Transcorp Hotels Plc’s operating cash flow swung from a surplus to a deficit in the first nine months of 2026, as a surge in trade and other receivables put pressure on cash generated from its hospitality business.
The company’s unaudited third-quarter financial statements show that net cash used in operating activities reached N15.93 billion in the nine months ended September 30, compared with a positive N18.82 billion in the corresponding period of 2025.
The reversal occurred despite the hospitality group reporting a 4.8 percent increase in profit after tax to N15.54 billion from N14.82 billion a year earlier, highlighting a widening gap between its reported earnings and the cash generated from its operations.
An analysis of the cash flow statement shows that cash generated from operations turned negative at N11.27 billion, against a positive N21.79 billion in the same period last year.
The biggest pressure came from an increase in trade and other receivables, which absorbed N35.55 billion in cash during the period, compared with N3.53 billion in the corresponding period of 2025.
The increase in receivables was substantially larger than the company’s ₦22.53 billion profit before tax, making the collection of outstanding balances a significant factor in its cash flow performance.
The company’s balance sheet shows that current trade and other receivables rose to N50.53 billion at September 30, 2026, from N11.00 billion at the end of December 2025.
Within the receivables balance, amounts due from other related parties increased sharply to N42.77 billion from N4.02 billion, while trade receivables rose to N4.01 billion from N3.50 billion.
Fresh borrowing cushions cash position
The company raised N44.48 billion in new borrowings during the nine-month period, compared with no new borrowing proceeds recorded in the corresponding period of 2025.
After repaying N3.43 billion in borrowings and N713.64 million in loan interest, the company recorded net cash generated from financing activities of N27.02 billion.
The financing inflow also accommodated N13.32 billion in dividend payments, which were not recorded in the corresponding period of 2025.
The new borrowing coincided with a sharp increase in the group’s outstanding interest-bearing loans and borrowings, which rose to N54.96 billion at September 30, 2026, from N10.52 billion at the end of 2025.
The financial statements list a N42.92 billion loan carrying an interest rate of 22 percent and a maturity date of March 17, 2031. The loan was recorded at N49.19 billion in the borrowing schedule at the reporting date.
Interest on debt rose to N5.51 billion in the nine months, compared with N1.40 billion in the previous corresponding period, contributing to total finance costs of N5.91 billion.
The increase in debt therefore presents an important consideration for investors assessing the company’s ability to sustain dividend payments and finance future investment while improving cash generation.
Capital expenditure remains substantial
Transcorp Hotels also continued to invest in its asset base during the period.
Net cash used in investing activities stood at N5.92 billion, compared with N8.20 billion in the corresponding period of 2025.
Purchases of property, plant and equipment accounted for N6.28 billion, down from N7.42 billion a year earlier, while the company spent a further N84.74 million on intangible assets.
The capital expenditure reflects continued investment in the group’s physical and operational assets, although the financial statements do not attribute the spending to specific expansion projects.
The group’s property, plant and equipment increased to N127.69 billion at September 2026 from N124.86 billion at the end of December 2025.
After accounting for operating cash outflows, investing expenditure and financing inflows, cash and cash equivalents increased by N5.17 billion during the nine months.
Cash and cash equivalents stood at N20.34 billion at September 30, 2026, compared with N12.21 billion a year earlier.
Cash conversion emerges as key issue
Revenue declined 2.6 percent to N69.46 billion in the nine months to September, from N71.30 billion in the corresponding period of 2025. Operating profit also fell to N24.36 billion from N24.71 billion.
Nevertheless, lower income tax expense and a substantial increase in finance income helped lift profit after tax.
Finance income rose to N4.46 billion from N520.68 million, largely reflecting interest on intercompany loan receivables.
The company closed its last trading day on Friday at N290.50 per share on the Nigerian Stock Exchange (NGX). Transcorp Hotels began the year with a share price of N170.90 and has since gained 70 percent on that price valuation, ranking it 31st on the NGX in terms of year-to-date performance.
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Chinwe Michael is a Nigerian business journalist and media professional with over 4 years of experience covering companies, financial markets, banking, fintech, economic policy, financial inclusion, and corporate affairs. She currently leads the Companies & Markets desk at BusinessDay, where she drives coverage of Nigeria’s corporate and capital markets, translates complex financial data into accessible stories, and mentors younger journalists. Prior to that, she was the head of the financial inclusion/fintech desk. With a background in banking and finance and extensive experience in media and communications, Michael has developed expertise in financial journalism, economic analysis, investigative reporting and market intelligence. Her work examines how monetary policy, corporate performance, capital flows, technology, and regulatory decisions affect businesses, investors, and households. She was selected from about 3,000 applicants as one of 20 journalists for Cohort 4 of the MTN Media Innovation Programme, gaining exposure to new approaches to journalism, technology, and media innovation. Her international journalism experience and engagement with professionals across Russia, Dubai, Saudi Arabia, and others in different sectors have further broadened her understanding of global communication and development.
