European Database for Stock-Listed Companies | Financial Reports & Insights

Untitled CONTENT ANNUAL REPORT INTRODUCTION NSI highlights 3 NSI at a glance 4 CEO comments 6 MANAGEMENT BOARD REPORT Purpose & long term value creation 8 ESG Strategy - The Future is here 14 The NSI roadmap to align with the Paris Agreement 21 Income, costs and result 23 Dutch property market overview 25 Real estate portfolio 27 Balance sheet, NTA and financing 34 Risk management and internal control 36 Climate risks 47 A great place to work 52 GOVERNANCE Corporate governance 64 ESG governance 69 Details Management Board 71 Report of the Supervisory Board 76 Details of the Supervisory Board 81 FINANCIAL STATEMENTS Consolidated statement of comprehensive income 84 Consolidated statement of financial position 85 Consolidated cash ﬂow statement 86 Consolidated statement of changes in shareholders’ equity 87 Notes to the consolidated financial statements 88 Company balance sheet 118 Company income statement 119 Notes to the company financial statements 120 OTHER INFORMATION Statutory provision in respect of profit appropriation 124 Independent auditor’s report 125 Assurance report of the independent auditor 133 SUPPLEMENTARY INFORMATION Other data 135 NSI share 136 Property list 137 ESG (non-financial) performance measures 2022 138 EPRA key performance measures 144 Taxonomy eligibility and alignment 146 Five year overview 149 Glossary key performance measures 150 Glossary sustainability performance measures 152 ANNUAL REPORT 2022 2 | NSI ANNUAL REPORT 2022 1 The previously reported energy intensity for 2021 of 110 kWh/sqm/year was based on GFA including parking garages, not on CRREM sqm. 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. NSI HIGHLIGHTS KEY FINANCIAL METRICS REVENUES AND EARNINGS  2022 2021 Change Net rental income 59,325 63,272 -6.2% Net rental income - like-for-like 54,849 51,050 7.4%   Direct investment result 42,733 46,373 -7.9% Indirect investment result -74,103 74,588 -199.3% Total investment result -31,370 120,961 -125.9% EPRA earnings per share (€) 2.15 2.38 -9.6% Weighted average number of ordinary shares outstanding 19,869,975 19,499,825 1.9% EPRA cost ratio (excl. direct vacancy costs) 27.8% 26.0% 1.8 pp BALANCE SHEET  31 December 2022 31 December 2021 Change Investment property 1,259,235 1,338,034 -5.9% Net debt -365,480 -382,073 -4.3% Other assets / liabilities -6,746 -7,504 -10.1% Equity 887,008 948,457 -6.5% EPRA NTA per share (€) 44.17 48.23 -8.4% Number of ordinary shares outstanding 20,054,241 19,698,207 1.8%   Net LTV 28.7% 28.2% 0.5 pp KEY ESG METRICS (NON-FINANCIAL)  2022 2021 Change CRREM building energy intensity (kWh/sqm/year) 131 131 1 0.0% EPC-label (percentage portfolio with label A or better) 88.0% 81.2% 6.8 pp GRESB score 93 92 1 KEY PORTFOLIO METRICS  31 December 2022 31 December 2021 Change  Amsterdam Other G4 Other NL TOTAL Number of properties 23 14 12 49 52 -5.8% Market value (€ m) 2 730 342 203 1,275 1,355 -5.9% Lettable area (sqm k) 178 122 82 382 409 -6.6% Annualised contractual rent (€ m) 3 40 24 14 78 76 3.1% ERV (€ m) 47 26 15 88 87 1.5%   EPRA net initial yield 4.4% 4.9% 4.6% 4.6% 4.1% 0.5 pp Gross initial yield 5.9% 7.2% 7.0% 6.4% 5.9% 0.6 pp EPRA vacancy 7.0% 6.1% 4.1% 6.2% 5.9% 0.3 pp   Wault 4.1 4.0 3.3 3.9 4.1 -2.9% INTRODUCTION NSI ANNUAL REPORT 2022 | 3 NSI AT A GLANCE AVERAGE YIELD ON COST DEVELOPMENT PROJECTS 5.4% NET PROMOTER SCORE (NPS) 10.3 GRESB SCORE ★ ★ ★ ★ ★ HIGHLIGHTS 2022 EPC SCORE (BY VALUE) 1 GRESB A++ AA+ B C D E F & G 1 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 (LFL) OCCUPANCY 0.3% - (LFL) ERV GROWTH 4.6% + AVERAGE PORTFOLIO VALUE GROWTH 5.6% City # Assets Book Value % of total portfolio Gross Initial Yield     Amsterdam 23 € 730m 57.3% 5.9% Other G4 14 € 342m 26.8% 7.2% Other NL 12 € 203m 15.9% 7.0% TOTAL 49 € 1,275m 100% 6.4% PORTFOLIO BREAKDOWN (YEAR-END 2022) BREEAM 2021 2022 UNCLASSIFIED ACCEPTABLE - PASS GOOD VERY GOOD EXCELLENT 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% 2017 2018 2020 2021 20222019 11% 6% 16% 4% 35% 10% 37% 14% 30% 36% 0% 1% 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. INTRODUCTION 4 | NSI ANNUAL REPORT 2022 VALUE NETHERLANDS 1 2 3 Sloterdĳk Zuidas Zuidoost DEVELOPMENTS Vitrum Well House Laanderpoort 1 2 3 PORTFOLIO BY SEGMENT AMSTERDAM Amsterdam Utrecht Rotterdam Eindhoven The Hague Leiden Amsterdam 57% Other G4 27% Other NL 16% INTRODUCTION NSI ANNUAL REPORT 2022 | 5 “ We have to keep offering the right product, in terms of location, sustainability and services, to stay relevant for our customers. We have a clear strategy and continue to invest in our portfolio.” Bernd Stahli CEO CEO COMMENTS 2022 ended up being a remarkable and unpredictable year. The end of covid did not bring an economic recovery as expected, as Russia’s invasion of Ukraine resulted in an energy crisis and contributed to already rising inﬂationary pressures. This in turn has affected business and consumer confidence. To top it all off, Government pre-announced - totally unwarranted, in our view - the abolishment of the Dutch real estate FBI per 2025. 6 | NSI ANNUAL REPORT 2022 INTRODUCTION Whilst the long term strategy remains intact (a clear focus on location, sustainability and services, supplemented by selec- tive developments and underpinned by a strong balance sheet), given the uncertainty we accelerated and slowed elements of the strategy as appropriate. In 2022 the emphasis was on leasing, the HNK brand update and our Paris alignment roadmap. In Q4 we chose to dispose of a few remaining non-core locations and decided to postpone the Well House project. CAPITAL DISCIPLINE The rapid and material rise in interest rates in H1 forewarned a correction in property values in H2. Values were down by 6.2% in H2 (FY22: -5.6%). This has pushed the gross initial yield on the portfolio now to an attractive 6.5%. 2022 as such was a year to be disciplined, both on acquisitions and developments. No acquisitions were made during the year. In December we sold HNK Hoofddorp and a small asset in The Hague for € 8.2m (a 2% discount to 2021 book values), to end the year with a LTV of 28.7%. Two further assets, HNK Ede and HNK Den Bosch, were sold in January 2023 for a total of € 23.2m (a 12.4% premium to the 2021 book values). Capital discipline remains key going into 2023. We will have to judge potential acquisitions vs potential developments (and vs our cost of capital), whereby we appreciate that acquisitions of the quality of our development programme may not become available, nor become available at a price that makes sense. BUSINESS DISCIPLINE In a period where our clients worry about the impact of WFH (work from home), the economic outlook, high indexation and service charges, more than ever we have maintained an active dialogue with our clients. Customer retention is key. In the end, as a result, the overall vacancy rate was marginally up, at 6.2%. We have to keep offering the right product, in terms of location, sustainability and services, to stay relevant for our customers. We have a clear strategy and continue to invest in our portfolio. Especially on sustainability we have made great strides, with a clear path to be fully Paris-aligned by 2034, and with improved BREEAM and EPC labels to match, as we discuss in detail in the following section. DEVELOPMENT By late Q4 we were fully ready to start the Well House project, but we have - for now - chosen not to, due to higher than expected building costs in combination with increased overall market uncer - tainty. We will actively revisit the case for Well House in 2023, taking into account construction costs, land values, yield and rent levels. In 2022 the focus at Vitrum was on getting all stakeholders to agree on the new plans. Getting the municipality, the owner- association and local residents to agree proved a daunting task. All our efforts should result in a fully worked-out plan by early Q2 2023, with the start of the project still foreseen for H2 2023. In January 2023 ING and NSI jointly approved the final design for the Laanderpoort project. We are still on track to start the project in Q4 2023. In Q1 2023 the tender for the contractor will start, which should confirm the business case for what will be a new, highly sustainable, asset with a 15-year lease to a blue-chip tenant. OUTLOOK FOR 2023 Whilst the abolishment of the FBI regime by Government has been postponed to January 2025, going into 2023 we have a strong incentive to agree a clear path forward for the business and provide clarity to all stakeholders. We are still lobbying for a reversal, jointly with our listed peers and other stakeholders, but prolonging the current uncertainty is hardly appealing. We continue our work on identifying possible alternative scenarios. For 2023 we expect inﬂation to subside yet stay elevated. As a result, interest rates are unlikely to revert back down much. This will probably see institutional capital shift from real estate (now overweight) into bonds (now underweight). Yet, as prime office real estate continues to offer highly attractive inﬂation-hedging characteristics, for the best, most sustainable, assets, we expect valuation yields may well end up stabilising at levels below interest rates, as it has been in the past. In late 2022 appraisers have adjusted capital values down a lot more quickly than in the 2009-2014 down cycle. We believe this is a positive, and the speed of adjustment would suggest this time any value declines might well be behind us by end 2023. Yet, if interesting opportunities were to come along earlier, we will not hesitate to act. EPRA EPS for 2022 is € 2.15. We will propose to the AGM a final dividend of € 1.12, for a total dividend of € 2.16, as promised. Going into 2023 it is too early to provide guidance on EPS as there are too many moving variables. Whilst we expect to capture circa 6% lease indexation in 2023, a delayed effect from 2022, much will also depend on the outcome of our FBI review, and the potential impact of further asset rotation and further movements in interest rates. Rest assured we will continue to work hard to maximise value for all stakeholders. Bernd Stahli NSI ANNUAL REPORT 2022 | 7 INTRODUCTION 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”. PURPOSE AND LONG TERM VALUE CREATION 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. The post covid ‘return to office’ has made very clear what an office should offer: a great 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. 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, as we see an ongoing trend where tenants are upgrading to better locations, with a clear focus on sustainability, health and well-being and a sufficient level of services. As such, providing the right space in the right location, with services to match, is key to success. 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 recognise our respon- sibility 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. LONG TERM VALUE CREATION PURPOSE AND LONG TERM 8 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT 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 innovative collaboration 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 DATA & IT INFRASTRUCTURE - Best in class (ERP) systems - Cybersecurity DIGITALISATION & CONNECTIVITY - Data driven decision making/ business model - Digitalisation of services - Portfolio optimisation - Connectivity of assets SUSTAINABILITY - 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 ENVIRONMENT AND CLIMATE INVESTORS PARTNERS & SUPPLIERS CUSTOMERS EMPLOYEES STAKEHOLDERS CUSTOMER SATISFACTION & BRAND RECOGNITION 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 NSI ANNUAL REPORT 2022 | 9 MANAGEMENT BOARD REPORT 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. 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. PORTFOLIO MANAGEMENT & DEVELOPMENT PORTFOLIO MANAGEMENT NSI in its portfolio management pursues a long term total return strategy, through active management, refurbs, asset reposition- ings and (re)developments, always with a clear focus on sustain- ability and underpinned by regular asset rotation.NSI is active in Amsterdam and selected other key cities in The Netherlands, in line with the global trend of urbanisation. We have a strong emphasis on inner city locations and locations at or near the main transport hubs, which are – or will become – vibrant multi-func- tional 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 increasing 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 invest- ment plans and asset rotation from here. Our focus is on highly sustainable and adaptable buildings, with sufficient scale to be able to offer services on a profitable basis, but we may also own or acquire assets that in time can be rede- veloped to offer all this (or can profitably be converted to alterna- tive use). Going forward the primary focus will remain location: the future potential and our ability to strengthen the attractiveness of loca- tions. This may go beyond our main office activities, as we have identified several mixed-use and residential development oppor- tunities in our portfolio. 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. Development as such can enhance prospective returns and drive shareholder value creation, on a risk-adjusted basis, if managed well. NSI is keen on mitigating development risks by operating an appropri - ately prudent balance sheet, selecting the right locations, securing pre-letting arrangements and working with reputable partners. Our development projects enable us to shape our buildings and portfolio around the changing needs of our customers and provides new insights that can be used to improve the attractive- ness of our standing assets. In our development vision we antici- pate changes in demographics, the way people work, shop and live, and the ever-growing importance of sustainability to ensure a future-proof design. Furthermore, we incorporate services and technology into our developments to create ﬂexible and adapt- able 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 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 10 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT Our in-house team regularly reviews for every individual asset what level of services is appropriate and how these should be organ - ised, 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-HOUSED 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 pro-actively meet the increasing demands from our customers – a key differentiating feature that arguably very few other serviced-office operators can offer. OPERATIONAL 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 the data-analytics and management information to support multi-functional collaboration and data-driven decisions. 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 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 take into account all aspects that determine the intended experi - ence, including the level of service and the layout, but also the personal approach of trained hosts. Results are measured regularly through NPS and customer satisfaction surveys, in our quest to continuously improve the experience we provide. Only with the right team, 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 expertise and the will to push boundaries. NSI ANNUAL REPORT 2022 | 11 MANAGEMENT BOARD REPORT ASSET ROTATION ACTIVITIES Following the transformation of our portfolio executed over the past years, our asset rotation activities were quite limited in 2022. No acquisitions were made during the year. We sold two peripheral assets (HNK Hoofddorp and a small asset in The Hague) and two other ones after balance sheet date in January 2023 (HNK Ede and HNK Den Bosch). (RE)DEVELOPMENT NSI sees project development as a key way to enhance returns on the overall portfolio, on top of the return of the standing portfolio, on a risk adjusted basis. We have continued to further all our development initia- tives in 2022, though we are fully aware of the higher level of building costs, higher funding costs and less favourable economic outlook in general. Discipline is key. We will continue to look at the overall risk/reward profile of the business if and when we start a project, fully cognizant that we may well have to mitigate risks elsewhere. In this light we decided to revisit the case for Well House in 2023, considering construction costs, land values, yield and rent levels. For Vitrum, we focused on getting all stakeholders aligned on the new plans in 2022. The start of the project is foreseen for the second half of 2023. For Laanderpoort we are still on track to start the project in the fourth quarter of 2023. IMPROVING SUSTAINABILITY CREDENTIALS In 2022, as detailed on page 21, we have set out a roadmap to align our portfolio with the 1.5°c Paris Agreement. NSI is using the Carbon Risk Real Estate Monitor’s (CRREM) decarbonisation pathways as a point of reference for its portfolio, which means that the energy intensity of the portfolio should be reduced to below 85 kWh/m2/year by 2034. Alexanderpoort in Rotterdam is expected to be the first asset to be Paris- aligned, with the upgrade expected to be completed in 2024. Furthermore NSI made significant strides in its BREEAM ambition, with having a ‘Very Good’ or ‘Excel- lent’ label for the majority of its assets. For all new (re) developments, we are still on track to achieve BREEAM “Outstanding”, the highest possible BREEAM rating. As per regulation for the renting out of commercial space, it must have an EPC label of at least C, by 1 Jan 2023. At NSI we are already well ahead of that target (88% at label A, only 4% at label C, no assets below). Our progress in the field of sustainability is also evidenced by achieving, for the first time, EPRA’s sBPR Gold rating and maintaining our 5-star rating at GRESB for the third year in a row. We amended and extended our existing term loan facility (€ 50 million), which now also includes a sustainability- linked interest margin mechanism, in line with the Sustainability-Linked Revolving Credit Facility frame- work we agreed last year. By also integrating sustain- ability in our financing, we ensure that sustainability is embedded in all aspects of our strategy, business and operations. EXECUTION OF OUR STRATEGY – PROGRESS IN 2022 PORTFOLIO MANAGEMENT & DEVELOPMENT MANAGEMENT BOARD REPORT 12 | NSI ANNUAL REPORT 2022 In 2022, HNK's upgraded brand positioning has been launched, building upon the customer insights and pilot testing we did in 2021. The new positioning has a strong focus on sustainability, well-being and comfort, and is truly customer-centric; customers need to feel welcome, connected, truly supported and energised. The new food & beverage concept ”The Social” seam- lessly fits the HNK brand promise, offering delicious and healthy menu options. The launch was also accompanied by a new website, including a new booking system. Furthermore, an HNK App was developed, allowing HNK tenants to book and pay for meeting rooms and services. Another important element in our offering is providing the desired level of services and hospitality, for which our staff receives appropriate training. HNK also established a new partnership with Nornorm, a fully circular, subscription-based furnishing service. The new HNK concept will first be implemented in Amsterdam Sloterdijk (Motion building) in 2023. SERVICES CUSTOMER EXCELLENCE The scope of the NPS survey was broadened in 2022, making the comparison with previous years less mean - ingful. The score of 10.3 (2021: 20.3) reveals that NSI's customer base contain more promotors than detractors, though NSI is aiming for a higher score. A deeper analysis of the survey reveals that tenants in buildings that are fully operated and managed by NSI (like the HNKs) do give significantly higher scores, confirming the added value of the services component in NSI's offering. In 2022, feedback obtained from the previous customer survey has been followed up. Among other things, tenants indicated they would like to get more insight in NSI's sustainability strategy and initiatives. Therefor NSI now (pro)actively communicates about plans and steps taken in this respect, both in direct contacts with tenants and through other communication channels (like narrow casting). OPERATIONAL EXCELLENCE We improved our data warehouse in 2022, allowing us to further optimise dashboards and to make data real-time and easy accessible. For example, NSI has developed a valuation dashboard in which all relevant valuation param - eters are summarised including the historical data. As a result the team is able to spend its time on analysis and gain a better understanding of the individual valuations. Next year our business analytics activities will focus on collecting ESG data as well. This ESG data will play a key role in the execution and tracking of our Paris-alignment roadmap. To achieve this, NSI implemented Scaler in 2022. This is a powerful ESG data tool which allows us to control, organise and automate ESG data collection and visualise the output by providing various dashboards and reports, established for different (external and internal) reporting purposes. MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 13 ESG – THE FUTURE IS HERE 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. Last year we presented our refreshed sustainability strategy, “The Future is here”. We have always acknowledged the ever-changing nature of ESG and the need to respond accordingly. With this in mind, we have further sharpened our strategy this year to present a more precise view of our three pillars and have expanded our third pillar to encompass a broader social component. We are pleased about our 5-star GRESB rating for a third year running and our first ever EPRA sBPR gold award. We have also mentioned that our ambition goes further than this and it does: this year we have taken a significant step forward in our sustainability journey by creating and costing a roadmap to align our portfolio with the 1.5c Paris Agreement. We have also performed a thorough 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. When we defined ‘The Future is here’ it was our intention for it to reﬂect the urgency to act now, our commitment to do what is neces- sary, and our appreciation for the challenges of today that will shape the industry tomorrow. A year on we are more convinced than ever that a robust, ambitious and comprehensive sustainability strategy will be a key component 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 stake - holders, 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. NSI has performed a CSRD gap analysis and will continue with the implementation of CSRD in 2023, which is expected to become appli - cable to NSI in 2025. MANAGEMENT BOARD REPORT 14 | NSI ANNUAL REPORT 2022 FUTURE-PROOF BUILDINGS HEALTH & WELL-BEING ENERGY & CARBON TRANSCENDING IMPORTANCE TO STAKEHOLDERS IMPORTANCE TO NSI 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 corre - sponding themes: Future-proof investments, Energy & Carbon, Health & Wellbeing, and transcending topics (which focus on issues related to governance). 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 mate - rial to both stakeholder groups. 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 decar- bonisation 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 inuence 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. Oset where not economically viable to reduce emissions through energy eciency gains / renewable energy procurement. OUR COMMITMENT Own assets that are aligned with the EU Taxonomy, now or in time. Minimum BREEAM rating for assets is “Very Good”. Focus on Climate resilience: physical risk assessment with a mitigation plan for every asset. Incorporate a Biodiversity strategy. OUR COMMITMENT Make health and wellbeing a priority: – for our customers: – for our employees Strive to have a diverse and inclusive workforce. Give back to our communities and respect our surroundings. 1 1 2 2 3 3 1 2 3 4 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 15 OUR COMMITMENT TO DECARBONISATION: WALKING THE TALK 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/m2/year by 2034, as per the pathway below. At year-end 2022 the total (tenant + building-related) average energy consumption of our portfolio was 131 kWh/m 2 /year. While this is well above the 85 kWh/m 2 / Dutch office CRREM year target, NSI is far below the Dutch office CRREM target for 2022, of 164 kWh/m 2 /year. Based on this starting point, if we were to take no further action, NSI’s overall intensity would no longer comply with the CRREM pathway by 2026. In 2023 we will start executing our Paris-alignment investment plan. The total investment for the first 32 assets (ca. 70% of assets by value) is ca. € 58m over the next 10 years. On completion these assets should see their energy intensity reduce significantly, from 116 kWh/m 2 /year to 80 kWh/m 2 /year, well below the CRREM target. See the ‘NSI roadmap to align with the Paris Agreement’ section for more details and substantiation. 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. 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. ENERGY AND CARBON 2020 2025 2030 2035 2040 2045 2050 0 50 100 150 200 164 85 131 kWh/m2/year 0 10 20 30 40 kWh/m2/year 2020 2030 2040 2050 50 60 NSI VS. CRREM ENERGY INTENSITY PER YEAR NSI VS. CRREM GREEN HOUSE GAS EMISSIONS PER YEAR CRREM NSI 1 2 3 1 MANAGEMENT BOARD REPORT 16 | NSI ANNUAL REPORT 2022 SCOPE AND METHODOLOGY – Note that the above trajectory does not take into account the effect of weather. Energy intensity at any given point in time is highly dependent on the weather (cold winters, hot summers). Whilst weather effects will even out over longer periods of time, to measure progress in any given year we will have to adjust the actual energy intensity for degree days to properly measure our short term progress in reducing the energy intensity of the portfolio. We have not yet corrected for this so far. – Because the majority of NSI’s emissions (scope 1, 2, 3) stem from energy usage, we are steering on the energy intensity curves as our main reference and have calculated the resulting GHG emissions using the market-based conversion factors. – Our focus is on the actual energy intensity of our buildings: both building-related and tenant-driven energy consumption. As the target of 85 kWh/m2/year includes both building-related energy consumption and tenant-driven energy consumption, reaching the target will have to be joint exercise between tenant and land - lord. – The square meters used in our calculations are an approxima - tion. CRREM uses Gross Floor area minus internal garage and outer facade. NSI used to report according to EPRA best prac - tices, i.e Gross Floor Area. Based on the available ﬂoor plans we have estimated the difference between the two measures to be approximately 6%. We have made an adjustment to the 2021 figures to reﬂect this. – As we approach higher efficiency levels, the incremental impact of improvements that are sometimes too uneconomic is why we focus on a portfolio average rather than each asset in isolation: in some cases, getting close to the target is not only sufficient but desirable from a cost, energy efficiency and total life cycle assessment of the building. GOING BEYOND EPC LABELS Formally the only sustainability regulatory requirement in the Nether- lands 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 (88% at label A, only 4% 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 regulatory point of view. Indeed, EPC does not suffi- ciently represent a Paris-aligned solution as it focuses on theoret- ical 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. 100% OF PROCURED ELECTRICITY SHOULD COME FROM RENEWABLE SOURCES All electricity procured by NSI is 100% green, procured from renew- able sources (European wind) . The total average share of renew- able energy used is 57.7% (European wind grid energy + solar panel generation of electricity + geothermal energy). OFFSET REMAINING CARBON We will offset remaining carbon emissions only after all other finan- cially 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 . kWh/m2/year 0 50 100 150 200 2020 2025 2030 2035 2040 2045 2050 116 80 85 CRREM ENERGY REDUCTION PATHWAY FOR 32 “STRAIGHT FORWARD” ASSETS A++ AA+ B C D E F & G 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% 2017 2018 2020 2021 20222019 EPC LABELS 2022 2 3 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 17 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 Minimum BREEAM rating for assets is “Very Good” Focus on Climate resilience: physical risk assessment with a mitigation plan for every asset Incorporate Biodiversity strategy 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 NSI’S TAXONOMY ALIGNMENT – An analysis was performed on NSI’s portfolio based on the Taxonomy-recognised activity of “Acquisition and Owner - ship of buildings”. The objective to which this activity contrib- utes 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 on which the building was built (different conditions for buildings built before or after 31 December 2020) and on the energy performance. – In order to ensure that the activity does no significantly harm to the other objectives, it should be verified that adaptation solu - tions 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. 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. 1. Determine Eligibility of economic activity. 2. Determine alignment economic activity. Substantial contribution to at least one climate objective DNSH (do no significant harm to all other objectives Minimum Social safeguards Based on Technical Screening Criteria (TSC) DETERMINING ELIGIBILITY AND ALIGNMENT EU TAXONOMY 1 2 3 4 1 MANAGEMENT BOARD REPORT 18 | NSI ANNUAL REPORT 2022 – In this analysis, all our assets were assessed against the activity “acquisition and ownership of buildings”. As a result, invest - ment properties under construction and renovations are not aligned with the EU taxonomy based on this activity. We will explore in 2023 alignment against other EU taxonomy-eligible relevant activities for these buildings. – Based on the technical assessment (points 2.1 and 2.2 of the chart above) our alignment would be as follows: The minimum safeguards analysis (2.3) on company level is still outstanding and will be performed in 2023 to assess alignment with the applicable EU Taxonomy scope. The extensive EPRA taxonomy eligibility and alignment table against revenue, capex and opex can be found on pages 145-147. MINIMUM BREEAM RATING FOR ASSETS IS “VERY GOOD” We view sustainability not only as a responsibility but ultimately as a driver of value creation. BREEAM seeks to improve the opera- tional performance of buildings through sustainable improve- ments. The BREEAM assessment method involves nine areas: management, health, energy, transport, water, materials, waste, land use, ecology and pollution. 96% of the assets in NSI’s port- folio now have a BREEAM certificate vs 89% in 2021. In 2022 NSI’s made significant strides in its ambition to obtain an at least “very good” label for its standing assets: a majority of our assets (66%) now have either a Very Good or Excellent Label. FOCUS ON CLIMATE RESILIENCE: PHYSICAL RISK ASSESSMENT 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 port- folio. A further analysis was not only required in view of complying with the EU taxonomy (DNSH assessment), it also increasingly weighs on investment and portfolio decisions. NSI performed an assessment of the net risks of climate change related heat stress and ﬂooding of its portfolio, also taking individual asset char- acteristics into consideration. The assessment included which measures can be taken to mitigate these risks. This assessment identified that from its 49 assets 9 assets are poten- tially exposed to a higher risk of heat stress and 12 assets to a higher risk of ﬂooding. Measures to mitigate these risks have been inte - grated in the asset plans, and will be executed in the coming years. More details on climate risk analyses can be found on page 47. INCORPORATE BIODIVERSITY STRATEGY: In line with sustainability best practices, NSI aims to establish a comprehensive biodiversity strategy in 2023 to accompany our sustainability efforts. 