- Revenue up 31% to P358m, driven by higher rent and contracts
- Rental income alone up 16% or P27m yoy to P196m
- Repairs and maintenance costs soared by 150% to P55m
- Other operational expenses climbed to P45m from P38m in 2023
GAZETTE REPORTER
Botswana Housing Corporation (BHC) recorded a 31 percent revenue increase to P358 million for the six months ending 30 September 2024, driven largely by higher rental income and contract revenues.
However, the Corporation’s profit after tax declined significantly, underscoring challenges with rising costs and impairments.
According to the Corporation’s unaudited interim results, rental income – which is one of BHC’s primary revenue streams – rose by P27 million to P196 million.
Profit after tax
This is a 16-percent year-on-year increase, buoyed by government rental subsidies. However, BHC’s profit after tax for the period was P10 million, a steep drop from P29 million recorded in the same period in 2023.
“The decline in profitability was due to a P19 million increase in impairment expenses on rental receivables, primarily caused by delayed payments from a major customer,” the report states.
The vacancy rate for BHC properties stood at 0.87 percent at the end of the review period, equivalent to 79 vacant units across the country. This figure is below the Corporation’s target of 1.5 percent, signalling improved occupancy levels.
Cost pressures
While revenue surged, cost pressures dampened profitability. Employee expenses rose by P6 million year-on-year, driven by inflationary adjustments and reduced staff vacancies.
Repairs and maintenance costs soared by 150 percent to P55 million, reflecting the resumption of deferred maintenance projects.
“Maintenance expenses were significantly higher compared to the previous year due to delays in planned activities during the prior period,” the report notes.
Housing sales
Other operational expenses climbed to P45 million, up from P38 million in 2023, attributed to inflation and increased administration and training costs.
Revenue from housing sales dropped from P8 million to P5 million year-on-year, constrained by limited stock. Despite this, BHC achieved gains of P28 million from the sale of 63 housing units, with an impressive sales margin of 71 percent.
In contrast, 56 units were sold in the prior year, generating P13 million in gains and a 53 percent margin.
Old stock
“Old stock, which typically yields higher margins, dominated sales during the review period,” the report says. Of the 63 units sold, 57 were older properties, while only six were new stock.
The Corporation also reported delays in initiating planned projects during the first half of the financial year, which reduced the rate of capitalisation of interest and development expenses.
“Financing costs declined by 18 percent year-on-year, reflecting increased capitalisation of borrowing costs to ongoing development projects,” the report states.
Resilience
Despite the profitability challenges, the report emphasises the resilience of the Corporation’s revenue streams, including rental income, facilities management fees, and contract revenues.
However, it acknowledges the need to address operational inefficiencies and manage costs.