C & I Leasing to Recapitalise Capital Base, Raise Fresh Funds

By Dipo Olowookere

Managing Director/CEO of C & I Leasing Plc, Mr Andrew Otike-Odibi, has expressed the determination of the company to raise its capital base to a higher level from its present.

Mr Otike-Odibi made this disclosure while reacting to the performance of the firm in the first six months of this year. He said this is one of the main targets the company hopes to achieve in the 2019 financial year.

“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,” Mr Otike-Odibi said.

Business Post reports that the company disclosed that it “plans to raise equity via a Rights Issue for the purpose of business expansion, loan refinancing and working capital need.”

In the first half of 2019, C & I Leasing improved its gross earnings by 27.2 percent to N16.3 billion from N12.8 billion in H1 2018. This was mainly driven by the growth in the firm’s lease rental income by 70.6 percent of total gross earnings.

The growth in lease rental income was attributed to the expansion of the company’s lease rental portfolio, both in the marine and fleet management services respectively. Lease rental income comprising Fleet Management earnings and Marine earnings was up 30.9 percent to N11.5 billion in H1 2019 versus N8.8 billion in H1 2018.

According to the company, the growth in earnings from the lease rental business was the result of reduced vehicle downtime and new contracts signed during the period.

Marine provided ‘operate and maintain services’ on vessels owned by third parties, while Fleet Management saw an increase in earnings from the open rental business.

Personnel outsourcing earnings rose by 22.6 percent to N4.0 billion in H1 2019 (H1 2018: N3.2 billion) and represents 24 percent of total gross earnings. This was driven by increasing demand for professional services especially by the International Oil Companies, which resulted in higher volumes on existing contracts through the provision of expanded services such as enhanced logistics and trainings.

Tracking income was up by 16.6 percent to N115.8 million in H1 2019 (H1 2018: N99.3 million) due to increase in demand for tracking services reflected in increased customer uptake of its devices.

Net operating income increased by 24.7 percent to N4.6 billion in H1 2019 (H1 2018: N3.7 billion), underscoring the growth in gross earnings across the various business units.

Interest income, other operating income and share of gain from marine joint venture grew 3.4 percent to N704.6 million in H1 2019 (H1 2018: N681.5 million), largely driven by returns from the company’s marine business.

Interest expenses were up by 17.5 percent y-o-y to N2.5 billion in H1 2019 due to an increase in term loans to drive business expansion and to support the purchase of operating assets for the Fleet Management Business, while direct operating expenses were up by 31.7 percent y-o-y to N9.1 billion in H1 2019, reflecting the increase in gross earnings of the group, with indirect operating expenses increasing by 23.9 percent to N3.7 billion in H1 2019 (H1 2018: N3.0 billion).

The firm said its personnel costs rose 49.5 percent from N508.3 million in H1 2018 to N760.0 million in H1 2019 as a result of an ongoing welfare packages and performance incentives, while other administrative and general expenses grew by 26.6 percent from N794.7 million in H1 2018 to N1.0 billion in H1 2019, reflecting an increase in legal and professional fees, on business entered in by the company during the period as well as insurance expenses.

Profit before tax went up 25.8 percent year-on-year to N909.2 million from N723.0 million, while the profit after tax increased by 27.1 percent year-on-year to N866.9 million from N682.2 million.

Recall that in April 2019 the company entered into a Joint Venture arrangement with OCS Integrated Services Nigeria Limited, an Integrated Local Service Company, established to provide comprehensive operations and maintenance solutions for offshore oil and gas fields. It is a complete asset management which involves offshore asset maintenance and manpower solution.