1. Eligible activity: Acquisition and Ownership of buildings 2. Alignment Revenue 88.5% Capex 92.3% Opex 87.6% 2.1 Substantial contribution to Climate Change Mitigation objective 2.2 DNSH - Assess Climate related Hazards - Adopt adaptation measures to reduce vulnerability 2.3 Minimum Social safeguards TSC for Acquisition and Ownership of Buildings ANALYSIS OF NSI'S TAXONOMY-RECOGNISED ACTIVITY “ACQUISITION AND OWNERSHIP OF BUILDINGS” BREEAM LABEL AS % OF BOOK VALUE 2021 2022 11% 6% 16% 4% 35% 10% 37% 14% 1% 30% 36% 2 3 4 Revenue 88.5% Capex 92.3% Opex 87.6% UNCLASSIFIED ACCEPTABLE PASS GOOD VERY GOOD EXCELLENT 0% MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 19 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 A non-exhaustive list of initiatives we support include: MAKE HEALTH AND WELLBEING A PRIORITY FOR OUR OUR CUSTOMERS NSI actively engages with customers through a yearly customer satisfac - tion survey. In 2022 NSI achieved a Net Promoter Score (NPS) of + 10.3 from its tenants, down from + 20.3 a year ago. HNK’s NPS was 19.9 vs 23.7 in 2021. The NPS measures customer experience and predicts busi - ness growth. 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? 1 NSI’s score of + 10.3 is a positive score which means that there are more promoters than detractors. With sustainability also being a key concern for our clients, we have rolled out a communica - tions program to better engage with our customers on this topic. Initia- tives, air quality and improvements are shared through narrow casting screens, the Office App and newsletter. FOR OUR EMOPLOYEES NSI actively engages with employees through a employee satisfaction survey. NSI currently performs an employee engagement survey every two years. The result is an eNPS (employee Net Promotor Score), which measures staff engagement and involves asking employees “How likely would you be to recommend (score 0-10) us as an employer?”. NSI’s most recent eNPS score was 29.3 (2021), which qualifies as a high score. Furthermore we performed a Leesman Workplace Survey in 2022. Read more on page 52 (Great Place to Work) about our employee engagement activities. STRIVE TO HAVE A DIVERSE AND INCLUSIVE WORKFORCE NSI is committed to fostering a fair and inclusive working environment. Our culture is based on the principles of mutual respect and non-discrim - ination irrespective of nationality, age, disability, gender, religion or sexual orientation. At NSI we currently have 48% male and 52% female work - force. In 2023 NSI will establish a diversity and inclusion policy. 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. We strive to be a long-term positive inﬂuence on our customers, employees and communities. SOCIAL ENGAGEMENT URBAN LAND INSTITUTE PROGRAM The mission of the Urban Land Institute is to ‘Shape the future of the built environment for transformative impact in communities worldwide’. One of its programs, UrbanPlan, is supported by NSI. This is an educational program aimed at students between 15 and 18 years old, with the goal of increasing young people's understanding of urban development. 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 has been a Gold Partner of the Philips Innova - tion Award since 2017. The Philips Innovation Award is an entrepreneur- ship prize awarded to students with an innovative start-up concept. DONATION TO BREAST CARE FOUNDATION The Breast Care Foundation raises funds to support patients who have breast cancer or other breast disorders. The foundation focuses on enabling full recovery, including paramedical and additional (after) care, and on promoting awareness and information, prevention, science and paramedical care in a broad sense. NSI has chosen to support this foundation following the loss of a dear colleague due to this devastating disease. 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 children and their families can be close to each other, is in Amsterdam Southeast. GREEN BUSINESS CLUB ZUIDAS NSI participates in the Green Business Club Zuidas. This network organi - zation 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. UPTOWN SLOTERDIJK NSI participates with nine other parties in UPTown Sloterdijk to help promote the transformation of this area into an attractive 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. ONDERNEMERSFONDS UTRECHT NSI made a donation to Ondernemersfonds Utrecht (Entrepreneurs Fund Utrecht). This fund connects local entrepreneurs, various sectors and organizations with the aim of promoting the quality of business in Utrecht. 1 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. 2 3 1 2 3 1 MANAGEMENT BOARD REPORT 20 | NSI ANNUAL REPORT 2022 THE NSI ROADMAP TO ALIGN WITH THE PARIS AGREEMENT TAKING THE "E" IN ESG TO A NEW STANDARD At NSI we have been a long standing advocate of sustainability, both at the corporate and at the asset level. We use GRESB at the corpo - rate level to track our progress and success, whilst at the asset level we focus on EPC, BREEAM and more recently on CRREM. We fully appreciate that the sustainability question is a complex one. There is no single metric or solution to square the circle. GRESB, EPC, BREEAM, CRREM and EU Taxonomy alignment all have a role to play in achieving our sustainability goals. FROM EPC LABELS TO CRREM ALIGNMENT The key downside of the EPC labelling system is that it is based on the theoretical energy usage of a building, not on the actual energy usage, and that it ignores the energy consumption by tenants. EPC labels are, however, relevant as a key input for both BREEAM and the EU taxonomy alignment assessment. Our ambition is to reduce the actual energy intensity of all our buildings, in line with the aims of the Paris agreement as set in 2016. This goes beyond the formal regulatory requirement of EPC label C, which is in place in The Netherlands since January 2023 and with which we fully comply, because 1) we believe it is the right thing to do, 2) tenants will increasingly demand it, and 3) the regulatory requirements are likely to become more stringent in the period ahead. Given the shortcomings of EPC, we have chosen to use the CRREM (carbon risk real estate monitor) methodology as a tool to track our progress in reducing the energy intensity over time, as CRREM measures the actual energy intensity of buildings, including both the building-related and tenant-driven energy consumption. CRREM has calculated that for Dutch offices to be aligned with the Paris agreement, the energy intensity should be reduced to below 85 kWh/m 2 /year by 2034. This is more or less in line with the target for other European office markets. At year-end 2022 the energy intensity of our portfolio was 131 kWh/m 2 /year (113 kWh/ m2/year excluding the Leiden life science assets). As the objective is to reduce the total energy intensity of our portfolio, both building-related and tenant-driven, meeting the CRREM target will end up being a joint exercise between tenant and landlord. Lease contracts will increasingly have to include language to allow and facilitate for this. Having said that, we recognise the effort will predominantly lie with the owner, as a typical office tenant nowadays only uses 20-25 kWh/m 2 /year. During 2022 we established a detailed plan to bring the energy intensity of the portfolio to below 85 kWh/m 2 /year by 2034. An investment plan has been created for each asset, including time line, to reach this target. Plans at the asset level include a mixture of replacing window frames/glazing, extra insulation, further upgrades to technical installations, improved sealing, solar panels, etc. STARTING WITH THE FIRST 32 ASSETS FROM 2023 ONWARDS In our analysis we exclude the near term development program as Paris-alignment is already part of the project scope and cost. We have also decided to exclude the life science labs in Leiden for now, as these buildings have a much higher energy intensity due to the specialised nature of lab activities, which we cannot inﬂu- ence as a landlord. We have also identified a number of assets which we view as complex and where further analysis is required in the period ahead. This leaves 32 assets, making up 71% of the portfolio by value, where we are fully comfortable with the analysis and viability of the plans. We will start with these plans from this year onwards. We will look to fit the timing of our sustainability initiatives with our regular maintenance cycle as much as possible. Over time we will track the actual results versus our model assumptions and adjust the plans where necessary. The prospect of new, cheaper, technical innovations to help reach targets will also see us adjust plans as appropriate. Portfolio split # Assets % of book value CRREM area (sqm) Current inten- sity (kWh/ sqm/year)      Straight forward 32 71% 268,123 116 Complex 7 14% 79,705 118 Leiden 5 8% 30,053 367 Development 3 6% 30,511 29 TOTAL 1 47  408,391 129 1 Excluding assets sold in 2023: HNK Ede and HNK Den Bosch For the above 32 assets we expect a significant reduction in energy intensity on completion of our investment plans, from 116 kWh/m 2 /year to 80 kWh/m 2 /year, below the CRREM target. This will reduce the energy consumption by 9.8 MWh/year (37 kWh/m 2 /year on 268k sqm), which based on an electricity price of ca. € 0.2/kWh represents an economic value of € 2.0m. THE ECONOMICS OF SUSTAINABILITY ARE FAVOURABLE The estimated investment capex for the 32 assets is € 58m, over a ca. 10 year period. This equates to just over one year of rent for these assets, or ca. 7% of the current asset value. # Assets 32 Incremental capex (€m) 58 CRREM area ('000 sqm) 268 Current intensity (kWh / sqm / year) 116 Expected 2034 intensity (kWh / sqm/year) 80 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 21 ROADMAP TO PARIS ALIGNMENT 2023 The objective is for all NSI buildings to have an EPC A label A 2025 The ambition is for all NSI buildings to have a BREEAM label Very Good, Excellent or Outstanding. 2035 NSI is Paris-Aligned. The aim is that all NSI buildings are gas-free. 2032 2022 in annual rent roll. This in turn would represent a value of ca. € 50m, based on the current 6.5% gross yield for the portfolio and this would more or less cover the cost of the entire investment plan. Overall, we expect the economic benefit to be greater still, as we believe energy-efficient, highly sustainable, assets will not only see higher rents, but structurally benefit from lower vacancy and lower yield as well. This analysis is the first step in a new journey for NSI. We are excited about the journey ahead and expect to learn along the way. We are certain it is a necessary and eventually rewarding journey, for the planet, the business and all our stakeholders. On an investment of € 58m the € 2.0m in actual energy savings represent a return of ‘only’ 3.5%. This benefit/return largely falls to the tenants, as lower service charges, although undoubtedly some of this will eventually ﬂow back to us, as owner. Recent research by some leading real estate agents increasingly points to evidence that tenant demand is shifting to the most sustainable buildings, which achieve a ca. 6% rent premium as a result. Taking into account this possible 6% rent premium, for the 32 assets in our analysis, this would equate to a ca. € 3.2m increase YEARS BEFORE – establish ESG strategy – obtained BREEAM certificates – and improve EPC labels * Excluding (re)developments MANAGEMENT BOARD REPORT 22 | NSI ANNUAL REPORT 2022 INCOME, COSTS AND RESULT EPRA EARNINGS PER SHARE (€) EPS - Q4 2021 GRI Administrative costs Operating costs Financing cocts Other EPS - Q4 2022Service costs not recharged 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40 2.38 -0.39 0.03 0.10 -0.04 0.07 0.00 2.15 INTRODUCTION EPRA earnings in 2022 amount to € 42.7m compared to € 46.4m in 2021 (- 7.9%). The decrease in EPRA earnings is the result of lower net rental income and higher administrative costs, partly offset by lower financing costs. EPRA EPS is € 2.15, 9.6% lower than last year. EPRA NTA is down 8.4% or € 4.06 per share compared to the end of 2021, primarily due to the negative revaluation of the invest- ment portfolio in the second half of 2022. RENTAL INCOME Compared to last year, gross rental income decreased by € 6.2m (8.0%) to € 71.3m. This decrease is explained by disposals in the past year (- € 8.7m) and the redevelopment of Vitrum as from July 2021 (- € 2.8m). The positive effect of acquisitions amounts to € 1.7m. On a like-for-like basis gross rental income increased by 5.8%, impacted by lease indexations, higher rent for ING at Laander- poort, lease renewals and lower vacancy loss. Non-recoverable service costs are € 0.6m lower than last year, of which € 0.4m is related to disposed objects or objects currently in development. Operating costs are € 1.7m (13.7%) lower compared to 2021, mainly due to lower maintenance costs (- € 1.6m) and lower municipal taxes (- € 0.3m). Net rental income amounts to € 59.3m, down € 3.9m (6.2%) versus 2021. The NRI margin is 83.2%, up 1.6 pp vs last year. Net rental income increased by 7.4% on a like-for-like basis, the result of an increase in Amsterdam and Other G4 (Den Haag, Rotterdam and Utrecht) of respectively 6.0% and 14.7% and a 0.2% decrease in Other Netherlands. ADMINISTRATIVE COSTS Administrative expenses are € 0.9m higher compared to 2021, reﬂecting mainly depreciation costs made in relation to the new headquarter in Amsterdam Zuidoost, consultancy costs, higher travel costs and employee training expenditures. NET FINANCING COSTS Financing costs are down by 13.6% (€ 1.3m) compared to the same period last year due to lower interest costs (€ 0.3m) and higher interest capitalised on development projects (€ 0.8m). INDIRECT RESULT In 2022 the investment portfolio incurred a negative revaluation of € 76.8m (- 5.6% at market value) compared to the valuation in 2021. A positive mark-to-market effect on interest rate swaps (+ € 2.9m) and other indirect costs (- € 0.2m) result in a total indirect result for 2022 of - € 74.1m. POST-CLOSING EVENTS AND CONTINGENCIES On January 24 the sale of HNK Ede and HNK Den Bosch was completed for a total of € 23.2m (before transactions costs). MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 23  2022 2021  Amsterdam Other G4 Other Netherlands Corporate TOTAL        Gross rental income 35,855 22,315 13,139  71,309 77,507 Service costs not recharged -521 -412 -389  -1,322 -1,873 Operating costs -4,527 -3,774 -2,361  -10,663 -12,362 Net rental income 30,807 18,129 10,389  59,325 63,272  Administrative costs    -8,566 -8,566 -7,612 Earnings before interest and taxes 30,807 18,129 10,389 -8,566 50,759 55,660  Net financing result    -8,024 -8,024 -9,285 Direct investment result before tax 30,807 18,129 10,389 -16,590 42,735 46,375  Corporate income tax    -2 -2 -2 Direct investment result / EPRA earnings 30,807 18,129 10,389 -16,592 42,733 46,373 INCOME SEGMENT SPLIT MANAGEMENT BOARD REPORT 24 | NSI ANNUAL REPORT 2022 DUTCH PROPERTY MARKET OVERVIEW VACANCY RATE AND TAKE-UP OFFICES NETHERLANDS INVESTMENT VOLUMES OFFICES NETHERLANDS (€ BN) 8 0 2 4 6 20102010 2.3 2011 1.1 2012 1.4 2013 1.9 2014 3.8 2015 4.3 2016 5.9 2017 6.7 2018 6.8 2019 6.3 2020 3.3 2021 5.5 2022 2.5 2.0m 0.0,m 0.5,m 1.0m 1.5m 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 5% 10% 15% Vacancy (%; rhs) Take-up (m sqm; lhs) 2021 1.4m 1.4m 1.2m 1.0m 1.2m 1.1m 1.1m 1.3m 1.3m 1.5m 0.9m 1.0m 0.6m ECONOMIC CONDITIONS Dutch GDP expanded by 4.6% 1 in 2022. While optically a healthy figure, Q4 showed a significant deceleration. Despite the high economic growth, an ultra-low unemployment rate at 3.5% and a very tight labour market, the economic mood has dampened significantly during the year, with energy security, deteriorating purchasing power, monetary tightening and strong geopolitical tensions dominating the conversation. Going into 2023 all these subjects remain largely unresolved. In 2022 inﬂation (CPI) has been a major theme worldwide and the Netherlands was no exception: despite a firm deceleration in the last two months of the year, Dutch CPI was 9.9% in 2022. In the short-term inﬂation is expected to remain elevated, but is expected to stabilise at nearer 4% towards the end of 2023. OCCUPATIONAL MARKET 2 2022 started relatively upbeat, with the expectation that the end of covid would unleash significant pent up tenant demand. Yet inﬂation, supply chain disruption and recession fears added an extra layer of uncertainty to potential occupiers who had already been juggling with the fallout from Covid. The “office vs WFH” debate transitioned into a hybrid working arrangement, with many employers having adopted an official policy of a minimum days back in the office. Be that as it may, the total impact of this behavioural shift on the overall demand for office space will only become visible in the mid to long term, while factors such as labour market shortages, the economic outlook, sustainability credentials of buildings and the scarcity of Grade A space in general all injecting nuance into the debate. Against this backdrop, Dutch office take up until Q3 2022 was 3% lower compared to the same period in 2021. The vacancy rate for the overall market has remained stable at 8.2%. Location remains the key variable in the selection of space. With energy and service charges now having a bigger impact on total costs tenants increasingly focus on total rental cost rather than purely on rents, so that sustainability credentials of a building have become much more important. Also, given the continued war for talent and the need to re-attract employees back to the office, the overall mix of location, sustainability and services has become significantly important. Increased polarisation is more than likely. The limited Grade A supply in prime locations, the slow delivery of new office space, the sustainability requirements and rising inﬂation are putting further upward pressure on prime office rents. AMSTERDAM Office take-up in Amsterdam in the first three quarters of 2022 was circa 73.000 sqm (vs same period 2021: 163.000 sqm), owing to both economic uncertainty and limited availability of high- quality office space. The office vacancy rate in Amsterdam as of Q3 2022 was 7.0%, down 10bps from 2021. The vacancy in the prime South-axis market is up 40bps to 3.2%, Southeast saw the biggest increase at 8.3% (was 5.3% in 2021, surpassing the Dutch average of 8.2%). The vacancy in Sloterdijk is down by 220 bps to 6.4%. In a clear sign of polarisa - tion prime office rents increased to €535/m 2 , even with significant pockets of available space in the wider Amsterdam market. 1 Source OECD 2 Source Cushman and Wakefield MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 25 PRIME YIELDS (%) PRIME RENTAL GROWTH In 2022 some 160,000 m 2 of new office space was delivered in Amsterdam, while around double that was initially slated for completion. Supply is expected to increase by 1 million m 2 by 2027, with peak completions expected in 2025 and 2026 as a result of projects currently being postponed due to rising financing and building costs and higher uncertainty. Some 60% of this supply is speculative. With take-up having been on average 280 000 m 2 per year over the last 5 years, this new supply should be readily absorbed, being on the right side of the polarisation debate. OTHER G4 In 2022 take-up in Utrecht was soft, in line with 2020 and 2021. Vacancy decreased by 120bps to 5% in 2022, while prime rents increased to €305/m2 (€285/m 2 ). In Rotterdam prime rents increased to €265/m 2 from €245/m 2 and the vacancy was markedly down to 7.4% from 8.6% in 2021. In The Hague, where Government is the largest occupier, the overall vacancy increased by 20bps to 4.5%. OTHER NETHERLANDS The vacancy rate in Eindhoven decreased to 6.9% from 7.3%, with low take-up levels in 2022 confirming the scarcity of high quality office space in the area. Vacancy at the Bio Science Park in Leiden remains at 0%. INVESTMENT MARKET The end to ultra-low interest rates, which has driven investment markets for years, has significantly impacted transaction levels. Office investment volumes were down circa 30% to €2.5bn in the first 9 months of 2022, as the disconnect between buyer expecta- tions and seller hopes grew wider. Yields have already started to move out from all-time lows to reﬂect this. Some price discovery did take place towards the end of the year which suggest that prime yields in Amsterdam have moved out by up to 100bps to circa 4% at year-end. To the extent there is any distress, it appears to be largely limited to development compa- nies with too much land on their books. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 Amsterdam Eindhoven 80 100 120 160 Rotterdam The Hague Utrecht 140 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 Amsterdam Eindhoven 2.0% 4.0% 6.0% 8.0% Rotterdam The Hague Utrecht 2021 MANAGEMENT BOARD REPORT 26 | NSI ANNUAL REPORT 2022 21.4% EPRA Vacancy 18.4% 13.8% 7.1% 7.0% 0.6% -0.3% 5.9% LFL Disposals / Acquisitions 2017 2018 20202019 20222016 2021 6.2% EPRA VACANCY RATE TOTAL PORTFOLIO NET RENTS LIKE-FOR-LIKE (%) REAL ESTATE PORTFOLIO Three assets were sold during 2022: the shopping centre ‘t Loon in Heerlen in January, marking the end of our retail disposal program, HNK Hoofddorp and a small asset in the Hague. The combined proceeds of all disposals were € 17.3m (before transaction costs) reﬂecting on average a circa 0.8% discount over year-end 2021 book values. There were no acquisitions in 2022. PORTFOLIO BREAKDOWN – 31 DECEMBER 2022  # Assets Market value (€ m) Market value (%)     Amsterdam 23 730 57% Other G4 14 342 27% Other Netherlands 12 203 16% TOTAL 49 1,275 100% VACANCY The EPRA vacancy at the end of 2022 is 6.2%, up from 5.9% at the end of 2021. On a like-for-like basis the increase was 0.6%, mainly due to tenant departures in Amsterdam and Other Netherlands. The vacancy rate at year-end includes 0.7% strategic vacancy for Alexanderpoort, Rotterdam. Adjusted for this the vacancy rate at year-end of 2022 is 5.5%. EPRA VACANCY  Dec. 2021 L-f-l Other Dec. 2022      Amsterdam 5.8% 1.2%  7.0% Other G4 6.8% -0.8% 0.1% 6.1% Other Netherlands 4.9% 1.0% -1.9% 4.1% TOTAL 5.9% 0.6% -0.3% 6.2% RENTS On a like-for-like basis, gross rents are up by 5.8% in 2022. Split by segment, Amsterdam is up by 6.5%, Other G4 is up by 6.8% and Other Netherlands 2.1%. Indexation accounted for circa 2.6% of the total increase. For Amsterdam, the rest of the increase was largely due to higher rent in Laanderpoort (circa 2.2%), related to the revised development agreement with ING. Net rents increased by 7.4% on a like-for-like basis in 2022 mainly as a result of lower maintenance. LIKE-FOR-LIKE GROWTH NET RENTAL INCOME (€M)  2022 2021 L-f-l     Amsterdam 28.1 26.5 6.0% Other G4 17.5 15.2 14.7% Other Netherlands 9.3 9.3 -0.2% TOTAL 54.8 51.1 7.4% REVERSIONARY POTENTIAL / ERV BRIDGE As per 2022 ERVs were up by 4.6%. In Amsterdam the highest increase in ERVs was recorded in Zuidas at 12.2%. In Other NL the increase is in Leiden, at 11.3% and Eindhoven at 8.3%. LIKE-FOR-LIKE GROWTH ERV (€M)  Dec. 2022 Dec. 2021 L-f-l     Amsterdam 47 45 4.5% Other G4 26 25 2.8% Other Netherlands 15 14 8.0% TOTAL 88 84 4.6% As per 2022 the investment portfolio is 6.1% reversionary, down from 7.9% at year-end 2021. This is mainly the result of higher rent levels, partially attributable to indexation. 2018 2019 20212020 2022 7.4% 5.2% 3.0% 0.8% 3.0% MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 27 GROSS INITIAL YIELD EPRA NET INITIAL YIELD REVERSIONARY POTENTIAL  Dec. 2022 Dec. 2021    Amsterdam 11.0% 15.7% Other G4 -0.6% 1.7% Other Netherlands 3.6% -1.4% TOTAL 6.1% 7.9% The reversion for lease contracts due for renewal in 2023 is 7.9%, with Amsterdam remaining the most reversionary segment (13.6%). Contracts were signed on average at approximately 3% above ERV. The total tenant retention rate for 2022 was 69.4%. The WAULT of the portfolio is 3.9 years. Contracts representing an annualised rental income of € 10.6 m (14% of total annualised contractual rent) are set to expire in 2023. This includes ING’s lease at Laanderpoort, which will expire in relation to the develop- ment and € 3.5m 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 50bps to 4.6% in 2022. This reﬂects both yield expansion and the impact of higher rents. The lack of liquidity in the investment market in combination with increased economic uncertainty has resulted in appraisers taking a more cautious stance to valuation yields. PORTFOLIO YIELDS  EPRA net initial yield  Gross initial yield  Reversionary yield  Dec. 2022 Dec. 2021  Dec. 2022 Dec. 2021  Dec. 2022 Dec. 2021          Amsterdam 4.4% 3.7%  5.9% 5.0%  7.0% 6.2% Other G4 4.9% 4.4%  7.2% 6.6%  7.6% 7.2% Other NL 4.6% 4.9%  7.0% 7.6%  7.5% 7.9% TOTAL 4.6% 4.1%  6.4% 5.9%  7.3% 6.7% VALUATIONS The portfolio is appraised externally twice a year. All assets saw a change in external appraiser in H1 2022, in accordance with our standard appraiser rotation process. The portfolio valuation is down by 5.6% over the 12-month period. H1 still saw a positive revaluation (+ 0.5%) while in H2 the deteriorated market conditions were acknowledged and reﬂected in valuations (- 6.2%). The write-down is almost entirely attributable to yield expansion in response to heightened market uncertainty, higher interest rates and decreased investment volumes. The largest capital value decline was seen in Amsterdam (- 9.2%). The positive revaluation in other NL is related mainly to the Leiden BioScience Park which saw both an increase in ERV’s and a decrease in yields, to reﬂect the continued high desirability of medical offices and lab space even in the face of generally more challenging market conditions. 2017 5.5% 2018 5.2% 2019 4.6% 2022 4.6% 2021 4.1% 2020 4.5% 2017 7.9% 2018 7.1% 2019 6.4% 2022 6.4% 2021 5.9% 2020 6.7% MANAGEMENT BOARD REPORT 28 | NSI ANNUAL REPORT 2022 72 78 88 6 6 -1 6 60 65 70 75 80 85 90 Net Effective Rent Rent incentives Contracted rent Positive reversion Negative reversion ERV Vacant space Total ERV Contracted rent Reversion ERV BRIDGE CONTRACTED RENT TO ERV - 31 DECEMBER 2022 (€M) REVALUATION (€M)  Market value Revaluation  Positive Negative TOTAL %       Amsterdam 730 11 -84 -74 -9.2% Other G4 342 15 -28 -12 -3.4% Other NL 203 15 -4 10 4.9% TOTAL 1,275 40 -116 -76 -5.6% CAPITAL EXPENDITURE Capex is € 12.8m, of which € 2.4m is defensive. The € 10.4m of offensive capex includes € 7.2m of investments in the three major development projects. CAPITAL EXPENDITURE (€M)  Offensive Defensive TOTAL     Amsterdam 9.5 0.9 10.4 Other G4 0.6 1.2 1.8 Other NL 0.2 0.4 0.6 TOTAL 10.4 2.4 12.8 AMSTERDAM Vacancy increased from 5.8% to 7.0% in 2022, mostly as a result of tenant departures at Centerpoint I and II and Q-Port. The tenant retention rate during 2022 was 66.5%. KEY METRICS AMSTERDAM 2022 2021 Change     Number of properties 23 23  Market value (€ m) 730 792 -7.8% Market value asset (€ m) 32 34 -7.8%   Lettable area (sqm k) 178 178 0.0%   Ann. contract rent (€ m) 40 37 7.7% Average rent / sqm 243 222 9.5%   ERV (€ m) 47 45 4.5%   EPRA vacancy 7.0% 5.8% 1.2 pp   EPRA net initial yield 4.4% 3.7% 0.7 pp Gross initial yield 5.9% 5.0% 1.0 pp   WAULT 4.1 4.2 -3.1% REVALUATIONS TOTAL PORTFOLIO (€M) Amsterdam Other G4 Other NetherlandsTotal 40 -116 -84 11 15 -28 15 -4 Positive revaluation Negative revaluation 60 40 20 0 -20 -40 -60 -80 -100 -120 -140 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 29 0.0 10.0 20.0 30.0 40.0 50.0 2023 2024 2025 2026 2027 2027+ Total Contract rent (€m) 6.7 5.4 6.1 7.4 4.1 9.4 39.0 ERV (€m) 7.6 5.4 7.3 7.6 4.3 11.1 43.3 # Contracts 76 38 28 10 27 26 205 Reversion 13.6% -0.9% 20.2% 3.3% 6.1% 18.0% 11.0% ANNUAL EXPIRATIONS AND REVERSIONARY POTENTIAL AMSTERDAM OTHER G4 The EPRA vacancy rate for Other G4 is 6.1%, down from 6.8% at year-end 2021, mainly thanks to occupancy gains at HNK Scheepvaartkwartier. The vacancy includes 2.3% in strategic vacancy for Alexanderpoort, where several ﬂoors are being held vacant as part of a major refurbishment. The retention rate for 2022 amounts to 54.7%. KEY METRICS OTHER G4  2022 2021 Change     Number of properties 14 15 -6.7% Market value (€ m) 342 356 -3.9% Market value asset (€ m) 24 24 3.0%   Lettable area (sqm k) 122 124 -1.7%   Ann. contract rent (€ m) 24 23 4.7% Average rent / sqm 213 203 4.6%   ERV (€ m) 26 25 1.4%   EPRA vacancy 6.1% 6.8% -0.7 pp   EPRA net initial yield 4.9% 4.4% 0.6 pp Gross initial yield 7.2% 6.6% 0.6 pp   WAULT 4.0 4.4 -8.3% OTHER NETHERLANDS The vacancy rate was 4.1%, down from 4.9% at year-end 2021. The vacancy in our Life Sciences activities in Leiden remains 0%. The retention rate in this segment is 82.8%. KEY METRICS OTHER NETHERLANDS  Dec. 2022 Dec. 2021 Change     Number of properties 12 14 -14.3% Market value (€ m) 203 207 -2.0% Market value asset (€ m) 17 15 14.4%   Lettable area (sqm k) 82 107 -23.4%   Ann. contract rent (€ m) 14 16 -10.2% Average rent / sqm 180 161 11.5%   ERV (€ m) 15 16 -6.8%   EPRA vacancy 4.1% 4.9% -0.9 pp   EPRA net initial yield 4.6% 4.9% -0.3 pp Gross initial yield 7.0% 7.6% -0.6 pp   WAULT 3.3 3.2 4.1% 0.0 20.0 40.0 60.0 80.0 100.0 2023 2024 2025 2026 2027 2027+ Total Contract rent (€m) 10.6 12.4 14.3 12.0 9.6 17.8 76.6 ERV (€m) 11.4 12.4 15.7 12.3 10.1 19.4 81.3 # Contracts 296 95 45 59 58 70 644 Rev. Potential 7.9% 0.4% 9.7% 2.7% 5.1% 8.8% 6.1% ANNUAL EXPIRATIONS AND REVERSIONARY POTENTIAL MANAGEMENT BOARD REPORT 30 | NSI ANNUAL REPORT 2022 0.0 5.0 15.0 20.0 25.0 2023 2024 2025 2026 2027 2027+ Total Contract rent (€m) 3.0 2.4 6.1 2.5 3.1 6.5 23.6 ERV (€m) 3.0 2.2 6.1 2.6 3.1 6.4 23.4 # Contracts 167 37 34 25 19 26 308 Reversion -1.9% -5.5% 0.8% 0.5% 2.3% -1.1% -0.6% 10.0 ANNUAL EXPIRATIONS AND REVERSIONARY OTHER G4 0.0 4.0 8.0 12.0 16.0 2023 2024 2025 2026 2027 2027+ Total Contract rent (€m) 0.9 4.6 2.1 2.1 2.4 2.0 14.0 ERV (€m) 0.9 4.8 2.2 2.2 2.6 1.9 14.5 # Contracts 53 20 18 10 12 18 131 Reversion -1.2% 5.1% 5.1% 3.5% 6.7% -3.3% 3.6% ANNUAL EXPIRATIONS AND REVERSIONARY OTHER NETHERLANDS DEVELOPMENT AND RENOVATIONS LAANDERPOORT The Final Design has been approved by both ING and NSI. The agreement letter with the Municipality was signed in December 2022. Following selection of the contractor, demolition works are scheduled for Q4 2023. WELL HOUSE We have made the decision to postpone the Well House project at this stage. We will actively revisit the case for Well House in 2023, taking into account construction costs, land values, yields and rent levels. We already have obtained an irrevocable building permit for this project. VITRUM The Final Design phase will be completed in February 2023. Following an additional delay in 2022 due to the approval needed from the owner’s association, the technical design should be fully ready Q3 2023, with the start of the project still foreseen for Q4 2023. Project New area (LFA sqm k) Increase area (sqm k) Expected start / completion Current phase Vitrum, Amsterdam ca. 13.8 ca. 2.2 Q4 2023 / H2 2025 Final Design Laanderpoort, Amsterdam ca. 38.8 ca. 26.1 Q4 2023 / H1 2026 Tender Well House, Amsterdam ca. 19.2 ca. 19.2 t.b.d Technical Design Alexanderhof, Rotterdam t.b.d. t.b.d. t.b.d. Feasibility BALANCE SHEET IMPACT OF DEVELOPMENT At the end of 2022, the balance sheet value of the development activities consists of Vitrum and Alexanderhof, Rotterdam, both transferred in 2021. In addition, the accumulated development costs of Vitrum, Laanderpoort and Well House are also included in investment property under construction. Laanderpoort is currently not part of investment property under construction, as the asset is still leased to ING. It will be trans- ferred once ING vacates the building in Q1 2023. The negative revaluation in 2022 is mainly related to a decline in the valuation of Vitrum, due to yield expansion and a higher capex adjustment reﬂecting increased building costs assumed by the appraiser. MOVEMENT TABLE INVESTMENT PROPERTY UNDER CONSTRUCTION (€M) TOTAL   Balance 1 January 2022 62.0   Capital expenditure (Investments) 7.2 Capitalised interest 1.3 Revaluation -11.5 Balance 31 December 2022 59.1 Market value 31 December 2022 58.9 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 31 DEVELOPMENT PIPELINE OVERVIEW THREE PROJECTS IN AMSTERDAM VITRUM WELL HOUSE Size (current LFA sqm) - Size (completion) 19,200 Est. total cost (€) 140–150m Start date T.B.D. VITRUM Size (current LFA sqm) 11,600 Size (completion) 13,800 Est. total cost (€) 95-105m Start date H2 2023 LAANDERPOORT Size (current LFA sqm) 13,000 Size (completion) 38,800 Est. total cost (€) 200–220m Start date H2 2023 Initiative Definition Tendering Construction Delivery Preliminary Design Final Design End calculation & evaluation Building Permit Technical design Initiative Design Construction 202220212020 MANAGEMENT BOARD REPORT 32 | NSI ANNUAL REPORT 2022 WELL HOUSE LAANDERPOORT Initiative Definition Tendering Construction Delivery Preliminary Design Final Design End calculation & evaluation Building Permit Technical design Initiative Design Construction 202220212020 Initiative Definition Tendering Construction Delivery Preliminary Design Final Design End calculation & evaluation Building Permit Technical design Initiative Design Construction 202220212020 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 33 Alianne de Jong CFO “ Its our belief that a more sustainable portfolio is vital to the business.” BALANCE SHEET, NTA AND FINANCING NET TANGIBLE ASSETS EPRA NTA per end of December 2022 is € 886m, down 6.8% compared to the end of 2021 (€ 950m), 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 8.4% from € 48.23 at the end of 2021 to € 44.17 at the end of 2022. FUNDING At the end of 2022 NSI amended and extended its € 80m Term Loan. The loan has been scaled back to € 50m and the maturity has been extended from its original maturity date in April 2023 to December 2026. Given the interest rate hedging already in place, the overall funding cost in Q4 2022 was not impacted. Consistent with NSI’s strategy to integrate sustainability into all aspects of its business and operations, the amended facility includes a sustainability-linked interest margin mechanism, in line with the revolving credit facility (“RCF”). NET DEBT (€M)  Dec.2022 Dec. 2021 Change    Debt outstanding 353.2 391.4 -38.2 Amortisation costs -1.6 -1.6 0.0 Book value of debt 351.6 389.8 -38.2     Cash and cash equivalents -0.2 -7.7 7.5 Debts to credit institutions 14.0 0.0 14.0 Net debt 365.5 382.1 -16.6 Net debt is down by € 16.6m compared to the end of December 2021. This is primarily due to disposals totalling € 17.2m (net of transaction costs). At the end of 2022 NSI has circa € 283m of committed undrawn credit facilities at its disposal. The average loan maturity is 4.7 years (December 2021: 4.9 years), with only one loan maturing in 2023 (€ 66m) this ensures sufficient ﬂexibility and capacity to fund the development pipeline and selective acquisitions. At year-end 81% of debt drawn is unsecured (90% of available debt). The average cost of debt is slightly lower at 2.0% (was 2.2% per the end of 2021) due to lower swap costs and a lower level of utilisation of the RCF. LEVERAGE AND HEDGING The LTV is 28.7% at the end of 2022, 0.5 percentage points higher compared to December 2021 (28.2%), driven by negative revalua- tions of assets in 2022 and partly offset by lower net debt. The ICR stands at 6.3x at the end December 2022, compared to 6.5x at the end of December 2021. This is the result of lower NRI during 2022, due to disposals, and is partly offset by lower swap costs. The ICR remains firmly above the 2.0x covenant. COVENANTS  Covenant Dec. 18 Dec. 19 Dec. 20 Dec. 21 Dec. 22    LTV ≤ 60.0% 36.9% 27.4% 29.2% 28.2% 28.7% ICR ≥ 2.0x 5.5x 6.8x 7.2x 6.5x 6.3x MANAGEMENT BOARD REPORT 34 | NSI ANNUAL REPORT 2022 NSI is using swaps to hedge interest rate risk on variable rate loans. Due to the reduction of the term loan, the volume hedge ratio has temporarily increased to 104% (target range: 70-100%). The weighted average maturity for the derivatives and fixed rate loans is 3.9 years at the end of December 2022. The maturity hedge ratio is 82.1% (target range 70-120%). 