BHC records 84% slide in profit after tax
Botswana Housing Corporation (BHC) has blamed its losses on the rising operating expenses and financing costs although the parastatal was awarded rental increases during the pandemic. In its latest financial results for the six months ended September 30, 2022, the state owned entity said profits after tax dropped by 84% to P3.5 million, which is a decrease of P14.5 million when compared to the P18 million that was recorded in the prior year.
According to the Corporation, its operating costs increased year on year on the back of increased repairs and maintenance. During the reporting period, the parastatal’s repairs and maintenance saw a 40% increase to P31 million due to planned maintenance activities. Other expenses also went up by 11% from the prior year due to a rise in inflation.
Owing to the slowdown in project activities, BHC’s loan interest expenses could not be capitalised, leading to financing costs increasing by 24% year on year representing P3 million, which negatively affected its profitability.
In a statement accompanying the results, acting CEO, Nkaelang Matenge said BHC did not start any project during the period under review, which affected the rate of capitalisation to projects of both interest expenses and staff costs resulting in an increase in interest expenses year on year by 24% to P18 million.
“However, there are three major projects which are scheduled to start in the second half of the financial year, and this is expected to mitigate against this negative performance,” he said.
Moving forward, BHC plans to start development of 531 housing units, which will include 196 units in Gaborone Block 7, 212 units in Kazungula, 100 units in Maun, 13 units in Phakalane and 10 units in Tsabong before the end of the financial year. The Corporation’s sales revenue which is its major revenue stream also did not perform well as its decreased year on year by 93% to P5 million from P74 million. “This negative performance was driven by low sales volumes compared to the prior year. During the period under review, old stock, which has relatively higher margins, dominated the sales mix at 30 units compared to new stock which sold 11 units,” Matenge added
The rental income which is the second major revenue stream for the Corporation rose by P18 million to P139 million recorded in the prior year. Matenge said this income line increase due to rental adjustment, which was effected from April 2022 and some additional housing units, added to their investment portfolio.
The vacancy rate at the end of the review period was 1.61% which is above the Corporations benchmark rate of 1.5% representing 161 vacant units across the country.
“Rental revenue continues to be the cornerstone of the Corporation’s financial sustainability and the strategy of maintaining a rental threshold of 10,000 units will continue.”