The Botswana Housing Corporation (BHC) is optimistic that they will experience a huge increase in revenue this year following a deep in revenue last year. The revenue of the parastatal went down by P167 million from the P467 million realised in 2013.
“BHC’s revenue has continued to grow over the years, having grown from P296 million in 2010 to P467 million in 2013. The Corporation’s major revenue stream, sales revenue, decreased by 65 per cent due to challenges experienced with the delivery of the Phakalane Project. This project was expected to have been sold in this financial year but owing to delays in the upgrading of the sewage infrastructure, the project was not delivered. Envisaged profit margins were eroded due to delays experienced. However, the sale of this project will go a long way into generating more capital for development of more houses in other areas,” BHC said in its 2014 Annual Report.
The report indicated that the rental income remained flat at P187 million year on year, as the Corporation focused on selling its new properties instead of leasing them. “The threshold rental stock is 11, 500 and this threshold has been maintained over the last three years. The main strategy of selling more and renting less is meant to empower Batswana through home ownership. The Corporation recorded P91 million in sales of housing units and made P17 million from professional fees, which relate mainly to management of the project from inception to delivery, including governance processes,” read the report.
Total assets went up by 4 per cent from P2.5 billion to P2.59 billion while the debt equity ration went down from 45 per cent to 41 per cent and the operating surplus also dropped by 41 per cent from P74 million to P44 million mainly as a result of underperformance in revenue. The report further said lack of growth in operating surplus is also attributable to high construction costs. Cost to income ratio rose from 93 per cent to 95 per cent and comprehensive income dropped from P38 million to P16 million.
The Corporation noted that repairs and maintenance costs continue to be a challenge, having grown by 11 per cent year on year. “The cost of maintenance increased as a result of the rise in inflation, while the rental for the houses did not go up. This means that it is becoming more and more expensive to maintain houses with low rentals,” the report read, further indicating that even though management has put in place a planned maintenance program, there is still need for reactive maintenance of some properties.
It concluded by saying the intervention in place to manage this expense is enforcement of the lease agreement, which ensures that tenants pay for maintenance which comes about as a result of their negligence. “This year alone we have recovered close to P1 million as maintenance costs charged to tenants,” the report read.