Last Update 04 Dec 25
Wane_Investment_House made no meaningful changes to valuation assumptions.
Executive Summary
Legend Internet Plc delivered a challenging performance for the period ended October 31, 2025, marked by declining revenue, margin contraction, and a significant increase in administrative expenses. Revenue declined to ₦258.27 million, down from ₦309.74 million in the prior year, driven by weaker sales volumes and reduced customer activity.
The company recorded a loss of ₦14.78 million, reversing a prior-year profit of ₦94.52 million, as cost inflation, higher operating expenses, and finance charges weighed on performance. Although Legend maintained a solid equity base of ₦2.70 billion, liquidity tightened, with cash declining to ₦11.52 million and working capital pressure intensifying. Despite near-term financial headwinds, Legend continues to invest in its infrastructure base, maintaining over ₦2.49 billion in non-current assets and focusing on operational restructuring to restore profitability.
Financial Highlights – Statement of Profit or Loss (₦’000)
₦’000 Oct 2025 Oct 2024 YoY
Revenue 258,270 309,744 –16.6%
Cost of Sales (110,369) (108,587) +1.6%
Gross Profit 147,901 201,157 –26.5%
Administrative Expenses (168,782) (105,791) +59.5%
Operating Profit Before Tax & Interest (20,881) 95,366 –121.9%
Finance Cost (847) – NM
Profit Before Tax (21,728) 94,519 –123%
Income Tax Credit 6,953 – NM
Profit/(Loss) for the Period (14,775) 94,519 –115.6%
Total Comprehensive Income (14,775) 94,519 –115.6%
Revenue Performance
Revenue declined 16.6% YoY to ₦258.27 million, reflecting:
- Softer customer demand
- Lower sales volume across key segments
- Weakened operating conditions
Gross profit fell sharply by ₦53.26 million, driven by reduced revenue and a slight increase in cost of sales.
The company’s ability to restore revenue growth will depend on:
- Improved client acquisition and retention
- Better inventory management
- Strengthened distribution and operational efficiencies
Profitability and Margins
Legend Internet Plc experienced substantial pressure on profitability:
- Administrative expenses surged by 59.5%, driven by overhead escalation and operational inefficiencies.
- Earnings swung from ₦94.52 million profit to a ₦14.78 million loss, driven by higher costs and weak revenue.
- Finance cost of ₦847,000 further depressed earnings.
Although the company benefited from a ₦6.95 million tax credit, it was insufficient to offset operational losses.
The overall result reflects the need for:
- Cost optimization
- Operational restructuring
- Stronger expense control
Balance Sheet Overview (₦’000)
₦’000 Oct 2025 Jul 2025 % Δ
Total Cash & Cash Equivalents 11,523 21,024 –45.2%
Accounts Receivable 166,472 173,193 –3.9%
Inventory 30,519 74,378 –58.9%
Net PP&E 2,473,471 2,595,924 –4.7%
Total Assets 3,087,148 3,210,821 –3.8%
Total Liabilities 382,580 371,476 +3.0%
Total Equity 2,704,569 2,839,344 –4.7%
Net Debt (Loan – Cash) 37,850 54,209 –30.2%
Interpretation
- Cash levels declined significantly due to weak operating performance.
- Inventory reduction reflects efforts to unlock working capital.
- Total liabilities grew moderately due to higher payables and dividend obligations.
- Equity decreased by ₦134.78 million, driven by operating losses.
The balance sheet remains strong from a solvency perspective but liquidity is tightening.
Cash Flow Highlights (₦’000)
₦’000 Oct 2025 Jul 2025
Cash from Operating Activities 51,844 18,427
Cash from Investing Activities (35,485) (29,029)
Cash from Financing Activities (25,860) (20,257)
Net Change in Cash (9,501) (30,861)
Closing Cash Position (37,850) (28,349)
Insights
- Operating cash flow improved due to better working capital movements.
- Investment expenditure remained high, especially on fixed assets.
- Loan repayment reduced financing inflow, contributing to further cash outflow.
The company closed the period with negative net cash due to overdraft usage, highlighting the need for stronger liquidity management.
Strategic Insights
Operational Efficiency
Rising administrative expenses signal the need for streamlining cost centers and optimizing operating processes.
Liquidity Management
Reduced cash reserves and reliance on overdraft facilities indicate the need for:
- Improved receivables collection
- Reduced dependence on debt
- Enhanced cash conversion cycle
Revenue Stabilization
Regaining top-line momentum will require:
- Stronger customer acquisition
- Enhanced service delivery
- Better inventory and distribution structure
Asset Utilization
Maintaining over ₦2.4 billion in PP&E highlights significant investment in infrastructure. Efficiency of these assets must translate to improved service capacity and profitability.
Strengths
- Strong equity position (₦2.7B) provides resilience.
- Large infrastructure base supports long-term growth.
- Improvement in operating cash flow signals early restructuring progress.
Weaknesses
- Revenue decline and margin contraction.
- High administrative costs materially reducing profitability.
- Weak cash position and reliance on overdraft facilities.
- Reduced inventory and receivables indicate tightening liquidity.
Outlook – 2026
Legend Internet Plc’s near-term outlook will depend on:
- Successful cost control measures
- Strengthening revenue through improved client engagement
- Enhanced operational efficiency
- Improved liquidity and reduced debt reliance
Key risks include persistent cost inflation, weak consumer spending, and continued cash flow pressure.
Analyst View
“Legend Internet Plc faces a period of operational recalibration as weak revenues and rising costs place pressure on profitability. However, the company’s strong asset and equity base provides a platform for recovery, provided management executes disciplined cost control, improves liquidity, and strengthens commercial operations. Restoring revenue growth and optimizing expenses will be central to reviving earnings momentum.”
Conclusion
Legend Internet Plc’s financial performance for the period ended October 31, 2025 reflects a business undergoing operational and cost challenges. While revenue softness, increased expenses, and liquidity constraints weighed on results, the company retains a strong capital structure and significant infrastructure capacity. With focused restructuring efforts, liquidity improvements, and strategic cost discipline, Legend Internet Plc is positioned to restore stability and long-term value creation.
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