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 US PP Secured debt Term Loan RCF RCF un drawn 66 50 40 18 283 50 50 40 40 2 ND GREEN FINANCING AGREEMENT NSI is convinced that the pursuit of sustainability in all of its activities and initiatives is critical to the long term viability of NSI as a business. This is also reﬂected by the inclusion of a sustain- ability linked mechanism in the in 2022 amended and extended term loan with ABN Amro, Rabobank, ING and Belfius. The interest margin of this loan will be adjusted based on the performance on four indicators: an energy inten- sity reduction target in line with the CRREM1 decar- bonisation pathway, the percentage of the portfolio that is aligned with the EU Taxonomy, the average BREEAM score of our portfolio, and our GRESB rating. Alianne de Jong, CFO: “The inclusion of the sustainability- linked mechanism aligns with NSI’s belief that a more sustainable portfolio is vital to the business’ long-term financial viability and performance. This is the 2 nd green financing arrangement, demonstrating how we place the importance of sustainability at the heart of how we operate.” MATURITY PROFILE 52.0 50.0 48.0 46.0 44.0 42.0 40.0 48.23 31 Dec. 2021 EPRA Earnings Revaluation Result on sales Effect stock div. 31 Dec. 2022 Dividend Other -2.16 2.15 -3.87 0.00 -0.00 -0.18 44.17 BRIDGE EPRA NTA PER SHARE (€) MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 35 RISK MANAGEMENT AND INTERNAL CONTROL 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 – 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 signif - icant errors, losses, fraud or the violation of laws or regulations. 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. . 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 safe - guarding the policy, guidelines, reporting systems and segregation of duties has been set up and put into operation in order to execute these control measures. The organisational structure and corpo - rate 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 aimed at pursuing growth within the G4-cities (Amsterdam, Den Haag, Rotterdam and Utrecht), Eindhoven and Leiden, with a well-defined asset strategy using clear acquisition and divestment criteria. During the past years, NSI has sold its retail port - folio and office assets in non-core cities. As from 2020, NSI started to MANAGEMENT BOARD REPORT 36 | NSI ANNUAL REPORT 2022 increase investments in development of properties, which leads 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 regularly 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 conserva - tive financing objectives stated in the strategy chapter. NSI’s policy regarding the hedging of interest rate risk is defensive and does not allow speculative positions. NSI set specific hedging ratios to monitor this risk. 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. This is also a required basic prin - ciple linked to NSI’s status as a Dutch REIT (fiscale beleggingsinstelling or FBI). 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 framework (devel - oped by the Committee of Sponsoring Organizations of the Treadway Commission). The risk and control framework is assessed regularly in consultation with advisors; 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 decision-making. Strict procedures are followed for the preparation of monthly, quarterly and annual reporting of results based on the company’s accounting princi - ples. Annual and quarterly budgets and forecasts are prepared by the Management Board and approved and set by the Supervisory Board. Based on an integrated ERP system combined with a data warehouse, Business Intelligence tools and Excel applications, the internal manage - ment 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 calamity or cyberattack. The Audit Committee discusses the findings of the independent external auditor regarding the company’s internal control environment with the Management Board and the independent external auditor, and monitors compliance with recommendations and follow-up action on comments made by the independent 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 acqui - sition, redevelopment and divestment of properties were discussed and assessed during regular meetings of the Real Estate Committee. Real estate transactions valued below € 5.0m may be entered into by the Management Board without the prior approval of the Real Estate Committee. Approval of transactions valued at between € 5.0m and € 20.0m is delegated by the Supervisory Board to the Real Estate Committee, which consists of two members of the Supervisory Board with specific expertise in the field of real estate. Transactions valued above € 20.0m need approval from the entire Supervisory Board after receiving the advice of the Real Estate Committee. In 2022 the full risk and control framework was reviewed by the management board and senior management. Likewise, the complete - ness of the identified risks was discussed with the Audit Committee. Based on this review, the sustainability risk under Strategic risk had been split into two separate risks: the Transition risk and the Physical risk of climate change. This is based on the fact that sustainability is more and more important and as such is considered as preconditional for our business. Furthermore, a separate Supply chain risk is added under Operational risks. Other risks have been redefined to better reﬂect the actual risk. RISK ASSESSMENT AND MONITORING NSI measures and assesses risks using tools including scenario anal- ysis models in which the impact of variables can be set. The outcome of these models results in more awareness of the sensitivity 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. Risks are hedged or minimised where possible. High-impact risks are risks that could have a material impact on NSI’s income statement and / or the balance sheet, the company’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 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 esti - mated impact of all identified risks is still in line with the actual situation. RISK MANAGEMENT AND CONTROL IN 2022 INTERNAL AUDIT The Company has not appointed an internal auditor as specified in best practice provision 1.3.1 of the Dutch Corporate Governance Code. NSI appointed a third party for a three-year period to assist (co-sourcing) in fulfilling the internal audit function. 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. MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 37 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, exten - sive 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 2022, the following processes were reviewed: – Acquisitions and disposals of real estate (full scope); – Technical management of real estate (limited scope); – Accounts receivable (debtors) (limited scope); – Project Development (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 2020 and 2021 was also performed. The progress with respect to the follow-up of the prior year audits was: 49% of the recommendations were completed, 25% is in progress, whereas for 26% 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 independent external auditor. FRAUD RISK ASSESSMENT The management of fraud risks is an integral part of NSI's risk management. In 2022, NSI has conducted a separate fraud risk anal - ysis 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 vastgoedsector’ (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 disposi - tions 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 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 the valu - ation process and the standardisation of processes and formats in general are also important mitigating measures in this regard. In 2022 BDO performed a review on the fraud risk analysis as prepared by NSI in 2021. The purpose of this review was to assess the way in which the analysis was prepared and to provide feedback on it in order to support NSI in identifying company-specific fraud risks and managing these risks. The general outcome of this review was that all risks were identified and current controls mitigate the risks defined. Improvement could be made in the field of more explicitly linking risks and mitigating meas - ures. The recommendations of the review have been implemented in the fraud risk analysis of 2022. 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 integrity in 2022. SUSTAINABILITY, HEALTH AND SAFETY Sustainability is an integral part of NSI’s long term value creation strategy. As a real estate company, our business is exposed to both transition and physical risks and opportunities from climate change. NSI deems that both climate change risks could become more mate - rial 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 all objects acquired in the past years, due diligence has shown that the respective buildings comply with applicable laws and regula - tions. This also applies to all transformation and renovation projects. In each acquisition or investment proposal the level of sustainability of the specific asset has been assessed, including the identification MANAGEMENT BOARD REPORT 38 | NSI ANNUAL REPORT 2022 of further required or desired improvements (including the financial impact) in line with our ambition. We have improved the BREEAM credentials of our existing assets over the past years; as per yearend 2022 already more than 60% 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 obligation which has become effective as from 1 January 2023. As per yearend 2022 88% of NSI's portfolio has energy label A or better. In 2022, with respect to our net zero carbon ambition per 2035, a Paris Aligned Roadmap has been prepared, including a technical and finan - cial impact analysis for each individual asset. PHYSICAL RISKS In 2020 and 2021 we performed a risk assessment, based on the posi - tioning / locations of our individual properties, in relation to the most apparent physical risks due to climate changes in the Netherlands as foreseen by climatologists / experts for the year 2050. In 2022, based on this investigation a further analysis on individual property level was performed by a third party. In this analysis, the vulnerability without any mitigating measures of each asset was deter - mined. The existing mitigating measures were mapped and measures that are additionally needed to mitigate the risks were determined and prioritised. Further detailed information on sustainability can be found on pages 138 to 142 on environmental, social and governance performance. As in 2021, NSI’s independent auditor PricewaterhouseCoopers Accountants N.V. has provided a limited assurance opinion on the reported sustainability and non-financial KPIs (pages 133 to 134) for the financial year 2022. 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 Corporate Sustainability Reporting Directive (CSRD), which is expected to be applicable for NSI as from 2025. DATA AND CYBER SECURITY DATA SECURITY During 2022 one incident occurred in relation to data security: during a short period of time a number of employees unwittingly obtained certain user access rights within the ERP-system. The involved employees were unaware of their change in access rights. As soon as the incident was detected, user access rights were corrected and the process for changing user access rights was amended to prevent similar incidents in the future. Furthermore, a detailed investigation was started to analyse whether improper use of the system lead to data integrity issues. The method of investigation and the results were reviewed by NSI’s internal auditor. No breaches in relation to data integrity were detected during this investigation. CYBER SECURITY In 2021 an update of the IT Business Continuity Plan was drawn up, including an assessment of the risk of business interruption due to possible vulnerabilities in our key applications as a consequence of data leaks and breaches. Furthermore, in 2021, the migration of the main ERP system to a private cloud environment was executed and we started the decommissioning of the remaining traditional data center. In prior year, a third party has performed a penetration test to identify and test the vulnerabilities of NSI’s IT Infrastructure and systems. There were no critical particularities detected. One of the identified risks was a lack of awareness on new methods of phishing with our employees. In February 2022 we organised aware - ness sessions on this topic for our full staff. 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 Operations Center) as a preventive monitoring control for detecting and reporting any possible ransomware attacks or cyber security breaches. DUTCH REAL ESTATE TAX REGIME - FBI In its tax plan for 2023 Government pre-announced plans to abolish the FBI regime per 1 January 2025, at which time NSI is set to become a corporation (NV) subject to a normal 25.8% corporation tax rate, equating to an effective tax rate of circa 10% to 12% on commercial profits. The exact details on the legislation to end the FBI regime in 2025 will only become available in 2023. In 2022, NSI started an extensive analysis of the potential implica - tions and started mapping potential scenarios to alleviate the impact of losing the FBI-regime. External advisors have been appointed to support this process. NSI expects that there are several restructuring opportunities avail - able to lower the effective tax rate below the 10% to 12% indicated. Re-domiciling NSI is one of the more extreme options available. The final outcome of the analysis is expected after final agreement on FBI- legislation. Standing to lose the FBI regime is perhaps not all negative, as it opens up new opportunities for NSI to explore. For example, we could poten - tially sell development projects; we could set up JVs more easily to manage our overall capital/risk allocation more effectively; 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). NSI is still lobbying for a reversal, jointly with our listed peers and other stakeholders. MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 39 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: Bernd Stahli The wider macro-economic and geo-political landscape and outlook has structural and cyclical implications for overall business activity. Low business confidence could lead to a reduction in tenant demand, investment demand, or both, impacting property valuations and our ability to acquire or sell assets. It may also impact our cashﬂow and vacancy position. 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. Below average High 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. Most of NSI's rental contracts include an indexation clause. With respect to expenses NSI has fixed price contracts for electricity and gas. Variable rate loans are typically hedged through interest rate swaps. MARKET VALUE OF PROPERTIES Executive responsible: Alianne de Jong 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 indi - rect results, reputational damage and the potential for claims due to false expectations being generated among stakeholders. 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. Above average High In the markets in which NSI operates property yields are lower as a result of which valuations have become more sensitive to yield shifts. 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. Appraisals currently hardly reﬂect any transition costs (sustainability capex) to Paris-alignment. The risk is that this will increasingly happen the coming years, which for certain assets may lead to lower 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 deci - sions 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 aligned. CHANGE IN TENANT DEMAND Executive responsible: Bernd Stahli 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 loca - tion and size of the properties is able to provide relevant services on a profitable basis. Below average Above average COST OF CAPITAL Executive responsible: Bernd Stahli 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, resulting in a structurally high overall cost of capital, which could impair the ability of the business to operate efficiently or profitably. 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-) develop - ment opportunities to drive growth, to lower its cost of capital. High High MANAGEMENT BOARD REPORT 40 | NSI ANNUAL REPORT 2022 Risk category Description of risk Mitigating measure Assessment Impact Probability COMPETITION Executive responsible: Bernd Stahli 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 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. Below average Above average 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 competitors is better, or more attractively priced. NSI believes property is about location, sustainability and services. We pursue leading positions in all of these, to make sure our product offering is competitive. NSI also pursues a strong relationship with its customers and tracks its NPS score to understand if it still meets customer needs. CONCENTRATION Executive responsible: Bernd Stahli 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 and so have a signifi- cantly adverse impact on the overall business in certain unforeseen circumstances. NSI takes the view that concentration does not have to be a negative. it is better to be good in a few things in the most promising locations, than being moderate in lots of markets. Whilst NSI’s portfolio has become more concentrated in recent years, there is still plenty of diversity in terms of locations, micro-locations, tenant profile, lease terms and lease conditions. NSI is focussing on multiple loca - tions in the G4 and pursues a multi-tenant strategy in its portfolio to spread its tenant risk and increase diver - sification. Low Low SUSTAINABILITY - TRANSITION Executive responsible: Bernd Stahli The risk whether a property is and will continue to be aligned to current and future sustainability requirements, in particular EU-taxonomy and the Paris Agreement. 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. Due to a general push to improve the sustainability stan - dards in all aspects of society, there may be a higher risk of scarcity of sustainable raw materials resulting in increasing costs. Reporting requirements on ESG are being upped all the time. Due to lack of (timely) available relevant data, NSI may not be able to meet new reporting requirements in time. 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’. Sustainability is an integral part of our long-term value creation strategy. Our efforts are geared towards mini - mising our 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 net zero in 2035. NSI uses external parties to set-up and review its ESG reporting requirements. The independent external auditor provides limited assurance on the reported ESG measure. Below average Above average SUSTAINABILITY - PHYSICAL RISK OF CLIMATE CHANGE Executive responsible: Bernd Stahli 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 challenges 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 reputa - tional 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 occupiers 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 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 41 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: Bernd Stahli 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 busi - ness 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 satisfaction survey to obtain insight on how employees experience 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 FRAUDULENT TRANSACTIONS Executive responsible: Bernd Stahli 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 EXECUTION DEVELOPMENT PROJECTS Executive responsible: Alianne de Jong This is the risk that NSI may not be able to success - fully turn the development plans that exists on paper into profitable, attractive investment assets on completion through inadequate project management, poor timing of activities, unidentified issues (e.g. asbestos and ground conditions) and / or an inappropriate 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 reputational damage. 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 poten - tial project risks are identified and assessed and - where possible - quantified in a risk budget. This risk assess - ment 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. Below average Below average MAINTENANCE Executive responsible: Bernd Stahli 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 depart - ment, taking into account NSI’s sustainability ambitions. 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 MANAGEMENT BOARD REPORT 42 | NSI ANNUAL REPORT 2022 Risk category Description of risk Mitigating measure Assessment Impact Probability SUPPLY CHAIN Executive responsible: Bernd Stahli 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 High TENANT SATISFACTION Executive responsible: Bernd Stahli 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 staggering 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 Above average DATA AND CYBER SECURITY Executive responsible: Alianne de Jong 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. The 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 consequence is that NSI may not be able to report inter - nally 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, availability and transparency of its data and other information, and 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. Below average Below average CALAMITIES Executive responsible: Bernd Stahli 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 improvement 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 reconstruction 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: Bernd Stahli 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 obliga - tions and may also result in a delay in the execution 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 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 43 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: Bernd Stahli 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 SUSTAINABILITY / HEALTH AND SAFETY LEGISLATION Executive responsible: Bernd Stahli T he risk that the portfolio does not comply with prevailing laws and regulations in the field of Sustainability 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. Below average Below average FISCAL REGULATIONS Executive responsible: Alianne de Jong NSI has the status of a Dutch REIT (known in The Nether- lands as an FBI) in accordance with section 28 of the Dutch Corporate Income Tax Act 1969 (Wet op de Vennootsc - hapsbelasting 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 its tax plan for 2023 Government pre-announced plans to abolish the FBI regime per 1 January 2025, at which time NSI is set to become a regular corporation (NV) subject to a normal 25.8% corporation tax rate. The exact details on the legislation to end the FBI regime in 2025 will only become available in 2023. Meeting the requirements of the FBI regime has been a continuous area of focus for the Management Board. NSI monitors the main risks relating to its tax position, including an ‘activity test’ for HNK and project develop - ment, the dividend distribution requirement, the compo- sition of its shareholder base and the debt financing limits. NSI facilitates internal knowledge sharing, raising employee awareness and enabling them to identify relevant signals and where necessary obtain relevant (external) advice. Twice a year NSI and its independent external auditor determine whether the FBI requirements have been met. All this prevents NSI from being exposed to the risk of non-compliance with tax legislation. The high level of uncertainty over how the pre-announced plans to abolish the FBI regime in 2025 will take effect (and its ultimate implications for NSI), have required the management board to start an extensive, highly detailed, analysis of the potential implications, and start mapping potential scenarios to alleviate the negative implications of losing the FBI regime benefits (loss of competitive playing field vs non-listed operators). Tax optimisation strategies and potential new business lines that were previously prohibited under the FBI regime are part of this review. External advisors have been appointed to support this process. High Very high MANAGEMENT BOARD REPORT 44 | NSI ANNUAL REPORT 2022 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: Alianne de Jong 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 safe - guard the consistency and reliability of information. The half-year results are assessed by an independent 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: Alianne de Jong 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. 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 quarterly basis, in which it performs stress tests and uses scenario analyses to closely monitor its performance and finan - cial 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: Alianne de Jong 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: Alianne de Jong 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 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 45 INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) In accordance with European and Dutch laws and regulations NSI has prepared its financial statements for the 2022 financial year based on EU-IFRS. The EU-IFRS result after tax includes unreal- ised 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 Executive 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 fail - ings thereof; – the aforementioned systems provide reasonable assurance that the financial reporting does not contain any material inaccuracies; – based on the current state of affairs, it is justified that the financial reporting is prepared on a going concern basis; and – the section on risk management in the report states those mate - rial risks and uncertainties that are relevant to the expectation 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 2022, the state of affairs at NSI and its affiliated companies during 2022, the details of which are presented in the financial statements, and that the management report describes the fundamental risks facing the company. MANAGEMENT BOARD REPORT 46 | NSI ANNUAL REPORT 2022 CLIMATE RISKS 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. The analysis was enriched in 2022 with more granular data about the buildings. The results of the risk analysis indicate that 7 assets have potentially a high risk and 2 assets score very high (out of a total of 49 assets). 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. 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. The results of the risk analysis performed in 2022 indicate that 12 assets have potentially a high risk (out of a total of 49 assets). There were no assets that scored ‘very high’. 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 measures 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. Both physical- and transition 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 21. 