Legend Internet Plc has reassured investors of stronger earnings prospects in the future despite reporting a pre-tax loss of N199.34 million for the six months ended January 31, 2026, as aggressive investments in network expansion, rising operating expenses and significantly higher financing costs weighed heavily on profitability.

The broadband and digital services provider moved from a pre-tax profit of N239.85 million recorded during the corresponding period of 2025 to a loss position, marking its first interim loss since it was listed on the Nigerian Exchange.

According to the company’s unaudited financial results for the half-year ended January 31, 2026, filed with the Nigerian Exchange, administrative expenses of N457.62 million exceeded gross profit of N322.99 million during the period, making an operating loss unavoidable even before finance charges were taken into account.

An analysis of the company’s first-half 2026 performance showed that the deterioration in earnings was driven by the convergence of four major pressure points.

These included a disproportionate increase in administrative overhead costs.

Another factor was the near-elimination of the company’s operating profit margin.

The company also faced a sharp rise in financing costs resulting from new commercial paper borrowings.

Despite the earnings pressure, management maintained that the current performance reflects the short-term impact of an expansion strategy designed to strengthen infrastructure, improve service delivery and support long-term growth.

The Chief Executive Officer, Aisha Abdulaziz, said the company remains committed to building a stronger platform capable of delivering sustainable earnings and long-term shareholder value.

“We are building for the future, and while short-term earnings may reflect the weight of our expansion strategy, the underlying fundamentals of the business remain strong. Our investments in fibre infrastructure, technology and operational capacity are positioning Legend Internet for improved performance, stronger cash generation and sustainable shareholder value in the periods ahead,” Mrs. Abdulaziz said.

Management argued that despite the disappointing earnings performance, the results should be assessed within the broader context of ongoing investments aimed at strengthening the company’s position in Nigeria’s rapidly expanding broadband market.

The unaudited results showed that revenue declined by 18.84 per cent to N505.36 million from N622.64 million recorded during the corresponding period of 2025.

Cost of sales declined by a slower 13.69 per cent to N182.37 million, resulting in gross profit falling by 21.48 per cent to N322.99 million.

The most significant pressure came from operating expenses, with administrative costs surging by 174.38 per cent to N457.62 million.

The increase in administrative expenses exceeded gross profit by N134.63 million and pushed the company into an operating loss position.

Personnel expenses accounted for N153.50 million of the administrative costs incurred during the period.

Depreciation expenses amounted to N98.36 million.

Professional fees, transportation and travel expenses, as well as marketing costs, also increased during the review period.

Consequently, the company recorded an operating loss of N134.63 million, compared with an operating profit of N244.55 million achieved in the corresponding period of the previous year, representing a deterioration of N379.18 million.

Finance costs further intensified the pressure on earnings, increasing by 1,278.78 per cent to N64.71 million from N4.69 million recorded during the same period in the previous year.

The sharp rise in finance costs was linked to new commercial paper borrowings of N537.95 million.

As a result, total borrowings increased to N564.88 million from N75.23 million as of July 2025.

After accounting for finance charges, the company reported a pre-tax loss of N199.34 million and a negative earnings position of N99.34 million for the six-month period.

Although total liabilities rose by 143.33 per cent to N903.91 million, largely due to increased short-term borrowings, shareholders’ funds remained strong at N2.55 billion.

Management stated that the strength of the company’s equity base demonstrates the resilience of its balance sheet despite the current pressure on earnings.

Total assets increased by 7.55 per cent to N3.45 billion from N3.21 billion at the end of July 2025, reflecting continued investments in infrastructure and operational capacity.

The company also reported a notable improvement in liquidity during the period.

Cash and cash equivalents increased significantly to N165.5 million from a negative position of N28.3 million previously, providing a stronger financial buffer to support operations and future growth initiatives.

Legend Internet continued to expand its infrastructure footprint during the review period, with property, plant and equipment rising to N3.25 billion from N3.20 billion in July 2025.

The company invested an additional N50.49 million in fibre network expansion and related infrastructure projects.

Its fibre network assets alone carried a book value exceeding N2.44 billion as of January 31, 2026, highlighting the scale of its long-term infrastructure investment programme.

Market reaction to the results has remained relatively subdued.

The company’s share price declined marginally from N6.06 on May 29 to N5.90 as of June 2.

Despite the decline, the stock remains approximately 11.5 per cent above its opening price for the year.

Investors are expected to closely monitor whether management can rein in operating costs, restore profitability and convert its substantial infrastructure investments into stronger earnings performance during the second half of the 2026 financial year.