New African Properties : INTEGRATED ANNULA REPORT 2022

Contents

	Page
NEW AFRICAN PROPERTIES
NAP Overview		3 - 4
Five Year Historical Review		5
Business Review	6	- 13
CORPORATE GOVERNANCE AND RISK MANAGEMENT
Directors	14	- 15
Management	16	- 17
Corporate Governance	18	- 20
King Code of Corporate Governance	21	- 24
Risk, Audit and Compliance Committee Report	25	- 28
Risk Management	29	- 30
Asset and Property Management		31
SUSTAINABILITY
Key Stakeholders		32
Key Capital Analysis	33	- 34
ANNUAL FINANCIAL STATEMENTS
Directors' Responsibility and Approval		35
Directors' Report	36	- 37
Independent Auditor's Report	38	- 42
Statements of Financial Position		43
Statements of Comprehensive Income		44
Statements of Changes in Equity	45- 46
Statements of Cash Flows		47
Notes to the Annual Financial Statements	48	- 83
TERMS AND DEFINITIONS	84	- 86
UNITHOLDER INFORMATION
Unitholder Analysis	87	- 88
Notice of Annual General Meeting	89	- 90
Proxy Form	91	- 92
Corporate Information and Administration		93

The Integrated Annual Report has been prepared in order to comply, in all material respects, with the requirements of the Botswana Companies Act (CH42:01) and requirements of the Botswana Stock Exchange. Accordingly, the Board of Directors and Management of the Company assume no responsibility for nor warrant compliance of information contained in the Annual Report with requirements of other legal frameworks or regulatory authorities of other jurisdictions.

INTEGRATED ANNUAL REPORT 2022

NAP overview

31 July 2022

OVERVIEW

New African Properties Limited ("NAP") is a public variable rate loan stock company offering investors the opportunity to share in a diversified portfolio of 67 well-established, strategically located, primarily retail properties across Botswana as well as a small portfolio of Namibian retail properties, all underpinned by quality tenants.

NAP has delivered a strong, consistent performance since listing on the Botswana Stock Exchange (BSE) on 28 September 2011, generating both distribution and capital growth to investors and with a market capitalisation of approximately P2.0 billion at 31 July 2022.

Distributable income vs Distributions in Pm

110	CAGR: 7.0%	CAGR: 6.9%		CAGR: 7.0%	170
100
				150
90
80					130
70					110
60					90
50
				70
40
				50
30
20					30
10	2012 2013201420152016201720182019202020212022	2012 2013201420152016201720182019202020212022	2012 20132014201520162017201820192020 20212022	10
	Interim	Final		Total
		Distributable income	Distributions

CAGR = Compound Annual Growth Rate

In view of the uncertainty created by Covid-19 at the 2020 financial year interim stage, that distribution was based on 90% of distributable income with the amount retained being distributed as part of the year end final distribution. This resulted in an unusual difference between the distribution and distributable income for both the interim and final periods in 2020, but not in the annual graphs.

While capital growth for investors is based on movement in the unit price the graph below summarises the net asset value since listing.

1 500									Net asset value in Pm
										CAGR: 5.0%
1 400
1 300
1 200
1 100
1 000
900
800
On	2012	2012	2013	2013	2014	2014	2015	2015	2016	2016	2017	2017	2018	2018	2019	2019	2020	2020	2021	2021	2022	2022
listing	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year	interim*	year
in2011		end		end		end		end		end		end		end		end		end		end		end
								* after deducting interim distribution

NEW AFRICAN PROPERTIES

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INTEGRATED ANNUAL REPORT 2022

Gaborone

Lobatse Ramotswa

NAP overview (continued)

31 July 2022

STRATEGY

NAP owns properties attracting good rentals from quality tenants to enable a consistent distribution flow to investors. Our primary objective is to provide returns to investors through income and capital growth superior to alternative risk related investments.

