If the three-month variable interest rate were to rise 100 basis points compared to 31 December 2023, the theoretical interest expenses for 2024 would increase by € 0.6m (2022: decrease by € 0.1m), due to a 17.9% exposure on loans to variable interest rates, assuming no changes to the portfolio or financing (including margins). In case the variable interest rate would be 100 basis points lower, the interest expenses would decrease by € 0.6m (2022: increase by € 0.1m). The financial derivatives are discounted (inclusive and exclusive of derivatives) in this calculation, but potential changes to the fair value of the derivatives are not. ANALYSIS OF EFFECTIVE INTEREST RATES AND INTEREST RATE REVISIONS The table below shows the effective interest rate (the variable interest rate is based on 3-month Euribor as per 31 December) of financial assets and liabilities for which interest is payable at the balance sheet date, together with the dates when the rates will be reviewed. 2023 Effective interest TOTAL < 1 year 1 - 2 years 2 - 5 years > 5 yearsFixed interest loans 2.0% 219,697 89,781 129,916Variable interest loans 5.7% 59,148 59,148Fixed interest as a result of swaps 5.2% 54,787 54,787Total 3.2% 333,632 203,717 129,916Redemption obligationsBalance as per 31 December 2023 333,632 203,717 129,916 2022 Effective interest TOTAL < 1 year 1 - 2 years 2 - 5 years > 5 yearsFixed interest loans 2.0% 219,624 39,928 179,697Variable interest loans 4.0%Fixed interest as a result of swaps 2.1% 132,016 65,656 66,359Total 2.0% 351,640 65,656 106,287 179,697Redemption obligations 65,656 65,656Balance as per 31 December 2022 285,984 106,287 179,697 CREDIT RISK Credit risk is defined as the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet their contractual obligations. Credit risks mainly arise from tenant receivables. The book value of the financial assets represents the maximum exposure to credit risk. The maximum credit risk on the balance sheet date was as follows: 31 December 2023 31 December 2022Financial fixed assets 0 0Derivative financial instruments 1,163Debtors and other receivables 1,887 852Cash and cash equivalents 202 196Credit risk 2,089 2,211 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 101 NSI ANNUAL REPORT 2023 BANKS The risks associated with a possible non-performance by counterparties are minimised by entering into transactions for loans and derivative financial instruments and cash management with various reputable banks. These banks have credit ratings of at least A1 (Moody’s) or A- (Standard & Poor’s). Management actively monitors the credit ratings. TENANTS The creditworthiness of tenants is closely monitored by careful screening the credit scores of tenants in advance and by actively moni- toring debtor balances. In addition, rent is generally paid in advance and tenants are required to provide collateral for rent payments for a limited period of three months in the form of guarantee payments or bank guarantees. As the tenant base consists of a large number of different parties, there is no concentration of credit risk. The maturity of (gross) receivables was as follows: 31 December 2023 31 December 2022Up to 1 month expired 901 254From 1 to 3 months expired 216 34From 3 months to 1 year expired 231 135More than 1 year expired 386 480Gross debtors 1,734 904 Aside from bank guarantees, security deposits for € 5.3m (2022: € 4.8m) were obtained to cover for potential loss of creditworthiness of tenants with regard to the receivables, of which € 1.8m (2022: € 2.0m) is relating to expiring lease contracts within one year. Movement in the provision for impairment of doubtful debts was as follows: 2023 2022Balance as per 1 January 349 300Addition to / release of provision 10 52Write-off bad debts -6 -2Balance as per 31 December 353 349 Impairment losses recognised at 31 December 2023 were related to various tenants who indicated that they would not be able to pay outstanding balances due to the economic circumstances. The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared characteristics and the days past due date, adjusted if deemed needed with forward looking information. On this basis the expected loss rate for trade receivables which are less than 90 days expired is below 3.5% and for trade receivables more than 90 days expired these rates per segment are: > 90 days expiredAmsterdam 51.26%Other G4 73.61%Other Netherlands 39.74% SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 102 NSI ANNUAL REPORT 2023 23. OFF-BALANCE SHEET ASSETS AND LIABILITIES OFF- BALANCE SHEET ASSETS PARK OFFICE, ROTTERDAM - NEW OWNER OF THE BUILDING In December 2021 NSI sold the Park Office, Rotterdam asset. NSI agreed a conditional additional payment of € 2.5m (earn-out clause relating to transformation potential), to be paid by the new owner or future owner(s), if an irrevocable environmental permit will be obtained by the owner before 2050. SHOPPING CENTER ‘T LOON, HEERLEN - INSURANCE COMPANIES Following the judgement of the The Hague Court of Appeal dated 21 November 2023, the association of owners of shopping mall 't Loon filed a claim with its general liability insurers to compensate the legal fees of the association of owners incurred as a consequence of the legal proceedings connected to the sinkhole in 2011. A first calculation of the legal fees incurred amount up to € 0.5m. NSI, as (former) member of the association owners, is entitled to approximately 60% of this claim. OTHER The company has entered into investment commitments for an amount of € 5.4m (31 December 2022: € 1.8m) relating to investment properties. For maintenance, technical property management, IT-providers etc. the company has entered into other contractual obliga- tions for € 6.6m (31 December 2022: € 5.0m). 24. RELATED PARTIES The following parties qualify as related parties: • The company and its subsidiaries; • Its Supervisory Board members and; • Management Board members. NSI defines its statutory Management Board as “key management personnel”. INTERESTS OF MAJOR INVESTORS Notifications of shareholdings of more than 3% are disclosed under the Dutch Disclosure of Major Holdings in Listed Companies Act. According to the Dutch Authority for the Financial Markets (AFM) the following shareholders hold a stake of more than 3% on 31 December: 31 December 2023 31 December 2022ICAMAP Investments SARL 10.0% 10.0%BlackRock, Inc. 5.6% 5.8%Clearance Capital Ltd. 5.1% 3.1%Ameriprise Financial < 3.0% 5.1% SUPERVISORY BOARD AND MANAGEMENT BOARD MEMBERS The members of the Supervisory and Management Boards of NSI N.V. have no direct personal interest in the investments made by NSI N.V., nor did they have such an interest at any time in the past year. The company is not aware of any investment property transactions with persons or institutions that could be considered to have a direct relationship with the company in the reporting year. REMUNERATION OF THE SUPERVISORY BOARD 2023 2022Jan-Willem de Geus 59 62Jan-Willem Dockheer 44 44Margreet Haandrikman 44 43Karin Koks - Van der Sluis 48 54Harm Meijer (up to 19 June 2023) 20 45Remuneration Supervisory Board 215 247 The schedule above includes the payment the Supervisory Board members receive as a member of the Audit Committee, the Remunera- tion Committee, the Selection & Appointment Committee and the Real Estate Committee. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 103 NSI ANNUAL REPORT 2023 The Supervisory Board members did not hold any shares in the company at the end of 2023 (2022: 0), except for Mrs. Koks - van der Sluis who holds 163 shares (2022: 163 shares). Furthermore, Mr. Meijer, who resigned from the Supervisory Board on 19 June 2023, is one of the shareholders at ICAMAP Investments SARL, holding 10.0% of the shares as per 31 December 2023 (2022: 10.0%). REMUNERATION OF THE MANAGEMENT BOARD 2023 Salary Variable SocialPension Other TOTAL EquityLong term Short termsecurityholding# sharesBernd Stahli 436 82 15 20 2 554 17,700Alianne de Jong (up to 15 November 2023) 295 96 13 14 -9 409 8,522Remuneration Management Board 730 178 28 34 -7 963 26,222 2022 Salary Variable SocialPension Other TOTAL EquitysecurityholdingLong term Short term# sharesBernd Stahli 436 45 91 13 18 -5 598 17,000Alianne de Jong 341 22 107 13 14 1 499 7,722Remuneration Management Board 777 68 198 27 32 -4 1,097 24,722 NSI shares held by directors are purchased at their own risk and expense. The remuneration of the Management Board consists of a base salary, a variable remuneration and secondary employment benefits. The variable component consists of a long-term incentive (LTI) and a short-term incentive (STI). The LTI concerns a rolling cash incentive plan covering a three-year period. The LTI is capped to 90% of the base salary at the moment of the grant for the CEO and at 45% for the CFO. It is based on the total shareholder return (TSR) during the LTI-period. This TSR takes into account the NSI share price at the beginning and at the end of the period as well as dividends distributed during the period. In addi- tion, NSI’s TSR is compared with a benchmark TSR. The STI concerns an annual performance related cash incentive. The collective performance measures in the STI represent short-term results needed for sustainable value creation with respect to the most important achievement areas of the company. These could include occupancy rate, like-for-like net rental income, EPRA earnings per share, organisational targets like personnel retention rate and sustain- ability performance. Next to these collective measures the company could also apply individual targets, related to the individual roles of the members and specific short-term achievements needed for NSI. The STI is capped to 24% of the base salary for the CEO and to 36% of the base salary for the CFO. The variable remuneration is a cash-settled, share-based payment transaction. Its allocation is paid in cash under the condition that the respective Management Board member uses two-thirds of the net amount of the LTI and one-third of the net amount of the STI to purchase NSI shares until the shareholding requirement has been met. During 2023, no LTI remuneration was paid; the variable remuneration paid to the CEO amounted to € 82k (STI) and for the CFO to € 96k (STI). The provision included in the balance sheet as per end of December 2023 amounts to € 189k. The provisions for the CEO and CFO on 31 December 2023 amount to respectively € 87k (STI) and € 102k (STI); no provisions for LTI are taken. The variable component in the remuneration overviews consists of the balance of the release of prior year provisions versus the actual payments made to the Management Board and the additional provision taken in the course of 2023. NO SHARE OPTIONS AND NO LOANS No members of the Management Board or Supervisory Board hold option rights in NSI N.V.. No loans, advances or guarantees have been provided to members of the Management Board or Supervisory Board by NSI N.V.. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 104 NSI ANNUAL REPORT 2023 25. SUBSIDIARIES The following subsidiaries are included in the consolidated financial statements: 31 December 2023 31 December 2022NSI Real Estate B.V. Amsterdam, The Netherlands 100.0% 100.0%NSI Kantoren B.V. Amsterdam, The Netherlands 100.0% 100.0%NSI Vastgoed I B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed IV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed V B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed VI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed VII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed VIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed IX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed X B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed X IIB.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XIV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XVI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XVII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XVIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XIX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXIV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXVI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXVII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXVIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXIX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXIV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXXI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXXII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed B.V. Amsterdam, The Netherlands 100.0% 100.0%NSI Flexoffices B.V. Amsterdam, The Netherlands 100.0% 100.0%HNK Vastgoed B.V. Amsterdam, The Netherlands 100.0% 100.0%NSI Vastgoed II B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed III B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXV B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXVI B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXVII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXVIII B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXIX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXX B.V. Amsterdam, The Netherlands 100.0%NSI Vastgoed XXXXIII B.V. Amsterdam, The Netherlands 100.0%HNK Services B.V. Amsterdam, The Netherlands 100.0% 100.0%NSI Development B.V. Amsterdam, The Netherlands 100.0% 100.0%NSI Projects I B.V. Amsterdam, The Netherlands 100.0%NSI Projects II B.V. Amsterdam, The Netherlands 100.0%NSI Projects III B.V. Amsterdam, The Netherlands 100.0% SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 105 NSI ANNUAL REPORT 2023 COMPANY BALANCE SHEET (BEFORE PROPOSED PROFIT APPROPRIATION) FOR THE YEAR ENDED 31 DECEMBER 2023 ( x € 1,000) Note 31 December 2023 31 December 2022 Assets Intangible fixed assets 32 72 Tangible fixed assets 904 1,035 Financial fixed assets 1 1,053,066 1,257,092 Non-current assets 1,054,001 1,258,199 Debtors and other receivables 7,792 457 Derivative financial instruments 1,163 Cash and cash equivalents 5 133 Current assets 7,797 1,753 Total assets 1,061,798 1,259,952 Shareholders' equity Issued share capital 2 74,171 73,800 Share premium reserve 2 915,068 915,447 Participations reserve 2 103,835 206,861 Retained earnings 2 -240,823 -277,729 Total result for the year 2 -142,370 -31,370 Shareholders' equity 709,882 887,008 Liabilities Interest bearing loans 333,632 285,984 Derivative financial instruments 1,608 Other non-current liabilities 275 151 Non-current liabilities 335,515 286,135 Redemption requirement interest bearing loans 65,656 Debts to credit institutions 11,012 14,037 Creditors and other payables 5,389 7,116 Current liabilities 16,401 86,809 Total liabilities 351,916 372,944 Total shareholders' equity and liabilities 1,061,798 1,259,952 The notes on pages 107 to 110 form an integral part of these company financial statements. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 106 NSI ANNUAL REPORT 2023 COMPANY INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2023 ( x € 1,000) Note 2023 2022 Administrative costs 3 -4,563 -8,558 Other income and costs -12 Financing income 4 1,763 Financing costs 4 -10,703 -9,574 Movement in market value of financial derivatives 4 -2,771 2,902 Net financing result -11,711 -6,672 Corporate result before tax -16,273 -15,242 Corporate income tax Corporate result after tax -16,273 -15,242 Result from participations -126,097 -16,128 Total result for the year -142,370 -31,370 The notes on pages 107 to 110 form an integral part of these company financial statements. SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 107 NSI ANNUAL REPORT 2023 NOTES TO THE COMPANY FINANCIAL STATEMENTS GENERAL NSI N.V. exclusively performs holding activities. NSI’s structure as described in the notes to the consolidated financial statements also applies to the company financial statements. The company financial statements have been prepared in accordance with the provisions of Title 9, Book 2 of the Dutch Civil Code regarding financial reporting. In the preparation of its financial statements, the company has also applied the provisions for the contents of financial reporting by investment institutions pursuant to the Dutch Financial Super- vision Act. PRINCIPLES OF DETERMINATION OF THE RESULT The company financial statements have been prepared in accordance with Article 362 Paragraph 8 Book 2 of the Dutch Civil Code. This means that the principles for the processing and valuation of assets and liabilities and the determination of the result as described in the disclosure to the consolidated financial statements also apply to the company financial statements, unless stated otherwise. These principles also include the classification and presentation of financial instruments, being equity instruments or financial liabilities. For a description of these principles, please refer to pages 86 to 91. If required notes have been incorporated in the consolidated financial statements these notes have not been incorporated here. FINANCIAL FIXED ASSETS Shares in group companies are valued at net asset value. In determining the net asset value, all assets, liabilities and profits and losses are subject to the accounting principles used for the consolidated financial statements, in accordance with the provisions of Article 362 Paragraph 8 (final sentence) of Book 2 of the Dutch Civil Code. All receivables from group companies are considered as an extension of net investments in group companies. 