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 transitional risks (related to the transition to a low-carbon economy) into account. MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 47 3 - 4 4 - 5 5 - 6 1 - 2 2 - 3 AMOUNT OF DAYS WITH ≥ 25 MM OF PRECIPITATION DROUGHT 2022 DROUGHT 2050 HEAT 2022 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 2022 PHYSICAL CLIMATE RISKS IN MORE DETAIL MANAGEMENT BOARD REPORT 48 | NSI ANNUAL REPORT 2022 REDUCING 22% ENERGY INTENSITY AT HNK THE HAGUE PROGRESSING ON OUR WAY TO PARIS ALIGNMENT 72% reduction in gas use and increasing electricity use by only 18% Significant reduction in GHG emissions Installation of heatpumps as replacement of cooling units (end of life cycle) 10 Placement additional EV charging stations 7 0 100 250 2018 50 200 2019 2021 20222020 7 ENERGY INTENSITY kWh/m 2 /yr EMISSIONS kWh/m 2 /yr CA. €820K CAPEX It NSI’s ambition to reduce the actual energy intensity of all our buildings, in line with the aims of the Paris Agree- ment. In 2022, NSI established a detailed plan (see page 21 for more details), including an investment plan for each asset, including time line, to reach this target. In two of its assets, HNK The Hague and Q-Port in Amsterdam, NSI has made big steps in 2022. In HNK The Hague, cooling units have been replaced by heat pumps. Heating can now be done (partially) electrical, using green electricity, leading to significant reduction of gas usage (72%) and GHG emissions. 0 5 10 2018 15 2019 2021 20222020 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 49 THE SUSTAINABLE OFFICE 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 MANAGEMENT BOARD REPORT 50 | NSI ANNUAL REPORT 2022 REDUCING 32% ENERGY INTENSITY AT Q-PORT AMSTERDAM CA. €2M CAPEX 57% 9% 32% reduction in use of additional district heating reduction in electricity consumption reduction in energy intensity (from 134 to 91 kWh/m 2 /year) Significant reduction in GHG emissions Installation of heatpumps Installation of variable air volume system 10 Placement additional EV charging stations 7 Placement of Solar panels 1 Placement LED lighting 4 0 5 10 2018 15 2019 2021 20222020 ENERGY INTENSITY kWh/m 2 /yr EMISSIONS kWh/m 2 /yr Also in Q-port NSI invested in the installations, including the installation of a heat pump and solar panels. Much sustainability gain is achieved through the installation of a variable air volume system. This allows to cool or heat based on what is required given the office occupancy and the outside temperature. 0 100 250 2018 50 200 2019 2021 20222020 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 51 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 consi- dered 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 53. 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 beco- ming 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 onboar- ding programme in place to familiarise new hires with the compa- ny’s cultural values. HEALTHY WORKPLACE The health and well-being of our employees and tenants is also an element of an important pillar of NSI’s sustainability strategy. NSI’s efforts and ambitions in this respect are reported in more detail in the ESG chapter ‘The future is here’ (on page 14). The sickness rate at NSI was stable at 3.5% in 2022 (2021: 3.5%). Sadly one of our colleagues passed away in 2022. 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. NSI’s culture and its commitment to providing a healthy and inspiring working environment to its employees are reﬂected in A GREAT PLACE TO WORK 52 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT OUR VALUES We believe that a clear set of values creates a common feeling of identity. Our values set out the common behaviours that support our purpose and define our culture: WE ARE TRANSPARENT We recognise that mutual trust can only really exist in an environ- ment 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 ﬂex- ible 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 recog- nise 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 acknowl - edge 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 associated with an opportunity to come up with well-considered solutions. WE LIKE TO KEEP IT SIMPLE Complexity often confuses, creates uncertainty, a fuzzy demarca- tion of responsibilities and generally results in slowdowns 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 shareholders. We are fully aware of short-term interests but will always favour the long term. HRM Legal Corporate Secretary Marketing Investor Relations CFOCEO Treasury ICT Business Analytics Investments Asset Management Project Development Finance & Control Customer Excellence MANAGEMENT TEAM 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 and is supported by a management team. The disciplines represented in the management team are Asset Management, Investment Management, Development, Customer Excellence and Finance & Control. NSI is characterised by decentralised responsibilities, allowing the organisation to operate efficiently and empowering indivi- duals to develop in their role, supported by a robust IT infrastruc- ture and effective management information systems. The number of employees (headcount) increased to 65 (NSI 48, HNK 17) at 31 December 2022 (2021: 60). In 2022, the organisa- tion has been strengthened in particular in the areas of Develop- ment and Business Analytics. For the company’s legal structure please refer to ‘The principles for consolidation' on page 89: MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 53 AGE BREAKDOWN NSI EMPLOYEESGENDER BREAKDOWN NSI AT 31 DECEMBER 2022 YE 2022 YE 2021 YE 2020 YE 2019 YE 2018 MALE 48% FEMALE 52% 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 Leesman survey was conducted in 2022 to measure how supportive and effective the working environment in the new head office is experienced by all employees. The results were extremely good; the score was around 30% higher (Lmi of 83.2) compared to the average benchmark (64.4). EMPLOYEE ENGAGEMENT Employee surveys are a strong tool used to track the actual and perceived well-being of employees, which is being conducted every two years. The latest survey ran in 2021 showed that employees generally feel engaged and connected, which was confirmed by a very high eNPS score (29.3). These surveys will be conducted again in 2023. To keep employees informed and engaged, the Management Board regularly hosts sessions to inform the staff on the compa- ny’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 2022, specific attention was paid to the macro- economical and political environment and what this meant to NSI. With a view to team building and knowledge sharing, NSI invited all employees for an inspirational trip to Stockholm in 2022. The program consisted of several presentations and property tours of leading property companies and property developers in Stock- holm, combined with an informal program. A ‘family and friends’ day was organised to present the new NSI head office. Pianist Aleksandr Zavyalov from Ukraine performed a concert during this day. After ﬂeeing his country he is giving concerts to raise money for humanitarian aid in Ukraine. The foun- dation “Get together for Ukraine” is sponsored by NSI. TRAINING AND DEVELOPMENT Each individual employee is expected to make, supported by HR and their manager, a personal development plan, to guide trai- ning needs and career perspectives. NSI provides ample training and development opportunities for all our employees. Employees are encouraged to take exter- nally recognised courses by granting annual individual training budgets. In 2022 NSI started to offer all employees the possibility to strengthen their, mainly soft skills, by means of an online training platform. In total employees spent 73 hours on this platform in 2022. This will be continued in 2023, and employees are being encouraged to further exploit the training opportunities and to increase the hours of training. Throughout 2022 several awareness sessions related to sustain- ability were organised for all employees to attend. Topics included Timber Construction and Biobased Materials. One of the aware- ness trainings dealt with Cyber Security. The training program that was specifically developed for the HNK team was implemented in 2022. The team was trained in how to embody the four defined and desired HNK experiences: I feel welcome, I feel connected, I feel truly supported, I feel energized. The entire team of NSI, including the Supervisory Board, was invited for a Profile Dynamics ® analysis. Profile Dynamics® provides insight into the values and drives of individuals in teams and organizations. Value systems largely determine people’s thin- king and behavior. 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. NSI will use it to further develop teams into even more effective teams. The Profile Dynamics ® tool will also be used as a reference point in future appointments.  Female  Male  # %  # % Management Board 1 50.0%  1 50.0% Senior Management 3 27.3%  8 72.7% Operations 23 65.7%  12 34.3% Support Staff 7 41.2%  10 58.8% TOTAL 34 52.3%  31 47.7%       Supervisory Board 2 40.0%  3 60.0% 0% 5% 10% 15% 20% 25% <30 31-40 41-50 >50 MANAGEMENT BOARD REPORT 54 | NSI ANNUAL REPORT 2022 NSI TEAM MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 55 In 2022, HNK's new brand positioning was launched. Building on the strength that HNK has developed over the past 10 years, the upgraded concept is distinctive in many aspects. The central theme is "You're welcome", underpinned by our brand values and translated into our distinctive hospitality approach. The wide range of Space at your service, desks on demand, and a host that knows you by name. services can all be arranged via the HNK app. Because we own our buildings, we are able to go the extra mile for our guests, and place sustainability top of mind. Sustainability is guiding our choices; in exterior and interior design, and in the way we operate. The new concept will be implemented in full in two HNK’s in 2023; in HNK Scheepvaartkwartier (Rotterdam) and in the new HNK Amsterdam Sloterdijk (former Motion building). Another new HNK, HNK Rotterdam Alexander, will be opened in 2024. Space at your service - The launch of the upgraded HNK brand 56 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT NSI ANNUAL REPORT 2022 | 57 MANAGEMENT BOARD REPORT I feel connected Being there for our customers also means taking the initiative to connect with them. By reaching out to them pro-actively and thinking alongside them. I feel welcome By really being there for our customers, we make them feel truly welcome through a personal approach by qualied personnel. I feel truly supported By active listening and asking questions, we aim to nd out what really matters to our customers. We aim to be one step ahead. We see every question, suggestion or complaint as an opportunity to learn and to make a dierence. I feel energised We aim to energise our customers in many ways. We prioritise Health & Well - being in the way we work, including serving healthy food options. Our HNK brand values guide us in how to deliver on our brand promise: supporting our customers to achieve ultimate growth. HNK customer experience 58 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT A fresh distinctive design The look and feel has completely changed, starting with the logo, The interior of the HNK locations will also be refreshed in line with this new design. The design guidelines ensure that the physical environment reects the HNK identity, embodies the brand positioning and design pillars, and empowers people. The use of colour is fundamental for creating a unique physical environment which evokes comfort, approachability, serenity and friendliness to the spaces. NSI ANNUAL REPORT 2022 | 59 MANAGEMENT BOARD REPORT Embedding sustainability in everything we do As an operator who also owns the buildings, our dis- tinctive strength is our ability to genuinely incorporate sustainability in all our activities. As we control all sustainability eorts, HNK can pro- actively meet the increasing demands from its custo- mers – a key dierentiating feature that arguably very few other serviced-oce operators can oer or promise. We also see health and well-being as a fundamental pillar to sustainability, which should already be embedded in the design. Our design approach is people-centered to ensure our buildings and spaces not only support oce activities, but also the well-being of its users allowing people to thrive. In addition to our design choices, like optimising natural light, acoustic quality and advanced indoor climate systems, we also use music and scents to foster a sensation of well-being. 60 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT The new food & beverage concept: The Social All brand values of HNK come together in ‘The Social’, the new food & beverage concept, oering great hospitality with a focus on sustainability, well-being and convenience Together with catering partner Vermaat, a tailor-made food concept has been developed. At The Social you can relax, nourish body and mind and have informal mee - tings. The guiding principles for the concept are (being) Sustainable, Surprising and Superpowers. For example, at least 70% of the products used consist of plant-based food, sourced from local suppliers as much as possible to reduce the CO2 footprint. Florine Evers, Marketing Manager of HNK adds: “The Social perfectly ts the HNK concept and contributes to the customer experience we want to oer. The Social oers a delicious menu, the best coee from freshly ground beans and healthy snacks to keep you going all day. Tenants can easily order and pay for food and drinks via the HNK app. They can order their coee from the train and it will be ready when they arrive.” NSI ANNUAL REPORT 2022 | 61 MANAGEMENT BOARD REPORT HNK-app: convenience at the palm of your hands HNK oers its customers a wide range of services, all of which can be easily arranged through the revamped app, like registering guests. Meeting rooms, catering or various services can be reserved, ordered and paid for via the app. To engage stakeholders in the new HNK story, a podcast (in Dutch) has been launched, covering relevant topics in twelve episodes, highlighting all aspects of the new HNK experience. Each episode features one the HNK business partners as a guest to share their expertise and views. Listen to Het Nieuwe Kantoor via Spotify or Apple podcast. HNK Podcast 62 | NSI ANNUAL REPORT 2022 MANAGEMENT BOARD REPORT HNK team NSI ANNUAL REPORT 2022 | 63 MANAGEMENT BOARD REPORT 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 specied 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 (actualised) 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 prac - tice 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. LONG-TERM VALUE CREATION 1.1 LONG-TERM VALUE CREATION The management board is responsible for the continuity of the company and its aliated enterprise and for sustainable long-term value creation by the company and its aliated enterprise. The management board takes into account the impact the actions of the company and its aliated enterprise have on people and the envi - ronment and to that end weighs the stakeholder interests that are relevant in this context. The supervisory board monitors the manage - ment 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 nancial 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 nancing 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 fullling this function. As is the case with many small, listed companies in the Netherlands, NSI has no separate department for the internal auditor function as specied in best practice provision 1.3.1. The Supervisory Board assesses annu - ally whether adequate alternative measures have been taken, partly on the basis of a recommendation issued by the audit committee and considers whether it is necessary to establish an internal audit depart - ment and includes the conclusions, along with any resulting recom- mendations and alternative measures, in the report of the Supervisory Board. In practice 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. 1.4 RISK MANAGEMENT ACCOUNTABILITY The management board discusses the eectiveness 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 manage - ment exercised by the Management Board and the general develop- ments at the company and its aliated enterprise, as well as to advise the Management Board. In the performance of its duties, the Super - visory Board focuses on the interests of the company and its ali- ated enterprise and on the eectiveness of the company’s internal risk management and control systems and the integrity and quality of the nancial reporting. 1.6 APPOINTMENT AND ASSESSMENT OF THE FUNCTIONING OF THE INDEPENDENT EXTERNAL AUDITOR The independent external auditor is appointed by the General Meeting of Shareholders and attends the meeting of the Supervisory Board at which the nancial statements are discussed and adopted in the pres - ence of the Management Board. NSI publishes audited annual gures and reviewed semi-annual gures. NSI publishes a trading update for the rst and third quarters, neither of which is reviewed or audited by the independent external auditor. PricewaterhouseCoopers Account - ants N.V. was appointed as NSI’s independent external auditor in 2016. 1.7 PERFORMANCE OF THE INDEPENDENT EXTERNAL AUDITOR’S WORK The audit committee and the independent external auditor discuss the audit plan and the ndings of the independent external auditor based on the work the independent external auditor has undertaken. The management board and the supervisory board maintain regular contact with the independent external auditor. 2. EFFECTIVE MANAGEMENT AND SUPERVISION 2.0 DIVERSITY The diversity policy for the composition of the management board aims at a balanced gender breakdown. With a management board GOVERNANCE 64 | NSI ANNUAL REPORT 2022 that was 50% female and 50% male in the past nancial year this policy is fully implemented. The diversity policy for the composition of the Supervisory Board aims at a supervisory board that is at least 33,3% female and 33,3% male. With a supervisory board that was 40% female and 60% male in the past nancial year this policy is fully implemented. The diversity policy for the composition of the Supervisory Board is included in the prole of the Supervisory Board which species the size, diversity 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 prole is published on the company’s website. The Supervisory Board strives to achieve a situation in which the experience and expertise of its members are appropriate in relation to the strategy and business activities of NSI, and cover specic areas of exper - tise, like nancial management, sustainability and IT. The experi- ence and expertise of the individual Supervisory Board members is detailed on page 81 and 82 of this annual report. 2.1 MANAGEMENT BOARD COMPOSITION, SIZE AND DIVISION OF DUTIES The Management Board consists of two directors: a CEO and a CFO. Directors are appointed by the General Meeting. The procedure for appointment and reappointment is specied 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 Associa - tion and the Management Board regulations which are made avail- able on the company’s website. The functioning of the Management Board as a collective and the functioning of individual 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 Super - visory Board currently comprises ve members. The procedure for appointment and reappointment is specied in section (h) below. 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 interest group. All Supervisory Board members are currently independent within the meaning of best practice provision 2.1.8 of the Dutch Corporate Governance Code. A supervisory director is considered to be independent if the dependence criteria stated in the Code do not apply. One of the members of the Supervisory Board is a shareholder in ICAMAP Investments SARL, which is holding over 10% of NSI shares as per 31 December 2022. This company has invested in NSI with a view to a long-term commitment and the respective Supervisory Board member actively ensures that no transactions in NSI shares take place during the closed periods and during periods when the member of the Supervisory Board has inside information at its disposal which has not yet been made public by the company. 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, a Selection and Appointment Committee, and a Real Estate 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 nancial 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 2022 the systems and procedures func - tioned 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. The Supervisory Board reports to the General meeting of Shareholders. The functioning of the Supervisory Board as a collective and the functioning of individual 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 aliated enterprise. The NSI Code of Conduct outlines the core values, the main integ - rity 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 eectiveness 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 conicts of interest between Management Board members, Supervisory Board members and the independent external auditor, on the one hand, and the company, on the other. Under the provi - sions of the Dutch Financial Supervision Act (Wet op het nancieel toezicht or Wft) and EU-IFRS, the item ‘related parties’ in the annual nancial statements species transactions between the company and related parties, including members of the Management Board GOVERNANCE NSI ANNUAL REPORT 2022 | 65 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 trans - actions between the company and related parties took place in the 2022 nancial 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 aliated enterprise and takes into account the internal pay ratios within the enterprise. The ‘Remu - neration 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 accord - ance 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 Super - visory Board, in accordance with the relevant statutory 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 nancial year. General Meetings of Share - holders are convened by the Management Board or the Supervisory Board. A legal term of at least 42 days applies between the convo - cation 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 provision 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 eect 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 2022 Annual General Meeting of Shareholders took place on 15 April. The agenda’s 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 € 99,568,556.64 and is divided into 27,056,673 ordinary shares, each with a nominal value of € 3.68). At 31 December 2022, 20,054,241 shares were issued and fully paid up. The capital does not include securities which are not admitted to trading on a regulated market in a Member State. Classes of shares There are no dierent classes of shares. All shares have equal enti - tlement to the company’s prot 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 Arti - cles 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. 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 dierence 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 currency 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 Notications pursuant to the Dutch Disclosure of Major Holdings and Capital Interests in Securities-Issuing Institutions Act were GOVERNANCE 66 | NSI ANNUAL REPORT 2022 received from holders of ordinary shares representing more than 3% of the company’s capital. According to the most recent notica - tions, these interests were as follows:  31 December 2022 31 December 2021   ICAMAP Investments SARL 10.0% 10.0% BlackRock, Inc. 5.8% 5.8% Ameriprise Financial 5.0% < 3.0% APG Asset Management N.V. - 3.2% Clearance Capital Ltd. 3.1% 3.1% 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, dead - lines 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 Meet - ings 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 share - holders that may result in restrictions on the transfer of shares or restrictions 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 Management Board at any time, providing the resolution to that ef - fect 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 oce 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. 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 GOVERNANCE NSI ANNUAL REPORT 2022 | 67 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 authority to another corporate body of the company for a period not exceeding five years. Unless otherwise decided, the designation cannot be re - voked. The designation may be extended from time to time, for peri- ods not exceeding five years. A resolution of the General Meeting to issue shares or to designate another corporate body of the company authorised to do so can only take place at the proposal of the Man - agement 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 prefer - ential 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 15 April 2022 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). – 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, in excess of the 10% referred to in the previous paragraph. This authorisation may be used by the Management Board only in case of the following specific circumstances: the distribution of a stock dividend, the implementation of a merger or a takeover, and/or the acquisition of property assets or property portfolios or the refinancing thereof. 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. – 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 nanciers include the provi - sion that in the event of a change in the control of NSI, the nanciers have the possibility of demanding that the loans be redeemed early. This could for instance come into eect after a successful public oer for the NSI shares. NSI and its subsidiaries have entered into an important agreement that contains a clause that in the event of a change of control the other party has the right to terminate the agreement and receive substantial reimbursements for investments in the t out of an oce. This clause aims to prevent and would come into eect in case of a transfer of the control over NSI to a party that is mentioned on the Specially Designated Nationals and Blocked Persons List, as from time to time published by the US Oce of Foreign Assets Control (OFAC), or to a party who is otherwise subject to economic or nancial sanctions by the relevant authorities of the US, the EU or The Netherlands. 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 Exec - utive Board or employees that provide for remuneration upon termi- nation of employment resulting from a public bid within the meaning of Article 5:70 of the Financial Supervision Act. GOVERNANCE 68 | NSI ANNUAL REPORT 2022 ESG – GOVERNANCE The oversight of ESG matters is crucial. ESG is overseen princi- pally by the Management Board. The strategy and targets for energy consumption and carbon emis- sions are set and monitored by the Management Board. Th e respon- sibility for overseeing day-to-day management is delegated to the management team. NSI has formed a dedicated ESG committee who meets twice a month to address targets, implementation and reporting of our ESG objectives. We have created an ESG coordi- nator 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 2022 the focus of the ESG committee was: – Sharpen ESG strategy and pillars, monitor progress and improve where necessary – Establish roadmap to a Paris aligned portfolio on an asset and portfolio level – Define the non-financial KPI’s – ESG accounting manual – ESG data collection and warehousing – EU taxonomy analysis and implementation – Organising internal awareness and knowledge sessions ALIGNMENT OF PERFORMANCE TARGETS DISCLOSURE AND REPORTING Progress on sustainability is disclosed to all stakeholders in the Annual Report and online in our sustainability report. NSI’s non- financial performance is reported and communicated considering the following standards and benchmarking tools: – GHG Protocol Corporate Standard – GRI Standards – EPRA – GRESB methodology – CRREM – EU Taxonomy methodology NSI aims to continuously improve its internal ESG governance. For this purpose NSI started the ISO14001 certification process. This standard will help NSI implement a holistic environmental manage - ment system and improve its general sustainability performance. ESG ASSURANCE NSI’s independent auditor PricewaterhouseCoopers Accountants N.V. has provided limited assurance on a selection of reported sustain- ability and non- financial KPIs for financial year 2022. In scope are 18 KPI’s in the field of Energy, Water, Waste, Greenhouse Gas Emissions, Certification and Social (full list outlined in the glossary on page 152-153) and the green financing agreement. 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 Corporate Sustainability Reporting Directive (CSRD), which will come into effect for NSI on 1 January 2025. NSI has performed a CSRD gap analysis and will continue with the implementation of CSRD in 2023, which is expected to become applicable to NSI in 2025. OTHER NON-FINANCIAL DISCLOSURE DIVERSITY AND INCLUSION 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 opportunities in their workplace. NSI recognises the benefits of diversity and inclu - sion, and is fully committed to providing equal opportunities 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. NSI aims for a balanced gender distribution and is committed to provide equal pay for equal work. The current gender pay gap ratio is largely driven by the structure of our workforce, including the higher representation of men in senior management roles and a higher representation of women in operations (HNK hosts), vari - eties 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. Personal and corporate sustainability targets are embedded into the annual performance goals of each employee at NSI. The Management Board also have annual performance ESG goals. NSI also encourages employees to contribute and share knowl- edge through specific knowledge sharing events. This is done predominately through the Sustainability Committee who take ESG responsibility for each of NSI’s commitments. Management board ESG committee (drives policy) Execution in all operations GOVERNANCE NSI ANNUAL REPORT 2022 | 69 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 results. In 2022, NSI measured how different perspectives, competences and value systems are represented in the organiza- tion by using the ‘Profile Dynamics’ methodology. This provided insight into whether the profile and composition of a team reﬂect the desired balance in terms of cognitive diversity and inclusion. The Profile Dynamics ® tool will also be used as a reference point in future appointments. Female Male Gender pay ratio # % # % Management Board 1 50.0% 1 50.0% 1.23 Senior Management 3 27.3% 8 72.7% 1.36 Operations 23 65.7% 12 34.3% 2.07 Support Staff 7 41.2% 10 58.8% 1.00 TOTAL 34 52.3% 31 47.7% 1.74 Supervisory Board 2 40.0% 3 60.0% * male average pay / female average pay 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 contractors and suppliers to respect these rights by committing to our Code of Conduct and busi - ness integrity principles as part of our general terms and conditions. No issues involving human rights were reported in 2022. ANTI-CORRUPTION NSI and its employees must act with integrity, honesty and in compli- ance 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 also provides a protocol on how to act in case of undesirable behaviour. The Code of Conduct is available on the company website. The code of conduct is signed annually by NSI employees. In 2022 NSI contracted an external counselor as part of its whistle-blower proce - dure, allowing employees to report suspected irregularities of various kinds within NSI without jeopardising their position. There were no issues reported in 2022. SAFETY & SECURITY DECISIVENESS & POWER HARMONY & GROUP FEELING COMPETITION HOLISTIC STRUCTURE & RELIABILITY CREATIVITY & INNOVATION 23 22 16 14 10 6 9 PROFILE DYNAMIC CHART NSI TEAM Profile Dynamics is a tool that provides insight into the values and drives of individuals in teams and organisa- tions. It also gives insights into the the strength and the pittfalls of a team, and how the drives fit the team’s tasks. 