As C& I Leasing Delivers Shareholder Value
C & I Leasing has taken steps aimed at boosting its performance, deliver better services to customers and returns to shareholders, writes Goddy Egene
“The board has laid down a solid foundation for growth, expansion and diversification, which is already yielding results as we remain consistent in improving the overall wellbeing of the company with initiatives that makes us leaders within our market space.”
The above were the words of the Chairman of C & I Leasing Plc, Chief Chuwkuma Okolo, in his address to shareholders at the company’s annual general meeting (AGM) in Lagos recently.
C & I Leasing Plc was incorporated in 1990 as a limited liability company and licensed by the Central Bank of Nigeria to provide transportation logistics solutions in the form of car and marine rental, fleet management as well as human resource solutions. But within the last 29 years, it has grown to become a diversified, leasing and business service conglomerate providing support services to various indigenous and multinational blue-chip organizations within the shores of Nigeria, Ghana and the United Arab Emirates.
Financial performance
The company rewarded shareholders with a dividend of N104.381 million for the 2018 financial year ended December 31, 2018. The dividend was paid out of the N437 million profit after tax (PAT) recorded for the 2018 financial year.
Specifically, C & I Leasing posted an increase of 32 per cent in gross earnings grew by 32 per cent and 25 per cent for the group and company respectively in comparison with 2017 performance. The group’s profit before tax also grew by 22 per cent from N1.3 billion in 2017 to N1.5 billion in 2018, while the company recorded an increase in profit before tax (PBT) by 32 per cent from N506.9 million in 2017 to N668.3million in 2018. Also, the group’s PAT grew from N1.1 billion in 2017 to N1.2billion in 2018 while the company’s PAT decreased due to the impact of back duty tax by three per cent from N451.3million in 2017 to N437.5million in 2018.
The group’s total assets grew by 17 per cent from N45 billion in 2017 to N52.6 billion in 2018 while that of the company grew by 24 per cent from N29 billion in 2017 to N36 billion in 2018. The group shareholder’s fund grew by 30 per cent from N9 billion in 2017 to N11 billion in 2018 and the company’s shareholder’s fund grew by 2.1 per cent from N6 billion in 2017 to N6.1billion in 2018.
C & I Leasing has improved on its performance for the half year (HI) ended June 30, 2019. It reported gross earnings of N16.3 billion for H1 2019, up 27.2 per cent from N12.8 billion posted in the corresponding period of 2018. A breakdown of the earnings showed that lease rental income rose 30.9 per cent from N8.8 billion in 2018 to N11.5 billion, while personnel outsourcing income increased by 22.6 per cent from N3.3 billion to N4.0 billion. Lease rental expenses rose higher by 36.4 per cent to N5.5 billion, from N4 billion. Consequently, net operating stood at N4.6 billion in 2019, up by 24.7 per cent compared to N3.7 billion in 2018. Profit before tax rose 25.8 per cent to N909.2 million in 2019, from N723 million, while profit after tax grew by 27.1 per cent to N866.9 million, as against N682.2 million in 2018.
Commenting on the results, Managing Director/ CEO of C & I Leasing Plc, Mr. Andrew Otike-Odibi said: “We recorded robust growth of 27.2 per cent in earnings from N16.3 billion in H1 2018 to N12.8 billion in H1 2019 and of 25.8 per cent in profit before tax (from N723.0 million in H1 2018 to N909.2 million in H1 2019). Despite stringent operating environment, we continued to create more business opportunities, which allowed us to deliver more value for all stakeholders. As at H1 2019, our group capital adequacy ratio stood at 18.5 per cent, well above the Central Bank of Nigeria (CBN) minimum requirement of 12.5 per cent. The improvement in this ratio is a result of our constructive attempts to make the group more stable to external fluctuations in the industry. We remain focused on our key priorities for 2019, including validation of our business expansion, growth objectives of meeting and exceeding client’s expectation, increasing demand for our products and services and recapitalising the company’s capital base.”
Performance Enablers
The improved performance of the C & I Leasing is the result of some strategic initiatives the company put in place last year. For instance, it raised a N7 billion 5-years bond, which was fully subscribed. That was the largest and most successful bond issue in the history of the company benefitting from increasing investor confidence in the business and track record of exceptional service delivery as the foremost leasing brand for over 25 years.
The proceeds of the bond were to be directed towards business expansion and restructuring of its debt to extend average tenor and better align repayments with cashflows from its existing contracts.
Priced at 16.5 per cent, the rate was cheaper relative to average borrowings from local banks. Consequently, a portion of the bonds proceeds was used to refinance expensive debts, leading to a reduction in the average funding cost of the business.
Also, last year, C& I Leasing concluded the buyout of 27.5 per cent minority stake in C & I Petrotech Marine Limited, a joint venture company with six vessels contracted to Shell Petroleum Development Company (SPDC), thereby taking full ownership of the vessels.
According to the company, the move was in furtherance of its commitment to restructure and reposition its marine business for enhanced profitability.