1. FINANCIAL FIXED ASSETS 31 December 2023 31 December 2022 Balance as per 1 January 1,257,092 1,337,336 Result from participations -126,097 -16,128 Changes in receivables from group companies -77,930 -64,116 Balance as per 31 December 1,053,066 1,257,092 2. SHAREHOLDERS EQUITY 2023 Issued share capital Share premium reserve (Statutory) participations reserve Retained earnings Result for the year Shareholders' equity Balance as per 1 January 2023 73,800 915,447 206,861 -277,729 -31,370 887,008 Total result for the year -142,370 -142,370 Other comprehensive income / expense Total comprehensive income / expense for the year -142,370 -142,370 Profit appropriation - 2022 -31,370 31,370 Distribution final dividend - 2022 372 -379 -19,633 -19,640 Interim dividend - 2023 -15,116 -15,116 Subtraction from participations reserve -103,026 103,026 Contributions from and to shareholders 372 -379 -103,026 36,906 31,370 -34,757 Balance as per 31 December 2023 74,171 915,068 103,835 -240,823 -142,370 709,882 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 108 NSI ANNUAL REPORT 2023 2022 Issued share capital Share premium reserve (Statutory) participations reserve Retained earnings Result for the year Shareholders' equity Balance as per 1 January 2022 72,489 916,768 271,047 -432,809 120,961 948,457 Total result for the year -31,370 -31,370 Other comprehensive income / expense Total comprehensive income / expense for the year -31,370 -31,370 Profit appropriation - 2021 120,961 -120,961 Distribution final dividend - 2021 398 -403 -17,464 -17,470 Interim dividend - 2022 913 -918 -12,603 -12,608 Subtraction from participations reserve -64,186 64,186 Contributions from and to shareholders 1,310 -1,321 -64,186 155,080 -120,961 -30,078 Balance as per 31 December 2022 73,800 915,447 206,861 -277,729 -31,370 887,008 Both the retained earnings reserve and the share premium reserve are available for distribution as dividend. For further details on movements in shareholders’ equity, please refer to the consolidated financial statements (see disclosure 17 to the consolidated financial statements). STATUTORY RESERVES The statutory reserves in the company balance sheet are reserves which must be retained pursuant to the Dutch Civil Code and consist of the participation reserve and the reserve for foreign currency translation. PARTICIPATION RESERVE The participation reserve relates to a revaluation reserve on the investment properties in the subsidiaries and consists of the cumula- tive positive (unrealised) revaluations of these investments. This statutory reserve is a non-distributable reserve in accordance with the Dutch Civil Code. The revaluation reserve was determined at individual property level in 2022 and 2023, before appropriation of profits. DIVIDEND Taking into consideration the interim dividend of € 0.75 per share already distributed (2022: € 1.04; adjusted for stock consolidation), a final dividend of € 0.77 per share has been proposed (2022: € 1.12). PROPOSED PROFIT APPROPRIATION The Articles of Association of NSI N.V. stipulate that the allocation of the result after tax for the financial year is determined by the General Meeting of Shareholders. For the 2023 financial year the Management Board, with the approval of the Supervisory Board and in line with the applicable dividend policy (i.e. a pay-out of at least 75% of the direct result), has proposed a final dividend of € 0.77 per share. This puts the total dividend for 2023 at € 1.52 per share, of which € 0.75 per share was already distributed as an interim dividend in August 2023. Based on the number of outstanding shares eligible for dividend (20,155,221), the total amount of the final dividend is € 15.5m and will be withdrawn from the retained earnings (excluding dividend paid in shares). SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 109 NSI ANNUAL REPORT 2023 Provided that the General Meeting of Shareholders approves this dividend proposal, the final dividend will be made payable in the second quarter of 2024. 2023 Total result for the year - 2023 -142,370 Interim dividend - 2023 -15,116 Proposed final dividend - 2023 -15,520 On balance subtracted from the reserves -173,006 In anticipation of a decision on the matter by the General Meeting of Shareholders the non-allocated result after tax for the financial year is accounted for separately in equity as the result for the financial year. 3. ADMINISTRATIVE COSTS 2023 2022 Salaries and wages -5,293 -5,195 Social security -624 -620 Pensions -367 -336 Depreciation right of use tangible fixed assets -267 -284 Other staff costs -1,274 -1,182 Staff costs -7,825 -7,618 Compensation supervisory board -252 -251 Depreciation and amortisation -348 -445 Other office costs -1,373 -1,476 Office costs -1,721 -1,920 Audit, consultancy and valuation costs -1,772 -1,269 Other administrative costs -1,053 -1,332 Administrative costs -12,624 -12,390 Allocated administrative costs 8,061 3,833 Administrative costs -4,563 -8,558 4. NET FINANCING RESULT 2023 2022 Interest income 1,763 Financing income 1,763 Interest costs -10,211 -9,115 Other financing costs -492 -459 Financing costs -10,703 -9,574 Movement in market value of financial derivatives -2,771 2,902 Net financing result -11,711 -6,672 SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 110 NSI ANNUAL REPORT 2023 5. OFF-BALANCE SHEET COMMITMENTS AND CONTINGENCIES NSI N.V. has issued guarantees for its 100%-owned subsidiary companies in accordance with Article 403, Book 2 of the Dutch Civil Code. NSI N.V. is part of a tax group for Dutch sales tax, and is therefore jointly and severally liable for the tax payable by the sales tax group as a whole. 6. AUDIT FEES PricewaterhouseCoopers Accountants N.V. charged the following fees to NSI and its subsidiaries: 2023 2022 Audit financial statements -356 -172 Other audit related services -93 -55 Audit fees -449 -227 In the 2023 financial year, an amount of € 356k for audit fees was charged by PricewaterhouseCoopers Accountants N.V. to the result in accordance with article 382a Title 9 Book 2 of the Dutch Civil Code (2022: € 172k). The audit fees charges in 2023 are related to the audit of 2022 accounts (€ 186k) and the audit of 2023 accounts ((€ 171k). Other audit fees in 2023 consists of ESG-audit fees for 2022 (€ 60k) and 2023 (€ 33k). 7. EVENTS AFTER BALANCE SHEET DATE The sale of the investment property under construction Laanderpoort, Amsterdam was completed in January 2024 for a total of € 24.0m (before transactions costs). Amsterdam, 7 March 2024 THE MANAGEMENT BOARD Bernd Stahli, CEO THE SUPERVISORY BOARD Jan-Willem de Geus, Chairman Jan-Willem Dockheer Margreet Haandrikman Karin Koks - Van der Sluijs Marlies Janssen SUPPLEMENTARY INFORMATIONOTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS 111 NSI ANNUAL REPORT 2023 OTHER INFORMATION CONTENT Statutory Provision in respect of profit appropriation 112 Independent Auditor’s report 114 Assurance report of the Independent Auditor 120 SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 112 NSI ANNUAL REPORT 2023 STATUTORY PROVISION IN RESPECT OF PROFIT APPROPRIATION The provisions in respect of the appropriation of profit are provided for in Article 21 of the Articles of Association of the company. The profit is at the disposal of the General Meeting of Shareholders. The company may only make distributions to shareholders to the extent that shareholders’ equity exceeds the amount of paid-up and called-up capital, plus the reserves that must be held by law or in accordance with the Articles of Association. Insofar as possible and justified by law, the company may distribute an interim dividend as proposed by the Management Board and subject to the approval of the Supervisory Board. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 113 NSI ANNUAL REPORT 2023 PricewaterhouseCoopers Accountants N.V., Thomas R. Malthusstraat 5, 1066 JR Amsterdam, P.O. Box 90357, 1006 BJ Amsterdam, the Netherlands, T: +31 (0) 88 792 00 20, F: +31 (0) 88 792 96 40, www.pwc.nl ‘PwC’ is the brand under which PricewaterhouseCoopers Accountants N.V. (Chamber of Commerce 34180285), PricewaterhouseCoopers Belastingadviseurs N.V. (Chamber of Commerce 34180284), PricewaterhouseCoopers Advisory N.V. (Chamber of Commerce 34180287), PricewaterhouseCoopers Compliance Services B.V. (Chamber of Commerce 51414406), PricewaterhouseCoopers Pensions, Actuarial & Insurance Services B.V. (Chamber of Commerce 54226368), PricewaterhouseCoopers B.V. (Chamber of Commerce 34180289) and other companies operate and provide services. These services are governed by General Terms and Conditions (‘algemene voorwaarden’), which include provisions regarding our liability. Purchases by these companies are governed by General Terms and Conditions of Purchase (‘algemene inkoopvoorwaarden’). At www.pwc.nl more detailed information on these companies is available, including these General Terms and Conditions and the General Terms and Conditions of Purchase, which have also been filed at the Amsterdam Chamber of Commerce. INDEPENDENT AUDITOR’S REPORT TO: THE GENERAL MEETING AND THE SUPERVISORY BOARD OF NSI N.V. REPORT ON THE FINANCIAL STATEMENTS 2023 OUR OPINION In our opinion: • the consolidated financial statements of NSI N.V. together with its subsidiaries (‘the Group’) give a true and fair view of the financial position of the Group as at 31 December 2023 and of its result and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (‘EU-IFRS’) and with Part 9 of Book 2 of the Dutch Civil Code; • the company financial statements of NSI N.V. (‘the Company’) give a true and fair view of the financial position of the Company as at 31 December 2023 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code. WHAT WE HAVE AUDITED We have audited the accompanying financial statements 2023 of NSI N.V., Amsterdam. The financial statements include the consolidated financial statements of the Group and the company financial statements. The consolidated financial statements comprise: • the consolidated statement of financial position as at 31 December 2023; • the following statements for 2023: the consolidated statements of comprehensive income, changes in shareholders’ equity and cash flow; and • the notes, comprising a summary of the significant accounting policies and other explanatory information. The company financial statements comprise: • the company balance sheet as at 31 December 2023; • the company income statement for the year then ended; and • the notes, comprising a summary of the accounting policies applied and other explanatory information. The financial reporting framework applied in the preparation of the financial statements is EU-IFRS and the relevant provisions of Part 9 of Book 2 of the Dutch Civil Code for the consolidated financial statements and Part 9 of Book 2 of the Dutch Civil Code for the company financial statements. THE BASIS FOR OUR OPINION We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. We have further described our responsibilities under those standards in the section ‘Our responsibilities for the audit of the financial statements’ of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. INDEPENDENCE We are independent of NSI N.V. in accordance with the European Union Regulation on specific requirements regarding statutory audit of public-interest entities, the ‘Wet toezicht accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics). OUR AUDIT APPROACH We designed our audit procedures with respect to the key audit matters, fraud and going concern, and the matters resulting from that, in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The information in support of our opinion, like our findings and observations related to individual key audit matters, the audit approach fraud risk and the audit approach going concern was addressed in this context, and we do not provide a separate opinion or conclusion on these matters. OVERVIEW AND CONTEXT NSI N.V. is a real estate company, primarily focussing on offices. The investment property is held to generate rental income or to benefit from an increase in value, or a combination of both. The Group is comprised of several components and therefore we considered our group audit scope and approach as set out in the section ‘The scope of our group audit’. We paid specific attention to the areas of focus driven by the operations of the Group, as set out below. The Group continued to sell some properties of their existing investment property portfolio. No acquisitions took place in 2023. NSI N.V. has classified three projects as investment property under construction, which might require significant investments by NSI N.V. The correct accounting of the capital expenditure and sales relating to investment properties have been addressed as part of our audit. Another area of focus, that is not considered as key audit matter, is the rental income which is a key performance indicator for the Group. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the management board made important judgements and significant accounting estimates. Refer for further details to our key audit matters. In the section ‘Basis for preparation’ in the consolidated financial statements, the Company describes the areas of judgement in applying accounting policies and the key sources of estimation uncertainty. Given the significant estimation uncertainty and the related higher inherent risks of material misstatement in the valuation of investment property, we considered this matter as key audit matter as set out in the section ‘Key audit matters’ of this report. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 114 NSI ANNUAL REPORT 2023 Materiality Audit scope Key audit matters Due to a change in FBI legislation NSI has undergone a restructuring in which most of the properties are now in separate entities, which are subject to corporate income tax. As result of the restructuring a Deferred tax asset was recognised. The Deferred tax assets are subject to significant risk of misstatement either through error or management bias (fraud). We therefore considered this area as a key audit matter. The management board assessed the possible effects of climate change on its financial position, refer to the section ‘Risk management and internal control’ in the management board report where the client disclosed the climate-related risks. We discussed management board’s assessment and governance thereof with the management board and evaluated the potential impact on the financial position including underlying assumptions and estimates underlying the valuation of invest- ment property. We addressed climate related risk in evaluating the assumptions underlying the valuation of investment property, but did not identify climate related risks as a separate key audit matter. We ensured that the audit team included the appropriate skills and competences which are needed for the audit of a real estate company. We therefore included experts and specialists in the areas of amongst others real estate valuation, sustainability, tax and IT in our team. The outline of our audit approach was as follows: Materiality • Overall materiality: €5,324,000 • Specific materiality: €2,047,000 Audit scope • We conducted the audit work centrally, given the fact that the group audit team was able to conduct all audit procedures. Key audit matter • Valuation of investment property; • Valuation of Deferred tax assets MATERIALITY The scope of our audit is influenced by the application of materiality, which is further explained in the section ‘Our responsibilities for the audit of the financial statements’. Based on our professional judgement we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified misstatements, both individually and in aggregate, on the financial statements as a whole and on our opinion. We evaluated our materiality benchmark compared to prior year and determined a change in our materiality by determining an overall materiality and specific materiality based on the best practices of other listed real estate companies. Overall materiality Specific materiality Materiality level €5,324,000 €2,047,000 Basis for determining materiality We used professional judgement to determine overall materiality. We used 0.75% of shareholders’ equity as included in the statement of financial position for the year ended 31 December 2023. We used 5% of the result before tax, adjusted for the net result on the sale of investment property, revaluation of investment property, movement in market value of finan- cial derivatives and other income and costs. Rationale for benchmark applied We have applied this benchmark based on our analysis of the common information needs of users of the finan- cial statements. This benchmark best fits the nature of the Company’s operations and equity is deemed most relevant for the investors and other users of the financial statements. We have applied this benchmark as it is an important measure for the financial performance of the Company’s investment property portfolio and is therefore deemed relevant for the investors and other users of the financial statements. We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons. We agreed with the supervisory board that we would report to them misstatements identified during our audit above €266,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. THE SCOPE OF OUR GROUP AUDIT NSI N.V. is the parent company of a group of entities. The financial information of this group is included in the consolidated financial statements of NSI N.V. For NSI N.V. and all its subsidiaries, the group audit team was able to conduct the audit procedures centrally from the head office of NSI N.V. and no use has been made of other auditors. The audit team has determined per financial statement line item which audit procedures needed to be performed in relation to the audit of the consolidated financial statements. For the ERP system, the management board makes use of an external service provider. As part of our audit procedures, we evaluated the SOC 1 assurance reports that include the scope and the results of the procedures performed rendered by the independent auditor of the external service provider. Furthermore, we assessed the objectivity and competence of the independent auditor of the service organization and we evaluated the design and tested the operating effectiveness of the internal controls in place at NSI N.V. over the outsourced services. In addition to the reliance on the SOC1 report we have performed substantive testing procedures. We are of the opinion that we have been able to obtain sufficient and appropriate audit evidence regarding the financial information of the Group as a whole to provide a basis for our opinion on the consolidated financial statements. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 115 NSI ANNUAL REPORT 2023 AUDIT APPROACH FRAUD RISK We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the Group and its environment and the components of the system of internal control, including the risk assessment process and management board’s process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes. We refer to section “Risk management and internal control” of the management board report for management board’s fraud risk assessment. We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as among others the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation and, where considered appropriate, tested the opera- tional effectiveness of internal controls designed to mitigate fraud risks. As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present. We identified the following fraud risks and performed the following specific procedures: IDENTIFIED FRAUD RISK AUDIT WORK AND OBSERVATIONS The risk of management override of controls The management board is in a unique position to perpetrate fraud because of management’s ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. That is why, in all our audits, we pay attention to the risk of management override of controls, including risks of potential misstatements due to fraud based on an analysis of potential interests of the management board. This includes the risk of bias by the management board when setting assumptions. In this respect, we gave specific consideration to: • the appropriateness of journal entries and other adjustments made in the preparation of the financial statements; • possible management bias in management board’s estimates; and • significant transactions, if any, that are outside the normal course of business for the entity. Where relevant to our audit, we evaluated the design of the internal control measures that are intended to mitigate the risk of management over- ride of controls and tested the operational effectiveness of the measures in the processes of generating and processing journal entries, recognition and accounting for estimates. We also paid specific attention to the access safe- guards in the IT system and the possibility that these lead to violations of the segregation of duties. We concluded that we, in the context of our audit, could rely on the internal control procedures relevant to this risk. We have selected journal entries based on risk criteria and conducted specific audit activities for these entries. In relation to possible management bias in management board’s estimates, we paid specific attention to significant assumptions in the valuation of investment property, for which we included a Key Audit Matter is this report. Our audit procedures did not lead to specific indications of fraud or suspicions of fraud with respect to management override of controls. The risk of fraudulent financial reporting through overstating rental income As part of our risk assessment and based on a presumption that there are risks of fraud in revenue recognition, we evaluated which types of revenue transactions or assertions give rise to the risk of fraud in revenue recognition. Where relevant to our audit, we assessed the design and tested the operational effectiveness of the internal control measures related to revenue reporting and in the processes for generating and processing journal entries related to the rental income. We also paid specific attention to the access safeguards in the IT system and the possibility that these lead to violations of the segregation of duties. Because rental income is a key performance indicator for the Group, we have identified an inherent risk in overstating revenue by the manage- ment board, especially in recognising fictitious rental income or improper accounting of lease incentives. We concluded that we, in the context of our audit, could rely on the internal control procedures relevant to this risk. We have performed analytics on the rental income per property and per month. We tested a sample of the rental income transactions by tracing the trans- actions back to the rental contracts and indexation letter to assess if it is recorded accurate and occurred. We also assessed the accounting policy for the accounting of lease incentives, tested for a sample the accuracy and occurrence of the lease incentive amount recognised by tracing the lease incentive back to the rental contracts and recalculated the amount of straight- lined rent recognised in the rental income. Our audit procedures did not lead to specific indications of fraud or suspicions of fraud with respect to the accuracy and occurrence of the rental income. The risk of kickbacks paid to the management board or employees when selling investment property As part of our risk assessment, we have identified an inherent risk that kick-backs could be paid to the management board and/or employees in exchanges for unfavourable transaction prices in the purchase or sale of investment properties. During 2023 only sales took place. Where relevant to our audit, we assessed the design and tested the oper- ational effectiveness of the internal control measures related to sales of investment properties, in which we have paid attention to the third party due diligence process (background checks regarding purchasers of investment properties). We concluded that we, in the context of our audit, could rely on the internal control procedures relevant to this risk. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 116 NSI ANNUAL REPORT 2023 Furthermore, we performed the following procedures: • verified for all sales of investment properties that agreements are signed by two employees of NSI N.V., in line with the approved authorisation matrix; • obtained for all transactions the final notary statements and deeds of delivery; • verified with Land Registry information if for sales transactions have taken place within one year (or as far as possible within one year) after the sale by NSI N.V.; • tested a sample of the cost incurred in relation to sales and evaluated the reasonableness of expenses incurred; • compared the sales price to the book value based on the latest valuation report for financial reporting. Our audit procedures did not lead to specific indications of fraud or suspi- cions of fraud with respect to the acquisitions and sales. We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud. We considered available information and made enquiries of relevant executives and the supervisory board. We performed an assessment of matters reported on the Company’s whistleblowing and complaints procedures, obtained legal letters and, when applicable, results of management board’s inves- tigation of such matters. AUDIT APPROACH GOING CONCERN The management board prepared the financial statements on the assumption that the entity is a going concern and that it will continue its operations for the fore- seeable future. Our procedures to evaluate management board’s going concern assessment include, amongst others: • Considering whether management board’s liquidity and solvency assessment includes all relevant information of which we are aware as a result of our audit, such as the expected capital expenditure in the development projects and the (re)financing of external loans on maturity date; • Inquire with the management board regarding management board's most important assumptions, such as the start date and expected capital expenditure of the development projects and the terms and conditions of (re)financing of external loans, underlying their going concern assessment and considering whether the management board identified events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereafter: going concern risks); • Analysing the financial position per balance sheet date in relation to the financial position per prior year balance sheet date to assess whether events or circum- stances exist that may lead to a going concern risk; • Performing inquiries of the management board as to their knowledge of going concern risks beyond the period of management board’s assessment. Our procedures did not result in outcomes contrary to management’s assumptions and judgments used in the application of the going concern assumption. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters identified by our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed on those matters. As the key audit matter is related to the nature of the operations of NSI N.V. and there are no significant changes in the strategy and business of NSI N.V., we have no changes in the key audit matters to report compared to prior year. IDENTIFIED FRAUD RISK AUDIT WORK AND OBSERVATIONS KEY AUDIT MATTER OUR AUDIT WORK AND OBSERVATIONS Significant assumption in the valuation of investment property [reference to note 10 in the annual report] The Group’s investment property portfolio comprises mainly offices. At 31 December 2023 the carrying value of the Group’s investment property port- folio was €1,029 million (2022: €1,259 million). Investment properties are valued at fair value at reporting date using the income capitalisation approach as the applied valuation method. The fair value of investment properties is on the one hand depending on the data input into the valuation models, such as: rental income, duration of the contract and square meters. On the other hand, and most important to our audit, given the sensitivity and impact on the outcome, the valuation is depending on a significant assumption, being the capitalisation rate. For the external valuation experts appointed by the management board, which we have identified as management experts in our audit, we have assessed the competence and capabilities of the external valuation experts by amongst others checking the registration of the qualification of the external valuation experts and checking the membership of a professional association for the external valuation expert organisations. We furthermore read the terms of engagements and discussed with the external valuation experts the context and environment in which they have worked with the persons within the Group responsible for the valuation process, to deter- mine whether there were any matters that might have affected their objectivity or may have imposed scope limitations upon their work. We also considered other engagements, which might exist between the Group and the external valuation experts’ organisations. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 117 NSI ANNUAL REPORT 2023 KEY AUDIT MATTER OUR AUDIT WORK AND OBSERVATIONS Primary factors, which influence this significant assumption, are general market conditions and the individual nature, condition and location of each property. At the end of each reporting period, the management board determines the fair value of its investment property portfolio in accordance with the requirements of IAS 40 and IFRS 13. All properties are bi-annually externally appraised by an external valuation expert, appointed by the management board. As the valuation of investment property is inherently judgmental in nature, due to the use of assumptions that are highly sensitive, any change in assumptions may have a significant effect on the outcome given the relative size of the investment property balance. This also effects the revaluation gains that directly impact the statement of comprehensive income. As a result, the valuation of investment property is subject to significant risk of misstatement either through error or manage- ment bias (fraud). We therefore considered this area as a key audit matter. In relation to the significant assumption in the valuation of investment property we have: • evaluated that the management board has designed and implemented appro- priate internal controls on the valuation process; • evaluated the valuation methods as applied by the management board and management experts, as included in the valuation reports; • evaluated the significant assumption made by the management board and the management expert by assessing the movements of the significant assump- tion in the valuation reports based on the overall shifts in the market conditions in which the group invests, based on the latest public property market data; • for a risk-based selection of valuation reports, we have challenged the (signi- ficant) assumptions used (including the capitalisation rate and market rent levels) against available market data. We have involved our internal real estate valuation experts in these assessments. Furthermore, we have: • reconciled the final valuation reports with the fair value in the Group’s accoun- ting records; • checked for each management expert the mathematical accuracy of the valu- ation model used; • checked for a sample of leases, that the standing data included in the valua- tion report such as rental income, the duration of lease contracts and square metres was supported by audit evidence; • discussed with the management’s experts the incorporation of energy labels in their assessment of the market value of the investment properties; • verified that all investment properties in operation have the minimum required energy label that office buildings need to have per 1 January 2023 to be able to operate; and • assessed and corroborated the adequacy and appropriateness of the disclo- sure, including the sensitivity disclosures, made in the consolidated financial statements. Based on the work performed, we found that investment property related data and the significant assumptions were supported by available evidence. In addition, we evaluated whether the information received from the management board and the audit evidence obtained, provided indications of management bias. We found no such indication. Significant assumption in the Deferred tax assets [reference to note 13 in the annual report] Due to a change in legislation, as from 2025 FBI’s can no longer directly invest in Dutch real estate. In 2023, NSI has undergone a restructuring in which most of the properties are now in separate entities, which are subject to corporate income tax. NSI N.V. intends to remain an FBI at least to the end of 2024. As result of the restructuring a Deferred tax asset was recognised. Deferred tax assets are recognised as income tax to be reclaimed in future periods relating to offsetable temporary differences between book value and the fiscal value of assets and liabilities. They also relate to the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that future taxable benefits will be available against which unused tax losses and tax credits can be utilised. Deferred tax assets are only recognised if it is likely that the temporary diffe- rences will be settled in the near future and sufficient taxable profit will be available for settlement. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. The basis of the deferred tax asset is the differences between the book value ad. €1,005 million and their fiscal book value ad. €1,178 million. Based on the assessment of management a Deferred tax asset has been formed ad. €38.654 million. This also effects the Corporate income tax that directly impact the statement of comprehensive income. As a result, the Deferred tax assets are subject to significant risk of misstatement either through error or management bias (fraud). We therefore considered this area as a key audit matter . In relation to the significant assumption in the deferred tax asset we have: • evaluated that the management board has designed and implemented appro- priate internal controls on the valuation process (book value and fiscal value), refer also to Significant assumption in the valuation of investment property; • evaluated the calculation methods as applied by the management board; • evaluated the significant assumption made by the management board by assessing the cashflow forecast of the standalone entities in the deferred tax asset calculation; • evaluated the applied tax rates for calculating the deferred tax asset. • for the deferred tax asset calculation, we have challenged the (significant) assumptions used (including the book value, fiscal value and tax rate used) against normal market practice. We have involved our internal tax experts in these assessments. Based on the work performed, we found that investment property related data and the significant assumptions were supported by available evidence. In addition, we evaluated whether the information received from the management board and the audit evidence obtained, provided indications of management bias. We found no such indication. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 118 NSI ANNUAL REPORT 2023 REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The annual report contains other information. This includes all information in the annual report in addition to the financial statements and our auditor’s report thereon. Based on the procedures performed as set out below, we conclude that the other information: • is consistent with the financial statements and does not contain material misstatements; and • contains all information regarding the management board report and the other information that is required by Part 9 of Book 2 and regarding the remu- neration report required by the sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code. We have read the other information. Based on our knowledge and the understanding obtained in our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing our procedures, we comply with the requirements of Part 9 of Book 2 and section 2:135b subsection 7 of the Dutch Civil Code and the Dutch Standard 720. The scope of such procedures was substantially less than the scope of those procedures performed in our audit of the financial statements. The management board is responsible for the preparation of the other information, including the management board report and the other information in accordance with Part 9 of Book 2 of the Dutch Civil Code. The management board and the supervisory board are responsible for ensuring that the remu- neration report is drawn up and published in accordance with the sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS AND ESEF OUR APPOINTMENT We were appointed as auditors of NSI N.V. on 29 April 2016 following the passing of a resolution by the shareholders at the annual meeting. Our appoint- ment has been renewed annually representing a total period of uninterrupted engagement appointment of eight years. EUROPEAN SINGLE ELECTRONIC FORMAT (ESEF) NSI N.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF). In our opinion, the annual report prepared in XHTML format, including the (partially) marked-up consolidated financial statements, as included in the repor- ting package by NSI N.V., complies in all material respects with the RTS on ESEF. The management board is responsible for preparing the annual report, including the financial statements in accordance with the RTS on ESEF, whereby the management board combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF. We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ‘Assuranceopdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting). Our examination included amongst others: • Obtaining an understanding of the entity’s financial reporting process, including the preparation of the reporting package. • Identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including: • obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance docu- ment and the XBRL extension taxonomy files have been prepared in accordance with the technical specifications as included in the RTS on ESEF; • examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF. NO PROHIBITED NON-AUDIT SERVICES To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to in Article 5(1) of the European Regulation on specific requirements regarding statutory audit of public-interest entities. SERVICES RENDERED The services, in addition to the audit, that we have provided to the Company and its controlled entities, for the period to which our statutory audit relates, are disclosed in note 6 to the company financial statements. RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT RESPONSIBILITIES OF THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD FOR THE FINANCIAL STATEMENTS The management board is responsible for: • the preparation and fair presentation of the financial statements in accordance with EU-IFRS and with Part 9 of Book 2 of the Dutch Civil Code; and for • such internal control as the management board determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 119 NSI ANNUAL REPORT 2023 As part of the preparation of the financial statements, the management board is responsible for assessing the Company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the management board should prepare the financial statements using the going-concern basis of accounting unless the management board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The management board should disclose in the financial statements any event and circumstances that may cast significant doubt on the Company’s ability to continue as a going concern. The supervisory board is responsible for overseeing the Company’s financial reporting process. OUR RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis for our opinion. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high but not absolute level of assurance, which makes it possible that we may not detect all material misstatements. Misstatements may arise due to fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion. A more detailed description of our responsibilities is set out in the appendix to our report. Rotterdam, 7 March 2024 PricewaterhouseCoopers Accountants N.V. A.A. Meijer MSc RA APPENDIX TO OUR AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS 2023 OF NSI N.V. In addition to what is included in our auditor’s report, we have further set out in this appendix our responsibilities for the audit of the financial statements and explained what an audit involves. THE AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS We have exercised professional judgement and have maintained professional scepticism throughout the audit in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit consisted, among other things of the following: • Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit proce- dures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepre- sentations, or the intentional override of internal control. • Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the manage- ment board. • Concluding on the appropriateness of the management board’s use of the going-concern basis of accounting, and based on the audit evidence obtained, concluding whether a material uncertainty exists related to events and/or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are made in the context of our opinion on the financial statements as a whole. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and evaluating whether the financial state- ments represent the underlying transactions and events in a manner that achieves fair presentation. Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are responsible for the direction, supervision and performance of the group audit. In this context, we have determined the nature and extent of the audit procedures for components of the Group to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole. Determining factors are the geographic structure of the Group, the significance and/or risk profile of group entities or activities, the accounting processes and controls, and the industry in which the Group operates. On this basis, we selected group entities for which an audit or review of financial information or specific balances was considered necessary. We communicate with the supervisory board 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. In this respect, we also issue an additional report to the audit committee in accor- dance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report. We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related actions taken to eliminate threats or safeguards applied. From the matters communicated with the supervisory board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 120 NSI ANNUAL REPORT 2023 LIMITED ASSURANCE REPORT OF THE INDEPENDENT AUDITOR TO: THE GENERAL MEETING AND THE SUPERVISORY BOARD OF NSI N.V. LIMITED ASSURANCE REPORT ON THE SELECTED NON-FINANCIAL INDICATORS IN THE ANNUAL REPORT 2023 OUR CONCLUSION We have examined the selected non-financial indicators marked with symbol in the Annual Report 2023 of NSI N.V. Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the selected non-financial indicators marked with symbol in the Annual report 2023 of NSI N.V. over 2023 is not prepared in all material respects, in accordance with NSI N.V.'s reporting criteria. WHAT WE HAVE EXAMINED The object of our assurance engagement concerns the selected non-financial indicators marked with symbol included in the section ‘ESG (non-financial) performance measures 2023’ in the Annual Report 2023 of NSI N.V. (hereafter: the indicators). 1. Total landlord- and tenant-obtained fuels, including its coverage on properties and applicable sqm. 2. Total landlord- and tenant-obtained heating and cooling, including its coverage on properties and applicable sqm. 3. Total landlord- and tenant-obtained electricity consumption, including its coverage on properties and applicable sqm. 4. (Sum of) annual kWh energy consumption and the building energy intensity. 5. (Sum of) annual GHG emissions, including its coverage on properties and applicable sqm, and the building carbon intensity. 6. Total water consumption, including its coverage on properties and applicable sqm, and building water intensity. 7. Total waste created, including its coverage on properties and applicable sqm. 8. BREEAM In-use: Asset Performance, including its coverage on properties and applicable sqm. 9. Diversity – Employee gender diversity. 10. Diversity – Gender pay ratio total (not for the individual categories). 11. Employee training and development. 12. Employee performance appraisals. 13. New hires & turnover (headcount). 14. Employee health and safety, absentee rate, injury rate and # of work-related fatalities. 15. Asset health and safety assessments. 16. Asset health and safety compliance. 17. EU taxonomy eligibility & alignment: revenue, capex and opex. 18. EU EPC label: meaning the label issued by a certified advisor in accordance with the rules set by the RVO or any other governmental or regulatory authority or similar body measuring energy performance of real estate including the percentage of Dutch real estate portfolio of the Group compared to the total market value of the Group’s real estate. 19. GRESB score: meaning the Global Real Estate Sustainability Benchmark measuring environmental, social and governance performance of real estate of NSI. THE BASIS FOR OUR CONCLUSION We conducted our examination in accordance with Dutch law, including the Dutch Standard 3000A Assurance engagements, other than audits or reviews of historical financial information (attestation-engagements). This engagement is aimed to provide limited assurance. Our responsibilities under this standard are further described in the section ‘Our responsibilities for the examination’ of our report. We believe that the assurance information we have obtained is sufficient and appropriate to provide a basis for our conclusion. INDEPENDENCE AND QUALITY CONTROL We are independent of NSI N.V. in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence requirements in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Code of Ethics for Professional Accountants, a regulation with respect to rules of professional conduct). PwC applies the ‘Nadere voorschriften kwaliteitssystemen’ (NVKS, Regulations for quality systems) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and other appli- cable legal and regulatory requirements. APPLICABLE CRITERIA The indicators need to be read and understood together with the reporting criteria. The reporting criteria used for the preparation of the indicators are the NSI N.V.’s reporting criteria, as included in the section ‘Measurement methodology and assumptions ESG (non-financial) performance measures’ of the Annual Report 2023. The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability between entities, and over time. PricewaterhouseCoopers Accountants N.V., Thomas R. Malthusstraat 5, 1066 JR Amsterdam, P.O. Box 90357, 1006 BJ Amsterdam, the Netherlands, T: +31 (0) 88 792 00 20, F: +31 (0) 88 792 96 40, www.pwc.nl ‘PwC’ is the brand under which PricewaterhouseCoopers Accountants N.V. (Chamber of Commerce 34180285), PricewaterhouseCoopers Belastingadviseurs N.V. (Chamber of Commerce 34180284), PricewaterhouseCoopers Advisory N.V. (Chamber of Commerce 34180287), PricewaterhouseCoopers Compliance Services B.V. (Chamber of Commerce 51414406), PricewaterhouseCoopers Pensions, Actuarial & Insurance Services B.V. (Chamber of Commerce 54226368), PricewaterhouseCoopers B.V. (Chamber of Commerce 34180289) and other companies operate and provide services. These services are governed by General Terms and Conditions (‘algemene voorwaarden’), which include provisions regarding our liability. Purchases by these companies are governed by General Terms and Conditions of Purchase (‘algemene inkoopvoorwaarden’). At www.pwc.nl more detailed information on these companies is available, including these General Terms and Conditions and the General Terms and Conditions of Purchase, which have also been filed at the Amsterdam Chamber of Commerce. SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 121 NSI ANNUAL REPORT 2023 RESPONSIBILITIES FOR THE INDICATORS AND THE EXAMINATION THEREOF RESPONSIBILITIES OF THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD The management board of NSI N.V. is responsible for the preparation of the indicators in accordance with the NSI N.V.'s reporting criteria, including the identification of the intended users and the criteria being applicable for the purpose of these users. Furthermore, the management board is responsible for such internal control as it determines is necessary to enable the preparation of the indicators that is free from material omission, whether due to fraud or error. The supervisory board is responsible for overseeing the company’s reporting process on the indicators. OUR RESPONSIBILITIES FOR THE EXAMINATION Our responsibility is to plan and perform our examination in a manner that allows us to obtain sufficient and appropriate evidence to provide a basis for our conclusion. Our conclusion aims to provide limited assurance. The procedures performed in this context consisted primarily of making inquiries with officers of the entity and determining the plausibility of the information included in the indicators. The level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. PROCEDURES PERFORMED We have exercised professional judgement and have maintained professional scepticism throughout the examination in accordance with the Dutch Standard 3000A, ethical requirements and independence requirements. Our examination consisted, among other things of the following: • Assessing the suitability of the criteria used, their consistent application and related disclosures to the indicators. • Obtaining an understanding of the reporting processes for the indicators, including obtaining a general understanding of internal control relevant to our review. • Identifying areas of the indicators with a higher risk of material misstatement, whether due to fraud or error. Designing and performing assurance proce- dures aimed at determining the plausibility of the indicators, responsive to this risk analysis. These procedures consisted amongst others of: – interviewing management and/or relevant staff at corporate level responsible for the sustainability strategy, policy and results; – interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data of the indicators; – determining the nature and extent of the review procedures for the group components and locations. For this, the nature, extent and/or risk profile of these components are decisive. Our procedures were performed from the head office; – obtaining assurance evidence that the indicators reconcile with underlying records of the company; – reviewing, on a limited test basis, relevant internal and external documentation; – performing an analytical review of the data and trends of the indicators submitted for consolidation at corporate level. • Reading the information other than the indicators in the Annual Report 2023, which is not included in the scope of our review, to identify material incon- sistencies with the indicators. We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the review and significant findings that we identify during our review. Rotterdam, 7 March 2024 PricewaterhouseCoopers Accountants N.V. A.A. Meijer RA partner SUPPLEMENTARY INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 122 NSI ANNUAL REPORT 2023 SUPPLEMENTARY INFORMATION CONTENT Other Data 123 NSI Share 124 Property List 125 ESG (non-financial) Performance Measures 126 EU Taxonomy eligibility and alignment 132 EPRA Key Performance Measures 138 Five Year Overview 140 Glossary Key Performance Indicators 141 Glossary Sustainability Performance Measures 143 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 123 NSI ANNUAL REPORT 2023 OTHER DATA Appraisers All investment properties in the portfolio have been appraised externally in June and December by qualified international firms Colliers, JLL and Cushman & Wakefield. Appraisal methods are compliant with international standards and guidelines as defined by RICS (Royal Institution of Chartered Surveyors). % assets % value Colliers 31.8% 35.3% Cushman & Wakefield 31.8% 34.8% JLL 36.4% 29.9% Total 100.0% 100.0% Top 10 tenants # lease contract % total contracted rent Goverment 10 13.8% Spaces 3 10.2% KPN 5 7.2% Janssen Vaccines & Prevention 3 5.3% WeWork 1 4.5% Airbus Defence and Space 1 2.0% ABN AMRO Bank 1 1.6% Federatie Nederlandse Vakbeweging 1 1.1% Seres 1 1.0% BDO Holding 1 1.0% 27 47.5% INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 124 NSI ANNUAL REPORT 2023 INVESTOR RELATIONS NSI strives for a high degree of transparency and continuous communication with existing and potential shareholders, as well as other stakeholders. NSI is committed to providing informa- tion through means of road shows, presentations, press releases, quarterly reports, annual reports and other publications, as well as via the Company’s website. All relevant publications are placed on the Company’s website. SHARE CAPITAL At 1 January 2023 NSI had 20,054,240 ordinary shares outstanding. During 2023, in total 100,981 shares have been issued and distrib- uted in relation the distribution of stock dividend (final 2022 divi- dend and interim 2023 dividend). At 31 December 2023 NSI had 20,155,221 ordinary shares outstanding. SHARE LISTING The NSI share is listed on Euronext (registered under code 29232; ISIN code: NL0000292324; Ticker symbol: NSI). The NSI share has an option listing on Euronext Liffe, the derivatives stock exchange of the Euronext (Ticker symbol: NSI). MAJOR SHAREHOLDERS Pursuant to the Dutch Financial Markets Supervision Act (Wet op het Financieel toezicht) the Netherlands Authority Finan- cial Markets (Autoriteit Financiële Markten) was notified of the following statement of interest of 3% or more in NSI up to 31 December 2023. 