Tony Elumelu's Transcorp Hotels lifts profit 21% as revenue falls and debt jumps fivefold

Transcorp Hotels, the Nigerian hospitality group controlled by Tony Elumelu's Transnational Corporation, lifted first-half profit 21 percent to ₦10.54 billion ($7.6 million) even as revenue declined, with the gain driven by a sharp reduction in operating costs rather than growth in the business.

Revenue for the six months to June 30 fell 5.3 percent to ₦44.43 billion ($32.2 million) from ₦46.93 billion ($34 million) a year earlier, according to unaudited consolidated statements filed with the Nigerian Exchange and approved by the board on July 21.

Operating expenses dropped 12.8 percent to ₦19.35 billion ($14 million) from ₦22.19 billion ($16.1 million), enough to push operating profit up 7.4 percent to ₦14.76 billion ($10.7 million). Profit before tax rose 12 percent to ₦13.69 billion ($9.9 million). Earnings per share came in at 103 kobo against 85 kobo.

Chief financial officer Oluwatobiloba Ojediran attributed the result to a "disciplined approach to cost management, revenue optimisation, and operational execution."

Food, beverage and events dragged

The revenue decline was concentrated outside the room business. Rooms brought in ₦30.33 billion ($22 million), down just 1.2 percent. Food and beverage fell 13.9 percent to ₦11.78 billion ($8.5 million). Event centre hall rental collapsed 58 percent to ₦389 million ($282,000), a striking figure given the group commissioned the 5,000-seat Transcorp Centre last year specifically to capture conference and large-event business.

The second quarter came in marginally below the first. Revenue between April and June was ₦22.02 billion ($16 million), against ₦22.41 billion in the first quarter, and down 15.1 percent on the ₦25.93 billion ($18.8 million) recorded a year earlier. Quarterly profit still rose 34.3 percent to ₦4.88 billion ($3.5 million), again on cost reduction, with operating expenses down 25.8 percent in the period.

Management fees remain a significant charge. The group paid ₦4.89 billion ($3.5 million) in the half, covering a base fee to Hilton International at 1.5 percent of revenue, incentive fees on gross operating profit, and a technical service fee to Transnational Corporation set at 5 percent of revenue.

Debt jumps fivefold

The balance sheet changed shape considerably. Total borrowings rose to ₦51.38 billion ($37.2 million) at June 30 from ₦10.52 billion ($7.6 million) at the end of December, after the group drew ₦42.92 billion ($31.1 million) in new debt during the half. It had raised no new borrowings in the comparable period last year.

The shift was concentrated in long-term debt. Non-current borrowings rose ninefold to ₦47.62 billion ($34.5 million) from ₦5.07 billion ($3.7 million), while the current portion fell to ₦3.76 billion from ₦5.45 billion.

Finance costs rose 66 percent to ₦3.06 billion ($2.2 million) as a result. Total liabilities increased 61.5 percent to ₦104.42 billion ($75.7 million), while total assets grew 23.5 percent to ₦197.48 billion ($143.1 million).

Total equity fell 2.3 percent to ₦93.06 billion ($67.4 million), with retained earnings down to ₦75.78 billion ($54.9 million) from ₦77.53 billion ($56.2 million) after the group paid ₦12.29 billion ($8.9 million) in dividends during the period, more than the ₦7.58 billion distributed across the whole of 2025.

Related-party receivables balloon

The most substantial movement sits in receivables. Amounts owed to the group by related parties other than subsidiaries rose to ₦39 billion ($28.3 million) at June 30 from ₦4.02 billion ($2.9 million) six months earlier. Total current trade and other receivables climbed to ₦46.31 billion ($33.6 million) from ₦11 billion ($8 million).

The group is earning on those balances. Finance income rose more than sixfold to ₦1.99 billion ($1.4 million), of which ₦1.87 billion came from interest on intercompany loan receivables, against ₦306 million a year earlier.

The effect on cash generation was pronounced. Operating activities produced an outflow of ₦22.21 billion ($16.1 million) in the half, reversing an inflow of ₦10.69 billion ($7.7 million) in the same period of 2025. Financing activities contributed ₦27.27 billion ($19.8 million), leaving cash and bank balances at ₦17.44 billion ($12.6 million) against ₦16.96 billion at December.

In its going concern assessment, the company stated that its working capital surplus was primarily caused by the related-party receivables within current assets and the significant amount of cash and bank balances, and said management forecasts sufficient cash to meet obligations as they fall due.

A board reshaped this year

Awele Elumelu, wife of Tony Elumelu, was appointed chairman of Transcorp Hotels on January 1, succeeding Emmanuel Nnorom. She signed off the accounts alongside chief executive Uzoamaka Oshogwe and Ojediran. Muyiwa Akinyemi joined as an independent non-executive director on April 1.

Nnorom, who left the Transcorp Hotels chair in January, is due to take over as group chairman of United Bank for Africa on August 21, when Tony Elumelu retires from that board after reaching the Central Bank of Nigeria's 12-year limit for non-executive directors.

Transnational Corporation holds 76.16 percent of Transcorp Hotels, unchanged from last year. Ministry of Finance Incorporated holds 11.04 percent. Heirs Holdings, Elumelu's private investment vehicle, owns 42 percent of subsidiary Transcorp Hotels Ikoyi and 20 percent of Aura by Transcorp Hotels.

The group also holds 77.36 million shares in United Bank for Africa, the lender Elumelu chairs until next month, which it says were bought at arm's length in the open market. The quoted holding was carried at ₦3.39 billion ($2.5 million), and the group's wider investment portfolio recorded a fair value loss of ₦419 million ($304,000) through other comprehensive income over the period.

Transcorp Hotels shares closed at ₦242 on Wednesday, up 41.6 percent since the start of the year.