In a similar vein, C & I Leasing acquired two new tug boats named “MV Chidiebube” and “MV Folashade” in addition to the existing pilot boat “MV Myra” under the Sifax C & I Marine Limited joint venture arrangement. These boats had since been deployed for a long-term contract with Nigerian Liquefied Natural Gas Company (NLNG).
Bright prospects
Despite the challenging operating environment, C & I Leasing is sure of delivering impressive performance and deliver good returns to shareholders.
According to the company, as a visionary group with sound corporate governance structure, our resolve is to continue to seek opportunities to expand our operations and markets frontiers. To sustain leadership and performance going forward the company will be injecting more funds into its operations. The fresh capital will be through rights issue and conversion of Aureos $10 million loan stock into equity before the end of the year.
Otike-Odibi explained that the business was growing at a fast rate and needed equity funding support.
He told the shareholders that the business was at a point where they needed equity injection.
“Management is working with financial advisers to look at different options that we can use to raise equity. One it might be a rights issue. So we might be calling on you very soon to support the business by taking up your rights and getting capital into the business to help the business grow to new heights,” Otike-Odibi said.
He said the company would consolidate the progress made in the previous years by delivering a strong and sustainable performance that enhances optimal returns to shareholders.
“We are progressing with confidence and optimism, knowing fully well that our businesses have been strategically positioned to take advantage of emerging opportunities in the market. Our future results will show improved year-on-year performance, retaining value in the company, sustaining our market leadership and brand presence,” he said.
Business opportunities
The frequent changes in government policies affecting land logistics business, and the high new vehicles purchase cost have presented an opportunity for the company to fill the gap of aging cars for different corporate bodies with new rented cars.
C & I Leasing said this had proven more efficient for the companies and has helped sustain their operations.
“Within the fleet management business, the company is leveraging technology to better serve and enhance its solutions to existing clients, improve the level of operational efficiency, whist at the same time growing its reservation business. Several application packages are in place, and more are planned, to ensure the business continues to provide world class service in a cost-efficient manner. The Citrack Telematic Solutions arm of the business provides technology-based, end-to-end tracking and other logistics and fleet management solutions for vehicles and various marine vessels. It has partnered with two renowned technology companies who are leaders in the tracking and fuel monitoring services,” the company said.
On the land vehicles and generators, the company said it had been working with leaders in vehicle tracking and fuel monitoring services. “On the marine side, Citracks partners with Nautical Control Services, the makers of Fueltrax devices. These devices are being installed on most boats working in the oil and gas fields in the country. In the current year, we are looking at deepening our relationship with these partners to expand the range of services currently being provided to our clients. This presents an avenue to increase our share of wallet of clients’ businesses and, by extension, additional income generating opportunities for the business,” the firm noted.
On personnel sourcing, C & I Leasing Plc said it provides personnel management, human resource outsourcing, consultancy, personnel evaluation, training and manpower development services.
“These services are provided to various clients with deployed personnel ranging from highly skilled to semi-skilled professionals. This enhances our client’s ability to focus on their core businesses while we provide a well-equipped support team. Thus, we have obtained several electronic certifications including e-learning programs in order to improve the services rendered to clients. In addition, the recruitment portal and job application site, “GETAJOBNG” is operational with focus on providing employable candidates of the right quality to our clients and other interested corporate bodies at short notice. We intend to improve the average quality of job seekers by providing basic training to make sure that they can meet employer expectations. This should mitigate rising unemployment in the society and the frustration of employers who continually complain of poor quality of employable candidates. We believe this approach will improve the clients’ recruitment experience and improve the rate at which vacancies are being filled, and by extension, enhance income streams for the business,” it said.
On its marine business, the company is offering a wide range of services to both onshore and offshore terminals, taking advantage of the opportunities created by the Nigerian Oil and Gas Industry Development Act for indigenous companies.
“Over the last eight years, the business has developed significant technical and operational capacity and owns/manages several boats to carry out various services in the maritime subsector of the oil and gas industry. These services include line and hose handling, terminal support and berthing services, security patrol and escort services, mooring support, fire-fighting, pollution control services, off shore installation supply services, anchor handling services for mooring large tankers during off-take operations, floating and self-elevating platforms services for supporting shallow water operations,” it said.
C & I Leasing Plc has continued to explore new opportunities in the industry for growth. It recently entered a joint venture partnership with OCS Services DMCC (OCS) India. The joint venture is operating in Nigeria under the brand name OCS Integrated Services Nigeria Limited (OCSISNL) and is was set up to operate and maintain offshore assets with emphasis on floating production storage and offloading (FPSO) units used by the offshore oil and gas industry for the production and processing of hydrocarbon and storage of oil. According to Otike-Odibi, this joint venture is expected to offer excellent, differentiated service to businesses in the Nigerian oil and gas sector by leveraging on the cumulative decades of experience and expertise from both organisations providing offshore support in Africa and Asia along the lines of business process outsourcing, personnel management, offshore vessel operation and maintenance.
“The joint venture is also committed to impacting the sector by identifying and nurturing talent in the sector and creating prospects for more jobs and skill development opportunities for interested young Nigerians,” he said.