ELLAH LAKES' RAY OF HOPE

In spite of years of losses, it appears there is hope yet that Ellah Lakes will someday find its way out of the loss league.
Sure, from the half year figures to January 2016 released a few days ago, Ellah Lakes is on its way to yet another loss but this time, second quarter figures offered a ray of hope.
According to the figures, at half year, the obvious trend points towards another loss this financial year as 32.5% rise in turnover to N28.9m from N21.8m was overshadowed by 67.3% increase in cost of sale to N17.2m from N10.3m.
Overhead in the other hand increased by far lower percentage (14.3%) to N21.1m from N18.5m. This though could not stop Ellah lakes from 36.1% higher loss of N9.43m compared to N6.93m loss by half year of 2015 financial year.
Thus by January 2016 Ellah Lakes was already losing N32.6 on each N100 sales recorded compared to N31.8 previously.
Consequently, shareholders fund was already down by 1.82% but huge reserves as usual continue to ensure their investment is not threatened yet.
However a close study of the second quarter figures to January seem to offer hope for hitting the bottom instead of seeking it yearly.
In those three months to January, Ellah lakes sales grew by 54.1% to N13.7m from N8.88m and even though cost of sale increased significantly, the loss reported came to N3.73m compared to N2.85m previously.
In other words, because of the rather substantial increase in turnover, loss on N100 income dropped to N27.3 in that quarter as against N32.1 at the same time in previous year.
SO:
* With Nigeria being forced to look inwards, Ellah lakes PLC may reap well from efforts deployed to stimulate sales. After all, when times are tough, agriculture related ventures are the last to be hit.
* However, to get there something must be done about direct cost penchant to outgrow sales.

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