The Botswana Housing Corporation (BHC) returned to profitability in the year ended 31 March 2026, recording a profit after tax of P49.6 million following a P104.6 million loss in the previous financial year, despite a sharp decline in revenue.
The state-owned housing developer’s audited financial results show that revenue and rental income fell 42.2% to P427.5 million from P739.5 million in the 2025 financial year, reflecting lower rental income and reduced revenue from construction and management contracts.
BHC’s recovery was supported by a significant reduction in impairment expenses and gains from the sale of investment properties, which helped offset the weaker revenue performance.
The corporation’s impairment expenses fell to P16.9 million from P219.2 million a year earlier, while gains from the sale of investment properties increased to P95.6 million from P71.9 million.
These factors helped BHC record an operating profit of P28 million, reversing an operating loss of P116.8 million in the previous financial year.
However, the results indicate that the return to profitability was supported partly by property disposals rather than stronger revenue generation. Without the P95.6 million gain from investment property sales, BHC estimates that it would have recorded an operating loss of approximately P67.6 million.
Rental income, the corporation’s largest revenue source, declined to P279.1 million from P392.2 million. Revenue from construction and management contracts dropped to P141.7 million from P336.8 million, while outright housing sales contributed P6.7 million, down from P10.5 million.
Rental income accounted for approximately 65% of total revenue during the year, with construction and management contracts contributing 33% and housing sales making up the remaining 2%.
Despite the decline in revenue, BHC improved its gross profit margin to 72.5% from 59.7%, as the cost of sales fell faster than revenue. Gross profit, however, declined to P309.9 million from P441.4 million.
Operating expenses, excluding impairment charges, decreased to P361.5 million from P412.5 million. Repairs and maintenance costs fell to P78 million from P110.7 million, while employee benefit expenses remained broadly unchanged at P170.6 million.
The reduction in operating costs was not sufficient to prevent the corporation’s cost-to-income ratio from rising to 84.6% from 55.8%, reflecting the sharper contraction in revenue.
BHC’s balance sheet expanded modestly, with total assets increasing 2.9% to P2.69 billion from P2.61 billion. Shareholders’ equity rose to P1.59 billion from P1.54 billion, while total borrowings declined slightly to P529.4 million from P546.2 million.
Housing inventories increased by P274.6 million to P984.2 million, up from P709.6 million in the previous financial year. The inventory balance included P706.5 million in housing under construction and P230 million in completed houses, after write-downs, alongside P47.6 million in land for development.
The increase means that approximately 36.6% of BHC’s total assets were tied up in housing inventories at year-end, placing greater importance on completing projects and converting work in progress into completed houses for sale or rental.
Cash and cash equivalents, meanwhile, declined to P354.5 million from P467.5 million. BHC recorded net operating cash outflows of P192.9 million, although investing activities generated P133.1 million, supported partly by P114.2 million in proceeds from investment property sales.
The cash position highlights the challenge of funding operations and housing developments while maintaining adequate liquidity. Although the current ratio improved to 2.35 times from 1.34 times, the corporation’s rising inventories and declining cash balance remain important considerations.
The structure of BHC’s borrowings also changed significantly during the year. Short-term borrowings fell to P32.8 million from P433.9 million, while long-term borrowings increased to P496.5 million from P112.3 million.
In its financial statements, management said its going-concern assessment considered financial performance, cash-flow forecasts, access to financing and stakeholder support. The corporation also outlined cost-containment measures, liability restructuring and engagement with financiers over refinancing options.
BHC’s ability to sustain its return to profitability will depend on stabilising rental and construction-related revenue, controlling costs, improving cash collections and converting its growing housing inventory into revenue and cash flow.