ICON PROPERTIES : ANNUAL REPORT 2023

ANNUAL REPORT 2023

Building

Better

Futures

CONTENTS

1. Mission Statement and Investment and Development Philosophy
2. Financial Highlights
3. Chairman's Statement

10 Board of Directors Profile

1. Overarching Strategic Managers' Report

1. Overarching Managers' Profile

1. ICON Properties Shareholder Statistics

1. Corporate Governance Statement

1. Directors' Report

1. Directors' Responsibilities Statement
2. Independent Auditor's Report

1. Statement of Financial Position
2. Statement of Comprehensive Income
3. Statement of Changes in Equity
4. Statement of Cash Flows
5. Notes to the Financial Statements

MISSION

STATEMENT

To be at the forefront of successful

quality property investments and developments

in Malawi and to provide maximum returns

for all stakeholders.

INVESTMENT AND

DEVELOPMENT

PHILOSOPHY

ICON Properties plc

is focused on acquiring high rental yield assets.

ICON Properties plc

has specific strategies for each investment opportunity by putting in place the most appropriate capital structures to meet strict criteria in terms of underlying quality of the assets, project returns, stability

of cash flows and capital growth.

Building Better Futures

4 || Annuall Report 2023 || IICON PROPERTIIES PLC

FINANCIAL

HIGHLIGHTS

Total

Assets

K122.6bn

Profit

Total

Income

K20.9bn

For the year ended 31 December 2023 (2022: K22.8bn)

For the year ended 31 December 2023 (2022: K108.8bn)

after tax

K19.2bn

For the year ended 31 December 2023 (2022: K16.7bn)

Profit After

Tax grew by

15%

ICON PROPERTIES PLC | Annual Report 2023 | 5

Building Better Futures

CHAIRMAN'S STATEMENT

Profit

After Tax

K19.2 15%

billion

(2022: K16.7 Billion)

Total Income

Generated

K20.9

bllion

Building Better Futures

OVERVIEW

I am pleased to report the results of ICON Properties Plc for the year ended 31 December 2023.

ECONOMIC PERFORMANCE

During the year, the Malawi economy continued to face several challenges due to external and internal factors. The Malawi Kwacha depreciated against the United States Dollar by 64.1% (2022: 25.73%) compared to the corresponding year mostly due to the 44% devaluation of the Malawi Kwacha in November 2023. The average headline inflation for 2023 increased to 28.8% (2022: 21%). The increase in inflation was due to increases in both food and non- food inflation.

6 | Annual Report 2023 | ICON PROPERTIES PLC

CHAIRMAN'S STATEMENT (CONTINUED)

PERFORMANCE REVIEW

The Company reported a 15% increase in profit after tax of K19.2 billion for the year ended 31 December 2023 (2022: K16.7 billion).

The Company generated total income of K20.9 billion (2022: K22.8 billion) for the year which included an increase in fair value of properties of K11.8 billion (2022: K14.3 billion). The Company's income performance was lower due to property revaluation gains and finance income. The property revaluation gains on properties were lower than the corresponding year due to normalisation of above normal growth on some properties in the previous year following market realignments. Investment income decreased due to reduced cash balances following an additional investment in Oasis Hospitality Limited (Oasis) at K1.7 billion (2022: K6.8 billion) bringing the total investment to K8.5 billion. Oasis is in the process of constructing an hotel in Lilongwe led by Blantyre Hotels plc and ICON Properties plc is one of the shareholders.

Total investment in hotel construction

K8.5

bllion

Rental income growth at 15% improved from the previous year growth of 6% due to executed rental escalations and consistent occupancy rate at above 90% throughout the financial year.

Total expenses for the year were at K3.9 billion (2022: K3.2 billion) representing a 23% increase. Some of the major expense areas included utility costs, repairs and maintenance and administration costs. The Company recorded an aggregate tax credit for the year due to the recalculation of deferred taxes which led to the reduction of deferred tax liabilities.

In March 2024, after the year end, the Company finalised piloting of the automated parking management system at Chichiri Shopping Centre, the system is expected to improve the customer experience at the mall by reducing over parking and generating income to sustain the growing cost of maintaining the car park as well as enhancing security.