31 December 2023 ICAMAP Investments SARL 10.0% BlackRock, Inc. 5.8% Clearance Capital Ltd. 5.1% Ameriprise Financial < 3.0% FINANCIAL CALENDAR Publication trading update Q1 2024 14 April Annual General Meeting 19 April 2024 Publication annual half year results 2024 17 July 2024 Publication trading update Q3 2024 16 October 2024 DIVIDEND POLICY AND DIVIDEND DISTRIBUTION NSI’s dividend policy is to distributes at least 75% of the direct result. The dividend is distributed in cash or optional in stock at the discretion of the Management Board. NSI distributes dividend twice a year. Ex-dividend date (final dividend 2023) 23 April 2024 Record date 24 April 2024 CHANGES TO DUTCH REIT (FBI) REGIME In its tax plan for 2023 the Dutch Government announced plans to abolish the FBI regime. Legislation has now been passed such that as of 2025 FBI’s can no longer directly invest in Dutch real estate. NSI NV intends to remain an FBI at least up to the end of 2024. NSI has executed the necessary restructuring in 2023 to limit the negative impact of this legislative change. PERFORMANCE OF THE NSI SHARE Share price low €16.62 Share price high €25.50 Closing price on 31 December 2023 €18.76 Proposed dividend per share for Total €1.52 Interim €0.75 Final €0.77 # outstanding shares outstanding at 31 December 2023 20,155,221 Market capitalisation at 31 December 2023 €378 million NSI SHARE COMPARATIVE SHARE PRICE DEVELOPMENT NSI EPRA DEVELOPED EUROPE the 2023 financial year 0 20 40 60 80 100 120 140 31-12-22 31-01-23 28-02-23 31-03-23 30-04-23 31-05-23 30-06-23 31-07-23 31-08-23 30-09-23 31-10-23 30-11-23 31-12-23 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 125 NSI ANNUAL REPORT 2023 PROPERTY LIST AMSTERDAM Property Property adress City Form ownership NEN-area Year construction / major renovation Year acquisition 1 Atlanta Building Stadhouderskade 5-6 Amsterdam Freehold 6,542 1928 2021 2 Centerpoint I Hoogoorddreef 60 Amsterdam Leasehold 8,952 2007 2015 3 Centerpoint II Hoogoorddreef 62 Amsterdam Leasehold 6,224 1988 2015 4 Cruquiusweg Cruquiusweg 111 Amsterdam Freehold 3,278 2006 2007 5 Glasshouse Changiweg 130, Teleportboulevard 121-133 Amsterdam Leasehold 22,981 2009 2016 6 Hettenheuvelweg I Hettenheuvelweg 37-39 Amsterdam Leasehold 2,474 1987 1997 7 Hettenheuvelweg II Hettenheuvelweg 41-43 Amsterdam Leasehold 2,480 1988 1997 8 HNK Amsterdam Houthavens Van Diemenstraat 20-200 Amsterdam Leasehold 10,323 2014 1999 9 HNK Amsterdam Schinkel Anthony Fokkerweg 1 Amsterdam Freehold 5,373 2018 1997 10 HNK Amsterdam Sloterdijk Radarweg 60 Amsterdam Leasehold 16,011 2023 2018 11 HNK Amsterdam Zuidoost Burgemeester Stramanweg 102-108 Amsterdam Freehold 11,468 2016 1997 12 Hogehilweg I Hogehilweg 6 Amsterdam Leasehold 3,144 2008 2021 13 Hogehilweg II Hogehilweg 12 Amsterdam Leasehold 3,143 1985 1997 14 Koningin Wilhelminaplein Koningin Wilhelminaplein 18 Amsterdam Leasehold 5,090 1995 1997 15 Laanderpoort Bijlmerdreef 100 Amsterdam Leasehold 12,739 2013 2017 16 One20 Teleportboulevard 120 - 142 Amsterdam Leasehold 9,743 2001 2020 17 Q-Port Kingsfordweg 43-117 Amsterdam Leasehold 12,771 2001 2018 18 Solaris Eclips Arlandaweg 98 Amsterdam Leasehold 4,151 2001 2001 19 Trivium Derkinderenstraat 2-24 Amsterdam Leasehold 8,315 2000 2019 20 Vitrum Parnassusweg 101, 103, 126, 128 Amsterdam Leasehold 11,612 2013 2017 21 Vivaldi Offices I Barbara Strozzilaan 201-229 Amsterdam Leasehold 9,493 2009 2015 22 Vivaldi Offices II Barbara Strozzilaan 101-125 Amsterdam Leasehold 8,778 2009 2015 OTHER G4 Property Property adress City Form ownership NEN-area Year construction / major renovation Year acquisition 1 Bentinck Huis Lange Voorhout 7 Den Haag Freehold 6,066 2020 2018 2 De Rode Olifant Zuid-Hollandlaan 7 Den Haag Freehold 9,993 1993 2007 3 HNK Den Haag Oude Middenweg 3E, 11-19 Den Haag Freehold 14,360 2014 2008 4 Alexanderhof Marten Meesweg 141-145 Rotterdam Freehold 3,095 1987 2015 5 Alexanderpoort Marten Meesweg 93-121 Rotterdam Freehold 9,324 2010 2015 6 HNK Rotterdam Centrum Westblaak 180 Rotterdam Leasehold 8,395 2016 2001 7 HNK Rotterdam Scheepvaartkwartier Vasteland 42-110 Rotterdam Freehold 21,532 2012 2008 8 Veerhaven Veerhaven 16-18 Rotterdam Freehold 1,641 2002 1996 9 Veerkade Veerkade 1-9C Rotterdam Freehold 5,783 1915 2000 10 Westblaak Westblaak 155-189 Rotterdam Freehold 6,163 1978 2021 11 HNK Utrecht Centraal Station Arthur van Schendelstraat 650-698, 700-748 Utrecht Leasehold 8,884 2015 2006 12 HNK Utrecht West Weg der Verenigde Naties 1 Utrecht Leasehold 2,947 2013 2007 13 Jacobsweerd Sint Jacobsstraat 200-499 Utrecht Freehold 14,781 1987 2018 14 Uniceflaan Uniceflaan 1 Utrecht Leasehold 12,083 1989 2017 OTHER NETHERLANDS Property Property adress City Form ownership NEN-area Year construction / major renovatio n Year acquisition 1 Het Binnenhof Magistratenlaan 156-186 Den Bosch Freehold 10,436 2005 2015 2 Fellenoord Fellenoord 310-370 Eindhoven Freehold 4,183 1987 1996 3 Hooghuisstraat / Keizersgracht Hooghuisstraat 18-30, Keizersgracht 3-11 Eindhoven Freehold 10,908 1970 2008 4 Kennedyplein Kennedyplein 101 Eindhoven Freehold 6,643 2000 2017 5 Beukenhaghe Neptunusstraat 15-37 Hoofddorp Freehold 4,754 1991 1991 6 Archimedesweg Archimedesweg 17 - 25 Leiden Leasehold 2,522 2001 2001 7 Archimedesweg I Archimedesweg 6 Leiden Leasehold 7,207 2000 2017 8 Archimedesweg II Archimedesweg 30 Leiden Leasehold 2,686 1999 2019 9 Mendelweg Mendelweg 30 Leiden Leasehold 6,198 2008 2021 10 Newtonweg Newtonweg 1 Leiden Leasehold 9,408 1993 2015 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 126 NSI ANNUAL REPORT 2023 ESG (NON-FINANCIAL) PERFORMANCE MEASURES 2023 Energy GRI Standard 302-1 ENV29 Fuels-Abs, Fuels-LfL annual kWh Fuels Total fuels purchased by landlord B 4,902,028 7,260,436 -32.5% 4,642,211 5,491,965 -15.5% ENV30 Proportion of fuels purchased by land- lord from renewable resources - - - - - - ENV31 Total fuels purchased by tenant C 2,749,891 2,882,537 -4.6% 2,749,891 2,612,892 5.2% Proportion of fuels purchased by tenant from renewable resources - - - - - - Total landlord- and tenant- purchased fuels 7,651,919 10,142,973 -24.6% 7,392,101 8,104,857 -8.8% Proportion of landlord- and tenant- purchased fuels from renewable resources - - - - - - ENV32 No. of applicable properties Fuels disclosure coverage 22 out of 22 26 out of 27 - 20 out of 20 20 out of 20 - Covered applicable sqm Fuels disclosure coverage - % 100.0% 98.7% 1.6% 100.0% 100.0% 0.0% % Proportion of fuels estimated - PCAF - - - - - - GRI Standard 302-1/302-2 ENV33 DH&C-Abs, DH&C-LfL annual kWh District heating and cooling Total district heating and cooling purchased by landlord C 9,459,150 9,310,981 1.6% 9,241,186 9,300,418 -0.6% ENV35 Total district heating and cooling purchased by tenant C 3,673,197 4,130,300 -11.1% 3,673,197 4,130,300 -11.1% Total landlord- and tenant- purchased heating and cooling C 13,132,347 13,441,275 -2.3% 12,914,383 13,430,718 -3.8% ENV35 No. of applicable properties District heating and cooling disclosure coverage 22 out of 23 22 out of 23 - 21 out of 21 21 out of 21 - Covered applicable sqm District heating and cooling disclosure coverage - % 93.7% 95.2% -1.5% 100.0% 100.0% 0.0% % Proportion of district heating and cooling estimated - PCAF - - - - - - GRI Standard 302-1/302-2 ENV37 Elec-Abs, Elec-LfL annual kWh Electricity Total electricity purchased by landlord B+C 16,410,622 18,200,793 -9.8% 16,104,394 16,699,471 -3.6% ENV11 Total generated off- site electricity and purchased by landlord 15,914,219 17,593,480 -9.5% 15,607,991 16,215,815 -3.7% ENV8 Generated and consumed on-site electricity purchased by landlord from renewable resources 496,403 607,312 -18.3% 496,403 483,656 2.6% ENV38 Proportion of on-site landlord-obtained elec- tricity from renewable resources of electricity purchased by landlord 3.0% 3.3% -9.3% 3.1% 2.9% 6.4% ENV9 Generated on-site and exported by landlord 60,460 - - 60,460 - - ENV38 Proportion of off-site electricity purchased by landlord from renewable resources of electricity purchased by landlord 97,0% 96,4% 0.6% 96,9% 96,8% 0.1% ENV39 Total electricity purchased by tenant C+D 13,579,246 14,130,181 -3.9% 13,141,985 13,773,211 -4.6% ENV12 Total generated off-site and purchased by tenant 13,563,446 14,077,305 -3.7% 13,126,185 13,720,335 -4.3% ENV10 Generated and consumed on-site by third party or tenant 15,800 52,876 -70.1% 15,800 52,876 -70.1% Proportion of on-site tenant or third party- obtained electricity from renewable resources of electricity purchased by tenant 0.12% 0.37% -68.9% 0.1% 0.4% -68.7% Proportion of off-site electricity purchased by tenant from renewable resources of electricity purchased by tenant 99.9% 99.6% 0.3% 99.9% 99.6% 0.3% Total landlord- and tenant- purchased elec- tricity consumption 29,989,867 32,330,973 -7.2% 29,246,379 30,472,682 -4.0% Absolute performance (Abs) Like-for-like performance (LfL) Impact area GRI Standard INREV Indicator ID Abbre viation (EPRA) Units of measure Indicator Notes 2023 2022 % change 2023 2022 % change Refers to the limited assurance report of the independent auditor (see page 120). The limited assurance applies to the absolute performance only (excluding like for like performance). A up to and including D refers to Measurement Methodology and Assumptions (see page 131) INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 127 NSI ANNUAL REPORT 2023 Absolute performance (Abs) Like-for-like performance (LfL) Impact area GRI Standard INREV Indicator ID Abbre viation (EPRA) Units of measure Indicator Notes 2023 2022 % change 2023 2022 % change Energy GRI Standard 302-1/302-2 ENV10 Elec-Abs, Elec-LfL annual kWh Electricity Proportion of on-site landlord- and tenant- purchased electricity from renewable resources of total electricity 1.7% 2.0% -16.4% 1.8% 1.8% -0.5% Proportion of off-site landlord- and tenant- electricity from rene- wable resources of total electricity 98.3% 98% 0.5% 98.2% 98.1% 0.2% ENV40 No. of applicable properties Electricity disclosure coverage 46 out of 46 51 out of 51 - 43 out of 43 43 out of 43 - Covered applicable sqm Electricity disclosure coverage - % 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% % Proportion of electricity estimated - PCAF - - - - - - Solar panels On-site solar panels - No.Applicable Assets 12 out of 12 13 out of 14 - 12 out of 12 11 out of 11 - No. of solar panels 2,318 2,678 -13.4% 2,318 2,318 0.0% GRI Standard 302-3 ENV1 Energy-Int (all assets) kWh Energy consumption Total energy consump- tion purchased by landlord 30,771,799 34,772,210 -11.5% 29,987,791 31,491,854 -4.8% ENV2 Total energy consump- tion purchased by tenant 20,002,334 21,143,018 -5.4% 19,565,073 20,516,403 -4.6% ENV3 Estimated energy consumption purchased by landlord - PCAF - - - - - - Estimated energy consumption purchased by tenant - PCAF - - - - - - ENV4 annual kWh / sqm Energy Intensity (sum of) annual kWh energy consumption 50,774,133 55,915,222 -9.2% 49,552,864 52,008,257 -4.7% (sum of) floor area (m 2 ) - Energy A 406,141 427,197 -4.9% 380,001 380,562 -0.1% ENV6, ENV7 Building energy intensity 125 131 -4,5% 130 137 -4,6% No. of applicable properties Energy and associated GHG dislosure coverage 46 out of 46 52 out of 52 - 43 out of 43 43 out of 43 - Covered applicable sqm Energy and associated GHG dislosure coverage - % 98.4% 100.0% -1.6% 99.6% 99.7% -0.1% ENV19 Covered applicable sqm Total operational energy and associated GHG data coverage Common area - Energy coverage - - - - - - Shared Services - Energy coverage - - - - - - Tenant space - Energy coverage - - - - - - Whole building - Energy coverage 98.4% 100.0% -1.6% 99.6% 99.7% -0.1% % Proportion of energy estimated - PCAF - - - - - - % Proportion energy from renewables resources 59.1% 57.7% 2.3% 59.0% 58.5% 0.9% ENV13 Covered applicable sqm Renewable energy data coverage Common area - Rene- wable Energy coverage - - - - - - Shared Services - Rene- wable Energy coverage - - - - - - Tenant space - Rene- wable Energy coverage - - - - - - Whole building - Rene- wable Energy coverage 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% Green- house gas emissions - Location based GRI Standard 305-1 ENV14 GHG-Dir-Abs annual kg CO2e Direct LB: Scope 1 897,855 1,329,822 -32.5% 850,267 1,005,908 -15.5% ENV17 LB: estimated - PCAF emissions Scope 1 - - - - - - GRI Standard 305-2 and 305-3 ENV15 GHG-Indir- Abs Indirect LB: Scope 2 8.090.807 9.045.782 -10.6% 7,765,329 8,361,441 -7.1% ENV17 LB: estimated - PCAF emissions Scope 2 - - - - - - ENV16 LB: Scope 3 6.006.116 6.618.942 -9.3% 5,857,711 6,428,911 -8.9% ENV17 LB: estimated - PCAF emissions Scope 3 - - - - - - GRI Standard 305-4 ENV18 GHG-Int (all assets) kg CO2e / sqm / year GHG emissions intensity LB: (sum of) annual GHG emissions - Total operational carbon 14,994,778 16,994,546 -11.8% 14,473,307 15,796,260 -8.4% LB: (sum of) floor area (m2) - GHG A 406,141 427,197 -4.9% 380,001 380,562 -0.1% ENV20, 21 LB: Building operational carbon intensity 37 39 -7.0% 38 42 -8.2% % LB: Proportion of GHG estimated - PCAF - - - - - - Refers to the limited assurance report of the independent auditor (see page 120). The limited assurance applies to the absolute performance only (excluding like for like performance). A up to and including D refers to Measurement Methodology and Assumptions (see page 131) INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 128 NSI ANNUAL REPORT 2023 Absolute performance (Abs) Like-for-like performance (LfL) Impact area GRI Standard INREV Indicator ID Abbre viation (EPRA) Units of measure Indicator Notes 2023 2022 % change 2023 2022 % change Green- house gas emissions - PCAF Location Based GRI Standard 305-4 ENV20, 21 GHG-Int (all assets) annual kg CO2e 1a LB: Score 1 - - - - - - 1b LB: Score 2 14,827,001 16,767,996 -11.6% 14,473,307 15,796,260 -8.4% 2a LB: Score 3 - - - - - - 2b LB: Score 4 - - - - - - 3 LB: Score 5 - - - - - - Green- house gas emissions - Market based GRI Standard 305-1 ENV14 GHG-Dir-Abs annual kg CO2e Direct MB: Scope 1 897,855 1,329,822 -32.5% 850,267 1,005,908 -15.5% ENV17 MB: estimated - PCAF emissions Scope 1 - - - - - - GRI Standard 305-2 and 305-3 ENV15 GHG-Indir- Abs Indirect MB: Scope 2 853,215 839,850 1.6% 833,555 838,898 -0.6% ENV17 MB: estimated - PCAF emissions Scope 2 - - - - - - ENV16 MB: Scope 3 834,992 900,519 -7.3% 834,992 851,130 -1.9% ENV17 MB: estimated - PCAF emissions Scope 3 - - - - - - GRI Standard 305-4 ENV18 GHG-Int (all assets) kg CO2e / sqm / year GHG emissions intensity MB: (sum of) annual GHG emissions - Total operational carbon 2,586,063 3,070,191 -15.8% 2,518,815 2,695,936 -6.6% MB: (sum of) floor area (m2) - GHG 406,141 427,197 -4.9% 380,001 380,562 -0.1% ENV20, 21 MB: Building operational carbon intensity 6 7 -11.4% 7 7 -6.4% % MB: Proportion of GHG estimated - PCAF - - - - - - Green- house gas emissions - PCAF Market Based annual kg CO2e 1a MB: Score 1 - - - - - - 1b MB: Score 2 2,586,063 3,070,191 -15.8% 2,518,815 2,695,936 -6.6% 2a MB: Score 3 - - - - - - 2b MB: Score 4 - - - - - - 3 MB: Score 5 - - - - - - Water GRI Standard 303-5 ENV24 Water-Abs, Water-LfL annual cubic metres (m3) Water Total purchased by land- lord water consumption B 55,213 49,723 11.0% 50,981 44,549 14.4% ENV54 Total purchased by tenant water consumption C 22,005 34,221 -35.7% 20,590 13,257 55.3% ENV56 Total water consumption 77,219 83,944 -8.0% 71,571 57,806 23.8% Water-Int (all assets) annual m3 / sqm Water Intensity (sum of) floor area (m 2 ) - Water A 391,469 420,300 -6.9% 353,936 353,936 0.0% ENV57 Building water intensity 0,20 0,20 -1.2% 0,20 0,16 23.8% ENV59 No. of applicable properties Water disclosure coverage 43 out of 46 50 out of 51 - 39 out of 39 39 out of 39 - Covered applicable sqm Water disclosure coverage - % 94,8% 97,4% -2,7% 100,0% 100,0% 0.0% ENV55 % Proportion of water estimated - PCAF - - - - - - Waste GRI Standard 306-3 / 306-4 / 306-5 ENV63 Waste-Abs, Waste-LfL annual tonnes Waste type Hazardous waste - - - - - - Non-Hazardous waste 750 938 -20.0% - - - ENV62 Total waste created 750 938 -20.0% - - - ENV25 Total landlord controlled waste generated 699 938 -25.5% - - - ENV65 proportion by disposal route (%) Disposal routes Landfill (with of without energy recovery) - - - - - - Incineration (with or without energy recovery) 0.6% - 0.6% - - - Diverted (total) 94.2% 94% 0.2% - - - Diverted - Reuse - - - - - - Diverted - Waste to energy 63.3% 66% -4.1% - - - Diverted - Recycling 30.9% 28% 10.4% - - - Other / Unknown 5.2% 6% -13.5% - - - ENV66 No. of applicable properties Waste disclosure coverage 29 out of 46 29 out of 51 - - - - Covered applicable sqm Waste disclosure coverage - % 65,7% 79,7% -17,6% - - - ENV61 % Proportion of waste estimated - PCAF - - - - - - Refers to the limited assurance report of the independent auditor (see page 120). The limited assurance applies to the absolute performance only (excluding like for like performance). A up to and including D refers to Measurement Methodology and Assumptions (see page 131) Absolute data 2022 deviates from last year's annual report due to applying another emission factor. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 129 NSI ANNUAL REPORT 2023 Absolute performance (Abs) Like-for-like performance (LfL) Impact area GRI Standard INREV Indicator ID Abbre viation (EPRA) Units of measure Indicator Notes 2023 2022 % change 2023 2022 % change Certification ENV26 Cert-Tot % of m2 Percentage of assets with a certificate Common area - % Certificate - - - - - - Shared Services - % Certificate - - - - - - Tenant space - % Certificate - - - - - - Whole building - % Certificate 91.1% 86.7% 5.2% 97.7% 97.7% 0.0% Green Buil- ding Certifi- cation Covered applicable properties Certified by at least one Green Building Certi- fication 42 out of 46 46 out of 49 - 41 out of 46 41 out of 46 - Covered applicable sqm Certified by at least one Green Building Certifica- tion - % 91.1% 94.0% -3.0% 97.7% 97.7% 0.0% BREEAM New Construc- tion - Level of certification New Construction - Outstanding - - - - - - New Consxtruction - Excellent - - - - - - New Construction - Very Good - - - - - - New Construction - Good - - - - - - New Construction - Pass - - - - - - BREEAM In Use - Level of certification In Use - Outstanding - - - - - - In Use - Excellent 38% 36% 4.9% 40.8% 40.8% 0.0% In Use - Very Good 35% 30% 15.7% 37.5% 37.5% 0.0% In Use - Good 13% 14% -6.2% 14.2% 14.2% 0.0% In Use - Pass 6% 10% -44.8% 5.1% 5.1% 0.0% In Use - Acceptable 0% 4% -100.0% - - - GPR Gebouw - Level of certification Design & Construction - - - - - - Operational - - - - - - Energy Ratings ENV27 % of m2 Percentage of assets with an energy rating Common area - % Energy Rating - - - - - - Shared Services - % Energy Rating - - - - - - Tenant space - % Energy Rating - - - - - - Whole building - % Energy Rating 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% EU EPC Covered applicable properties Certified EU EPC 46 out of 46 49 out of 49 - 43 out of 46 43 out of 46 - % of asset value Certified EU EPC - % 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% Level of certification A+++++ - - - - - - A++++ - - - - - - A+++ - - - - - - A++ 15% 13% 16.3% 16.3% 16.3% 0.0% A+ 12% 10% 18.9% 12.9% 12.9% 0.0% A 68% 65% -9.7% 63.5% 63.5% 0.0% B 4% 8% 5.8% 4.8% 4.8% 0.0% C 1% 4% 45.8% 2.5% 2.5% 0.0% D - - - - - - E - - - - - - F - - - - - - G - - - - - - Refers to the limited assurance report of the independent auditor (see page 120). The limited assurance applies to the absolute performance only (excluding like for like performance). A up to and including D refers to Measurement Methodology and Assumptions (see page 131) GRESB Score 94 out of 100 93 out of 100 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 130 NSI ANNUAL REPORT 2023 ENVIRONMENTAL SUSTAINABILITY PERFORMANCE MEASURES Note 2023 eligibility 2023 alignment 2023 alignment Turnover 100% 0% 93.3% Capex 100% 0% 95.5% Opex 100% 0% 90.4% SOCIAL PERFORMANCE MEASURES Note 2023 2022 Diversity - Emp Employee gender diversity Female 58.2% 52.3% Percentage of employees Male 41.8% 47.7% Diversity-Pay Gender pay ratio Management Board 1.18 1.23 Ratio Senior Management 1.33 1.36 Operations 2.44 2.07 Support Staff 1.17 1.00 Total 2.03 1.74 Emp-Training Employee training and development 55 83 Emp-Dev Employee performance appraisals 100.0% 100.0% Emp- Turnover New hires and turnover New hires 15 20 New hires headcount 22.4% 30.8% New hires percentage Leavers -13 -15 Leavers headcount -19.4% -23.1% Leavers percentage H&S-Emp Employee health and safety Absentee rate 4.2% 3.5% Injury rate 0.0% 0.0% Work related fatalities 0 0 H&S-Asset Asset health and safety assessments 14 out of 46 33 out of 49 H&S-Comp Asset health and safety compliance Number of incidents 3 2 Comty-Eng Community engagement, impact assessment and development programs 9 out of 46 10 out of 49 HNK office app in all HNK’s EU TAXONOMY 2023 2022 Gov-Board Composition of the highest governance body Page 55-59 Page 64-68 See composition and total number Gov-Selec Process for nominating and selecting the highest governance body Page 55-59 Page 64-68 Narrative on process Gov-CoI Process for managing conflicts of interest Page 55-59 Page 64-68 Narrative on process GOVERNANCE PERFORMANCE MEASURES refers to the limited assurance report of the independent auditor (see page 120) * Alignment if minimum social safeguards would have been fully met. See page 132 for more information. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 131 NSI ANNUAL REPORT 2023 MEASUREMENT METHODOLOGY AND ASSUMPTIONS ESG (NON-FINANCIAL) PERFORMANCE MEASURES NSI reports environmental, social and governance performance in accordance with the EPRA Sustainability Best Practice Recom- mendations (sBPR). This reporting is split into several sections consisting of the overarching EPRA recommendations, the envi- ronmental performance indicators, the social performance indica- tors and the governance performance indicators. REPORTING PERIOD AND ORGANISATIONAL BOUNDARIES The reporting period for this report is the same as for the annual financial report. NSI includes its ESG performance in its annual report since 2017, and publishes a separate sustainability report since 2020. The analysis includes data of the portfolio as per 31 December 2023. Assets that were acquired (not applicable in 2023) or disposed during 2023 were excluded from the Like-for- like performance analysis. MEASUREMENT SCOPE AND COVERAGE In 2023, 100% of the total portfolio value belonged to the measure- ment scope, which corresponds to 46 properties, including the NSI head office. The consumption data were collected using our invoice data, invoice data obtained from tenants, combined with smart meters and data obtained from tenants. In the event of incomplete or missing data, the data was extrapolated in accor- dance with EPRA guidelines or the asset was excluded. With regard to the measurement of electricity, the following apply: • The energy generated by the solar panels has not been deducted from the total electricity consumption • The consumption of the electric charging stations is excluded in the total electricity consumption. • The electricity consumption of the tenant is based on renew- able energy. The calculation of the ‘building energy intensity’ is based on all buildings for which data is available for at least 9 months. In case of missing data, the data is extrapolated to a whole year. On page 138 to 139 you can find the EPRA tables with the various performances, including the share of buildings in scope for each of the performance indicators and the extent of data coverage/ extrapolation. In addition, there has been a change in the methodology and presentation of GreenHouseGas emissions. In the Annual Report 2023, the emissions are presented on a market-based and loca- tion-based basis. Finally, there has been a change in the methodology used to convert energy consumption into CO 2 emissions. The meth- odology has changed from CO 2 emissiefactoren.nl to CRREM (Carbon Risk Real Estate Monitor's) emission factors. ESTIMATION AND EXTRAPOLATION OF CONSUMPTION DATA At the time of publication of this report, not all data are available for the measurement year 2023 yet. If data for at least ten months is available, it has been extrapolated in accordance with EPRA guidelines. If the data of one of the meters in a building is missing, the square meters of the building will be adjusted pro-rata for the purpose of determining the energy-, CO 2 - and water intensity and calculating the data coverage. In accordance with the EPRA guidelines, a like for like analysis was carried out for several envi- ronmental indicators. The analysis enables NSI to observe evolu- tions in consumption, irrespective of the fact that new assets are added to the scope of measurement. EXPLANATORY NOTES TO SUSTAINABILITY PERFORMANCE MEASURES The like for like (LfL) calculation reflects consumption of the portfolio that has been consistently in operation during the most recent two full reporting years, in line with the EPRA sBPR definition. As a result, assets sold in the reporting period are not included in this calculation. This means that: • 3 assets are excluded from Like-for-Like Performance as these assets were not fully operational during the reporting period of 2023. Furthermore, the Notes in the table refer to the following: A Square meters based on CRREM methodology (Gross floor area minus internal parking garage minus outer façade). B Normalization (as a consequence of Acquisitions and Disposi- tions during the year): • When a property is in the portfolio for less than 9 months (< 274 days), the property will be excluded. • When a property is in the portfolio for 9 months or longer (=> 274 days), the property will be included. For these properties, the consumption for the remaining part of the year should be estimated/extrapolated and explained in the report. C Reported consumption changes compared with last year due to additional data availability. This results in a higher data coverage. D Data of last year was not accurate due to a double counting. This is corrected. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 132 NSI ANNUAL REPORT 2023 OWN ASSETS THAT ARE ALIGNED WITH THE EU TAXONOMY OF SUSTAINABLE ACTIVITIES, NOW OR IN TIME We aim to own assets that are aligned, now or in time, with the EU taxonomy, the classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes. In order to determine alignment to the EU Taxonomy, the economic activity of the company must first be eligible. If the activity is not defined in the description of the EU taxonomy compass, it is not eligible under the EU Taxonomy and therefore, it cannot be considered as environmentally sustain- able. Second, once the economic activity has been deemed eligible, it must be determined that it makes a substantial contribution to at least one of the EU’s climate and environmental objectives, while at the same time not significantly harming (DNSH – do no signifi- cant harm) any of the other objectives and meeting minimum social safeguards. The taxonomy defines 6 environmental objectives. • Climate change mitigation • Climate change adaptation • The sustainable use and protection of water and marine resources • The transition to a circular economy • Pollution prevention and control • The protection and restoration of biodiversity and ecosystem Of the 6 environmental objectives, EPRA’s analysis indicates that only the objectives of the ‘Climate Change Mitigation’, ‘Climate Change Adaptation’ and ‘Transition to a Circular Economy’ have a focus on the Real Estate sector. Only Climate change mitigation and Climate Change adaptation have been in force since 2022. The other four remaining objectives were adopted by Commission Delegated Regu- lation (not in force until publication in the Official Journal) of 27 June 2023 of the European Parliament and are in force since 2023. EU TAXONOMY CONSTRUCTION AND RENOVATION OF BUILDINGS INSTALLATION, MAINTENANCE AND REPAIR ACTIVITIES ACQUISITION AND OWNERSHIP OF BUILDINGS KEY ACTIVITIES OF THE TSC FOR CONSTRUCTION AND REAL ESTATE STAND-ALONE TRANSITIONAL ENABLING ENABLING ENABLING ENABLING STAND-ALONE Constructionof newbuildings Renovationof existing buildings Individual reno- vation measures consistingof Instal- lation, maintenance and repairof energy efficiency equip- ment Installation, main- tenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) Installation, main- tenance and repair of instruments and devices for measu- ring, regulating and controlling energy performance of buildings Installation, mainte- nance and repair of renewable energy technologies Acquisition and ownership of buil- dings Note: Construction and civil enginee- ring works or prepa- ration thereof. Note: Buying real estate and exerci- sing ownership of that real estate. Note: Development of building projects for residential and non-residential buildings by brin- ging together finan- cial, technical and physical means to achieve the building- projectsforlatersa- leand the construc- tion of complete buildings,onow- naccountforsale, onafeeorcontract- basis. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 133 NSI ANNUAL REPORT 2023 NSI’S TAXONOMY ELIGIBILITY AND ALIGNMENT • Eligibility: An analysis was performed on NSI’s portfolio based on the Taxonomy-recognised activity of “Acquisition and Ownership of buildings” as defined by the EU taxonomy of sustainable activi- ties (see graph on page 132 for the Key activities). • The objective to which this activity contributes is “Climate change mitigation” defined as “contributing to the stabilisation of greenhouse gas emissions by avoiding or reducing them or by enhancing greenhouse gas removals”. To prove this, the activity must comply with specific Technical Screening Criteria (TSC)- a set of conditions specific to this activity. • The TSC for substantial contribution for the economic activity “Acquisition and ownership of buildings”, largely depend on the type of buildings in scope (residential vs non-residential), the date in which the building was built (different conditions for build- ings built before or after 31 December 2020) and on the energy performance certificates. Please see the graph below for a more detailed explanation. • The CapEx KPI is defined as Taxonomy-aligned CapEx (numer- ator) divided by our total CapEx (denominator). The allocation of our Capital Expenditures (CapEx) towards assets aligned with the EU Taxonomy offers a transparent insight into NSI's strategic path. Specifically, channelling a significant portion of our overall CapEx into assets that align with the EU Taxonomy demonstrates our commitment to fostering a portfolio that is both sustainable and resilient to climate change. This approach not only guides our transition strategies but also provides the necessary finan- cial support. To ascertain the proportion of our CapEx that aligns with the EU Taxonomy, we calculate this by dividing the CapEx invested in EU Taxonomy-compliant assets by the total CapEx allocated across all assets. • The proportion of our Operational Expenditure and Turnover that align with EU Taxonomy is calculated in the same way but provides us with different insights. Namely, the proportion of OpEx that is EU Taxonomy aligned, tells us what proportion of Operational Expenditure goes to EU Taxonomy-aligned assets, and it is thus invested in assets that meet the according sustain- ability criteria. • Finally, the proportion of turnover from EU Taxonomy-aligned assets provides us with insights into how much turnover comes from activities that meet the sustainability criteria outlined by the EU Taxonomy. All in all, these proportions CapEx, OpEx, and turn- over from EU Taxonomy-aligned assets demonstrate how much of our current assets are aligned with the sustainable principles that are required for the EU Taxonomy. • In order to ensure that the activity does no significantly harm to the other objectives, it should be verified that adaptation solutions are put in place to tackle the climate risk hazards which have been assessed as “material”. • The analysis was performed on each individual asset based on the TSC for the Acquisition and ownership of buildings as defined by the EU taxonomy. Through a climate risk hazard and mitigation plan the DNSH condition was assessed. The Do No Significant Harm (DNSH) criteria were evaluated through two assessments. Initially, Cushman & Wakefield conducted an analysis to identify climate risks that could significantly affect the financial perfor- mance of our assets, in alignment with the DGBC Framework for Climate Adaptive Buildings. Following this analysis, Sweco further examined specific assets flagged for one or more physical climate-related risks. This examination involved a comprehensive assessment of climate risk and vulnerability at the asset level. Based on these outcomes, a tailored climate adaptation strategy was developed to mitigate each asset identified as being at risk. Implementation of the adaptation plans is scheduled to be executed over the next five years. • In this analysis, all our assets were assessed against the activity “acquisition and ownership of buildings”. As a result, investment properties under construction and renovations are not aligned with the EU taxonomy based on this activity. We will explore in 2024 alignment against other EU taxonomy-eligible relevant activ- ities for these buildings. • NSI adheres to international standards for human rights as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisa- tion on Fundamental Principles and Rights at Work and the Inter- national Bill of Human Rights. • Based on this, the proportion of the portfolio that would be EU taxonomy aligned based on the Climate Change Mitigaton: 2023 eligibility 2023 alignment 2023 alignment * Turnover 100% 0% 93.3% Capex 100% 0% 95.5% Opex 100% 0% 90.4% The EU Taxonomy guidelines expect a bundle of coherent processes aimed at identifying negative impacts on the four pillars of minimum social safeguards (human rights & labour rights, bribery and corrup- tion, taxation and fair competition), identifying how these can be prevented or reduced, the implementation of these actions, the monitoring of the results and the method of communicating how negative impacts are addressed in relation to the company's own operations, the value chain and other business relationships. NSI does not have all these process steps in place to meet the require- ments of the minimum social safeguards. Additional efforts will be made in 2024 and beyond to ensure to meet these conditions for alignment. NSI made subsequent progress on EU Taxonomy alignment throughout 2023. Alignment based on the technical assessment points increased compared to last year on Revenue, Capex and Opex. Progress was also realized with respect to minimum safe- guard requirements including the adoption of relevant policies. Addi- tional steps will be made in 2024 and beyond to ensure compliance with the minimum safeguard requirements can be verified. The extensive EPRA taxonomy eligibility and alignment table against revenue, capex and opex can be found on pages 135 to 137. * Alignment if minimum social safeguards would have been fully met. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 134 NSI ANNUAL REPORT 2023 NO NO NO TSC SUBSTANTIAL CONTRIBUTION CHECK ACQUISITION AND OWNERSHIP OF BUILDINGS WAS YOUR BUILDING BUILT BEFORE 31 DECEMBER 2020? NOYES Does your building have an EPC class A? NO Is your building: 1. Within the top 15% of the national or regional building stock in terms of PED? 2. I s this adequately demonstrated? 3. Does it at least compare the perfor- mance of the assets to the one built before 31 December 2020 and distinguish between residential and non- residential? Is the PED at least 10% lower than the threshold set for NZEB (nearly zero- energy building)? Is the energy perfor- mance certified using EPC? The activity is not aligned YES NOYES Is your building larger than 5000 m 2 ? Did the building undergo testing for air-tightness and thermal integrity and report deviations in level of perfor- mance? Alternatively, is there a robust/ traceable quality control process during construction? The activity is not aligned The activity is not aligned Has the life-cycle GWP from construc- tion been calculated for each stage and disclosed to investors/clients on demand? YES YESYES YES Is your building large and non-residential? Is efficiently operated through energy performance monitoring and assessment? YES YES The activity complies with the substantial contribution TSC, the alignment assessment can proceed to DNSH check NO The activity is not aligned NO As the building is not larger than 5000 m 2 , there are no further checks There are no further checks INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 135 NSI ANNUAL REPORT 2023 Substantial contribution criteria Do not significant harm criteria Economic activity Codes Absolute [Turnover] Proportion of [Turnover] - % Climate Change Mitigation Climate Change Adaptation Water and Marine Resources Circular Economy Pollution Biodiversity and Ecosystem Climate Change Mitigation Climate Change Adaptation Water and Marine Resources Circular Economy Pollution Biodiversity and Ecosystem Minimum safeguards Taxonomy Aligned proportion of [Turnover] year N - % Taxonomy Aligned proportion of [Turnover] year N-1 - % Category Enabling activity - % Category Transitional activity - % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % % % A. Taxonomy Eligible activities (A1 + A2): % A.1 Enviromentally sustainable actitivies (Taxonomy aligned) Activity 1 - Acquisition and ownership of buildings (7.7) L68 71,46 100,0% 93,3% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y N/A N/A N/A N/A Y 93,3% 0,0% N/A N/A Turnover of environ- mentally sustainable activities (Taxonomy- aligned) (A.1) 100,0% 93,3% 0,0% 0,0% 0,0% 0,0% 0,0% 93,3% A.2 Enviromentally sustainable actitivies (not Taxonomy aligned) Activity 1 - Acquisition and ownership of buildings (7.7) L68 Turnover of Taxo- nomy-eligble but not enviromentally sustainable activities (not Taxonomy- aligned activities) (A.2) Total (A.1 + A.2) 100,0% 93,3% 0,0% 0,0% 0,0% 0,0% 0,0% 93,3% B. Non-Eligible activities: % Turnover of non- Eligble activities 0,0% Total (A + B) 100,0% TAXONOMY ELIGIBILITY AND ALIGNMENT AGAINST TURNOVER, CAPEX AND OPEX TABLE 1 Table - Proportion of Turnover from products or services associated with economic activities that qualify as enviromentally sustainable - disclosure covering year N The alignment would have been as follows if minimal social safeguards would have been fully met: INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 136 NSI ANNUAL REPORT 2023 Substantial contribution criteria Do not significant harm criteria Economic activity Codes Absolute [CapEx] Proportion of [CapEx] - % Climate Change Mitigation Climate Change Adaptation Water and Marine Resources Circular Economy Pollution Biodiversity and Ecosystem Climate Change Mitigation Climate Change Adaptation Water and Marine Resources Circular Economy Pollution Biodiversity and Ecosystem Minimum safeguards Taxonomy Aligned proportion of [CapEx] year N - % Taxonomy Aligned proportion of [CapEx] year N-1 - % Category Enabling activity - % Category Transitional activity - % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N A. Taxonomy Eligible activities (A1 + A2): % A.1 Enviromentally sustainable actitivies (Taxonomy aligned) Activity 1 - Acquisition and ownership of buildings (7.7) L68 13,99 100,0% 95,5% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y N/A N/A N/A N/A Y 95,5% 0,0% N/A N/A CapEx of environ- mentally sustainable activities (Taxonomy- aligned) (A.1) 100,0% 95,5% 0,0% 0,0% 0,0% 0,0% 0,0% 95,5% A.2 Enviromentally sustainable actitivies (not Taxonomy aligned) Activity 1 - Acquisition and ownership of buildings (7.7) L68 CapEx of Taxonomy- eligble but not envi- romentally sustai- nable activities (not Taxonomy-aligned activities) (A.2) Total (A.1 + A.2) 100,0% 95,5% 0,0% 0,0% 0,0% 0,0% 0,0% 95,5% B. Non-Eligible activities: % CapEx of non-Eligble activities 0,0% Total (A + B) 100,0% TABLE 2 Table - Proportion of CapEx from products or services associated with economic activities that qualify as enviromentally sustainable - disclosure covering year N The alignment would have been as follows if minimal social safeguards would have been fully met: INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 137 NSI ANNUAL REPORT 2023 Substantial contribution criteria Do not significant harm criteria Economic activity Codes Absolute [OpEx] Proportion of [OpEx] - % Climate Change Mitigation Climate Change Adaptation Water and Marine Resources Circular Economy Pollution Biodiversity and Ecosystem Climate Change Mitigation Climate Change Adaptation Water and Marine Resources Circular Economy Pollution Biodiversity and Ecosystem Minimum safeguards Taxonomy Aligned proportion of [OpEx] year N - % Taxonomy Aligned proportion of [OpEx] year N-1 - % Category Enabling activity - % Category Transitional activity - % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N A. Taxonomy Eligible activities (A1 + A2): % A.1 Enviromentally sustainable actitivies (Taxonomy aligned) Activity 1 - Acquisition and ownership of buildings (7.7) L68 11,18 100,0% 90,4% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y N/A N/A N/A N/A Y 90,4% 0,0% N/A N/A OpEx of environ- mentally sustainable activities (Taxonomy- aligned) (A.1) 100,0% 90,4% 0,0% 0,0% 0,0% 0,0% 0,0% 90,4% A.2 Enviromentally sustainable actitivies (not Taxonomy aligned) Activity 1 - Acquisition and ownership of buildings (7.7) L68 OpEx of Taxonomy- eligble but not envi- romentally sustai- nable activities (not Taxonomy-aligned activities) (A.2) Total (A.1 + A.2) 100,0% 90,4% 0,0% 0,0% 0,0% 0,0% 0,0% 90,4% B. Non-Eligible activities: % OpEx of non-Eligble activities 0,0% Total (A + B) 100,0% TABLE 3 Table - Proportion of OpEx from products or services associated with economic activities that qualify as enviromentally sustainable - disclosure covering year N The alignment would have been as follows if minimal social safeguards would have been fully met: INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 138 NSI ANNUAL REPORT 2023 EPRA KEY PERFORMANCE MEASURES OVERVIEW KEY PERFORMANCE INDICATORS 2023 2022 € ' 000 per share (€) € ' 000 per share (€) EPRA earnings 40,402 2.01 42,733 2.15 EPRA cost ratio (incl. direct vacancy costs) 30.8% 28.8% EPRA cost ratio (excl. direct vacancy costs) 29.1% 27.8% EPRA property related capital expenditure 19,425 12,776 31 December 2023 31 December 2022 € ' 000 per share (€) € ' 000 per share (€) EPRA NRV 819,913 40.68 987,844 49.26 EPRA NTA 711,460 35.30 885,774 44.17 EPRA NDV 733,561 36.40 918,162 45.78 EPRA LTV 34.4% 29.3% EPRA net initial yield (NIY) 5.3% 4.6% EPRA topped-up net initial yield 5.8% 5.0% EPRA vacancy rate 5.2% 6.2% EPRA EARNINGS 2023 2022 Gross rental income 71,199 71,309 Service costs not recharged -1,926 -1,322 Operating costs -10,852 -10,663 Net rental income 58,421 59,325 Administrative costs -9,120 -8,566 Net financing result -8,349 -8,024 Direct investment result before tax 40,953 42,735 Corporate income tax -550 -2 Direct investment result / EPRA earnings 40,402 42,733 Direct investment result / EPRA earnings per share 2.01 2.15 EPRA COST RATIO 2023 2022 Administrative costs 9,120 8,566 Service costs not recharged 1,926 1,322 Operating costs (adjusted for municipality taxes) 10,852 10,663 Leasehold 0 -3 EPRA costs (including direct vacancy costs) 21,898 20,548 Direct vacancy costs -1,187 -753 EPRA costs (excluding direct vacancy costs) 20,711 19,795 Gross rental income 71,199 71,309 EPRA gross rental income 71,199 71,309 EPRA cost ratio (incl. direct vacancy costs) 30.8% 28.8% EPRA cost ratio (excl. direct vacancy costs) 29.1% 27.8% INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 139 NSI ANNUAL REPORT 2023 EPRA PROPERTY RELATED CAPITAL EXPENDITURE 2023 2022 Acquisitions -104 Development 5,466 7,233 Like-for-like portfolio 13,244 5,648 Other 715 0 EPRA capital expenditure 19,425 12,776 EPRA NAV 31 December 2023 31 December 2022 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV IFRS Equity attributable to shareholders 709,882 709,882 709,882 887,008 887,008 887,008 Hybrid instruments Diluted NAV 709,882 709,882 709,882 887,008 887,008 887,008 Diluted NAV at fair value 709,882 709,882 709,882 887,008 887,008 887,008 Deferred tax in relation to fair value gains of investment property 2 2 Fair value of financial instruments 1,608 1,608 -1,163 -1,163 Intangibles as per IFRS balance sheet -32 -32 -72 -72 Fair value of fixed interest rate debt 23,711 31,225 Real estate transfer tax 108,422 101,999 NAV 819,913 711,460 733,561 987,844 885,774 918,162 Fully diluted number of shares 20,155,221 20,155,221 20,155,221 20,054,241 20,054,241 20,054,241 NAV per share 40.68 35.30 36.40 49.26 44.17 45.78 EPRA YIELD 31 December 2023 31 December 2022 Investment property including assets held for sale 1,037,215 1,274,988 Developments -53,730 -58,878 Property investments 983,485 1,216,110 Allowance for estimated purchasers' costs 110,101 109,450 Gross up completed property portfolio valuation 1,093,586 1,325,560 Annualised cash passing rental income 71,835 72,852 Annualised property outgoings -13,725 -11,951 Annualised net rent 58,110 60,901 Notional rent expiration of rent free periods or other lease incentives 5,661 5,940 Topped-up annualised net rent 63,771 66,841 EPRA net initial yield 5.3% 4.6% EPRA topped-up net initial yield 5.8% 5.0% EPRA VACANCY 31 December 2023 31 December 2022 Estimated rental value of vacant space 4,320 5,510 Estimated rental value of the whole portfolio 83,516 88,317 EPRA vacancy 5.2% 6.2% INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 140 NSI ANNUAL REPORT 2023 FIVE YEAR OVERVIEW KEY FINANCIAL METRICS - REVENUES AND EARNINGS 2019 2020 2021 2022 2023 Net rental income 67,227 60,466 63,272 59,325 58,421 Net rental income - like-for-like growth 5.2% 0.8% 3.0% 7.4% 4.6% Direct investment result 49,439 44,943 46,373 42,733 40,402 Indirect investment result 146,858 -65,357 74,588 -74,103 -182,772 Total investment result 196,297 -20,414 120,961 -31,370 -142,370 EPRA earnings per share 2.64 2.35 2.38 2.15 2.01 Weighted average number of shares outstanding 18,751,178 19,138,717 19,499,825 19,869,975 20,117,872 EPRA cost ratio (excl. direct vacancy costs) 26.3% 28.4% 26.0% 27.8% 29.1% KEY FINANCIAL METRICS - BALANCE SHEET 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021 31 Dec. 2022 31 Dec. 2023 Investment property 1,278,992 1,240,192 1,338,034 1,259,235 1,028,801 Net debt -352,632 -366,194 -382,073 -365,480 -344,443 Other assets / liabilities -23,052 -19,560 -7,504 -6,746 25,524 Equity 903,308 854,438 948,457 887,008 709,882 EPRA NTA per share 47.95 44.44 48.23 44.17 35.30 Number of shares outstanding 18,917,764 19,291,415 19,698,207 20,054,241 20,155,221 Net LTV 27.4% 29.2% 28.2% 28.7% 33.0% KEY ESG METRICS 2019 2020 2021 2022 2023 EPC-label (percentage portfolio - label A or better) 61% 74% 81% 88% 95% GRESB-score 71 88 92 93 94 KEY PORTFOLIO METRICS 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021 31 Dec. 2022 31 Dec. 2023 Number of properties 65 60 52 49 46 Market value (€m) 1,287 1,253 1,355 1,275 1,043 Lettable area (sqm k) 491 473 409 382 351 Annual contracted rent (€m) 81 84 76 78 77 ERV (€m) 92 93 87 88 84 EPRA net initial yield 4.6% 4.5% 4.1% 4.6% 5.3% Gross initial yield 6.4% 6.7% 5.9% 6.4% 7.9% EPRA vacancy 7.1% 7.0% 5.9% 6.2% 5.2% Wault (yrs) 4.2 4.0 4.1 3.9 3.7 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 141 NSI ANNUAL REPORT 2023 AVERAGE RENT PER SQM The total annual contracted rent divided by the total leased square meters. CERTIFICATION The percentage of assets within the portfolio that have formally obtained sustainability certification, ratings or labelling valid at the end of the reporting period. NSI reports on the following certificates: • BREEAM (based on sqm); • EPC label (based on market value); • GRESB-score (expressed as an overall score for total NSI). COST RATIO (EPRA) EPRA costs include all administrative costs, net service costs and operating expenses as reported under IFRS, but do not include ground rent costs. These costs are reflected including and excluding direct vacancy costs. The EPRA cost ratio is calculated as a percentage of gross rental income less ground rent costs. DUTCH REIT (FBI-REGIME) NSI qualifies as a Dutch Real Estate Investment Trust (fiscale beleg- gingsinstelling or FBI) and as such is charged a corporate income tax rate of 0% on its earnings. The tax regime stipulates certain conditions, such as a maximum ratio of 60% between debt and the book value of real estate, maximum ownership of shares by one legal entity or natural persons, and the obligation to pay out the annual profit by way of divi- dends within eight months after the end of the financial year. Before 2014, activities permitted under FBI legislation were limited to portfolio investments activities only. Effective 1 January 2014, new legislation that allows FBI’s to perform enterprise-type business acti- vities within certain limits. These activities must be carried out by a taxable subsidiary and must support the operation of the FBI’s real estate business. EARNINGS (EPRA) EPRA earnings is a measure of operational performance and repre- sents the net income generated from operational activities. It excludes all components not relevant to the underlying net income performance of the portfolio. EARNINGS PER SHARE (EPRA) Indicator for the profitability of NSI; portion of the EPRA earnings attri- butable to shareholders allocated to the weighted average number of ordinary shares. ENERGY INTENSITY (CRREM) The total energy used by renewable and non-renewable resources during a reporting period, normalised by the sum of the CRREM floor area in square meters (gross floor area minus parking garages and outer façade) for the properties in scope. EPC-LABEL Energy Performance Certificates (EPCs) tell you how energy efficient a building is and give it a rating from A (very efficient) to G (inefficient) EUROPEAN PUBLIC REAL ESTATE ASSOCIATION (EPRA) Association of Europe’s leading property companies, investors and consultants which strives to establish best practices in accounting, reporting and corporate governance and to provide high-quality infor- mation to investors. ESTIMATED RENTAL VALUE (ERV) The estimated amount at which a property or space within a property, would be let under the market conditions prevailing on the date of valuation. G4 G4 refers to the locations Amsterdam, Den Haag, Rotterdam, and Utrecht. GRESB SCORE The GRESB Score is an overall measure of ESG performance – repre- sented as a percentage (100 percent maximum). The GRESB Score gives quantitative insight into the company’s ESG performance in absolute terms, over time and against your peers. HNK HNK stands for ‘Het Nieuwe Kantoor’, (which means ‘The New Office’). HNK is NSI’s flexible office concept and offers an inspiring environment with stylish workplaces, office spaces, meeting areas, catering facili- ties and various ancillary services. HNK offers different propositions, including memberships (flexible workstations), managed offices (fully equipped offices), bespoke offices and meeting rooms. INTEREST COVERAGE RATIO (ICR) Debt ratio and profitability ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calcu- lated by dividing net rental income during a given period by net financing expenses during the same