• Thursday, March 28, 2024
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C&I Leasing to expand business, improve working capital with N3.2bn Rights Issue  

C&I Leasing Rights Issue extended to January 13, 2020
The N3.2billion projected proceeds from C&I Leasing Plc Rights Issue will be used to expand the company’s business and meet its working capital requirements. The company is  currently undergoing a Rights Issue of 539,003,333 ordinary shares of 50kobo each at N6 per share following the approvals of both the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE).
Andrew Otike-Odibi, Managing Director/CEO, C&I Leasing Plc said the capital raise will also position it to take advantage of opportunities for further business expansion.
Speaking during a conference call on Monday November 18 on the Rights Issue, Otike-Odibi noted that Nigerian leasing industry is vibrant and can thrive during periods of both economic boom and recession.
The Rights Issue to existing shareholders is on the basis of 4 new ordinary shares for every 3 ordinary shares held. The qualification date for the Rights Issue was Wednesday, September 4, 2019.
The CEO believes that a Rights Issue does not have the limitations of other capital sources, “but would allow the Company’s shareholders to increase their equity holdings at a discount”. “This would help avoid the risk of dilution and create an avenue for capital gains for shareholders,” he added.
“It is expected that appetite for the equities market will be renewed by both domestic and foreign players, following the just concluded election as market fundamentals remain supportive of growth”, Otike-Odibi said.

Between 2019 and 2023, C & I Leasing expects its total revenue to witness a steady increase from N33.67 billion to N66.34 billion at a Compound Annual Growth Rate (CAGR) of 18.48percent.

This growth will be supported by increased volumes –that is anticipated rise in gross earnings in the Company’s divisions in Nigeria, Ghana and United Arab Emirates.

“In line with the growth is total assets, we anticipate a simultaneous rise in shareholders’ funds from N13.68 billion in 2019 to N34.57 billion in 2023. The significant rise in shareholders’ funds will be substantiated by a 466percent growth in retained earnings.

“Over the same period, we expect net income to grow by 367percent, following significant increase in revenue of the business divisions and other operating income” he said.

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The CEO said that appetite for leasing continued to increase especially in the current economic situation which has made outright purchase increasingly difficult and this demand was buoyed by multinationals and other large corporate for service oriented leases like fleet management.

Between 2013 and 2018, C & I Leasing’s total assets base saw an increase from N19.11 billion to N52.61 billion at a Compound Annual Growth Rate (CAGR) of 22.5percent. This can be attributed to the significant increase in operating lease assets from N22.52 billion in 2016 to N30.69 billion in 2018.

The rise in total assets was followed by an increase in shareholders’ funds from N8.09billion in 2016 to N11.83billion in 2018. The rise came on the back of 424.91percent rise in retained earnings recorded between 2016 and 2018.

Over the same period, profit after tax grew by 30.29percent and this was majorly driven by income from joint venture and a 1473percent jump in interest income. Notably, there were improvements across segments of the business.

Over the years, C & I Leasing Plc has enjoyed consistent growth and has expanded its scope of business to cover major sectors of the Nigerian economy, providing specialized services, in Marine, Telecommunications, Oil and Gas, Equipment Rentals, Manpower Outsourcing and Transportation.

Currently, the Company has three divisions and two subsidiaries under its auspices, making up the C & I Leasing group of companies.

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Also, between 2013 and 2018, the operating income for C & I Leasing Plc increased from N3.73 billion to N7.93 billion. It has grown at a CAGR of 16.3percent over the past 5 years following: increase in other operating income, interest income, and relative improvement across business segments.

The operating income margin grew from 30percent to 35percent in 2017, it however declined in 2018 to 28percent following lease expenses growing at a faster rate than lease income; and further dragged by nil income in vehicle sales.

Earnings before Interest Tax, Depreciation and Amortization (EBITDA) maintained an upward trajectory over the past 5 years, growing at a compound annual growth rate (CAGR) of 24.8percent.

The company’s total debt (short and long term debt) to equity has been on an average of 3.19x in the last three years; up from 2.6x in 2014, depicting an increased borrowing by C & I Leasing in recent years.

The current ratio measures the ability of the company to meet its short term liabilities from its short term assets. C & I’s current ratio suggests a steady pattern and the business model of the company as it has remained on the same level in the past 5 years.

In addition, the companies long term assets/investments can be used to meet its liabilities. The Company’s interest coverage ratio (how many times the company’s operating profit can cover its interest expense) increased from 1.21x in 2015 to 1.33x in 2018. This depicts that the company generates more than enough operating profit (Cash flow) to pay its interest expense.