DIVIDEND PERFORMANCE

The Directors have recommended a final dividend of MK935.2 million (2022: MK868.4 million) representing 14 tambala per share (2022: 13 tambala). The payment date will be announced after the Company's Annual General Meeting (AGM).

An interim dividend of MK868.4 million (2022: MK801.6 million) representing 13 tambala per share (2022: 12 tambala) was paid on 27 October 2023.

This would bring the total dividend for the year to MK1.804 billion (2022: MK1.603 billion) representing 27 tambala per share.

CORPORATE SOCIAL RESPONSIBILITY

In April 2024, the construction of a double story classroom block at Mbayani Primary School in Blantyre was completed and this was done in collaboration with the NICO Foundation and other technical partners

Building Better Futures

ICON PROPERTIES PLC | Annual Report 2023 | 7

CHAIRMAN'S STATEMENT (CONTINUED)

Double story classroom block at Mbayani Primary School

Chichiri Shopping Centre Police Unit

Building Better Futures

8 | Annual Report 2023 | ICON PROPERTIES PLC

CHAIRMAN'S STATEMENT (CONTINUED)

and the same was handed over to the Ministry of Education. The Company contributed K49.7 million towards the project during the year and the total contribution will be K89 million.

As reported last year, the Company had begun construction of a Police unit at Chichiri Shopping Centre. The police unit was completed and handed over during the year and will be used by the law enforcement agency at no rent.

The Company also donated K1.5 million to Netball Association of Malawi (NAM) towards the National Netball Team's (The Queens) World Cup Tournament 2023 in South Africa.

The Company will seek to continue responding to the needs of its tenants and wider community whilst delivering value to its shareholders.

PROSPECTS FOR 2024

Following the devaluation of the Malawi Kwacha in November 2023, foreign currency reserves remain low which risks further pressure on the local unit. High inflationary pressures have resulted in suppliers of goods and services hiking their prices hence impacting Company costs as well as disposable income of current and prospective tenants. These conditions are expected to persist in 2024.

Despite the economic challenges, demand for quality space which the Company offers remains high. Rental growth as well as growth in property values is expected to continue as the property market gradually adjusts to changes in the economic landscape. Management will continue controlling expenditure levels whilst ensuring that service delivery is unaffected.

FUTURE PROJECTS

The Company continues to work on projects that will grow the asset base. The Company has had to restructure some projects considering the ever-changing economic environment which has extended the intended start dates. The projects in the pipeline are in the commercial, hospitality and industrial real estate sectors. Once project structuring and following negotiations are complete, the Company will work towards launching these projects.

As the Company progresses in its strategic projects, it will cautiously manage cashflows to balance between operational and capital needs.

As Chairman, I would like to thank the Board of Directors and the staff at the management company for their continued efforts in producing positive results each year despite economic challenges.

Eric Chapola

Chairman

ICON PROPERTIES PLC | Annual Report 2023 | 9

Building Better Futures

BOARD OF DIRECTORS PROFILE

Building Better Futures

Mr. Eric Chapola

Chairperson

Mr. Eric Chapola is a Chartered Insurer with the UK Associateship ACII qualification (Master's Equivalent), and a fellow under Society of Fellows UK. He also holds a Diploma in Business Studies from the then University of Malawi (Polytechnic). He served as the Chief Executive Officer of NICO Life Insurance Company Limited up to December 2023. In his tenure as Chief Executive Officer, Mr. Chapola has provided strategic leadership in management of the NICO Life property portfolio.

Mr. Chapola has extensive board leadership and experience having served as Chairman of Malawi Revenue Authority (2017 -2019) and currently the Chairman of the Malawi Blood Transfusion Services Board and Life Pharmacies Limited Board. He also serves on the boards of the University of Malawi, Sanlam Mozambique, NICO Zambia Insurance Company Limited, Insurance Institute of Malawi, amongst other boards.

10 | Annual Report 2023 | ICON PROPERTIES PLC

Mr. Dasford Kamkwamba

Non-executive Director

Mr. Kamkwamba is an accountant by profession. He holds an MBA from Stellenbosch University Business School and is an Associate Member of the Chartered Institute of Secretaries. He is a Chartered Certified Accountant and was awarded a Fellowship (FCCA). Mr. Kamkwamba holds a Bachelor of Commerce and has over 35 years' work experience in financial management; strategic management and corporate secretarial matters.