Botswana Housing Corporation’s (BHC) revenues for the first six months ended 30 September 2020 suffered a big knock declining by 14% to stand at P335 million from P391m in prior period.
The corporation attributes that to a reduction in revenue from construction and management contracts which decreased by P69 million, a sharp 41% fall.
The reduction in this revenue stream was on the back of low activity on construction projects due to the economic lockdowns. The sales revenue, which is the Corporation’s major revenue stream, performed well during the first half of the financial year increasing year-on-year by 15% to P90 million. This positive performance was driven by high sales volumes.
However, the margins on the sales were low due to the sales mix between old and new stock.
Chief Executive Reginald Motswaiso’s led corporation said during the period under review new stock which has relatively lower margins has now dominated the sales mix.
“This was further exacerbated by the fact that some of the sales were in areas away from the main markets of Gaborone and Francistown. The rental income, which is the second major revenue stream for the corporation, increased by P7 million to P103 million compared to the same period in the prior year,” BHC said, noting that rental arrears rose from P10 million to P14 million.
This income line, the corporation further buttressed, has increased due to some additional housing units that were added to investment properties portfolio during the first half of the year.
“The units added to investment portfolio were leased at cost recovery rentals and operating expenses decreased by 6%, total assets decreased by 2% and debt to equity ratio is at 0.46 within corporation’s benchmark rate of 1.5%. Income from professionals were P3m decrease of 88%,” BHC added.
COVID 19 has negatively impacted on this revenue line as some projects which were planned could not start as professional fees income is third largest of revenue stream for the corporation.
“On the expenditure side of the business, employee expenses went down by 4% to P70 million compared to the same period in the prior year, as a result of some vacant positions which were not filled during the reporting period,” said the corporation.
As part of boosting revenue, BHC CEO Motswaiso recently informed standing parliamentary committee of Government Assurances that it will refurbish Samaphaleche Units in Jwaneng. He noted that BHC intends to build better houses that could enable it to generate better revenues, adding that the current rental fees were low and not sustainable to BHC.
On the outlook, the corporation said it further anticipates appetite for its products and services will remain unaffected in the short-term; remaining confident on positive results for the end year.