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Crumbling Profits

Crumbling Profits
DEGRADING: BHC flats

BHC profits drop by a staggering 98 percent (maybe 98 could be in a different colour so it stands out)

Botswana Housing Corporation (BHC) has seen its profits crumble by a whopping 98 percent for the financial year ended 31 March 2021.

The parastatal recorded profit after tax of just P1 million, a massive drop from the P49 million it brought home the previous year.

The plummet in profitability is largely down to low sales revenue from property inventories and investment properties, a decrease in professional fees revenue, and an increase in impairment expenses.

During the 365 days under review, house and investment property sales halved, down from 829 the year before to 405 this time around.

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BHC’s Acting General Manager (GM), Pascaline Sefawe attributed the decline primarily to Coronavirus and the chaos that came with it.

“This revenue stream was impacted negatively by the Covid-19 pandemic as the government, being the major client, reduced spending on house purchases as it redirected resources to the fight against the pandemic,” Sefawe explained.

Although sales took a nosedive, BHC did see an increase in rental revenue, which rose by 5 percent, from P199 million to P209 million.

Rentals are the Corporation’s second-biggest revenue stream after-sales.

“The total rental stock at the end of the reporting period was 9, 911 units, and these units are rented to house Batswana across the country,” said Sefawe, adding BHC’s strategy is to maintain the rental units at 10, 000 units to meet the Corporation’s operating costs.

At the end of the financial year, BHC recorded a vacancy rate of 1.04 percent on its rental portfolio, which translates to 103 vacant units and is below the industry target of 1.5 percent.

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Professional fees revenue, which is the revenue from project management for third parties, is the Corporation’s third-biggest source of income.

This stream also dried up, suffering a 66 percent drop, down from P41 million to P14 million.

The Acting GM noted this was on the back of the Covid-19 pandemic as construction activities were affected by the intermittent lockdowns.

“There were few third-party projects during the review period, as the government and government-owned entities had to suspend some of the planned projects to focus on fighting the Covid-19 pandemic,” she stated.

Nevertheless, Sefawe expressed confidence that once the Covid-19 pandemic subsides, this income stream will start growing as more of the suspended third-party projects are undertaken.

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