70 | NSI ANNUAL REPORT 2022 GOVERNANCE 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 Nationality Dutch Previous positions Several management positions at Schiphol Real Estate, a subsidiary of Schiphol Group, including Manager Portfolio Management, Business Area Controller and Senior Business Controller. Audit Manager at international business unit of Audit & Assurance at PricewaterhouseCoopers Accountants N.V. Education Business Administration for the Financial Sector at the Vrije University Amsterdam, Chartered Accounting at the Vrije University Amsterdam First appointment 15 September 2017 Current term To 15 september 2025 GOVERNANCE NSI ANNUAL REPORT 2022 | 71 NSI’S EXPOSURE TO ATTRACTIVE EVOLVING CLUSTER AREAS NSI focuses on a number of key growth clusters in the Netherlands, including Amsterdam Zuidoost, Amsterdam Sloterdĳk, Amsterdam Zuidas and Leiden Bio Science Park. These cluster areas are well- connected, vibrant, urban mixed use locations, where people want to work, live and play. AMSTERDAM ZUIDOOST TRANSFORMING INTO A LIVELY PLACE TO LIVE, WORK AND RELAX 1 HNK Amsterdam Zuidoost (9,663 sqm), Burgemeester Stramanweg 102-108 2 Hettenheuvelweg 41-43 (2,428 sqm) 3 Hettenheuvelweg 37-39 (2,463 sqm) 4 Hogehilweg 6 (3,097 sqm) 5 On the left, Centerpoint II (6,292 sqm), Hoogoorddreef 62. On the right, Centerpoint I (8,952 sqm), Hoogoorddreef 60 6 Hogehilweg 12 (3,129 sqm) 7 Laanderpoort (12,700 sqm), Bĳlmerdreef 100 1 3 2 5 4 6 7 AMSTERDAM ZUIDOOST TRANSFORMING INTO A LIVELY PLACE TO LIVE, WORK AND RELAX In the 1990s, a plan was set in motion to enhance the quality of the living environment in Amsterdam Zuidoost, also to achieve a better balance in the population composition. Many of the high-rise buildings were demolished and replaced by smaller-scale housing, including many owner-occupied units. The remaining ﬂats were thoroughly renovated. New recreational facilities were added to the area, such as the Football stadium for Amsterdam-based Ajax, music venues and a shopping center. Also excellent public transportation facilities were developed. LARGE SCALE RENOVATION AND GENTRIFICATION The upgrade of the several subareas is set to continue, like ArenaPoort which is set to densify and turn into a lively place to live, work and relax. To the south of Arenapoort, the area is also being upgraded and redeveloped. Obsolete offices will make way for an extensive city park with 5,000 new homes, all sorts of facilities and modern work- places. With all these redevelopment plans, Amsterdam-Zuidoost is growing from a city district to a city within the city, including all the facilities that a vibrant city should offer, with a potential population of 200,000. NSI’s cluster in Zuidoost. NSI has a prominent presence in the Amsterdam Zuidoost and is actively involved in the future plans for this area. NSI’s own head office is located in the heart of this new transformative area. NSI owns six office buildings in the area, for a total of 47,000 sqm. NSI is currently working on a redevelopment project for ING at Laan - derpoort, with medium term plans to redevelop most of the other assets in the area, including some residential units. A total of 80,000 m2 of office space (an additional 40,000 m2) and 650 homes can be developed, allowing NSI to further strengthen its cluster in the area. GOVERNANCE 72 | NSI ANNUAL REPORT 2022 GOVERNANCE AMSTERDAM SLOTERDIJK FROM OFFICE AREA TO URBAN CITY DISTRICT NSI strongly believes in the value of Sloterdijk. The office district of Amsterdam Sloterdijk is gradually changing from a mono-func - tional working area into a unique urban neighbourhood. NEW DISTRICT STRATEGY FUELLED TRANSFORMATION The transformation of Sloterdijk started in 2008, when a new district strategy was established to combat the high vacancy rates in this mono-functional office area. Opportunities were created for the transformation of outdated offices into hotels, catering estab - lishments and homes. Sustainable office buildings are combined with unusual hotels and striking residential buildings, adding new life to Sloterdijk. ADDING MORE RESIDENTIAL SPACE The number of residents is expected to reach 15,000 (currently 900) in the next 20 years, with a diverse housing offer in the best tradition of the city: high end to affordable housing. There will also be extra attention for green space and biodiversity, like the bee- friendly garden park that has been landscaped. To reduce the shortage of affordable housing in Amsterdam, the municipality wants to speed up housing construction under the name of Haven- Stad, comprising twelve subareas, including Sloterdijk. Haven- Stad will be highly urban, mixing living and working everywhere. NSI'S CLUSTER IN SLOTERDIJK NSI's cluster in Sloterdijk of six modern, high-quality and sustain- able office buildings has high potential. It is located in an area that is becoming increasingly attractive to tenants, residents and visi - tors. Additionally, the cluster is strategically located on a number of crucial transport routes. Important motorways, railways, water- ways and Schiphol Airport are all located nearby. Plans have been made to invest substantially in the train station in the coming years, with a new metro connection being considered. Sustainable office buildings continue to be an important part of Sloterdijk. All assets (Solaris Eclips, Motion Building, Donauweg, Q-Port, ONE20 and Glass House, comprising a total of 70,500 sqm) have energy label A and a BREEAM Good label or higher. NSI actively partici - pates in UPtown Sloterdijk, a coalition established to promote and further develop the area. 1 Donauweg 2B (4.606 m 2 ), Donauweg 2B 2 ONE20 (9.743 m 2 ), Teleportboulevard 120-142 3 Q-Port (12.709 m 2 ), Kingsfordweg 43-117 4 Solaris Eclips (4.257 m 2 ), Arlandaweg 94-98 5 Motion Building (16.231 m 2 ), Radarweg 60 6 Glass House (22.984 m 2 ), Changiweg 130 / Teleportboulevard 121-133 1 3 2 5 4 6 GOVERNANCE NSI ANNUAL REPORT 2022 | 73NSI ANNUAL REPORT 2022 | 73 AMSTERDAM ZUIDAS TRANSFORMATION INTO A LEADING OFFICE LOCATION Amsterdam Zuidas has rapidly developed into a high-quality inter- national knowledge and business centre that is also one of the most important office locations in the Netherlands. As of today, there are 2,645 companies located on the Zuidas, Including the World Trade Center (WTC Amsterdam). Additionally, Zuidas is home to striking residential buildings, a high level of amenities and a research university. RESIDENTIAL DEVELOPMENTS The municipality of Amsterdam aims for a mixed residential area, where social rent properties, student accommodation, owner-occu - pied and rental apartments in the middle and luxury segments can all be found. Around 2,700 houses have been developed and this number is expected to reach 7,000 by 2030. As more and more residents are welcomed on the Zuidas, new facilities are also being added. Nowadays, the Zuidas features many catering establishments and shops, as well as cultural, sporting and healthcare facilities. IMPROVING THE ACCESSIBILITY WITH ZUIDASDOK Since over one million square metres of offices, housing and facilities are planned to be developed on the Zuidas until 2030, more people will be travelling to and from the district or passing through the area in transit. To better connect both strips and maintain the accessibility of the Zuidas, the Zuidasdok is being realised. This includes the refur - bishment and expansion of Amsterdam Zuid station, the widening and partial tunnelling of the A10 South motorway and the redesign of the public space in the station area. NSI’S PRESENCE ON THE ZUIDAS NSI strongly believes in the Zuidas. Office vacancy rates are tradi - tionally low, and rents are at a relatively high level for the Nether- lands. The area is favourably located near Amsterdam city centre and Schiphol Airport and is easily accessible by both public transport and car. Moreover, the Zuidas is known for its sustainable office buildings, excellent digital infrastructure, large-scale concentration of business service providers, and high level of amenities. With the addition of new residential developments and recreational facilities, the Zuidas has evolved into a vibrant mixed-use area that continues to hold a strong national and international position as a high-end business centre. NSI owns three office buildings on the Zuidas: Vitrum (11,600 sqm), Vivaldi I (9,600 sqm), and Vivaldi II (8,700 sqm). In addition, NSI is working on its plans to redevelop Vitrum and develop Well House (22,000 sqm). With a height of 86 metres, Well House will be one of the tallest wooden office buildings in the world. 1 Render of Well House 2 Vitrum (11,600 sqm), Parnassusweg 101-103 3 Vivaldi I (9,600 sqm), Barbara Strozzilaan 201-229 4 Vivaldi II (8,700 sqm), Barbara Strozzilaan 101-125 1 3 2 4 GOVERNANCE 74 | NSI ANNUAL REPORT 202274 | NSI ANNUAL REPORT 2022 LEIDEN BIO SCIENCE PARK FROM OFFICE AREA TO URBAN CITY DISTRICT Leiden Bio Science Park (LBSP) has developed from a conven- tional business park into an attractive bio-tech focused campus with housing and meeting spots for students, scientists and entre - preneurs. Nowadays, the park is internationally known for its strong biotech ecosystem and is gaining increasing economic importance in the Netherlands. FIRST THEMED BUSINESS PARK LBSP was one of the first themed business parks in the Nether - lands in the mid-1980s. Although its development was not without a struggle - among other things due to a critical social attitude towards biotech and genetic manipulation in particular, the business area has now developed into one of the most important centres for biotech - nology in the world. Easy access to university research, support of the national government for new companies, and willingness of the municipality to offer land to the business community also contributed to its appeal. LBSP now hosts multiple educational and research buildings of Leiden University, the Leiden University Medical Centre and a large number of small start-ups and internationally established names, such as Janssen and Galapagos. NSI’S CLUSTER IN LBSP NSI’s owns five adjacent assets in this area, making up circa 7% of the overall NSI portfolio. 1 Archimedesweg 6 (7,239 sqm), Archimedesweg 6 2 Archimedesweg 30 (2,686 sqm), Archimedesweg 30 3 Archimedesweg 17 (2,526 sqm), Archimedesweg 17 4 Mendelweg 30 (6,234 sqm), Mendelweg 30 5 Newtonweg 1 (9,421 sqm), Newtonweg 1 1 4 3 5 5 2 GOVERNANCE NSI ANNUAL REPORT 2022 | 75 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 2022 nancial year. PricewaterhouseCoopers Accountants N.V. has audited the nancial statements and has issued an unqualied opinion (page 125-132). We will recommend that the nancial state - ments be adopted at the General Meeting of Shareholders on Friday 21 April 2023. The discharge of the Management Board in respect of the policy pursued in 2022 and of the Supervisory Board from the supervision it provided in 2022 will be addressed as separate agenda items at this General Meeting of Shareholders. COMPOSITION OF THE SUPERVISORY BOARD The Supervisory Board currently consists of five members. RESIGNATION ROTA FOR SUPERVISORY BOARD MEMBERS First appoint- ment End of current term End of Ultimate term Jan Willem de Geus 2021 2025 2033 Karin Koks- Van der Sluijs 2016 2024 2028 Harm Meijer 2016 2024 2028 Margreet Haandrikman 2017 2025 2029 Jan Willem Dockheer 2020 2024 2032 DUTIES AND INDEPENDENCE The role and responsibilities of the Supervisory Board, its composi- tion and how it carries out its duties are specied in the Supervisory 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 64-68). 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 fullled. In relation to best practice provision 2.1.8.vi it is noted that Mr. Meijer is a share - holder in ICAMAP Investments SARL, which is holding more than 10% of the shares in NSI (as per 31 December 2022). As of the date of publication of this report, Mr. Meijer himself held no shares in NSI. MEETINGS AND ATTENDANCE The Supervisory Board met on 15 occasions during the year under review. The attendance (rate) at these meetings was as follows: Full year 2022 100% (15/15) De Geus 86,6% (13/15) Koks 80% (12/15) Haandrikman 93,3% (14/15) Meijer 93,3% (14/15) Dockheer 100% (15/15) The attendance rate at the committee meetings was 100%. REPORT OF THE ACTIVITIES OF THE SUPERVISORY BOARD Seven meetings were regular Supervisory Board meetings which commenced with a preparatory meeting 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 aairs and the company’s nancial position were discussed. Furthermore, there were discussions with the Management Board on various occasions regarding the implementation of the long- term value creation strategy, the implementation of the business plan, the budget and targets, shareholder relations, proposals for acquisi - tions and disposals, development projects and the main risks asso- ciated with the company and the mitigating measures taken in this regard. Developments in the real estate markets and the eects 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 the valuation methodology, the system of internal controls and risk control procedures, and corporate governance also had the Supervisory Board’s constant attention. In the meetings of 24 January, 12 and 15 April, 11 July and 11 October and during calls on 13 July and 12 October , the Supervisory Board met to monitor the implementation of the company’s strategy, approve the quarterly, half year or full year results and (interim)dividends and to discuss the pertaining press releases, making sure our shareholders and the market at large are adequately informed about the state of aairs and nancial position of the company and about its outlook. The Supervisory Board was involved in the preparation of the Capital Markets Day that took place on 14 april 2022 and which was attended by the chairman of the Supervisory Board. On 17 June and 27 September, the Supervisory Board met with the Management Board to brainstorm about political and economic trends and developments in society, and the implications thereof for our long term sustainable value creation model and our strategy. On Budget Day 20 September 2022 the Government announced the intent to exclude Real Estate from the Dutch Investment Trust regime (FBI) as per 1 January 2024, a date later postponed to 1 January 2025. In all our meetings following this announcement, we have discussed with management the probability, timing, modalities and implications of its possible execution and the best course of action for the business and its stakeholders going forward. On 25 November the Supervisory Board discussed a draft ve-year Business plan (period 2023-2027) and the Budget for the following year (2023) put forward by management. In this meeting and the subsequent discussions about the strategy the Board focussed on the implementation of the strategy and feasibility of dierent scenario’s, the company’s operational, nancial and ESG goals and their impact on NSI’s future position in the real estate market, the interests of stake - holders and other aspects important to the company, such as sustain- ability and integrity. These discussions led to an update and netuning of the Business plan and Budget which were discussed and approved in their nal form in the meeting of 12 December of the Supervisory Board. The 2023 – 2027 Business plan is based on a total return and cost eciency 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 2023 is in accord - ance with this plan. GOVERNANCE 76 | NSI ANNUAL REPORT 2022 RISK MANAGEMENT, INTERNAL AND EXTERNAL AUDITING Throughout 2022 the Supervisory Board maintained regular contact with the independent external auditor, primarily during the meetings of the Audit Committee. In the meeting of 12 December 2022, the Audit Committee reported on the draft 2022 management letter of the independent external auditor and the Risk-and control framework of the company, in particular the analysis of the identied risks associated with the strategy and activi - ties of the company, the risk appetite and the mitigating measures that have been put in place in order to counter the risks. In the same meeting the audit committee reported on the functioning of, and the developments in the relationship with the independent external auditor. The discussion of the eectiveness of the internal risk management and control systems during the year was post - poned and took place on 24 January 2023. INTERNAL AUDIT FUNCTION The Internal Audit Function is established by, and positioned inde- pendently under, the Management Board. The Internal Audit Func- tion is part of the portfolio of the Chief Financial Ocer, the execu- tion of the Internal Audit Function is outsourced to a qualied 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 Ocer 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 (escalation) reporting line towards the Audit Committee. NSI has no separate department to perform the internal audit function. The Supervisory Board assesses annually whether adequate alterna - tive measures have been taken and whether it is necessary to establish an internal audit department. In the Supervisory Board meeting of 12 December 2022, the Audit Committee reported about the eective - ness of the internal and external audit function. In line with a recom- mendation by the Audit Committee issued in consultation with the independent external auditor and the Management Board, the Super - visory Board has considered that NSI has a compact organization, no activities outside the Netherlands, 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 consultation with the Audit Committee, the Super - visory Board is of the opinion that adequate alternative measures have been taken and that there is therefore no need to establish an internal audit department 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 2023. 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 €5 million are made solely by the Management Board, decisions above this threshold require approval of the Real Estate Committee and decisions above a threshold of €20 million require an advice by the Real Estate Committee and a subsequent approval by the full Supervisory Board. The Real Estate Committee is involved at an early stage in all material decisions concerning the company’s real estate portfolio. This mechanism functions well and contributes to the execution power and eciency of the company. 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 acquisi - tions or acquisition opportunities of oces and with various develop- ment and redevelopment opportunities. DEVELOPMENT In 2022 the development projects moved further towards realisation and towards the phase of building permit applications, tendering and contracting. The nancial risks of Project Development are greater than those of traditional asset management. Therefor the supervisory board has evaluated and subsequently intensied its supervision of the Development projects during 2022. The Supervisory Board was involved in dening the scope of the Audit that BDO performed regarding the Development activities. The demarcation of the supervisory duties of the Audit Committee, the Real Estate Committee and the full board Regarding the Develop - ment projects was evaluated. The Audit Committee will continue to focus on the risk & control and audit related aspects of the projects. The other aspects of the development projects are discussed in the Real Estate Committee. Both committees report to the full Supervi - sory Board who discusses in each regular meeting to what extent the projects are progressing in accordance with time schedule, cost budget, expected prot on cost and the biggest risks per project based on a written update of the current projects including a nan - cial update of the overall business case (currently Laanderpoort, Well House and Vitrum) prepared by the Management Board. When applicable “phase”-documents prepared by /the Development department are submitted for discussion and approval of the budgets by the Supervisory Board, which will be the basis for entering into the next phase of the specic Development project. Several additional supervisory board meetings were held this year that focussed exclusively on the Development projects to allow a broader, more holistic reection and control. These concerned both the construction cost and land price development of the projects themselves and the consequences of general market developments (e.g. yields and rent levels) for the total risk for the company. EVALUATIONS On 24 January 2022 the Supervisory Board discussed the func- tioning of the Management Board as a whole and of the individual members of the Management Board. The conclusions of these evalu - ations were shared with the Management Board. These were also GOVERNANCE NSI ANNUAL REPORT 2022 | 77 SAFETY & SECURITY DECISIVENESS & POWER HARMONY & GROUP FEELING COMPETITION HOLISTIC STRUCTURE & RELIABILITY CREATIVITY & INNOVATION used to decide on the performance on the personal targets under the Short-Term Incentive for the CEO and CFO and as input for the target setting for the Management Board for 2022 under the Short- Term Incentive plan. On 24 January 2022 the Supervisory Board also discussed the functioning of the Supervisory Board as a whole and of the indi - vidual members of the Board. The evaluation of the Supervisory Board, the various committees and the individual supervisory board members had been carried out by means of a self-assessment based on a list of questions. The answers were bundled and subsequently discussed. The supervisory board concluded: – That the mutual interaction and the interaction with the Manage - ment Board is based on content, respectful and to the point. – That the self-assessment by the Board members indicated that for each competence one or more supervisory directors have sufficient knowledge and experience and that the competences of the existing profile are currently sufficiently represented in the Supervisory Board. – Provision of information about the development projects should be structured in a way that not only the members of the Real Estate Committee but all members of the Supervisory Board have sufficient information to be able to make informed deci - sions about Phase Documents. – To discuss a demarcation with the aim of framing to what extent the Supervisory Board wishes to discuss the development proj - ects in the full Board and which parts can be delegated to the Audit Committee and the Real Estate Committee. The evaluation of the functioning of the committees conrmed the conclusions of last year’s evaluation. The Committees play an important role in the preparation of the meetings and decisions of the Supervisory Board. The focus of the Audit Committee is on fullling the critical constructive supervisory role of the Board, whereas the Real Estate Committee also plays an important advi - sory role and functions as a sounding board for the Management Board. The Heads of the Asset Management, Development and of the Investments departments regularly participate in the Real Estate Committee meetings, and the Head of Finance regularly participates in the Audit Committee meeting giving the Supervi - sory Board direct contact to middle management. At the meeting of 12 December 2022 the Supervisory Board evaluated its own functioning under the supervision of an external expert and measured how dierent perspectives and drivers were represented by using the “prole Dynamics” methodology. This provided insight in the cognitive diversity of the Board. The high scores on creativity, decisiveness and competition represent a tendency to easily speak up and put things on the table which was generally regarded positively in view of the complicated themes that NSI is currently dealing with. The functional scores on group feeling, structure and holistic views balance the individu - alistic tendencies and allow for dierent views to be put forward. The scores of the Supervisory Board were also compared with the scores of the Management Board and the entire organisation. PROFILE DYNAMICS CHART SUPERVISORY BOARD At the meeting of 12 December 2022, the Supervisory Board discussed any other positions held by the members of the Manage - ment Board and Supervisory Board. EDUCATION On 12 April the Supervisory Board attended a presentation of external tax advisers and lawyers about various topics of company and tax law. On 17 June presentations of external and internal speakers about geopolitical and economic developments, customer excellence, client surveys, portfolio optimization and sustainability were attended. During 2022 the members of the Supervisory Board have also attended individual trainings in the context of their permanent educa - tion on matters such as governance, nance, 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 12 April 2022 the Supervisory Board authorised the issuance of shares for those shareholders who opted for distribution of the nal dividend for 2021 in shares. The General Meeting of Shareholders approved the issuance on 15 April 2022. On 11 July 2022 the Supervisory Board approved the interim divi - dend for 2022 and authorised the issuance of shares for those share- holders who opted for distribution of the interim dividend for 2022 in shares. 2022 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 nal dividend for 2022 of € 1.12 per share. That brings the total dividend for 2022 to € 2.16 per share, of which € 1.04 per share was distributed as an interim dividend on 4 August 2022. NSI is oering shareholders the option to receive the nal dividend in cash and/or fully or partly in shares. The voluntary nature of this Find more information about the tool Prole Dynamics on page 70. GOVERNANCE 78 | NSI ANNUAL REPORT 2022 option provides more possibilities for shareholders while enabling NSI to retain liquidity in the company. This cash can then be used for investment or loan repayment purposes. Provided that the General Meeting of Shareholders approves this dividend proposal, the nal dividend will be payable on 16 May 2023. SUPERVISORY BOARD COMMITTEES The Supervisory Board has 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. REMUNERATION COMMITTEE From 1 January to 31 December 2022 the 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 specied 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 2021 under the Short-Term Incentive for the CEO and CFO. The Remuneration Committee had one joint meeting with the Selec - tion and Appointment Committee in the year under review to discuss the establishment of collective and individual targets for 2022 linked to the Short-Term Incentive of the members of the Manage - ment 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 nancial and nonnancial KPI’s including ESG related targets. The targets were aligned with the targets set for the employees and xed after scenario planning’s had been carried out to ensure a proper relation between perfor - mance and remuneration levels. REMUNERATION POLICY The Remuneration Committee had two joint meetings with the Selection and Appointment Committee to review the Remuneration 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 2022 the Remuneration Committee started the review of the policy and has looked into the (denition of) the Reference Group for the base fee, the peer group and the vesting level for the Long Term Incentive, the target areas and metrics set for the Short Term Incentive and Long Term Incentive, including forward-looking perfor- mance measures for the latter and the question how to give sustain- ability targets and performance a more prominent role in the Policy. The Remuneration Committee conducted a study of relevant best practices and of practices among peers and has discussed the initial results of the review with the Supervisory Board. The Supervisory Board has identied certain areas where the policy can be optimized. The Supervisory Board has considered that in general the policy is currently functioning properly and that there is no urgency to adjust it. Therefor no amendments will be put forward in the 2023 AGM. The Supervisory Board will report on its ndings in the 2023 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 2022. The remuneration report (dated 10 March 2022) is posted on the company’s website. The report will be presented to the AGM of 21 April 2023 for an advisory vote. SELECTION AND APPOINTMENT COMMITTEE From 1 January to 31 December 2022 the 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 specied in the Selection and Appointment Committee regula- tions which are posted on the company's website. The Selection and Appointment Committee had four meetings with the Remuneration Committee in the year under review. During these meetings the committees discussed the Remuner- ation Policy o the Management Board, the achievement of the 2021 individual targets of the members of the Management Board linked to their Long-Term Incentive and Short-Term Incentive Plan, the establishment of the 2022 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. The Selection and Appointment Committee had a separate meeting with the CEO and CFO to discuss the set-up of the organisation of the company and the prole, composition, competencies and expe - rience of the management team and of other key personnel. AUDIT COMMITTEE During 2022 the Audit Committee consisted of Margreet Haan- drikman (Chair) and Karin Koks-Van der Sluijs (member). The Audit Committee met on ve occasions in the year under review. The role and responsibilities of the Audit Committee, its compo- sition and how it carries out its duties are specied in the Audit Committee regulations which are posted on the company’s websit e. Audit Committee meetings pay special attention to the opportuni- ties and risks that the company faces. GOVERNANCE NSI ANNUAL REPORT 2022 | 79 The Audit Committee regularly conferred with the independent 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 sepa - rate department for the internal audit function- whether adequate alter- native measures have been taken and whether it is necessary to estab- lish an internal audit department. In 2022 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 internal audit plan for 2022 and internal audit findings; in 2022 the internal audits focussed on Technical Asset management, Accounts receivable, Project Development and the process for acquisitions and disposals (divestures); H evaluation of the functioning of the external accountant and the rela - tionship with the independent external auditor, reporting the results of the evaluation to the Supervisory Board and informing the inde - pendent external auditor about the main topics of the evaluation; I discussions with the independent external auditor about the 2022 audit plan, the audit report and the management letter of the inde - pendent external auditor, compliance with recommendations from and the follow-up of remarks by the independent external auditor, also with regard to ICT systems; J the application of information and communication technology and measures to improve cybersecurity; K the renewal of the Term Loan based on a Sustainability Linked margin mechanism (Green Financing). REAL ESTATE COMMITTEE From 1 January to 3 March 2022 the Real Estate Committee consisted of Harm Meijer (Chair) and Karin Koks-Van der Sluijs (member). From 3 March to 31 December 2022 the Real Estate Committee consisted of Harm Meijer (Chair) Karin Koks-Van der Sluijs (member) and Jan Willem de Geus (member). The role and responsibilities of the Real Estate Committee, its compo - sition and how it carries out its duties are specied in the Real Estate Committee regulations which are posted on the company’s website. Real Estate Committee meetings pay special attention to the feasibility of the strategy, the implementation of the business model, and the real estate market. The regulations of the Real Estate Committee delegate Supervisory Board decisions about divestments, acquisitions and investments with a value between €5mio and €20mio to the Real Estate Committee. During the execution of the asset rotation programme that started in 2017 and was successfully completed at the end of 2021 an important part