Veritasi Homes & Properties Plc saw its revenue slump 17.5% in 2023 due to the rising cost of construction and significant Naira devaluation amid the general inflationary pressures.
This constrained demand for properties, pressuring land sales and construction services.
Veritasi Homes revenue declined by 17.5% to N22.44 billion in 2023 and further by 8.2% (annualised) during the 4M 2024, period.
Similarly, EBITDA margins also receded to 15.8% in 2023 from 38.2% in 2022 due to escalated cost of construction and a moderation in higher margin land sales.
Veritasi is one of the fastest growing real estate and property development companies in Nigeria.
The company’s competitive position is supported by its strong operating performance relative to peers and a sizeable land bank, providing operating flexibility in terms of monetising land sales.
The company has successfully delivered over 3,000 housing units (over 400 units delivered in 2023) since the inception of operation some six years ago in 2018.
To expand its footprint and enhance earnings stability, the company plans to diversify into commercial property segment via the development of student accommodation in public and private universities across Nigeria.
However, gross debt spiked to N8.3 billion as of April 2024 from N2.3 billion at December 2021 due to increased funding requirements to finance new projects and boost sales.
Liquidity uses by Veritasi Homes & Properties Plc, comprise short-term debt around N6.7 billion maturing by December 2024 and capital spending of N371.2 million.
“We negatively view the high proportion of short-term debt (68% as of April 2024) in the capital structure. The company intends to refinance this with longer tenor debt and is looking to raise two tranches of NGN5.0 billion each in 2024 and 2025 respectively,” GCR Ratings said.
“We view liquidity as somewhat weak, given the high refinancing risk arising from the large proportion of short-term debt.”
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