Last Update 30 Nov 25
Fair value Decreased 11%based on recent valuation and more share dilution
Executive Summary
Ellah Lakes Plc reported mixed performance for the period ended 31 October 2025, with modest revenue improvement but sustained operating losses driven by high administrative and personnel expenses, limited scale efficiencies, and elevated finance charges. For the 3 months ended October 2025, revenue grew significantly to ₦5.05 million compared with ₦0.25 million recorded in October 2024, while revenue for the 15-month period increased materially to ₦72.16 million (vs ₦1.03 million in the corresponding prior period). Gross profit improved accordingly; however, profitability remained under pressure due to heavy operating expenses totaling ₦2.18 billion for the 15-month period.
Despite posting an operating loss of ₦1.92 billion, the company recorded significant other income, including FX gains and revaluation gains totaling ₦356 million. Finance costs reduced substantially to ₦58.5 million from ₦157.6 million, reflecting improved debt management. The balance sheet remained strong, underpinned by ₦24.9 billion in property, plant & equipment and a total asset base of ₦30.74 billion. Equity stood at ₦22.36 billion, supported largely by a revaluation surplus of ₦14.93 billion, though retained losses widened to ₦5.91 billion. Overall, Ellah Lakes maintained a solid asset position despite continued operating losses. Significant restructuring, capital injection, and operational scale-up remain essential to move the company toward sustainable profitability.
Financial Highlights – Statement of Profit or Loss (₦’000)
₦’000 3M Oct 2025 3M Oct 2024 15M Oct 2025 15M Oct 2024
Revenue 5,054 249 72,158 1,029
Cost of Sales (277) – (1,392) –
Gross Profit 4,777 249 70,766 1,029
Other Income 147,412 – 186,054 15,933
Admin Expenses (233,373) (78,282) (900,147) (375,523)
Personnel Expenses (234,576) (194,083) (1,020,697) (785,534)
Finance Costs (7,050) (9,940) (58,521) (157,561)
Depreciation (871) (961) (5,495) (4,806)
FX Gain/(Loss) 22,749 (191,990) 152,257 –
Revaluation Gain 18,763 – – –
Total Operating Expenses (457,108) (260,517) (2,176,849) (1,171,168)
Operating Profit/(Loss) (304,919) (260,268) (1,920,029) (1,154,207)
EPS (₦) (0.08) (0.13) (0.50) (0.58)
Revenue Performance
Ellah Lakes recorded a strong improvement in topline performance, albeit from a low base:
Key Growth Drivers
- Improved operational activity across agricultural and land development assets.
- Increased contribution from biological assets as plantations matured.
- Higher ancillary income, particularly non-operating revenue, provided much of the uplift.
Despite the revenue improvement, operating activity remains sub-scale and insufficient to cover fixed costs.
Profitability and Margins
Gross Profit
Gross profit rose significantly to ₦70.8 million for the 15-month period (vs ₦1.0 million), reflecting enhanced operational output.
Operating Expenses
Operating expenses remain the company’s largest challenge:
- Administrative expenses: ₦900 million
- Personnel expenses: ₦1.02 billion
- Finance cost reduced to ₦58.5 million but remained a pressure point.
FX & Revaluation Gains
- FX gain of ₦152.3 million provided partial relief.
- Revaluation gain of ₦18.76 million boosted quarterly performance.
Operating Loss
Operating loss widened to ₦1.92 billion, reflecting heavy overheads and insufficient revenue scale.
Earnings Per Share
EPS improved marginally but remained negative at ₦(0.50) (15 months).
Balance Sheet Overview (₦’000)
₦’000 31 Oct 2025 31 Jul 2025 (Audited) % Δ
Total Assets 30,737,727 31,051,476 -1%
Non-current Assets 26,348,271 24,592,466 +7%
Current Assets 4,389,456 6,459,011 -32%
Total Liabilities 8,382,198 8,391,029 -0.1%
Total Equity 22,355,529 22,660,448 -1%
Interpretation
- Assets increased slightly due to growth in PPE and biological assets.
- Cash declined from ₦5.90 billion to ₦3.70 billion, indicating ongoing cash burn.
- Liabilities remained stable with director loans (₦7.08 billion) and borrowings (₦400 million).
- Retained losses widened to ₦5.91 billion, though total equity remains strong at ₦22.36 billion, driven largely by revaluation reserves.
Key Ratios & Indicators
Metric Performance
Revenue Growth (15M YoY) +>7,000% (from ₦1m to ₦72m)
Gross Margin High but revenue base small
Operating Margin Strongly negative
Total Asset Growth -1%
Equity/Assets 73% (very strong equity backing)
Cash Ratio Declining
Debt to Equity Low (due to strong revaluation surplus)
Insights
- The business remains asset-rich but cash-weak.
- Profitability challenges are driven by high fixed costs and low operational scale.
- Improvement in FX gains and revaluation gains provide temporary support but are not operating cash flows.
Strategic Insights
- Substantial asset base (₦26.3bn in non-current assets) provides room for operational expansion.
- Reduction in finance costs signals improved capital structure management.
- Need for revenue scale-up to match overhead costs and achieve breakeven.
- Operational restructuring and cost optimization are critical.
- Improved monetization of biological assets and land bank could lift core revenue.
Strengths
- Strong asset base dominated by land and agricultural assets.
- Healthy equity position supported by revaluation surplus.
- Growing revenue and improving gross profit.
- Lower financial leverage reduces liquidity risk.
Weaknesses
- Persistent operating losses.
- Heavy administrative and personnel costs.
- Declining cash reserves.
- Low revenue relative to operating scale.
- Large retained losses affecting shareholder value.
Outlook
Ellah Lakes’ outlook depends on:
- Scaling agricultural production to materially increase revenue.
- Cost optimization to improve operating margins.
- Potential capital injections to support working capital.
- Diversification of income streams including potential land leases or JV opportunities.
Risks include cash depletion, cost overruns, delays in project monetization, and operational inefficiencies.
Analyst View
“Ellah Lakes remains fundamentally asset-backed, with a strong equity position that reflects significant land and agricultural holdings. However, the company’s operating performance continues to lag due to structural cost pressures and insufficient revenue scale. Stabilizing cash flow, accelerating operational output, and implementing cost controls will be essential to drive long-term sustainable profitability.”
Conclusion
Ellah Lakes Plc delivered improved revenue and gross profit but continues to face significant cost pressures leading to widened operating losses. The company remains highly asset-backed and minimally leveraged, providing a foundation for recovery if operational efficiency and scale-up initiatives are pursued. Sustained restructuring and improved monetization of assets will be key catalysts for future value creation.
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Disclaimer
The user Wane_Investment_House has a position in NGSE:ELLAHLAKES. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.