Ellah Lakes Posts Zero Revenue For Two Years

Ellah Lakes Plc, a Nigerian agricultural company listed on the Nigerian Exchange (NGX), has reported zero revenue for the second consecutive fiscal year, ending July 2024

The company also recorded a net loss of ₦893.9 million during this period, compounding concerns over its operational and financial difficulties. In addition to these losses, Ellah Lakes announced a significant shareholding change, as CBO Capital divested 81 million shares in a bid to realign its financial commitments.

CBO Capital’s divestiture, disclosed in a corporate filing, involved the sale of 79 million shares at ₦3.67 per share and an additional 1.4 million shares at ₦3.75 per share. This move aligns with the company’s plan to meet NGX’s free float requirements and repay obligations to its shareholders and creditors. Earlier in July 2024, CBO Capital had signaled its intention to transfer portions of its holdings as part of a restructuring process aimed at improving liquidity and satisfying regulatory standards. Following the sale, CBO Capital’s ownership in Ellah Lakes dropped significantly from 28.2 percent in 2023 to 8.1 percent in 2024, leaving the firm with 225.3 million shares out of the company’s total 2.75 billion shares.

This restructuring has notably shifted Ellah Lakes’ ownership dynamics, with nine significant shareholders now holding 69 percent of the company’s equity.

Despite its inability to generate revenue for the second consecutive year, Ellah Lakes reported substantial expenses, including personnel costs of ₦591.4 million, administrative expenses amounting to ₦297.7 million, and interest payments of ₦147 million on outstanding bank loans. These figures highlight the company’s ongoing financial pressures.

Ellah Lakes also faced with substantial debt obligations, including a ₦658 million loan from the Central Bank of Nigeria (CBN) and First City Monument Bank (FCMB). This debt, obtained under the CBN’s Oil Palm Plantation Development Programme, features an initial interest rate of five percent in the first year, which subsequently increases to nine percent, further intensifying the company’s financial strain.

In an attempt to address its liquidity crisis, Ellah Lakes’ Board of Directors approved a plan in March 2024 to raise funds via private placement. The company informed the Securities and Exchange Commission (SEC) about ongoing discussions with a core investor. Although specific details of the proposed capital injection remain undisclosed, the funding is anticipated to stabilise Ellah Lakes’ financial position and reinvigorate its operations.

Ellah Lakes finds itself at a crucial moment, with its mounting debts and high-cost structure threatening its growth trajectory. The anticipated inflow of capital and the recent shareholder restructuring represent crucial steps toward repositioning the company. However, the success of these measures will depend on the company’s ability to translate these developments into operational efficiency and revenue generation.