The key strategic goals underlying this are:

• Managing our properties to achieve stable and sustainable growth
• • Investing in appropriate properties
  • Maintaining our retail focus
  • Maintaining our strong tenant profile
  • Maximising contractual rentals
  • Minimising rental arrears, bad debts and vacancies
  • Optimising expenditure
• Understanding the environment we operate in
• Managing using a sound governance framework
• The use of skilled service providers
• Distribution certainty and transparency
• Diversifying our funding through the introduction of prudent gearing
• Diversifying the unitholder base

NEW AFRICAN PROPERTIES

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PROPERTY PORTFOLIO

The portfolio has a diverse geographical footprint covering the main urban areas, with a weighting in Gaborone, the primary economic hub of the country.

NATURE OF INVESTMENT AND RETURNS

The ownership of linked units in a variable rate loan stock company is tax efficient as profits are distributed by means of a dividend and a debenture interest payment which is larger than the dividend. The full amount of interest is deductible from income of the variable rate loan stock company

as an expense incurred in the production thereof. The Income Tax (Amendment) Act of 2019 restored this position after the 2018 Amendment temporarily restricted this deductibility.

Kasane

Shakawe

Maun

Francistown

Letlhakane

Selibe Phikwe

Ghanzi Serowe

Palapye

Mahalapye

Molepolole

Jwaneng

Dividends paid by the company are subject to withholding tax which is a final tax. Interest is also subject to withholding tax, unless the unitholder is exempt, and this tax can be credited against tax payable by the recipient. Any capital gains on disposal of linked units after one year of acquisition

are exempt from taxation under the current taxation regime as the Company has offered more than 49% of its linked units to trade on the Botswana Stock Exchange. In addition to being able to vote on issues that affect them, unitholders' interests are protected through application of a code of governance and appointment of independent directors to the Board.

INTEGRATED ANNUAL REPORT 2022

Five year historical review

	31 July 2022	31 July 2021	31 July 2020	31 July 2019	31 July 2018
INCOME
Revenue * (P000)	225 814	212 911	207 111	196 759	188 030
Distributable income (P000)	175 263	165 226	154 498	156 040	147 834
Distributable income (tpu)	29.00	27.34	25.56	25.82	24.46
Increase in distributable income (%)	6%	7%	-1%	6%	8%
Distributions (tpu):	29.01	27.34	25.52	25.80	24.53
- interim	14.26	13.38	12.04	12.56	12.25
- final	14.75	13.96	13.48	13.24	12.28
Distribution growth (%)	6%	7%	-1%	5%	8%
Profit (P000)	225 499	161 518	149 323	198 730	217 272
Increase in profit (%)	40%	8%	-25%	-9%	9%
ASSETS
Investment property * (Pm)	1 545	1 467	1 489	1 503	1 459
Borrowings (Pm)	8	12	15	19	22
Net asset value (Pm)	1 483	1 433	1 433	1 442	1 401
Change in net asset value (%)	4%	0%	-1%	3%	5%
GEARING
Debt to property value (%)	1%	1%	1%	1%	1%
Debt fixed (%)	0%	0%	0%	0%	0%
UNIT STATISTICS
Units in issue (millions)	604	604	604	604	604
Closing price (tpu)	331	325	323	324	321
Mkt cap at end of period (Pm)	2 001	1 964	1 952	1 958	1 940
Premium to NAV (%)	35%	37%	36%	36%	38%
Historic yield (%)	8.8%	8.4%	7.9%	8.0%	7.6%
Total return per linked unit (%)	10.8%	9.1%	7.6%	9.0%	7.3%
PROPERTIES
Number of properties	67	64	64	64	64
Last valuation * (Pm)	1 545	1 467	1 489	1 503	1 459
Change in property valuation (%)	5%	-2%	-1%	3%	5%
GLA (000m2)	135	129	129	129	129
Vacancy (by GLA)	5.8%	5.0%	4.6%	3.4%	3.8%

* excludes lease accounting adjustments

NEW AFRICAN PROPERTIES

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INTEGRATED ANNUAL REPORT 2022