Two weeks ago, the management of C&I Leasing Plc announced that it had finalised the complete acquisition of stakes in C&I Petrotech Marine Limited, thereby making the company its wholly-owned subsidiary.
Prior to the 27.5% minority stake buyout, C&I Petrotech Marine Limited was a joint venture partnership.
The complete acquisition of C&I Petrotech Marine Limited is just one out of the two major steps that C&I Leasing Plc has taken in recent times towards the restructuring and repositioning of its operations for enhanced profitability. More about this will be discussed shortly.
In the meantime, note that C&I Leasing Plc is one of those little-known companies which Nairametrics has been profiling once every week. Get to know more about it – its year of incorporation, services, financial performance, and debt crisis.
Corporate information about C&I Leasing Plc
Incorporated in 1990, C&I Leasing Plc is a Nigerian company which, through its subsidiaries, specialises in the provision of services such as fleet management, automobile distribution, marine vessel rental, equipment leasing, security and escort services, and fire-fighting services.
The company also offers pollution control services, mooring support, and recruitment/HR consultancy services, to mention a few. It is headquartered in Lagos Nigeria, but has operations in Ghana (Leasafric) and the United Arab Emirates (EPIC International FZE).
Like most companies, C&I Leasing Plc initially started out as a limited liability company, with a license from the Central Bank of Nigeria to offer finance leases and operating leases.
By 1997, the company restructured and diversified its operations, while also converting from a limited liability company to a public company. That same year, it had its stocks listed on the Nigerian Stock Exchange, thereby becoming the first leasing, logistics and rental company to do so in Nigeria.
Some of the company’s main services are:
- C&I Marine
- Fleet Management Solutions
- Hertz Rent-A-Car
- C&I Outsourcing
- CITRANS Telematics Solutions
A look at the target markets for C&I Leasing Plc
As one of the leading logistics, leasing and support services firms in Nigeria, C&I Leasing Plc has target markets in the maritime, oil and gas, transportation, manpower outsourcing, telecommunications and equipment rental sectors. One of its biggest customers is probably Shell Petroleum Development Corporation (SPDC).
C&I is currently engaged in a long-term contract with the international oil company, which has seen six of C&I’s vessels deployed to the deep sea for oil exploration activities.
Meanwhile, as part of its outsourcing support services, C&I Leasing offers human resources and recruitment services to different companies. The company also manages fleets and rents vehicles — all services that are needed by companies in different sectors of the economy.
From the foregoing, it is obvious that it has a wide target market but how well has it leveraged this opportunity towards ensuring success?
The company’s board of directors
Mr Andrew Otike Odibi: He is the company’s Managing Director and Chief Executive. He has a Bachelor’s of Science degree in Accounting from the University of Benin, as well as a Masters’ in Business Administration.
He is also a Chartered Accountant. Prior to joining C&I Leasing in 1998 as a Senior Manager, Odibi served a Branch Manager for Diamond Bank Plc. He was appointed to C&I’s board of directors in 2007, 9 years after joining the company. He has since remained with the company, becoming its MD/CEO in 2016.
Chief Henry Okolo: Okolo currently serves as the company’s Chairman. A graduate of the University of Nigeria, Nsukka with a degree in Accounting, he is also the Chief Executive Officer of Dorman Long Engineering Limited.
He is also the Vice Chairman of the Nigerian Economic Summit Group, as well as a former Coordinator of the West African Enterprise Network (Nigerian Chapter) from 1995–1997.
Other notable members of the company’s board are:
- Mr Emeka Ndu: Vice Chairman and Founder
- Mr Alex Mbakogu: Executive Director
- Mr Omotunde Alao-Olaifa: Non-Executive Director
- Mr Sule Ogbomo: Non-Executive Director
- Jacob Kholi: Non-Executive Director
- Ikechukwu Duru: Independent Non-Executive Director
- Larry Ademeso: Non-Executive Director
The company’s substantial shareholding structure
C&I Leasing Plc’s shares are substantially held by Leadway Assurance Co Ltd, CIL Acquico Ltd, and Petra Properties Ltd. These are all companies that are affiliated with some of the company’s directors.
The number of units and the percentages held by each of the above can be seen below:
- Leadway Assurance Co Ltd: 140,000,353 units; 8.66%
- CIL Acquico Ltd: 130, 789, 499 units; 8.099%
- Petra Properties Ltd: 87, 685, 985 units; 5.42%
Who are the company’s competitors?
C&I Leasing Plc faces competition mainly from other maritime support services providers such as Shelf Drilling and Borr Drilling, OES Energy Services Limited, Fenog Offshore Vessels, Zircon Marine, Blue Seas Maritime Services Limited, Japaul Plc, etc.
The company faces competition in the human resources/outsourcing sector, with the likes of Jobberman and other newer entrants dominating the sector.
It is also important to note that the company is not having it easy in the car renting space, seeing as platforms such as Uber and Taxify are having a field day.
The company’s financial performance over the years
C&I Leasing Plc has managed to keep its revenue on the rise in the past five years. In the same vein, it has remained relatively profitable over the same period under review, between 2013 and 2017.
For instance, the company’s revenue rose from ₦12.2 billion in 2013 to ₦21.3 billion in 2017. Similarly, it remained profitable over the same period, with profit after tax (PAT) increasing from ₦161 million in 2013 to ₦1.1 billion in 2017. Margin as you can see has remained low.
But this performance notwithstanding, C&I Leasing has remained in bed with debt over the years.
More on the company’s financial woes
The company has a balance sheet size of N45 billion, out of which N35 billion is made up of all kinds of debt.
The interesting thing about its debt profile is not just that it is 3.5x its equity, it is the number of people that the company is owing. C&I owes just about every category of debtors – from banks, bondholders, tax authorities, to suppliers and even retirees. It’s a long list that can make any perennial borrower proud.
Some of its major debtors are banks like Access Bank, Diamond Bank, Citi Bank, FCMB, GTBank, Fidelity Bank, First Bank, UBA, Zenith Bank, Standard Chartered Bank, FSDH Merchant Bank, Absa Bank, Lotus Capital, Stanbic IBTC and Intercontinental Bank – Cedi.
That is about 15 banks by our count. It also owes about ₦9.6 billion to some “Individual Clients” and “Institutional Clients” as at 2017.
With all these in perspective, it becomes intriguing to know what exactly the company has been doing to offset its debts.
On its struggles to overcome its financial difficulties
Earlier this year, C&I Leasing Plc issued a ₦7 billion bond, the first in a series of ₦20 billion debt issuance programme.
Interestingly, the issue was oversubscribed by 33%, thereby indicating, if nothing else, that the investing community still has faith in the company.
Proceeds from the capital issue was reportedly meant for the refinancing of maturing bank loans, while some parts of it would also be used to scale the company’s operations.
Meanwhile, as we noted earlier, the company also recently completed the buyout of 27.5% minority stake in Petrotech Marine Ltd ostensibly taking charge of the company, which is by the way one of its biggest revenue generators.
In closing, there is light in the tunnel for this company, despite its financial challenges. Margins are still relatively low and returns on equity remain in the single digits.
It recently released its Q1 2018 financial statement, reporting gross earning to the tune of ₦6.47 billion; up from ₦6.097 billion in Q1 2017. Profit after tax also grew from ₦305 million in Q1 2017 to ₦405 million in Q1 2018.
The stock has returned 300% in the last one year and has been one of the better performers this years. At N2.44 per share (as at Friday) it is still trading at 3x its earnings.
Perhaps not a stock we could consider a buy but one surely to watch.