of the Real Estate Committees activities consisted in evaluating and approving numerous divestment and reinvestment decisions. Going into 2022 the focal point of the committees agenda has 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. In view of these development the Supervisory Board has decided to extend the size of the Real Estate Committee and on 3 march appointed the chairman of the Supervisory Board as an additional member. The Real Estate Committee had three regular meetings with the Management Board. In 2022 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 trans - actions 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 and Well House developments in the Amsterdam Southaxis area; E assessing asset business plans for all major offices including HNKs; and discussing the analysis (financial and qualitative) of the assets on portfolio level F improvement of the portfolio with regard to sustainability, in partic - ular the establishment of a Paris Aligned Roadmap and the identifi- cation and validation of the related benefits and cost; G discussing the transformation potential within the portfolio and holding discussions with management with regard to the HNK strategy and product offering towards the HNK brand update in November 2022 IN CONCLUSION During 2022 several geopolitical political and economic developments have set new challenges for the Management Board and employees of NSI requiring creativity, hard work and resilience. The Supervisory Board wishes to express its gratitude for the eorts the entire team has made and the successes they realised in the year under review. Amsterdam, 9 March 2023 The Supervisory Board, Jan Willem de Geus, Chair Karin Koks-Van der Sluijs, Vice Chair Harm Meijer Margreet Haandrikman Jan Willem Dockheer GOVERNANCE 80 | NSI ANNUAL REPORT 2022 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 YAYS Group, Non-Executive Board member of AVID Property Group, member of the Board of the Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV) 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 CEO Delhaize Serbia, at Ahold Delhaize Additional positions Member of the Supervisory Board of 2theLoo First appointment 2020 Current term To 2024 GOVERNANCE NSI ANNUAL REPORT 2022 | 81 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 Centramed, Member of the Supervisory Board Monuta Holding and Monuta Verzekeringen NV, Member of the Supervisory Board Stichting Pensioenfondsen Huisartsen, 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. First appointment 2017 Current term To 2025 Mr H.M.M. Meĳer (1975) Nationality Dutch Current position Founding partner of ICAMAP, Board Member and Managing Director at ICAMAP Advisory Additional positions Non-executive Chairman of easyHotel plc First appointment 2016 Current term To 2024 GOVERNANCE 82 | NSI ANNUAL REPORT 2022 CONTENT FINANCIAL STATEMENTS Consolidated statement of comprehensive income 84 Consolidated statement of financial position 85 Consolidated cash ﬂow statement 86 Consolidated statement of changes in shareholders’ equity 87 Notes to the consolidated financial statements 88 Company balance sheet 118 Company income statement 119 Notes to the company financial statements 120 FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 83 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 ( x € 1,000) Note 2022 2021 Gross rental income 2 71,309 77,507 Service costs recharged to tenants 11,020 12,659 Service costs -12,343 -14,532 Service costs not recharged 2 -1,322 -1,873 Operating costs 2, 3 -10,663 -12,362 Net rental income 59,325 63,272 Revaluation of investment property 4 -76,826 63,149 Net result on sale of investment property 5 32 10,207 Net result from investments -17,470 136,628 Administrative costs 6 -8,566 -7,612 Other income and costs 7 -210 -170 Financing income 278 45 Financing costs -8,302 -9,330 Movement in market value of financial derivatives 2,902 1,401 Net financing result 8 -5,122 -7,884 Result before tax -31,368 120,962 Corporate income tax 9 -2 -2 Total result for the year -31,370 120,961 Other comprehensive income / expense 0 0 Total comprehensive income / expense for the year -31,370 120,961 Total comprehensive income / expense attributable to: Shareholders -31,370 120,961 Total comprehensive income / expense for the year -31,370 120,961 Data per average outstanding share: Diluted as well as non-diluted result after tax (€) 16 -1.58 6.20 The notes on pages 88 to 117 form an integral part of these consolidated financial statements. FINANCIAL STATEMENTS 84 | NSI ANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2022 ( x € 1,000) Note 31 December 2022 31 December 2021 Assets Investment property 10 1,259,235 1,338,034 Intangible fixed assets 11 72 134 Tangible fixed assets 12 4,063 5,165 Financial fixed assets 0 0 Other non-current assets 13 13,659 13,148 Non-current assets 1,277,027 1,356,481 Debtors and other receivables 14 1,403 4,015 Derivative financial instruments 21 1,163 0 Cash and cash equivalents 15 196 7,729 Current assets 2,763 11,744 Total assets 1,279,790 1,368,225 Shareholders' equity Issued share capital 16 73,800 72,489 Share premium reserve 16 915,447 916,768 Other reserves 16 -70,868 -161,762 Total result for the year -31,370 120,961 Shareholders' equity 887,008 948,457 Liabilities Interest bearing loans 17 285,984 389,096 Derivative financial instruments 21 0 1,739 Other non-current liabilities 18 3,744 3,742 Non-current liabilities 289,727 394,577 Redemption requirement interest bearing loans 17 65,656 700 Debts to credit institutions 19 14,037 7 Creditors and other payables 20 23,361 24,485 Current liabilities 103,054 25,192 Total liabilities 392,782 419,769 Total shareholders' equity and liabilities 1,279,790 1,368,225 The notes on pages 88 to 117 form an integral part of these consolidated financial statements. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 85 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022 ( x € 1,000) Notes 2022 2021 Result from operations after tax -31,370 120,961 Adjusted for: Revaluation of investment property 4 76,826 -63,149 Net result on sale of investment property 5 -32 -10,207 Net financing result 8 5,122 7,884 Corporate income tax 9 2 2 Depreciation and amortisation 6 739 477 82,658 -64,994 Movements in working capital: Debtors and other receivables 1,667 -3,427 Creditors and other payables -1,894 -5,527 -228 -8,954 Cash ﬂow from operations 51,061 47,013 Financing income received 278 45 Financing costs paid -8,545 -10,135 Tax paid 6 12 Cash ﬂow from operating activities 42,800 36,935 Purchases of investment property and subsequent expenditure 10 -12,682 -128,696 Proceeds from sale of investment property 10 17,067 103,879 Investments in intangible fixed assets 11 -31 -33 Investments in tangible fixed assets 12 -104 -743 Disinvestments in tangible fixed assets 12 4 Cash ﬂow from investment activities 4,255 -25,593 Dividend paid to the company's shareholders 16 -30,078 -26,942 Proceeds from interest bearing loans 17 5,000 140,000 Transaction costs interest bearing loans paid -339 -744 Repayment of interest bearing loans 17 -43,200 -115,700 Cash ﬂow from financing activities -68,617 -3,386 Net cash ﬂow -21,563 7,957 Cash and cash equivalents and debts to credit institutions - balance as per 1 January 7,723 -234 Cash and cash equivalents and debts to credit institutions - balance as per 31 December -13,840 7,723 The notes on pages 88 to 117 form an integral part of these consolidated financial statements. FINANCIAL STATEMENTS 86 | NSI ANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 ( x € 1,000) 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 2021 Issued share capital Share premium reserve Other reserves Result for the year Shareholders' equity Balance as per 1 January 2021 70,992 918,275 -114,416 -20,414 854,438 Total result for the year 120,961 120,961 Total comprehensive income / expense for the year 120,961 120,961 Profit appropriation - 2020 -20,414 20,414 Distribution final dividend - 2020 687 -692 -14,917 -14,922 Interim dividend - 2021 810 -815 -12,015 -12,020 Contributions from and to shareholders 1,497 -1,507 -47,346 20,414 -26,942 Balance as per 31 December 2021 72,489 916,768 -161,762 120,961 948,457 The notes on pages 88 to 117 form an integral part of these consolidated financial statements. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 87 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 2021. STATEMENT OF COMPLIANCE The financial statements have been prepared in accordance with International Reporting Standards (IFRS), as endorsed by the Euro - pean 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 9 March 2023. The financial statements will be submitted to the General Meeting of Shareholders on 21 April 2023 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 estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2021. The most significant assumption relates to the unobserv - able information used in the valuation of the investment property. Other judgements are made relating to the claims for shopping center ‘t Loon, the feasibility of the four investment properties under construction and timing of capitalisation of interest for the develop - ment 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. At the end of 2022 NSI had a negative working capital position. However, this does not impact the assumption of continuity as NSI still has a remaining committed undrawn credit facility amply exceeding this negative working capital (reference is made to note 21). Therefore, these financial statements are drawn up based on a going concern. 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. FINANCIAL STATEMENTS 88 | NSI ANNUAL REPORT 2022 The company has established a control framework with regard to the measurement of fair values. This includes a valuation team 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 21 - Financial instruments; – Note 22 - 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. 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. The following companies are included in the consolidated finan- cial statements: 31 December 2022 31 December 2021 NSI N.V. Amsterdam, The Netherlands NSI Real Estate B.V. Amsterdam, The Netherlands 100.0% 100.0% NSI Kantoren B.V. Amsterdam, The Netherlands 100.0% 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% HNK Services B.V. Amsterdam, The Netherlands 100.0% 100.0% NSI Development B.V. Amsterdam, The Netherlands 100.0% 100.0% 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). Valuations are performed on the basis of the guidance of the RICS Red Book. NSI works with at least two valuation firms. The valuation firms for indi - vidual 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 FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 89 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 prop - erty 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 prop - erties, given that they are recognised at fair value. 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 reclassi - fication 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 construction. Capitalisation of costs related to the development project commences as soon as it is probable that future economic benefits 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 reli - ably, 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 cumulative 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 cumu - lative 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 cumulative 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 FINANCIAL STATEMENTS 90 | NSI ANNUAL REPORT 2022 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 unrealised 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 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. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 91 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 2022 (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- ately recognised in the consolidated statement of comprehensive income. Hedge accounting is not 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 consideration 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. 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. 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. FINANCIAL STATEMENTS 92 | NSI ANNUAL REPORT 2022 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). The LTI is based on 2020 to 2023 and is capped at 90% of the base salary for the CEO and at 45% of the base salary for the CFO, whereas the STI is based on 2022 only and is capped at 24% of the base salary for the CEO and at 36% of the base salary for the CFO. At the end of 2022, 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. TAX ON PROFITS TAX STATUS NSI has the status of a fiscal investment institution within the context of Article 28 of the Dutch Corporate Income Tax Act 1969 (Wet op de Vennootschapsbelasting 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 share- holder 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. As long as the Group continues to meet the conditions and therefore maintains the status of fiscal FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 93 investment institution, corporate income tax will not be taken into account in the determination of profit or the reserves. Corporate income tax may be payable on the fiscal results of the Dutch subsidiaries (NSI Development B.V., HNK Services B.V., NSI Services HNK B.V.) which do not have the status of a fiscal investment institution. CORPORATE INCOME TAX Corporate income tax consists of payable tax liabilities, and is reported in the statement of comprehensive income. The tax payable 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. 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. 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 2022. These standards and amendments did not have an impact on these consolidated financial statements: – Annual Improvements to IFRS Standards 2018 - 2020: – IFRS 1“First time adopter of IFRS”; – IFRS 9 “Fees in the ‘10 per cent’ test for derecognition of financial’’; – IFRS 16 ’The amendment to Illustrative Example 13’’; – IAS 41‘’Agriculture’’; – Amendments to IFRS 3 ‘’Reference to the conceptual frame- work’’; – Amendments to IAS 16, “Proceeds before intended use”; – Amendments to IAS 37, “Cost of fulfilling a contract”. 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. FINANCIAL STATEMENTS 94 | NSI ANNUAL REPORT 2022 1. SEGMENT INFORMATION As from 2022, the former sub-segments “Other target cities” and “Other Netherlands” for both offices and HNK have been combined into one sub-segment, “Other Netherlands”, reﬂecting the strategic choices made by the management in recent years. Comparative figures have been adjusted accordingly. 2022 STATEMENT OF COMPREHENSIVE INCOME Amsterdam Other G4 Other NL Corporate TOTAL Gross rental income 35,855 22,315 13,139 71,309 Service costs recharged to tenants 4,667 4,129 2,225 11,020 Service costs -5,188 -4,541 -2,613 -12,343 Service costs not recharged -521 -412 -389 -1,322 Operating costs -4,527 -3,774 -2,361 -10,663 Net rental income 30,807 18,129 10,389 59,325 Revaluation of investment property -74,631 -12,105 9,909 -76,826 Net result on sale of investment property 1,187 -1,156 32 Net result from investment -43,824 7,211 19,143 -17,470 Administrative costs -8,566 -8,566 Other income and costs -210 -210 Net financing result -5,122 -5,122 Result before tax -43,824 7,211 19,143 -13,898 -31,368 Corporate income tax -2 -2 Total result for the year -43,824 7,211 19,143 -13,900 -31,370 Other comprehensive income / expense Total comprehensive income / expense for the year -43,824 7,211 19,143 -13,900 -31,370 Attributable 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 TOTAL Investment property 721,552 336,766 200,917 1,259,235 Other assets 6,589 5,284 1,786 6,897 20,556 Total assets 728,140 342,050 202,703 6,897 1,279,790 Non-current liabilities 2,411 820 361 286,135 289,727 Current liabilities 2,458 785 575 99,235 103,054 Total liabilities 4,870 1,606 936 385,370 392,782 Purchases of investment property and subsequent expenditures 10,543 1,561 578 12,682 FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 95 2021 STATEMENT OF COMPREHENSIVE INCOME Amsterdam Other G4 Other NL Corporate TOTAL Gross rental income 35,982 26,284 15,241 77,507 Service costs recharged to tenants 4,475 5,030 3,154 12,659 Service costs -4,965 -5,801 -3,766 -14,532 Service costs not recharged -490 -771 -612 -1,873 Operating costs -4,019 -5,284 -3,059 -12,362 Net rental income 31,473 20,230 11,569 63,272 Revaluation of investment property 43,437 8,662 11,050 63,149 Net result on sale of investment property 937 9,270 10,207 Net result from investment 74,910 29,828 31,890 136,628 Administrative costs -7,612 -7,612 Other income and costs -170 -170 Net financing result -7,884 -7,884 Result before tax 74,910 29,828 31,890 -15,666 120,962 Corporate income tax -2 -2 Total result for the year 74,910 29,828 31,890 -15,667 120,961 Other comprehensive income / expense Total comprehensive income / expense for the year 74,910 29,828 31,890 -15,667 120,961 Attributable to shareholders 74,910 29,828 31,890 -15,667 120,961 STATEMENT OF FINANCIAL POSITION AS PER 31 DECEMBER Amsterdam Other G4 Other NL Corporate TOTAL Investment property 784,223 350,374 203,436 1,338,034 Other assets 5,662 5,491 1,995 17,043 30,192 Total assets 789,885 355,865 205,432 17,043 1,368,225 Non-current liabilities 2,160 792 403 391,223 394,577 Current liabilities 3,345 813 1,507 19,526 25,192 Total liabilities 5,505 1,605 1,910 410,749 419,769 Purchases of investment property and subsequent expenditures 82,212 21,323 25,162 128,696 FINANCIAL STATEMENTS 96 | NSI ANNUAL REPORT 2022 2. NET RENTAL INCOME Gross rental income Service costs not recharged Operating costs Net rental income 2022 2021 2022 2021 2022 2021 2022 2021 Amsterdam 35,855 35,982 -521 -490 -4,527 -4,019 30,807 31,473 Other G4 22,315 26,284 -412 -771 -3,774 -5,284 18,129 20,230 Other Netherlands 13,139 15,241 -389 -612 -2,361 -3,059 10,389 11,569 Net rental income 71,309 77,507 -1,322 -1,873 -10,663 -12,362 59,325 63,272 Gross rental income can be specified in the following components: 2022 2021 Gross rental income - offices / HNK / other 70,501 75,956 Turnover rent 173 136 Indemnities received 153 1,002 HNK - meeting rooms 521 436 HNK - hospitality services 84 65 Other rental income / loss -123 -89 Other gross rental income / loss 808 1,551 Gross rental income 71,309 77,507 Gross rental income includes an amount of € 6.6m (2021: € 6.7m) 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 2022 31 December 2021 First year 69,434 68,336 Second to fourth year 148,675 150,407 As of fifth year 82,632 88,593 3. OPERATING COSTS 2022 2021 Leasehold -3 0 Municipal taxes -2,770 -3,141 Insurance premiums -602 -559 Maintenance costs -1,784 -3,385 Property management costs -3,489 -3,598 Letting costs -1,184 -1,082 Contribution to owner association -109 -209 Doubtful debt costs 19 -19 Other operating costs -740 -368 Operating costs -10,663 -12,362 Property management costs include administrative costs charged to operations for an amount of € 3.2m (2021: € 3.3m). Letting costs includes an amount of - € 0.1m (2021: - € 0.1m) for straight-lined letting investments and commissions. An amount of € 0.3m (2021: € 0.2m) relates to operating costs of fully vacant properties. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 97 4. REVALUATION OF INVESTMENT PROPERTY 2022 2021 Positive Negative Total Positive Negative Total Investment property in operation 40,453 -104,803 -64,350 81,129 -13,505 67,624 Investment property under construction -11,515 -11,515 350 -1,490 -1,140 Revaluation - market value 40,453 -116,318 -75,865 81,479 -14,995 66,484 Movement in right of use leasehold -66 -52 Movement in lease incentives -896 -3,283 Revaluation of investment property -76,826 63,149 Further details on revaluation can be found in note 10. 5. NET RESULT ON SALE OF INVESTMENT PROPERTY 2022 2021 Proceeds on sale of investment property 17,145 105,017 Transaction costs on sale of investment property -78 -1,138 Sale of investment property 17,067 103,879 Book value at the time of sale (excl. right of use leasehold) -17,036 -93,672 Net result on sale of investment property 32 10,207 During 2022 3 properties have been sold of which 1 in ‘Other G4’ and 2 in the segment ‘Other NL’ (2021: 5 properties in the segment ‘Other G4’ and 7 properties in the segment ‘Other Netherlands’). The net result on sale of investment property includes an amount of - € 0.1m (2021: - € 0.1m) related to prior years’ sales. Transaction costs on sale include the costs of real estate agents and legal fees. 6. ADMINISTRATIVE COSTS 2022 2021 Salaries and wages -5,648 -5,663 Social security -704 -594 Pensions -365 -332 Depreciation right of use tangible fixed assets -295 -283 Other staff costs -1,217 -1,093 Staff costs -8,229 -7,965 Compensation supervisory board -251 -273 Depreciation and amortisation -445 -194 Other office costs -1,476 -1,408 Office costs -1,920 -1,602 Audit, consultancy and valuation costs -1,269 -1,029 Other administrative costs -1,333 -838 Administrative costs -13,002 -11,707 Allocated administrative costs 4,436 4,096 Administrative costs -8,566 -7,612 FINANCIAL STATEMENTS 98 | NSI ANNUAL REPORT 2022 Administrative costs directly related to the operation of the investment property portfolio are recharged to the operating costs. Directly attributable costs related to development project are capitalised as part of the respective project (€ 0.6m, 2021: € 0.5m). Furthermore, part of the reception staff of HNK is included in the payroll of NSI. The costs concerned (€ 0.6m, 2021: € 0.3m) 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”. EMPLOYEES On average 61 employees (57 FTE), including the Management Board, were employed by NSI during the reporting year (2021: 56 employees (52 FTE)). As per 31 December 2022 the number of employees amounted to 65 (60 FTE). All employees are working in the Netherlands. 7. OTHER INCOME AND COSTS 2022 2021 Other costs -210 -170 Other income and costs -210 -170 Other costs in 2022 concern feasibility costs for projects (mainly related to Centerpoint, Amsterdam and Alexanderhof, Rotterdam) and costs of cancelled projects. Other costs in 2021 mainly concern of cancelled projects, mainly relating to redevelopment of shopping center ‘t Loon, Heerlen, and feasibility costs for projects (amongst others Vivaldi II and Centerpoint in Amsterdam and Alexanderhof in Rotterdam). 8. NET FINANCING RESULT 2022 2021 Interest income 278 45 Interest costs -9,118 -8,326 Capitalised interest 1,328 524 Bank costs -63 -1,171 Amortisation costs interest bearing loans -383 -280 Other financing costs -66 -78 Financing costs -8,302 -9,330 Movement in market value of financial derivatives 2,902 1,401 Net financing result -5,122 -7,884 The borrowing costs for the development projects Laanderpoort, Well House and Vitrum are capitalised. 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 2022, the range of weighted average interest rates used was: 2.0% - 2.2% (2021: 2.0% - 2.2%). FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 99 9. CORPORATE INCOME TAX 2022 2021 Current tax -2 -2 Corporate income tax -2 -2 NSI has 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. 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. The subsidiaries NSI Development B.V. and HNK Services B.V. are not part of the fiscal real estate investment trust NSI N.V. for tax purposes and are as such liable to pay corporate income tax. 2022 2021 Result before tax -31,368 120,962 Tax at Dutch tax rate 25.00% 7,842 25.00% -30,241 Exempt due to fiscal status -7,846 30,237 Tax of subsidiaries under other tax regime 1 2 Corporate income tax -2 -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 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 both 2021 and 2022. 10. INVESTMENT PROPERTY Investment property consists of investment property in operation and investment property under construction: 31 December 2022 31 December 2021 Investment property in operation 1,200,153 1,275,988 Investment property under construction 59,082 62,046 Investment property 1,259,235 1,338,034 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 2022 100% (2021: 100%) of investment property were externally appraised by external appraisers. In 2022 the appraisers are JLL, Colliers and Cushman & Wakefield. In 2021 there were four appraisers: JLL, Colliers, Cushman & Wakefield and CBRE. 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. FINANCIAL STATEMENTS 100 | NSI ANNUAL REPORT 2022 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. 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: 2022 2021 Average effective contractual rent per sqm (€): Amsterdam 243 222 Other G4 213 203 Other Netherlands 180 161 Average market rent per sqm (€): Amsterdam 266 255 Other G4 210 204 Other Netherlands 186 153 Average gross initial yield (%): Amsterdam 5.9% 5.0% Other G4 7.2% 6.6% Other Netherlands 7.0% 7.6% FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 101 INVESTMENT PROPERTY IN OPERATION The movement in investment property in operation per segment was as follows: 2022 Amsterdam Other G4 Other Netherlands TOTAL Balance as per 1 January 2022 725,852 346,699 203,436 1,275,988 Acquisitions 124 -228 -3 -107 Investments 3,275 1,789 587 5,651 Revaluation -63,721 -11,490 9,909 -65,302 Transfer from/ to real estate in own use 573 573 Disposals -3,064 -13,586 -16,650 Balance as per 31 December 2022 665,530 333,706 200,917 1,200,153 Right of use leasehold as per 31 December 2022 -680 -58 -738 Lease incentives as per 31 December 2022 6,589 5,284 1,786 13,659 Market value as per 31 December 2022 671,439 338,990 202,645 1,213,074 2021 Amsterdam Other G4 Other Netherlands TOTAL Balance as per 1 January 2021 658,249 387,091 191,896 1,237,237 Acquisitions 73,338 13,531 22,939 109,809 Investments 5,522 7,791 2,224 15,537 Revaluation 44,930 8,312 11,050 64,292 Transfer from / to investment property under construction -53,025 -3,325 -56,350 Transfer from/ to real estate in own use -3,162 -3,162 Disposals -66,702 -24,672 -91,374 Balance as per 31 December 2021 725,852 346,699 203,436 1,275,988 Right of use leasehold as per 31 December 2021 -652 -78 -730 Lease incentives as per 31 December 2021 5,662 5,491 1,995 13,148 Market value as per 31 December 2021 730,863 352,190 205,353 1,288,406 COLLATERAL On 31 December 2022, properties with a market value of € 230.0m (31 December 2021: € 248.4m) were mortgaged as security for loans drawn and current account overdraft facilities at banks amounting to € 65.7m (31 December 2021: € 66.4m). The level of security can vary within the financing facilities, enabling NSI to create additional loan capacity within the existing facilities or to allocate part of the security to another financing facility. SENSITIVITIES TO YIELD FLUCTUATIONS The value of investment property implies an average gross initial yield of 6.4% (31 December 2021: 5.9%). 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 2022, 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 8.0% (31 December 2021: 8.9%). In that case NSI’s equity would be € 103m (31 December 2021: € 120m) higher due to a higher result for the year. The loan-to-value would then decrease from 28.7% (31 December 2021: 28.2%) to 26.5% (31 December 2021: 25.9%). If, on 31 December 2022, 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 6.9% (31 December 2021: 7.5%). In that case NSI’s equity would be € 88m (31 December 2021: € 102m) lower due to a lower result for the year. The loan-to-value would then increase from 28.7% to 30.8%. FINANCIAL STATEMENTS 102 | NSI ANNUAL REPORT 2022 INVESTMENT PROPERTY UNDER CONSTRUCTION The movement in investment property under construction per segment was as follows: 2022 Amsterdam Other G4 Other Netherlands TOTAL Balance as per 1 January 2022 58,371 3,675 62,046 Investments 7,233 7,233 Capitalised interest 1,328 1,328 Revaluation -10,910 -615 -11,525 Balance as per 31 December 2022 56,022 3,060 59,082 Right of use leasehold as per 31 December 2022 -204 -204 Market value as per 31 December 2022 55,818 3,060 58,878 2021 Amsterdam Other G4 Other Netherlands TOTAL Balance as per 1 January 2021 2,956 2,956 Investments 3,359 3,359 Capitalised interest 524 524 Revaluation -1,493 350 -1,143 Transfer from / to investment property in operation 53,025 3,325 56,350 Balance as per 31 December 2021 58,371 3,675 62,046 Right of use leasehold as per 31 December 2021 -182 -182 Market value as per 31 December 2021 58,188 3,675 61,863 As per 31 December 2022 investment property under construction consists of capitalised project costs of Laanderpoort, Well House and Vitrum, all located in Amsterdam and Alexanderhof in Rotterdam. 11. INTANGIBLE FIXED ASSETS Intangible fixed assets consist of capitalised software. The movement in intangible fixed assets during 2022 and 2021 was as follows: 2022 2021 Balance as per 1 January 134 242 Investments 31 33 Amortisation -93 -142 Balance as per 31 December 72 134 Gross book value 1,316 1,285 Cumulative amortisation -1,245 -1,152 Intangible fixed assets 72 134 Investments in both 2021 and 2022 concern costs made related to robotic process automation. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 103 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. As per 31 December 2021, also the previous headquarter of NSI, located at Antareslaan 69-75 (HNK Hoofddorp) in Hoofddorp, The Netherlands. was included under tangible fixed assets. This was transferred to investment property after termination of the lease contract in February 2022. The movement in tangible fixed assets during 2022 and 2021 was as follows: 2022 2021 Balance as per 1 January 5,165 1,464 Investments 186 895 Depreciation -646 -335 Transfer from / to investment property -573 3,162 Disposals -70 -21 Balance as per 31 December 4,063 5,165 Gross book value 5,366 6,295 Cumulative depreciation -1,303 -1,129 Tangible fixed assets 4,063 5,165 13. OTHER NON-CURRENT ASSETS 31 December 2022 31 December 2021 Lease incentives 13,659 13,148 Other non-current assets 13,659 13,148 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 € 2.0m to be settled in 2023 (2021: € 0.3m to be settled in 2022). 14. DEBTORS AND OTHER RECEIVABLES 31 December 2022 31 December 2021 Gross debtors 904 782 Provision for doubtful debts -349 -300 Debtors 555 483 Tenant loans 0 28 Taxes 40 89 Prepayments 511 528 Other current receivables 297 2,887 Debtors and other receivables 1,403 4,015 The largest item recognised under debtors and other accounts receivable concerns debtors (€ 0.9m), 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. FINANCIAL STATEMENTS 104 | NSI ANNUAL REPORT 2022 15. CASH AND CASH EQUIVALENTS 31 December 2022 31 December 2021 Bank balances 196 7,729 Cash and cash equivalents 196 7,729 The full amount of cash and cash equivalents is freely available. 16. EQUITY ATTRIBUTABLE TO SHAREHOLDERS ISSUED SHARE CAPITAL As per 31 December 2021 the authorised share capital consisted of 19,698,207 issued and fully paid shares (€ 72,5m). The issued shares have a par value of € 3.68 each. In May 2022 108,025 shares were issued as stock dividend, relating to the final dividend distribution for 2021. This resulted in 19,806,232 issued shares (€72,9m). In August 2022 an interim stock dividend of 248,009 shares was issued and distributed. After that date the number of issued and fully paid shares as per 31 December 2022 amounted to 20,054,241 (€ 73.8m). 2022 2021 Balance as per 1 January 72,489 70,992 Stock dividend - final distribution prior year 398 687 Stock dividend - interim 913 810 Balance as per 31 December 73,800 72,489 The movement in the number of shares issued in 2021 and 2022 was as follows: 2022 2021 Balance as per 1 January 19,698,207 19,291,415 Stock dividend - final distribution prior year 108,025 186,639 Stock dividend - interim 248,009 220,153 Balance as per 31 December 20,054,241 19,698,207 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 2022 2021 Balance as per 1 January 916,768 918,275 Stock dividend - final distribution prior year -403 -692 Stock dividend - interim -918 -815 Balance as per 31 December 915,447 916,768 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 2022, € 11k transaction costs on the issue of stock dividend is included. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 105 OTHER RESERVES 2022 2021 Balance as per 1 January -161,762 -114,416 Profit appropriation 120,961 -20,414 Cash dividend - final distribution prior year -17,464 -14,917 Cash dividend - interim -12,603 -12,015 Balance as per 31 December -70,868 -161,762 DIVIDEND AND EARNINGS PER SHARE The final dividend for 2022 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 21 April 2023. This proposal was not included as a liability in the balance sheet at 31 December 2022. NUMBER OF SHARES 31 December 2022 31 December 2021 Weighted average number of ordinary shares 19,869,975 19,499,825 Number of ordinary shares entitled to dividend 20,054,241 19,698,207 DIVIDEND 2022 2021 Per share (€) Total Per share (€) Total Interim dividend paid 1.04 20,598 1.04 20,257 Proposed final dividend 1.12 22,461 1.12 22,062 Total dividend 2.16 43,059 2.16 42,319 EARNINGS PER SHARE 2022 2021 Total result (€) -1.58 6.20 The calculation of earnings per share at 31 December 2022 is based on the result attributable to ordinary shareholders of € 31.4m negative (2021: € 121.0m) and a weighted average number of outstanding ordinary shares during 2022 of 19,869,975 (2021: 19,499,825). 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 benefit of a conservative capital structure is that it is possible to keep the overall cost of capital low. 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. FINANCIAL STATEMENTS 106 | NSI ANNUAL REPORT 2022 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 and security 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 investments was 28.7% on 31 December 2022 (31 December 2021: 28.2%). The ratio of debt owed to credit institutions / equity was 29.2% / 70.8% on 31 December 2022 (31 December 2021: 28.7% / 71.3%). 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 NSI units regarding independent financing arrangements with specific assets acting as security. 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 compliant 2022 2021 2022 2021 NSI - group-level 28.7% 28.2% Yes Yes In 2022 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 both 2021 and 2022. INTEREST COVERAGE RATIO NSI has two covenants relating to the interest coverage ratio (ICR): – The interest coverage ratio for independently financed NSI subsidiaries 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 compliant 2022 2021 2022 2021 NSI - group-level 6.3 6.5 Ye s Ye s In 2022 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. 70% before breaching this covenant. SOLVENCY Based on the covenants, adjusted shareholders’ equity at group level must be at least 40%. As per 31 December 2022 this was 69.6% (31 December 2021: 70.0%) 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. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 107 17. INTEREST BEARING LOANS The development of the interest bearing loans in 2021 and 2022 was as follows: 2022 2021 Balance as per 1 January 389,796 365,960 Drawn interest bearing loans 5,000 140,000 Transaction costs paid -339 -744 Amortisation transaction costs 383 280 Repayment of interest bearing loans -43,200 -115,700 Balance as per 31 December 351,640 389,796 Redemption requirement interest bearing loans 65,656 700 Balance as per 31 December 285,984 389,096 The maturities of the loans at 31 December 2021 and 31 December 2022 were as follows: 31 December 2022 31 December 2021 Fixed interest Variable interest Total Fixed interest Variable interest Total Up to 1 year 65,656 65,656 700 700 From 1 to 2 years 145,529 145,529 From 2 to 5 years 39,928 66,359 106,287 39,904 24,015 63,919 From 5 to 10 years 179,697 179,697 179,648 179,648 Total 219,624 132,016 351,640 219,552 170,244 389,796 Average interest rate (excl. interest-rate swaps) 2.0% 4.0% 2.0% 1.6% In 2023 € 65.7m (2022: € 0.7m) of financing will expire. The amount concerns the amortisation requirement of one loan due and will be covered by retained cash or the available financing facilities. Loans outstanding have a remaining average maturity of 4.7 years (31 December 2021: 4.9 years) The weighted average annual interest rate on the loans and interest-rate swaps at the end of 2022 was 2.0% (31 December 2021: 2.2%). These include margin, utilisation fees and amortised costs and exclude commitment fees. 31 December 2022 31 December 2021 Secured loans Unsecured loans Total Secured loans Unsecured loans Total Interest bearing loans - nominal value 65,700 287,500 353,200 66,400 325,000 391,400 Amortised costs -44 -1,516 -1,560 -96 -1,508 -1,604 Total 65,656 285,984 351,640 66,304 323,492 389,796 During 2022 € 0.3m of financing costs were capitalised (2021: € 0.7m). The financing costs are recognised in the profit and loss account using the effective interest method. As security for loans (up to € 65.7m), mortgages were pledged against investment property valued at € 230.0m (31 December 2021: € 248.4m), combined with pledges on rental income and maximum LTV requirements. On 31 December 2022 the company’s undrawn committed credit facilities totalled € 282.5m (31 December 2021: € 275.0m). Taking into account the cash and cash equivalents and debts to credit institutions, the remaining undrawn committed credit facility is € 268.7m. The fair value of the loans on 31 December 2022 was € 322.1m (31 December 2021: € 393.9m). FINANCIAL STATEMENTS 108 | NSI ANNUAL REPORT 2022 18. OTHER NON-CURRENT LIABILITIES 31 December 2022 31 December 2021 Security deposits 2,764 2,551 Lease liabilities 980 1,191 Other non-current accounts payable 3,744 3,742 The average term of the leases relating to the security deposits is 2.3 years (31 December 2021: 2.4 years). The net present value of non-current future lease obligations amounts to € 1.1m, consisting of leasehold obligations (€ 0.8m) and car lease obligations (€ 0.2m). 19. 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 2022 was 1.3% (yearend 2021: 1.3%) per annum including margin. 31 December 2022 31 December 2021 Credit facilities 25,000 25,000 Unused 10,963 24,993 Debts to credit institutions 14,037 7 20. CREDITORS AND OTHER PAYABLES 31 December 2022 31 December 2021 Creditors 3,178 2,627 Taxes 1,918 1,587 Interest 1,357 721 Security deposits 1,994 2,059 Lease liabilities 373 413 Deferred income 6,129 7,848 Accruals 8,254 9,147 Other current payables 158 84 Creditors and other payables 23,361 24,485 As per 31 December 2022, the net present value included for leasehold obligations amounts to € 0.1m and for car lease obligations € 0.3m. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 109 21. 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. 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. Note 31 December 2022 31 December 2021 Fair value level Amortised cost price Fair value Fair value level Amortised cost price Fair value Financial assets valued at fair value through profit or loss Derivative financial instruments 2 1,163 2 Financial assets valued at amortised cost price Financial fixed assets 3 0 2 0 Debtors and other receivables 14 2 852 2 3,398 Cash and cash equivalents 15 1 196 1 7,729 Financial liabilities valued at fair value through profit or loss Derivative financial instruments 2 2 1,739 Financial liabilities valued at amortised cost price Interest bearing loans 17 2 351,640 2 389,796 Other non-current liabilities 18 2 3,744 2 3,742 Debts to credit institutions 19 1 14,037 2 7 Creditors and other payables 20 2 15,314 2 15,051 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. FINANCIAL STATEMENTS 110 | NSI ANNUAL REPORT 2022 The book value of the financial instruments in the balance sheet and the fair values are as follows: Note Category IAS39 31 December 2022 31 December 2021 Book value Fair value Book value Fair value Financial fixed assets AC 0 0 0 0 Derivative financial instruments FVPL 1,163 1,163 Debtors and other receivables 14 AC 852 852 3,398 3,398 Cash and cash equivalents 15 AC 196 196 7,729 7,729 Financial assets 2,211 2,211 11,127 11,127 Interest bearing loans 17 AC 351,640 322,124 389,796 393,853 Derivative financial instruments FVPL 1,739 1,739 Other non-current liabilities 18 AC 3,744 3,744 3,742 3,742 Debts to credit institutions 19 AC 14,037 14,037 7 7 Creditors and other payables 20 AC 15,314 15,314 15,051 15,051 Financial liabilities 384,735 355,219 410,334 414,392 On the balance sheet date the derivative financial instruments had the following maturity: 31 December 2022 31 December 2021 # contracts Nominal value Fair value assets Fair value liabilities # contracts Nominal value Fair value assets Fair value liabilities Up to 1 year 9 147,500 1,163 From 1 to 5 years 9 147,500 1,739 Total 9 147,500 1,163 9 147,500 1,739 NSI minimises its interest rate risk by swapping the variable interest it pays on the majority of its loans for a fixed interest rate by means of contracts with fixed interest rates varying from -0.11% to 0.73% (2021: -0.11% to 0.73%) and with maturity dates in 2023 (2021: 2023). The weighted average remaining maturity of the derivatives 0.4 years (2021: 1.4 years). NSI is hedged at a weighted average interest rate of 0.4% (2021: 0.4%), excluding margin, 4.0% of the total outstanding variable interest loans are now over hedged (2021: under hedged 6.1%), 104.0% of the total volume are hedged (2021: 93.9%). 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 € 282.5m (maturity: 3.9 years; 2021: € 275.0m, maturity: 4.9 years). FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 111 The interest and repayment obligations were safeguarded for 2022 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 4.7 years (2021: 4.9 years). At year-end 2022 NSI had € 25.0m of current account committed credit facilities with banks at its disposal, of which € 14.0m was drawn. The undrawn committed credit facilities of the interest-bearing loans and current account credit facilities amounted to € 293.5m at 31 December 2022. Furthermore, cash and cash equivalents amounted to € 0.2m at 31 December 2022. This brings the total of unused credit facilities and cash and cash equivalents to € 293.7m at 31 December 2022. The contractual periods of the financial liabilities, including the estimated interest payments are stated below: 2022 Book value Contractual cash ﬂow Total < 6 months 6 - 12 months 1 - 2 years 2 - 5 years > 5 years Loans 351,640 390,124 69,955 3,232 7,680 123,316 185,941 Other non-current liabilities 3,744 4,154 1,144 1,562 1,448 Debts to credit institutions 14,037 14,037 14,037 Creditors and other payables 15,314 15,324 14,812 511 Non-derivative financial liabilities 384,735 423,639 98,804 3,743 8,825 124,878 187,389 Derivative financial instruments Total 384,735 423,639 98,804 3,743 8,825 124,878 187,389 2021 Book value Contractual cash ﬂow Total < 6 months 6 - 12 months 1 - 2 years 2 - 5 years > 5 years Loans 389,796 425,541 3,713 3,731 151,110 77,782 189,205 Other non-current liabilities 3,742 4,311 862 1,785 1,664 Debts to credit institutions 7 7 7 Creditors and other payables 15,051 15,062 14,439 623 Non-derivative financial liabilities 408,596 444,920 18,158 4,354 151,972 79,567 190,870 Derivative financial instruments 1,739 2,020 753 765 501 Derivative financial instruments 1,739 2,020 753 765 501 Total 410,334 446,940 18,911 5,119 152,473 79,567 190,870 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 deriva - tives 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 2022. FINANCIAL STATEMENTS 112 | NSI ANNUAL REPORT 2022 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. 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 2022 the interest coverage ratio was 6.3 (31 December 2021: 6.5), 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 2022 NSI held financial derivatives with a nominal value of € 147.5m (31 December 2021: € 147.5m) for the purpose of managing the interest rate risk on its loans. SENSITIVITY OF INTEREST RATE If the variable interest rate were to rise 100 basis points compared to 31 December 2022, the theoretical interest expenses for 2022 would decrease by € 0.1m (2021: decrease by € 0.7m), due to the effect of interest rate swaps based on three-months Euribor with no ﬂoor against loans with a Euribor ﬂoor of zero, 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 increase by € 0.1m (2021: increase by € 1.5m). 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. 2022 Effective interes t Total < 1 year 1 - 2 years 2 - 5 years > 5 years Fixed interest loans 2.0% 219,624 39,928 179,697 Variable interest loans 4.0% Fixed interest as a result of swaps 2.1% 132,016 65,656 66,359 Total 2.0% 351,640 65,656 106,287 179,697 Redemption obligations 65,656 65,656 Balance as per 31 December 2022 285,984 106,287 179,697 2021 Effective interes t Total < 1 year 1 - 2 years 2 - 5 years > 5 years Fixed interest loans 2.0% 219,552 39,904 179,648 Variable interest loans 1.6% 22,744 700 22,044 Fixed interest as a result of swaps 2.7% 147,500 123,485 24,015 Total 2.2% 389,796 700 145,529 63,919 179,648 Redemption obligations 700 700 Balance as per 31 December 2021 389,096 145,529 63,919 179,648 Swaps in the table above for 2022 are to expire in Q2 2023; NSI plans to enter into new swap agreements after this period. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 113 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 2022 31 December 2021 Financial fixed assets 0 0 Derivative financial instruments 1,163 Debtors and other receivables 852 3,398 Cash and cash equivalents 196 7,729 Credit risk 2,211 11,127 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 AA1 (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 2022 31 December 2021 Up to 1 month expired 254 207 From 1 to 3 months expired 34 40 From 3 months to 1 year expired 135 95 More than 1 year expired 480 441 Gross debtors 904 782 Aside from bank guarantees, security deposits for € 4.8m (2021: € 4.6m) were obtained to cover for potential loss of creditworthiness of tenants with regard to the receivables, of which € 2.0m (2021: € 2.1m) is relating to expiring lease contracts within one year. Movement in the provision for impairment of doubtful debts was as follows: 2022 2021 Balance as per 1 January 300 454 Addition to / release of provision 52 -130 Write-off bad debts -2 -24 Balance as per 31 December 349 300 Impairment losses recognised at 31 December 2022 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. FINANCIAL STATEMENTS 114 | NSI ANNUAL REPORT 2022 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 expired Amsterdam 51.26% Other G4 73.61% Other Netherlands 39.74% 22. OFF-BALANCE SHEET ASSETS AND LIABILITIES OFF- BALANCE SHEET ASSETS SHOPPING CENTER ‘T LOON, HEERLEN - INSURANCE COMPANIES In the court case initiated by (the insurance company of) a former tenant of shopping mall ‘t Loon against - amongst others - the association of owners of shopping mall ‘t Loon, the Dutch Supreme Court presented its judgement on 4 February 2022. The outcome of the judgement is, amongst others, that the decision of the Amsterdam Court of Appeal dated 10 September 2019, is annulled. The legal basis for the payment of the association of owners of € 563k to the insurance company of the tenant, made pursuant to the decision of the Amsterdam Court of Appeal of 10 September 2019, is therefore also annulled. This means that the association of owners has a claim of € 563k (to be increased with the statutory interest) against the insurance company of the tenant. NSI, as (former) member of the association owners, is entitled to approximately 60% of this claim. The Dutch Supreme Court forwarded the court case to the The Hague Court of Appeal for further judgement. The judgment of the The Hague Court of Appeal is expected late 2023, early 2024. 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. OTHER The company has entered into investment commitments for an amount of € 1.8m (31 December 2021: € 2.4m) relating to investment properties. For maintenance, technical property management, IT-providers etc. the company has entered into other contractual obliga- tions for € 5.0m (31 December 2021: € 8.6m). The company has unused credit facilities amounting to € 282.5m (31 December 2021: 275.0m). FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 115 23. RELATED PARTIES The following parties qualify as related parties: – The company and its group companies; – 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 2022 31 December 2021 ICAMAP Investments SARL 10.0% 10.0% BlackRock, Inc. 5.8% 5.8% Ameriprise Financial 5.0% < 3.0% APG Asset Management N.V. - 3.2% Clearance Capital Ltd. 3.1% 3.1% 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 2022 2021 Luurt van der Ploeg 32 Jan-Willem de Geus 62 6 Jan-Willem Dockheer 44 44 Margreet Haandrikman 43 43 Karin Koks - Van der Sluis 54 56 Harm Meĳer 45 42 Remuneration Supervisory Board 247 222 The schedule above includes the payment the Supervisory Board members receive as a member of the Audit Committee, the Remuneration Committee, the Selection & Appointment Committee and the Real Estate Committee. The Supervisory Board members did not hold any shares in the company at the end of 2022 (2021: 0), except for Mrs. Koks - van der Sluis who holds 163 shares (2021: 159 shares). Furthermore, Mr. Meijer is one of the shareholders at ICAMAP Investments SARL, holding more than 10% of NSI shares as per 31 December 2022 (31 December 2021: 10.0%). REMUNERATION OF THE MANAGEMENT BOARD 2022 Salary Variable Social security Pension Other Total Equity holding # share s Long term Short term Bernd Stahli 436 45 91 13 18 -5 598 17,000 Alianne de Jong 341 22 107 13 14 1 499 7,722 Remuneration Management Board 777 68 198 27 32 -4 1,097 24,722 FINANCIAL STATEMENTS 116 | NSI ANNUAL REPORT 2022 2021 Salary Variable Social security Pension Other Total Equity holding # shares Long term Short term Bernd Stahli 415 72 92 13 17 6 614 17,000 Alianne de Jong 310 53 101 13 14 1 491 6,447 Remuneration Management Board 725 124 193 25 30 7 1,105 23,447 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 2022, the variable remuneration paid to the CEO amounted to € 203k, consisting of an LTI of € 107k and an STI of € 95k. The variable remuneration of the CFO amounted to € 176k, consisting of an LTI of € 69k and an STI of € 107k. The provision included in the balance sheet as per end of December 2022 amounts to € 189k. The provisions for the CEO and CFO on 31 December 2022 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 2022. 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.. 24. COST RATIO Under the Dutch Financial Supervision Act (Wet financieel toezicht) NSI is required to report its ratio of expenses to its net asset value. In 2022 this ratio is 2.3% (2021: 2.4%). This cost ratio is calculated as total expenses (operational costs, non-recharged service costs, administrative expenses and corporate tax) divided by the weighted average net asset value for the latest financial year. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 117 COMPANY BALANCE SHEET (BEFORE PROPOSED PROFIT APPROPRIATION) FOR THE YEAR ENDED 31 DECEMBER 2022 ( x € 1,000) Note 31 December 2022 31 December 2021 Assets Intangible fixed assets 72 134 Tangible fixed assets 1,035 1,425 Financial fixed assets 1 1,257,092 1,337,336 Non-current assets 1,258,199 1,338,895 Debtors and other receivables 457 456 Derivative financial instruments 1,163 Cash and cash equivalents 133 7,729 Current assets 1,753 8,185 Total assets 1,259,952 1,347,080 Shareholders' equity Issued share capital 2 73,800 72,489 Share premium reserve 2 915,447 916,768 Participations reserve 2 206,861 271,047 Retained earnings 2 -277,729 -432,809 Total result for the year 2 -31,370 120,961 Shareholders' equity 887,008 948,457 Liabilities Interest bearing loans 285,984 389,096 Derivative financial instruments 1,739 Other non-current liabilities 151 388 Non-current liabilities 286,135 391,223 Redemption requirement interest bearing loans 65,656 700 Debts to credit institutions 14,037 Creditors and other payables 7,116 6,701 Current liabilities 86,809 7,401 Total liabilities 372,944 398,623 Total shareholders' equity and liabilities 1,259,952 1,347,080 The notes on pages 120 to 123 form an integral part of these company financial statements. FINANCIAL STATEMENTS 118 | NSI ANNUAL REPORT 2022 COMPANY INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022 ( x € 1,000) Note 2022 2021 Administrative costs 3 -8,558 -7,626 Other income and costs -12 -12 Financing costs 4 -9,574 -9,789 Movement in market value of financial derivatives 4 2,902 1,401 Net financing result -6,672 -8,388 Corporate result before tax -15,242 -16,026 Corporate income tax Corporate result after tax -15,242 -16,026 Result from participations -16,128 136,986 Total result for the year -31,370 120,961 The notes on pages 120 to 123 form an integral part of these company financial statements. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 119 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 2022 31 December 2021 Balance as per 1 January 1,337,336 1,230,513 Result from participations -16,128 136,986 Changes in receivables from group companies -64,116 -30,164 Balance as per 31 December 1,257,092 1,337,336 2. SHAREHOLDERS EQUITY 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 T otal 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 FINANCIAL STATEMENTS 120 | NSI ANNUAL REPORT 2022 2021 Issued share capital Share premium reserve (Statutory) participations reserve Retained earnings Result for the year Shareholders' equity Balance as per 1 January 2021 70,992 918,275 211,889 -326,305 -20,414 854,438 Total result for the year 120,961 120,961 Other comprehensive income / expense Total comprehensive income / expense for the year 120,961 120,961 Profit appropriation - 2020 -20,414 20,414 Distribution final dividend - 2020 687 -692 -14,917 -14,922 Interim dividend - 2020 810 -815 -12,015 -12,020 Addition to participations reserve 59,157 -59,157 Contributions from and to shareholders 1,497 -1,507 59,157 -106,503 20,414 -26,942 Balance as per 31 December 2021 72,489 916,768 271,047 -432,809 120,961 948,457 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 16 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 2021 and 2022, before appropriation of profits. DIVIDEND Taking into consideration the interim dividend of € 1.04 per share already distributed (2021: € 1.04; adjusted for stock consolidation), a final dividend of € 1.12 per share has been proposed (2021: € 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 2022 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 € 1.12 per share. This puts the total dividend for 2022 at € 2.16 per share, of which € 1.04 per share was already distributed as an interim dividend in August 2022. Subject to the approval of the General Meeting of Shareholders, NSI will offer shareholders the option to receive the final dividend in cash and/or fully or partly in shares. Based on the number of outstanding shares eligible for dividend (20,054,241), the total amount of the final dividend is € 22.5m and will be withdrawn from the retained earnings (excluding dividend paid in shares). Provided that the General Meeting of Shareholders approves this dividend proposal, the final dividend will be made payable from 16 May 2023. FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 121 2022 Total result for the year - 2022 -31,370 Interim dividend - 2022 -20,598 Proposed final dividend - 2022 -22,461 On balance subtracted from the reserves -74,429 NSI is offering shareholders the option to receive this final dividend in cash and / or partly in shares. 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 2022 2021 Salaries and wages -5,195 -5,463 Social security -620 -554 Pensions -336 -324 Depreciation right of use tangible fixed assets -284 -283 Other staff costs -1,182 -1,088 Staff costs -7,618 -7,712 Compensation supervisory board -251 -273 Depreciation and amortisation -445 -194 Other office costs -1,476 -1,408 Office costs -1,920 -1,602 Audit, consultancy and valuation costs -1,269 -1,029 Other administrative costs -1,332 -838 Administrative costs -12,390 -11,454 Allocated administrative costs 3,833 3,828 Administrative costs -8,558 -7,626 4. NET FINANCING RESULT 2022 2021 Interest costs -9,115 -8,325 Other financing costs -459 -1,464 Financing costs -9,574 -9,789 Movement in market value of financial derivatives 2,902 1,401 Net financing result -6,672 -8,388 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 corporate income tax and Dutch sales tax, and is therefore jointly and severally liable for the tax payable by the tax group as a whole. FINANCIAL STATEMENTS 122 | NSI ANNUAL REPORT 2022 6. AUDIT FEES PricewaterhouseCoopers Accountants N.V. charged the following fees to NSI and its subsidiaries: 2022 2021 Audit financial statements -172 -263 Other audit related services -55 -20 Audit fees -227 -283 In the 2022 financial year, an amount of € 172k of 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 (2021: € 263k). 7. EVENTS AFTER BALANCE SHEET DATE The sale of HNK Ede and HNK Den Bosch was completed in January 2023 for a total of € 23.2m (before transactions costs). Amsterdam, 9 March 2023 The Management Board Bernd Stahli, CEO Alianne de Jong, CFO The Supervisory Board Jan-Willem de Geus, Chairman Jan-Willem Dockheer Margreet Haandrikman Karin Koks - Van der Sluĳs Harm Meĳer FINANCIAL STATEMENTS NSI ANNUAL REPORT 2022 | 123 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. OTHER INFORMATION 124 | NSI ANNUAL REPORT 2022 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 2022 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 2022 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 2022 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 2022 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 2022; – the following statements for 2022: 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 2022; – 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 assuranceop- drachten’ (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 2022. NSI N.V. has classified four project 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. OTHER INFORMATION NSI ANNUAL REPORT 2022 | 125 Materiality Audit scope Key audit matters 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, for example, in respect of significant accounting estimates that involved making assumptions and consi- dering future events that are inherently uncertain. In these considerations, we paid attention to, amongst others, the assumptions underlying the physical and transi- tion climate-related risks. 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 mate rial 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. 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 investment 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 and IT in our team. The outline of our audit approach was as follows: Materiality Overall materiality: €6,600,000 Specific materiality: €2,135,000 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. 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 state- ments 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 Specic materiality Materiality level €6,600,000 €2,135,000 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 nancial position for the year ended 31 December 2022. 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 nancial 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 nan- cial statements. This benchmark best ts the nature of the Company’s operations and equity is deemed most relevant for the investors and other users of the nancial statements. We have applied this benchmark as it is an important measure for the nancial performance of the Company’s investment property portfolio and is therefore deemed relevant for the investors and other users of the nancial 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 €330,000 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. OTHER INFORMATION 126 | NSI ANNUAL REPORT 2022 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. Based on the procedures performed, we conclude that in the context of our audit of the financial statements of NSI N.V., we could rely on the SOC 1 assurance report in combination with our substantive audit procedures performed. 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. 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 operational 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 nancial statements by overriding controls that otherwise appear to be operating eectively. 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 specic consideration to: – the appropriateness of journal entries and other adjustments made in the preparation of the nancial statements; – possible management bias in management board’s estimates; and – signicant 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 eectiveness of the measures in the processes of generating and processing journal entries, recognition and accounting for estimates. We also paid specic 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 specic audit activities for these entries. In relation to possible management bias in management board’s estimates, we paid specic attention to signicant assumption in the valuation of investment property, for which we included a Key Audit Matter is this report. Our audit procedures did not lead to specic 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 recogni- tion. Because rental income is a key performance indicator for the Group, we have identied an inherent risk in overstating revenue by the manage- ment board, especially in recognising ctious rental income or improper accounting of lease incentives. Where relevant to our audit, we assessed the design and tested the operational eectiveness 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 specic attention to the access safeguards 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 performed analytics on the rental income per property and per month. We tested a sample of the rental income transactions by tracing the transac - tions 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 occur- rence 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 specic indications of fraud or suspicions of fraud with respect to the accuracy and occurrence of the rental income. OTHER INFORMATION NSI ANNUAL REPORT 2022 | 127 The risk of kickbacks paid to the management board or employees when selling investment property As part of our risk assessment, we have identied 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 2022 only sales took place. Where relevant to our audit, we assessed the design and tested the operational eectiveness 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. Furthermore, we performed the following procedures: – veried for all sales of investment properties that agreements are signed by two employees of NSI N.V., in line with the approved authori- sation matrix; – obtained for all transactions the nal notary statements and deeds of delivery; – veried 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 valua- tion report for nancial reporting. Our audit procedures did not lead to specic indications of fraud or suspicions of fraud with respect to the acquisitions and sales. The r isk that the employees who (unwittingly) had extended user rights, had used the access rights to manipulate data to gain a personal advantage. As part of our assessment of the extended user access rights, we have identied that these users had the opportunity with these rights to edit all data in the ERP system, including creditor master data. Therefore, there is a risk of unlawful payments being made as a result of unauthorized adjustments made to creditor master data or payment batches. We have assessed the follow up performed by the management board because of the identication of these extended access rights. We have concluded that the management board has performed an adequate follow up. Additionally, we tested for a sample of payments made if the payment was made to the correct creditor and bank account number of that creditor, by comparing the bank account number to which the payment was made to the bank account number as stated on the invoice received from that creditor. Our audit procedures did not lead to specic indications of fraud or suspicions of fraud with respect to payments made. 