Nigerian agribusiness producer Ellah Lakes Plc reported a widening net deficit for the three months ended June 30, 2026, as sharp increases in cost of sales and administrative overheads neutralized year-on-year gains in product revenue.
The Benin-based enterprise posted a net loss of ₦573 million for the second quarter, expanding from a loss of ₦352 million recorded in the corresponding period of 2025. Although revenue grew year-on-year to ₦173.8 million from ₦58.5 million, cost of sales escalated sharply to ₦118.2 million compared to ₦911,000 in Q2 2025, eroding gross profitability.
On a sequential basis, revenue dropped 51.6% quarter-on-quarter from ₦359.48 million recorded in the three months to March 2026, driven by lower volume realizations in core palm product segments.
Revenue Breakdown and Cost Inflation
Quarterly revenue was dominated by the company’s oil palm operations, which generated ₦151.0 million (down from ₦359.0 million in Q1 2026). Additional revenue streams included Palm Kernel Nut (PKN) sales at ₦13.62 million, livestock operations at ₦7.11 million, and palm oil sludge sales at ₦2.09 million.
The margin pressure was intensified by significant expansion across operational expense line items:
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Administrative Expenses: Advanced to ₦253.46 million in Q2 2026, up 45.7% from ₦173.93 million in Q2 2025.
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Personnel Costs: Grew 51.8% year-on-year to ₦259.51 million from ₦170.90 million.
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Depreciation & FX Losses: Depreciation charges surged to ₦47.89 million (vs. ₦961,000 in 2025) following recent asset deployments, alongside foreign exchange losses of ₦5.28 million.
For the six-month period ending June 30, 2026, Ellah Lakes reported an aggregate net loss of ₦1.162 billion on total turnover of ₦533.85 million, while total operating losses reached ₦782.63 million.
Balance Sheet Restructuring via Director Debt Conversion
To alleviate debt service strain and rebalance its financial structure, Ellah Lakes completed a major debt-to-equity conversion during the quarter.
Under approved debt conversion agreements, the company converted ₦7.076 billion in outstanding director and shareholder loans into new ordinary equity at a conversion price of ₦2.80 per ordinary share (50 kobo nominal value).
Key transactions included:
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Chuka Mordi (CEO): Converted outstanding shareholder debt into 216,071,429 ordinary shares.
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Paul Farrer (Director): Converted loan balances into 65,354,058 ordinary shares.
The restructuring issued a total of 2.252 billion new shares, expanding Ellah Lakes’ total paid-up share capital base to over 6.11 billion ordinary shares, significantly reducing liabilities and expanding total equity reserves.
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