period adjusted for capitalised interest. INVESTMENT RESULT - DIRECT The direct result reflects the recurring income arising from core opera- tional activities. The direct result consists of gross rental income minus operating costs, service costs not recharged to tenants, administrative costs, direct financing costs, corporate income tax on the direct result, and the direct investment result attributable to non-controlling interests. INVESTMENT RESULT - INDIRECT The indirect result reflects all income and expenses not arising from day-today operations. The indirect result consists of revaluations of property, net result on sales of investment, indirect financing costs (movement in market value of derivatives and exchange rate diffe- rences, corporate income tax on the indirect result, and the indirect investment result attributable to non-controlling interests. INVESTMENT RESULT – TOTAL The total result reflects all income and expenses; it is the total of the direct and the indirect investment result. LEASE INCENTIVES Adjustments in rent granted to a tenant or a contribution to tenants’ expenses in order to secure a lease. The impact of lease incentives on net rental income is straight line over the firm duration of the lease contract under IFRS. GLOSSARY INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 142 NSI ANNUAL REPORT 2023 LIKE-FOR-LIKE RENTAL INCOME Like-for-like growth figures aim at assessing the organic growth of NSI. In the case of like-for-like rental income the aim is to compare the rental income of all or part of the standing portfolio over a certain period with the rental income for the same portfolio over a previous period (i.e. year-onyear and/or quarter-on-quarter). In order to calcu- late like-for-like growth, the nominal increase in rent is adjusted for the impact of acquisitions, divestments and properties transferred to and from the development portfolio and between segments (e.g. office to HNK). LOAN TO VALUE (LTV, NET) The LTV-ratio reflects the balance sheet value of interest-bearing debts plus short term debts to credit institutions, net of cash and cash equivalents, expressed as a percentage of the total real estate invest- ments, including assets held for sale. MARKET VALUE INVESTMENT PROPERTY (FAIR VALUE) The estimated amount for which a property should change hands on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein each party had acted knowledgeably, prudently, and without compulsion. The market value does not include transaction costs. NET ASSET VALUE (NAV) The net asset value represents the total assets minus total liabili- ties. At NSI this equates to the shareholders’ equity (excluding non- controlling interests as stated in the balance sheet). The NAV is often expressed on a per share basis; in this calculation the number of shares outstanding at reporting date is used rather than the average number of shares is used. NET ASSET VALUE (NAV, EPRA-DEFINITION) The EPRA NAV metrics make adjustments to the NAV as per the IFRS financial statements to provide the most relevant information on the fair value of the assets and liabilities, under different scenario’s. • EPRA net reinstatement value (NRV): assumes that entities never sell assets and aims to represent the value required to rebuild the entity; • EPRA net tangible assets (NTA): assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax; • EPRA net disposal value (NDV): represents the shareholders’ value under a disposal scenario, where deferred tax, financial instru- ments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax. NET MARGIN The net margin measures operating efficiency; it indicates how effec- tive NSI is in managing its expense base. It is calculated as net rental income as a percentage of gross rental income. NET RESULT ON SALE OF INVESTMENT PROPERTY The net result on sales of investment property reflects the disposal price paid by a third party for a property minus the value at which the respective property was recorded in the accounts at the moment of sale, net of sales costs made. The sales costs include costs of real estate agents and legal costs, but can also include internal costs made which are directly related to transaction. RENT - EFFECTIVE RENT The effective rent reflects the contractual annual rent after straight- lining of rent free periods and rental discounts. RENT - GROSS RENTAL INCOME (GRI) Gross rental income reflects the rental income from let properties, after taking into account the net effects of straight lining for lease incentives and key money, including turnover rent and other rental income (e.g. specialty leasing and parking income). RENT - NET RENTAL INCOME (NRI) Gross rental income net of (net) costs directly attributable to the opera- tion of the property (non-recoverable service charges and operating costs). Income and costs linked to the ownership structure, such as administrative expenses, are not included. RENT - PASSING CASH RENT / CONTRACTED RENT The estimated annualised cash rental income as at reporting date, excluding the net effects of straight-lining of lease incentives. Vacant units and units that are in a rent-free period at the reporting date are deemed to have no passing cash rent. REVERSIONARY POTENTIAL This ratio compares the minimum guaranteed rent and the turnover rent to the estimated rental value and as such indicates whether a unit or property is underlet or over-rented. REVERSIONARY RATE / RESULT FROM RELETTING AND RENEWAL The reversionary rate measures the rental gain/loss of a deal as the difference between the new rent (after the deal) and the old rent (before the deal). STANDING PORTFOLIO Standing portfolio is used in like-for-like calculations and concerns the real estate investments at a specific date that have been consistently in operation as part of NSI’s portfolio during two comparable periods. Note that an investment property can be considered both standing and at the same time non standing, depending on the comparison periods used (e.g. year-on-year and quarter-on-quarter). VACANCY RATE (EPRA) Vacancy rate (EPRA): reflects the loss of rental income against ERV as a percentage of ERV of the total operational portfolio. WEIGHTED AVERAGE UNEXPIRED LEASE TERM (WAULT) This ratio is used as an indicator of the average length of leases in port- folios. It can be calculated over the full lease term of the contracts either up to expiration date or up to break option date. YIELD Yield can generally be defined as the income or profit generated by an investment expressed as a percentage of its costs or the total capital invested. • Gross initial yield: the passing rent as a percentage of the market value of an object; • Net initial yield: the passing rent, net of property related costs, as a percentage of the market value of an object; • Net theoretical yield: annualised net theoretical rental income as a percentage of the real estate investments in operation; • EPRA net initial yield: annualised net effective cash passing rent (including estimated turnover rent and other recurring rental income) net of non-recoverable property operating expenses as a percentage of the gross market value of the real estate investments in operation; • EPRA topped-up net initial yield: EPRA net initial yield adjusted for expiring lease incentives; • Reversionary yield: the anticipated yield to which the initial yield will rise (or fall) once the rent reaches the ERV. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 143 NSI ANNUAL REPORT 2023 GLOSSARY ESG (NON-FINANCIAL) PERFORMANCE MEASURES ASSET HEALTH AND SAFETY ASSESSMENTS Asset Health and safety assessments refers to the proportion of assets for which health and safety related assessments have been performed, reviewed or assessed to determine the impact owith respect to compliance or further improvement possibilities. Every assessment will be reviewed every three years. • NSI reports on the following assessments:NEN 2767 Inspections (technical) • Inspections carriet out by the Insurance company (technical, health and safety) • Fire safety assessments safety ASSET HEALTH AND SAFETY COMPLIANCE Asset Health and safety Incidents refers to the amount of incidents of non-compliance with regulations and/or voluntary codes concer- ning Health and Safety within the reporting period. NSI reports on the following incidents: • Incidents of non-compliance with regulations resulting in a fine or penalty; • Incidents of non-compliance with regulations based on a a formal warning of a third party. CERTIFICATION The percentage of assets within the portfolio that have formally obtained sustainability certifications, ratings or labelling valid at the end of the reporting period. NSI reports on the following certificates: • BREEAM (based on sqm); • EPC-label (based on market value); • GRESB-score (expressed as an overall-score for total organisa- tion). DISTRICT HEATING AND COOLING CONSUMPTION The energy consumed from “District heating and cooling” systems during the reporting period by Landlord (Scope 2) and Tenant (Scope 3). NSI reports on the following KPI’s: • Total amount of district heating and cooling consumption, split by Landlord obtained and Tenant obtained heating and cooling; • The proportion of the total consumption that is from renewable resources (calculated as percentage of total annual kWh). Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. ELECTRICITY CONSUMPTION The electricity consumed during a reporting period. It includes elec- tricity from renewable and non-renewable sources, whether imported or generated on site. This includes the electricity consumed by the EV-charging stations. NSI reports on the following KPI’s: • Total amount of electricity consumption, split by Landlord (Scope 2) obtained and Tenant (Scope 3) obtained electricity; • The proportion of the total consumption obtained by Landlord from renewable resources. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. EMPLOYEES Individuals that are in an employment agreement with NSI, according to national law or its application (i.e. employees). Employees exclude temporary staff (not on payroll NSI) EMPLOYEE HEALTH AND SAFETY The occupational health and safety performance of the organisation with relation to its employees. NSI reports on the following KPI’s: • Absentee rate: actual absentee days lost due to illness as a percentage of total number of days scheduled to be worked by all employees; • Injury rate: the frequency of injuries relative to the total time worked by all employees during the reporting period; • Work related fatalities: this refers to the number of death of employees during the reporting period while performing work for the organisation EMPLOYEE TURNOVER AND RETENTION The total number and rate of new employee hires and employee turnover during the reporting period. EMPLOYEE TRAINING AND DEVELOPMENT The average hours of (external) training, paid for by NSI, that the orga- nisation’s employees have undertaken in the reporting period based on the average hours prescribed for the training as indicated by the training provider divided by the average number of employees (head- count) during the reporting period. ENERGY INTENSITY The total energy used by renewable and non-renewable resources during a reporting period, normalised by the sum of the gross floor area in square meters for the properties in scope. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. ENERGY INTENSITY (CRREM) The total energy used by renewable and non-renewable resources during a reporting period, normalised by the sum of the CRREM floor area in square meters (gross floor area minus parking garages and outer façade) for the properties in scope. FUEL CONSUMPTION The fuel used from direct (renewable and non-renewable) resources (direct meaning that the fuel is combusted on site) over a reporting period. NSI reports on the following KPI’s: • Total amount of fuel used from direct resources, split in Landlord obtained and Tenant obtained fuels; • The proportion of the total consumption that is from renewable resources. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION 144 NSI ANNUAL REPORT 2023 GENDER DIVERSITY The percentage of male and female employees in the organisation as per reporting date based on the headcount. GENDER PAY RATIO The ratio of the basic annual salary or remuneration, including vari- able components, of male to female, taking into account the full-time employee equivalent. GREENHOUSE GAS (GHG) DIRECT EMISSIONS (SCOPE 1) The total amount of Landlord induced direct greenhouse gas emis- sions generated during a reporting period. “Direct” refers to GHG-emissions that are generated on site through combustion of the energy source. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. GREENHOUSE GAS (GHG) INDIRECT EMISSIONS (SCOPE 2) The total amount of Landlord induced indirect greenhouse gas emis- sions generated during a reporting period. “Indirect” refers to GHG-emissions that are not generated on site through combustion of the energy source, but refers to GHG-emis- sions induced off site. This includes the GHG-emissions caused by “District heating and cooling” and/or consumption of “Non-renewable electricity”. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. GREENHOUSE GAS (GHG) DIRECT & INDIRECT EMISSIONS (SCOPE 3) The total amount of Tenant induced both direct and indirect green- house gas emissions generated during a reporting period. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. GREENHOUSE GAS (GHG) EMISSIONS INTENSITY The total amount of direct and indirect GHG-emissions (Scope 1, 2 and 3) generated from energy consumption in a building during a reporting period, divided by the sum of the gross floor area in square meters for the properties in scope. This includes only data of buil- dings if data for all GHG-scopes is available. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. LIKE-FOR-LIKE Like-for-like refers to the part of the portfolio that has been consi- stently in operation, and not under development, during the most recent two full reporting periods. LOCATION-BASED GHG EMISSIONS Location-based GHG emissions Is emissions that are calculated based on the average national energy mix. MARKET-BASED GHG EMISSIONS Market-based GHG emissions are emissions that are calculated on the basis of energy purchased by NSI. PERCENTAGE EMPLOYEE PERFORMANCE APPRAISALS The percentage of total employees who received annual performance and career development reviews during the reporting period, inclu- ding appraisals in the current reporting year over the previous repor- ting year. WATER CONSUMPTION The total amount of water consumed (by Landlord and Tenant) within the portfolio during a reporting period. The amount of water consumption includes a portion of estimate (calculated on an extra- polation based on the average consumption of the specific building) when data was yet not available for the 12 month period. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. WASTE BY DISPOSAL ROUTES The amount of waste produced and disposed of via various disposal methods routes over a reporting period (as calculated by Milieuser- vice NL). NSI reports on the following KPI’s: • Total amount of waste produced and disposed of, split in hazar- dous and non-hazardous waste; • The proportion of the waste disposed of by disposal route accor- ding to type (percentage). Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. WATER INTENSITY The total amount of water consumed during a reporting period, divided by the sum of the gross floor area in square meters for the properties in scope. Both absolute figures as well as a like-for-like comparison with the prior reporting period are reported. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATIONOTHER INFORMATION COLOPHON This annual report is a publication by NSI. NSI Antareslaan 69-75 Postbus 3044 2130 KA Hoofddorp T 020 76 30 300 F 020 25 81 123 E [email protected] www.nsi.nl Editing and texts NSI Lindner & van Maaren Design and layout Monter, Amsterdam Photography Michiel Poodt Antareslaan 69-75 PO Box 3044 2130 KA Hoofddorp T 020 76 30 300 F 020 25 81 123 www.nsi.nl 724500I77C30W2LZZJ032023-01-012023-12-31724500I77C30W2LZZJ032022-01-012022-12-31724500I77C30W2LZZJ032023-12-31724500I77C30W2LZZJ032022-12-31724500I77C30W2LZZJ032021-12-31724500I77C30W2LZZJ032022-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032023-01-012023-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032023-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032022-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032023-01-012023-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032023-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032022-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032023-01-012023-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032023-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032023-01-012023-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032023-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032021-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032022-01-012022-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032021-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032022-01-012022-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032021-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-01-012022-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032021-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-01-012022-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMemberiso4217:EURiso4217:EURxbrli:shares
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