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 and, when applicable, results of management board’s investigation of such matters. This did not lead to indications for fraud potentially resulting in material misstatements. 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 commu- nicated 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 OTHER INFORMATION 128 | NSI ANNUAL REPORT 2022 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 2022 the carrying value of the Group’s investment property port- folio was €1,259 million (2021: €1,338 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. 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 management bias (fraud). We therefore considered this area as a key audit matter. For the external valuation experts appointed by the management board, which we have identied 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 qualication 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 aected 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. In relation to the signicant assumption in the valuation of investment property we have: – evaluated that the management board has designed and implemented appropriate 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 assumption 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 (significant) 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 accounting records; – checked for each management expert the mathematical accuracy of the valuation 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 disclosure, including the sensitivity disclosures, made in the consolidated financial statements. Based on the work performed, we found that investment property related data and the signicant assumptions were supported by available evidence. In addition, we evaluated whether the information received from the manage- ment board and the audit evidence obtained, provided indications of manage- ment bias. We found no such indication. OTHER INFORMATION NSI ANNUAL REPORT 2022 | 129 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 seven 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. OTHER INFORMATION 130 | NSI ANNUAL REPORT 2022 OTHER INFORMATION 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. 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. Amsterdam, 9 March 2023 PricewaterhouseCoopers Accountants N.V. Original version signed by S. Herwig MSc LLM RA MRE MRICS OTHER INFORMATION NSI ANNUAL REPORT 2022 | 131 APPENDIX TO OUR AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS 2022 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. 132 | NSI ANNUAL REPORT 2022 OTHER INFORMATION ASSURANCE REPORT OF THE INDEPENDENT AUDITOR To: the general meeting and the supervisory board of NSI N.V. ASSURANCE REPORT ON THE SELECTED NON-FINANCIAL INDICATORS IN THE ANNUAL REPORT 2022 OUR CONCLUSION We have examined the selected non-financial indicators marked with symbol in the Annual Report 2022 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 2022 of NSI N.V. are not prepared in all material respects, in accordance with the 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 2022’ in the Annual Report 2022 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: 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. We have examined the above indicators in the Annual Report of NSI N.V. for 2022. Other information included in the Annual Report 2022 is not in scope of this limited assurance sustainability engagement, including comparatives. We were not engaged to report on or conclude on other information presented within the Annual Report 2022 which is outside our scope. 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 histo- rical 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 maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and other applicable 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) performace measures’ of the Annual Report 2022. The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable, measu - rement 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. OTHER INFORMATION NSI ANNUAL REPORT 2022 | 133 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 misstatement, whether due to fraud or error. The supervisory board is responsible for overseeing the company’s reporting process for 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 out of 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 2022, 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. Amsterdam, 9 March 2023 PricewaterhouseCoopers Accountants N.V. Original version signed by S. Herwig MSc LLM RA MRE MRICS OTHER INFORMATION 134 | NSI ANNUAL REPORT 2022 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 32.7% 35.4% Cushman & Wakefield 32.7% 34.2% JLL 34.6% 30.4% Total 100.0% 100.0% Top 10 tenants # lease contract % total contracted rent Government 11 12.4% Spaces 3 9.7% KPN 5 6.9% Janssen Vaccines & Prevention 3 4.9% WeWork 1 4.1% ING Bank 3 3.7% Airbus Defence and Space 1 1.8% ABN AMRO Bank 1 1.5% BDO Holding 1 1.0% Federatie Nederlandse Vakbeweging 1 0.9% 30 46.9% SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 135 136 | NSI ANNUAL REPORT 2022 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 2022 NSI had 19,698,207 ordinary shares outstanding. During 2022, in total 356,034 shares have been issued and distrib - uted in relation the distribution of stock dividend (final 2021 divi- dend and interim 2022 dividend). At 31 December 2022 NSI had 20,054,241 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 2022. 31 December 2022 ICAMAP Investments SARL 10.0% BlackRock, Inc. 5.8% Ameriprise Financial 5.0% Clearance Capital Ltd. 3.1% FINANCIAL CALENDAR Publication trading update Q1 2023 20 April 2023 Annual General Meeting 21 April 2023 Publication annual half year results 2023 14 July 2023 Publication trading update Q3 2023 13 October 2023 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 2022) 25 April 2023 Record date 26 April 2023 Stock dividend election period 27 April – 11 May 2023 Payment of final dividend 16 May 2023 DUTCH REIT (FBI) NSI qualifies as a Dutch real estate investment trust (fiscale beleg- gingsinstelling or FBI) within the context of Article 28 of the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsb- elasting 1969), which means that NSI is zero-rated for corporate income tax on its investment result. The Act stipulates certain conditions for this, such as the obligation to pay out the total fiscal profit as a dividend. In its tax plan for 2023 the Dutch Government pre-announced plans to abolish the FBI regime per 1 January 2025, at which time NSI is set to become a regular corporation (NV) subject to a normal 25.8% corporation tax rate. The exact details on the legislation to end the FBI regime in 2025 will only become avail- able in 2023. More information can be found in the Risk Manage- ment section on page 39 (Dutch Real Estate Tax Regime – FBI). PERFORMANCE OF THE NSI SHARE Share price low €22.30 Share price high €39.15 Closing price on 31 December 2022 €23.25 Proposed dividend per share for Total €2.16 Interim €1.04 Final €1.12 # outstanding shares outstanding at 31 December 2022 20,054,241 Market capitalisation at 31 December 2022 €466 million NSI SHARE COMPARATIVE SHARE PRICE DEVELOPMENT NSI EPRA DEVELOPED EUROPE the 2022 financial year 0 20 40 60 80 100 120 140 31-12-21 31-01-22 28-02-22 31-03-22 30-04-22 31-05-22 30-06-21 31-07-22 31-08-22 30-09-22 31-10-22 30-11-22 31-12-22 SUPPLEMENTARY INFORMATION 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 6,292 1988 2015 4 Cruquiusweg Cruquiusweg 111 Amsterdam Freehold 3,278 2006 2007 5 Donauweg Donauweg 2B Amsterdam Leasehold 4,613 2020 2001 6 Glasshouse Changiweg 130, Teleportboulevard 121-133 Amsterdam Leasehold 22,981 2009 2016 7 Hettenheuvelweg I Hettenheuvelweg 37-39 Amsterdam Leasehold 2,474 1987 1997 8 Hettenheuvelweg II Hettenheuvelweg 41-43 Amsterdam Leasehold 2,480 1988 1997 9 HNK Amsterdam Houthavens Van Diemenstraat 20-200 Amsterdam Leasehold 10,307 2014 1999 10 HNK Amsterdam Schinkel Anthony Fokkerweg 1 Amsterdam Freehold 5,386 2018 1997 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 5,019 1995 1997 15 Laanderpoort Bĳlmerdreef 100 Amsterdam Leasehold 12,739 2013 2017 16 Motion Building Radarweg 60 Amsterdam Leasehold 15,922 1992 2018 17 One20 Teleportboulevard 120 - 142 Amsterdam Leasehold 9,743 2001 2020 18 Q-Port Kingsfordweg 43-117 Amsterdam Leasehold 12,771 2001 2018 19 Solaris Eclips Arlandaweg 98 Amsterdam Leasehold 4,613 2001 2001 20 Trivium Derkinderenstraat 2-24 Amsterdam Leasehold 8,315 2000 2019 21 Vitrum Parnassusweg 101, 103, 126, 128 Amsterdam Leasehold 11,612 2013 2017 22 Vivaldi Offices I Barbara Strozzilaan 201-229 Amsterdam Leasehold 9,493 2009 2015 23 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 14,390 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 21,645 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 6,212 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 2,920 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 HNK den bosch Europalaan 28 Den Bosch Freehold 7,517 2014 1997 2 HNK Ede Bennekomseweg 41-43 Ede Freehold 9,326 2014 2007 3 Fellenoord Fellenoord 310-370 Eindhoven Freehold 4,183 1987 1996 4 Hooghuisstraat / Keizersgracht Hooghuisstraat 18-30, Keizersgracht 3-11 Eindhoven Freehold 10,908 1970 2008 5 Kennedyplein Kennedyplein 101 Eindhoven Freehold 6,643 2000 2017 6 Beukenhaghe Neptunusstraat 15-37 Hoofddorp Freehold 4,754 1991 1991 7 Archimedesweg Archimedesweg 17 - 25 Leiden Leasehold 2,522 2001 2001 8 Archimedesweg I Archimedesweg 6 Leiden Leasehold 7,207 2000 2017 9 Archimedesweg II Archimedesweg 30 Leiden Leasehold 2,686 1999 2019 10 Mendelweg Mendelweg 30 Leiden Leasehold 6,234 2008 2021 11 Newtonweg Newtonweg 1 Leiden Leasehold 9,408 1993 2015 SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 137 A bsolute performance (Abs) Like-for-like performance (LfL) Impact area INREV Code GRI Standard Units of measure Indicator Notes 2022 2021 2022 2021 % change Energy Fuels-Abs, Fuels-LfL GRI Standard 302-1 annual kWh Fuels Total landlord-obtained fuels B 7,260,436 12,351,361 6,772,802 9,500,231 -28.7% Proportion of landlord- obtained fuels from renewable resources - - - - - Total tenant-obtained fuels C 2,882,537 4,833,199 2,405,546 3,108,944 -22.6% Proportion of tenant- obtained fuels from renewable resources - - - - - Total landlord- and tenant-obtained fuels 10,142,973 17,184,560 9,178,348 12,609,175 -27.2% Proportion of landlord- and tenant obtained fuels from renewable resources - - - - - No. of applicable properties Fuels disclosure coverage 26 out of 27 36 out of 37 22 out of 22 22 out of 22 - Covered applicable sqm 98.7% 98.8% 100.0% 100.0% 0.0% % Proportion of fuels estimated 0% 0% 0% 0% - DH&C-Abs, DH&C-LfL GRI Standard 302-1/302-2 annual kWh District heating and cooling Total landlord-obtained district heating and cooling C 9,310,975 11,267,407 8,631,489 10,242,121 -15.7% Proportion of landlord- obtained heating and cooling from renewable resources - - - - - Total tenant-obtained heating and cooling C 4,130,300 3,701,974 3,697,244 3,701,974 -0.1% Proportion of tenant- obtained heating and cooling from renewable resources - - - - - Total landlord- and tenant-obtained heating and cooling C 13,441,275 14,969,381 12,328,733 13,944,095 -11.6% Proportion of landlord- and tenant-obtained heating and cooling from renewable resources - - - - - No. of applicable properties District heating and cooling disclosure coverage 22 out of 23 23 out of 27 20 out of 20 20 out of 20 - Covered applicable sqm 95.2% 86.9% 100.0% 100.0% 0.0% % Proportion of district heating and cooling estimated 0% 0% 0% 0% - Elec-Abs, Elec-LfL GRI Standard 302-1/302-2 annual kWh Electricity Total landlord-obtained electricity B+C 18,200,793 19,165,121 16,615,291 15,493,680 7.2% Proportion of on-site landlord-obtained elec- tricity from renewable resources 3% 3% 4% 3% 6.4% Proportion of off-site landlord-obtained elec- tricity from renewable resources 96% 96% 96% 97% -0.5% ESG (NON-FINANCIAL) PERFORMANCE MEASURES 2022 refers to the limited assurance report of the independent auditor only with respect to the 2022 absolute performance figures (see page 133) A up to and including D refurs to Measurement Methodology and Assumptions (see page 143) SUPPLEMENTARY INFORMATION 138 | NSI ANNUAL REPORT 2022 Energy Elec-Abs, Elec-LfL GRI Standard 302-1/302-2 annual kWh Electricity Total tenant-obtained electricity C+D 14,130,181 12,527,823 11,900,235 11,246,794 5.8% Proportion of on-site tenant-obtained electricity from renewable resources 0% 0% 0% 0% - Proportion of off-site tenant-obtained electricity from renewable resources 100% 89% 100% 88% 13.1% Total landlord- and tenant-obtained electricity consumption 32,330,973 31,692,943 28,515,525 26,740,474 6.6% Proportion of on-site landlord- and tenant- obtained electricity from renewable resources 2% 2% 2% 2% 16.3% Proportion of off-site landlord- and tenant- electricity from renewable resources 98% 93% 98% 93% 4.9% No. of applicable properties Electricity disclosure coverage 51 out of 51 63 out of 65 42 out of 42 42 out of 42 - Covered applicable sqm 100.0% 95.2% 100.0% 100.0% 0.0% % Proportion of electricity estimated 0% 0% 0% 0% - No. of applicable properties On-site solar panels coverage 13 out of 14 11 out of 15 13 out of 13 10 out of 10 - No. of solar panels 2,678 2,326 2,678 2,256 - Energy-Int (all assets) GRI Standard 302-3 annual kWh / sqm Energy Intensity (sum of) annual kWh energy consumption 55,915,222 63,846,884 50,022,607 53,293,744 -6.1% (sum of) ﬂoor area (m2) - Energy A 427,197 493,758 374,527 374,527 0.0% Building energy intensity 131 129 134 142 -6.1% % Proportion energy from renewables resources 57.7% 47.2% 56.9% 47.6% 19.4% Green- house gas emissions GHG-Dir- Abs GRI Standard 305-1 annual kg CO2e Direct Scope 1 1,549,377 2,382,578 1,445,316 1,832,595 -21.1% GHG-Indir- Abs GRI Standard 305-2 and 305-3 annual kg CO2e Indirect Scope 2 925,748 1,123,065 860,110 923,839 -6.9% annual kg CO2e Scope 3 1,014,120 2,014,635 870,497 1,682,026 -48.2% GHG-Int (all assets) GRI Standard 305-4 kg CO2e / sqm / year GHG emissions intensity (sum of) annual GHG emissions 3,489,246 5,520,277 3,175,923 4,438,460 -28.4% (sum of) ﬂoor area (m2) - GHG A 427,197 493,758 374,527 374,527 0.0% Building carbon intensity 8 11 8 12 -28.4% No. of applicable properties Energy and associated GHG disclosure coverage 51 out of 51 64 out of 65 43 out of 43 43 out of 43 - Covered applicable sqm 98.9% 94.3% 100.0% 100.0% 0.0% % Proportion of energy and associated GHG estimated 0% 0% 0% 0% - A bsolute performance (Abs) Like-for-like performance (LfL) Impact area INREV Code GRI Standard Units of measure Indicator Notes 2022 2021 2022 2021 % change refers to the limited assurance report of the independent auditor only with respect to the 2022 absolute performance figures (see page 133) A up to and including D refurs to Measurement Methodology and Assumptions (see page 143) SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 139 Water Water-Abs, Water-LfL GRI Standard 303-1 annual cubic metres (m3) Water Total landlord-obtained water consumption B 49,723 52,418 44,630 33,924 31.6% Total tenant-obtained water consumption C 34,221 29,337 31,265 27,393 14.1% Total water consumption 83,944 81,755 75,895 61,318 23.8% Water-Int (all assets) GRI stan- derd CRE2 annual m3 / sqm Water Intensity (sum of) ﬂoor area (m2) - Water A 420,300 486,272 372,804 372,804 0.0% Building water intensity 0.20 0.17 0.20 0.16 23.8% No. of applicable properties Water disclosure coverage 50 out of 51 59 out of 65 42 out of 42 42 out of 42 - Covered applicable sqm 97.4% 93.6% 100.0% 100,.0% 0.0% % Proportion of water estimated - - - - - Waste Waste-Abs, Waste-LfL GRI Standard 306-3 / 306-4 / 306-5 annual tonnes Waste type Hazardous waste - - - - - Non-Hazardous waste 938 891 - - - Total waste created 938 891 - - - proportion by disposal route (%) Disposal routes Landfill (with of without energy recovery) - - - - - Incineration (with or without energy recovery) - - - - - Diverted (total) 94% 93% - - - Diverted - Reuse - - - - - Diverted - Waste to energy 66% 64% - - - Diverted - Recycling 28% 30% - - - Other / Unknown 6% 7% - - - No. of applicable properties Waste disclosure coverage 29 out of 51 34 out of 65 - - - Covered applicable sqm 79.7% 75.6% - - - % Proportion of waste estimated - - - - - Certifica- tion Cert-Tot EU EPC Covered applicable properties Certified 49 out of 49 52 out of 52 43 out of 43 43 out of 43 Covered applicable sqm Certified 100.0% 100.0% 100% 100% refers to the limited assurance report of the independent auditor only with respect to the 2022 absolute performance figures (see page 133) A up to and including D refurs to Measurement Methodology and Assumptions (see page 143) A bsolute performance (Abs) Like-for-like performance (LfL) Impact area INREV Code GRI Standard Units of measure Indicator Notes 2022 2021 2022 2021 % change SUPPLEMENTARY INFORMATION 140 | NSI ANNUAL REPORT 2022 Certifica- tion Cert-Tot EU EPC Level of certification A+++++ - - - - A++++ - - - - A+++ - - - - A++ 13% - 16% 16% A+ 10% - 9% 9% A 65% 81% 65% 65% B 8% 7% 7% 7% C 4% 10% 3% 3% D - 0.0% - - E - - - - F - - - - G - 2% - - Green Buil- ding Certifi- cation Covered applicable properties Certified by at least one Green Building Certification 46 out of 49 45 out of 52 42 out of 43 41 out of 43 - Covered applicable sqm Certified by at least one Green Building Certification 94% 89% 99% 98% BREEAM In Use - Level of certification Outstanding 0% 0% 0% 0% Excellent 36% - 41% 41% Very Good 30% 1% 34% 34% Good 14% 37% 13% 13% Pass 10% 35% 9% 8% Acceptable 4% 16% 2% 2% GRESB Score 93 out of 100 92 out of 100 GRI Standard 306-3 / 306-4 / 306-5 A bsolute performance (Abs) Like-for-like performance (LfL) Impact area INREV Code GRI Standard Units of measure Indicator Notes 2022 2021 2022 2021 % change refers to the limited assurance report of the independent auditor only with respect to the 2022 absolute performance figures (see page 133) A up to and including D refurs to Measurement Methodology and Assumptions (see page 143) SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 141 SOCIAL PERFORMANCE MEASURES Note 2022 2021 Diversity - Emp Employee gender diversity Female 52% 45% Percentage of employees Male 48% 55% Diversity-Pay Gender pay ratio Management Board 1.23 1.28 Ratio Senior Management 1.36 1.37 Operations 2.07 2.09 Support Staff 1.00 1.20 Total 1.74 1.63 Emp-Training Employee training and development 83 70 Emp-Dev Employee performance appraisals 100% 100% Emp- Turnover New hires and turnover New hires 20 15 New hires headcount 30.8% 25.0% New hires percentage Leavers -15 -10 Leavers headcount -23.1% -16.7% Leavers percentage H&S-Emp Employee health and safety Absentee rate 3.5% 3.5% Injury rate 0.0% 0.0% Work related fatalities 0 0 H&S-Asset Asset health and safety assessments 33 out of 49 33 out of 52 H&S-Comp Asset health and safety compliance Number of incidents 2 0 Comty-Eng Community engagement, impact assessment and development programs 10 out of 49 11 out of 52 HNK office app in all HNK’s 2022 2021 Gov-Board Composition of the highest governance body Page 64-68 Page 74-78 See composition and total number Gov-Selec Process for nominating and selecting the highest governance body Page 64-68 Page 74-78 Narrative on process Gov-CoI Process for managing conicts of interest Page 64-68 Page 74-78 Narrative on process GOVERNANCE PERFORMANCE MEASURES Note 2022 eligibility 2022 alignment* Revenue 100.0% 88.5% Capex 100.0% 92.3% Opex 100.0% 87.6% EU TAXONOMY refers to the limited assurance report of the independent auditor only with respect to the 2022 absolute performance figures and EU-Taxonomy on eligibility (see page 133) * based on technical criteria 2.1 and 2.2. The minimum safeguards analysis (2.3) will be performed in 2023. SUPPLEMENTARY INFORMATION 142 | NSI ANNUAL REPORT 2022 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 2022. Assets that were acquired or disposed during 2022 were excluded from the Like-for-like performance analysis. MEASUREMENT SCOPE AND COVERAGE In 2022, 100% of the total portfolio value belonged to the measure- ment scope, which corresponds to 51 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 renewable 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 137 to 140 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. ESTIMATION AND EXTRAPOLATION OF CONSUMPTION DATA At the time of publication of this report, not all data are available for the measurement year 2022 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 inten- sity and calculating the data coverage. The 2021 consumption figures were adjusted compared to the previously reported and audited figures as a result of the final invoices and measurements. In accordance with the EPRA guidelines, a like for like analysis was carried out for several environmental indicators. The analysis enables NSI to observe evolutions 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 defini- tion. As a result, neither the purchased assets nor the assets sold in the reporting period are included in this calculation. This means that: – 7 assets are excluded from Like-for-Like Performance as these assets were not fully operational during the reporting period of 2022. – 4 assets are excluded from Like-for-Like Performance as these assets were purchased during the reporting period of 2021. 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. SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 143 EPRA KEY PERFORMANCE MEASURES OVERVIEW KEY PERFORMANCE INDICATORS 2022 2021 € ' 000 per share (€) € ' 000 per share (€) EPRA earnings 42,733 2.15 46,373 2.38 EPRA cost ratio (incl. direct vacancy costs) 28.8% 28.2% EPRA cost ratio (excl. direct vacancy costs) 27.8% 26.0% EPRA property related capital expenditure 12,776 128,704 31 December 2022 31 December 2021 € ' 000 per share (€) € ' 000 per share (€) EPRA NRV 987,844 49.26 1,058,582 53.74 EPRA NTA 885,774 44.17 950,062 48.23 EPRA NDV 918,162 45.78 945,661 48.01 EPRA LTV 29.3% 28.8% EPRA net initial yield (NIY) 4.6% 4.1% EPRA topped-up net initial yield 5.0% 4.5% EPRA vacancy rate 6.2% 5.9% EPRA EARNINGS 2022 2021 Gross rental income 71,309 77,507 Service costs not recharged -1,322 -1,873 Operating costs -10,663 -12,362 Net rental income 59,325 63,272 Administrative costs -8,566 -7,612 Net financing result -8,024 -9,285 Direct investment result before tax 42,735 46,375 Corporate income tax -2 -2 Direct investment result / EPRA earnings 42,733 46,373 Direct investment result / EPRA earnings per share (€) 2.15 2.38 EPRA COST RATIO 2022 2021 Administrative costs 8,566 7,612 Service costs not recharged 1,322 1,873 Operating costs (adjusted for municipality taxes) 10,663 12,362 Leasehold -3 0 EPRA costs (including direct vacancy costs) 20,548 21,847 Direct vacancy costs -753 -1,690 EPRA costs (excluding direct vacancy costs) 19,795 20,157 Gross rental income 71,309 77,507 EPRA gross rental income 71,309 77,507 EPRA cost ratio (incl. direct vacancy costs) 28.8% 28.2% EPRA cost ratio (excl. direct vacancy costs) 27.8% 26.0% SUPPLEMENTARY INFORMATION 144 | NSI ANNUAL REPORT 2022 EPRA PROPERTY RELATED CAPITAL EXPENDITURE 2022 2021 Acquisitions -104 109,850 Development 7,233 3,419 Like-for-like portfolio 5,648 10,419 Other 0 5,016 EPRA capital expenditure 12,776 128,704 EPRA NAV 31 December 2022 31 December 2021 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV IFRS Equity attributable to shareholders 887,008 887,008 887,008 948,457 948,457 948,457 Hybrid instruments Diluted NAV 887,008 887,008 887,008 948,457 948,457 948,457 Diluted NAV at fair value 887,008 887,008 887,008 948,457 948,457 948,457 Fair value of financial instruments -1,163 -1,163 1,739 1,739 Intangibles as per IFRS balance sheet -72 -72 -134 -134 Fair value of fixed interest rate debt 31,225 -2,662 Real estate transfer tax 101,999 108,387 NAV 987,844 885,774 918,162 1,058,582 950,062 945,661 Fully diluted number of shares 20,054,241 20,054,241 20,054,241 19,698,207 19,698,207 19,698,207 NAV per share 49.26 44.17 45.78 53.74 48.23 48.01 EPRA YIELD 31 December 2022 31 December 2021 Investment property including assets held for sale 1,274,988 1,354,840 Developments -58,878 -61,863 Property investments 1,216,110 1,292,977 Allowance for estimated purchasers' costs 109,450 116,368 Gross up completed property portfolio valuation 1,325,560 1,409,345 Annualised cash passing rental income 72,852 69,744 Annualised property outgoings -11,951 -11,919 Annualised net rent 60,901 57,825 Notional rent expiration of rent free periods or other lease incentives 5,940 6,121 Topped-up annualised net rent 66,841 63,946 EPRA net initial yield 4.6% 4.1% EPRA topped-up net initial yield 5.0% 4.5% EPRA VACANCY 31 December 2022 31 December 2021 Estimated rental value of vacant space 5,510 5,174 Estimated rental value of the whole portfolio 88,317 87,023 EPRA vacancy 6.2% 5.9% SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 145 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 - Acquisi- tion and ownership of buildings (7.7) L68 100.0% 88.7% 0.0% 0.0% 0.0% 0.0% 0.0% NA Y Y Y Y Y PM 88.7% NA NA NA Turnover of environmentally sustainable acti- vities (Taxonomy- aligned) (A.1) 88.7% A.2 Enviromentally sustainable actitivies (not Taxonomy aligned) Turnover of Taxonomy-eligble but not enviromen- tally sustainable activities (not Taxonomy-aligned activities) (A.2) Total (A.1 + A.2) 100.0% 88.7% 0.0% 0.0% 0.0% 0.0% 0.0% 88.7% B. Non-Eligible activities: % Turnover of non- Eligble activities 0.0% Total (A + B) 0.0% 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 SUPPLEMENTARY INFORMATION 146 | NSI ANNUAL REPORT 2022 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 - Acquisi- tion and ownership of buildings (7.7) L68 100.0% 92.2% 0.0% 0.0% 0.0% 0.0% 0.0% NA Y Y Y Y Y PM 92.2% NA NA NA Capex of envi- ronmentally sustainable acti- vities (Taxonomy- aligned) (A.1) 92.2% A.2 Enviromentally sustainable actitivies (not Taxonomy aligned) Capex of Taxo- nomy-eligble but not enviromen- tally sustainable activities (not Taxonomy-aligned activities) (A.2) Total (A.1 + A.2) 100.0% 92.2% 0.0% 0.0% 0.0% 0.0% 0.0% 92.2% B. Non-Eligible activities: % Turnover 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 SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 147 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 - Acquisi- tion and ownership of buildings (7.7) L68 100.0% 87.7% 0.0% 0.0% 0.0% 0.0% 0.0% NA Y Y Y Y Y PM 87.7% NA 0,0% 0,0% Opex of envi- ronmentally sustainable acti- vities (Taxonomy- aligned) (A.1) 87.7% A.2 Enviromentally sustainable actitivies (not Taxonomy aligned) Opex of Taxo- nomy-eligble but not enviromen- tally sustainable activities (not Taxonomy-aligned activities) (A.2) Total (A.1 + A.2) 100.0% 87.7% 0.0% 0.0% 0.0% 0.0% 0.0% 87.7% 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 SUPPLEMENTARY INFORMATION 148 | NSI ANNUAL REPORT 2022 FIVE YEAR OVERVIEW KEY FINANCIAL METRICS REVENUES AND EARNINGS 2018 2019 2020 2021 2022 Gross rental income 82,721 82,831 76,854 77,507 71,309 Net rental income 69,228 67,227 60,466 63,272 59,325 Direct investment result 48,745 49,439 44,943 46,373 42,733 Indirect investment result 42,780 146,858 -65,357 74,588 -74,103 Total investment result 91,525 196,297 -20,414 120,961 -31,370 Earnings per share 4.95 10.47 -1.07 6.20 -1.58 EPRA earnings per share 2.64 2.64 2.35 2.38 2.15 EPRA cost ratio (incl. direct vacancy costs) 26.5% 28.4% 30.6% 28.2% 28.8% EPRA cost ratio (excl. direct vacancy costs) 25.0% 26.3% 28.4% 26.0% 27.8% BALANCE SHEET 31 Dec. 2018 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021 31 Dec. 2022 Investment property 1,206,631 1,278,992 1,240,192 1,338,034 1,259,235 Net debt -447,909 -352,632 -366,194 -382,073 -365,480 Equity 733,283 903,308 854,438 948,457 887,008 IFRS equity per share 39.48 47.75 44.29 48.15 44.23 EPRA NTA per share 40.18 47.95 44.44 48.23 44.17 Net LTV 36.9% 27.4% 29.2% 28.2% 28.7% Number of shares outstanding 18,574,298 18,917,764 19,291,415 19,698,207 20,054,241 Weighted average number of shares outstanding 18,473,101 18,751,178 19,138,717 19,499,825 19,869,975 KEY PORTFOLIO METRICS 31 Dec. 2018 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021 31 Dec. 2022 Number of properties 95 65 60 52 49 Market value (€m) 1,214 1,287 1,253 1,355 1,275 Annual contracted rent (€m) 87 81 84 76 78 ERV (€m) 102 92 93 87 88 Lettable area (sqm k) 603 491 473 409 382 Average rent / sqm (€/p.a.) 179 188 197 201 219 EPRA vacancy 13.8% 7.1% 7.0% 5.9% 6.2% EPRA net initial yield 5.2% 4.6% 4.5% 4.1% 4.6% Reversionary yield 8.5% 7.3% 7.5% 6.7% 7.3% Wault (yrs) 4.4 4.2 4.0 4.1 3.9 SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 149 GLOSSARY KEY PERFOMANCE MEASURES 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 calculated 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. SUPPLEMENTARY INFORMATION 150 | NSI ANNUAL REPORT 2022 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 calculate 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 equi- valents, expressed as a percentage of the total real estate investments, 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 liabilities. 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 instruments 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 portfolios. 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. SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 151 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 with 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 carried 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 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. SUPPLEMENTARY INFORMATION 152 | NSI ANNUAL REPORT 2022 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. 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. SUPPLEMENTARY INFORMATION NSI ANNUAL REPORT 2022 | 153 – COLOPHON This annual report is a publication by NSI. NSI Hoogoorddreef 62 1101 BE Amsterdam 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 Hoogoorddreef 62 1101 BE Amsterdam T 020 76 30 300 www.nsi.nl 724500I77C30W2LZZJ032022-01-012022-12-31724500I77C30W2LZZJ032021-01-012021-12-31724500I77C30W2LZZJ032022-12-31724500I77C30W2LZZJ032021-12-31724500I77C30W2LZZJ032020-12-31724500I77C30W2LZZJ032021-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032022-01-012022-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032022-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032021-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032022-01-012022-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032022-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032021-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-01-012022-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032021-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-01-012022-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032022-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032020-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032021-01-012021-12-31ifrs-full:IssuedCapitalMember724500I77C30W2LZZJ032020-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032021-01-012021-12-31ifrs-full:SharePremiumMember724500I77C30W2LZZJ032020-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032021-01-012021-12-31NSI:OtherReservesAndRetainedEarningsExcludingProfitLossForReportingPeriodMember724500I77C30W2LZZJ032020-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMember724500I77C30W2LZZJ032021-01-012021-12-31ifrs-full:RetainedEarningsProfitLossForReportingPeriodMemberiso4217:EURiso4217:EURxbrli:shares

AI Terminal

NSI N.V.

Talk to a Data Expert