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      Men’s U-19 cricket team preps for world cup qualifiers

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      Less Rewards for The Mares after Historic WAFCON Feat

      Less Rewards for The Mares after Historic WAFCON Feat

      Sponsorship offers pour in for Botswana’s World Athletics U-20 Heroes

      BAA targets Four Medals at World Athletics U20 Champs

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      Home Companies & Markets

      Rental revenue key to financial sustainability of BHC

      mm by Baboloki Meekwane
      July 25, 2022
      in Companies & Markets
      Reading Time: 2 mins read
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      Rental revenue key to financial sustainability of BHC

      A general view of the BHC Flats in Gaborone city (Pic:MONIRUL BHUIYAN/PRESS PHOTO)

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      • Rental revenue line up 15% from prior year
      • Rental revenue covers bulk of operating costs

      Rental properties carry the bulk of the work at Botswana Housing Corporation (BHC) where rental revenue is the major source of income, the Chief Finance Officer of the parastatal, Diratsagae Kgamanyane, has pointed out.

      Giving the financial highlights for the year ended 31st March 2022, Kgamanyane stated that profit before income tax increased significantly from P2 million in the prior year to P72 million, resulting in an overall increase in surplus after tax from P1 million in the prior year to P64 million.

      “This growth in surplus was driven mainly by rental revenue that increased by 15 percent from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment,” he said. “Sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.”

      The CFO attributed the increase in rental revenue mainly to the second-year rental adjustment of BHC’s on-going five-year rental incremental plans to get to 80 percent of market rate, with new properties also added to the investment portfolio. During the period under review, rental revenue surpassed sales revenue as the major revenue stream for the Corporation. The total rental stock at the end of the reporting period was 9 901 units that are rented to house Batswana across the country.

      “The Corporation’s strategy is to maintain the rental units at 10 000 units to ensure sustainability,” Kgamanyane said. “At the end of the financial year, the Corporation recorded a vacancy rate of 0.81 percent on its rental portfolio, which translates to 80 vacant units. The vacancy rate is below the industry standard of 1.5 percent.” The CFO said BHC’s major revenue streams after the rental income line are sales of properties, professional fees (which is the revenue from project management for third parties) and facilities management (which is revenue from maintenance of properties for third parties).

      Kgamanyane added that sales revenue, which is one of the major earning sources, returned impressive margins, contributing significantly to the overall growth in the gross margin. He noted that some income streams were affected by the COVID-19 pandemic as the professional fees revenue line declined significantly by 64 percent to P5 million from P14 million in the prior year, because of suspension of planned projects by BHC clients due the pandemic.

      “Facilities management revenue decreased by P24 million from P69 million recorded in the prior year to P45 million due to a reduction in projects,” Kgamanyane said. He noted that the strength of BHC lies in its investment properties portfolio that stood at P1.4 billion at the end of the reporting period, hence and the parastatal continues to diversify revenue streams despite both facilities management income and professional fees being challenged by prevailing economic conditions that have seen most of BHC’s major clients curtail spending.

      Tags: Botswana Housing Corporation (BHC)COVID-19 pandemicDiratsagae Kgamanyane

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