RCC committed to become dividend paying contractor
Despite forecasting a negative cash flow position of N$93 million by the end of the current financial year, the financially-crippled Roads Contractors Company (RCC) hopes to turn around its fortunes to show a positive cash flow balance of about N$83 million by the end of the 2018/19 financial year.
The RCC has a history of financial woes since it became a parastatal in 2000 – whereby it was never able to pay dividends to its shareholder.
The company also failed to have its financial books audited since 2002, and currently owes Treasury for income tax which rank into millions of dollars over the years.
However, RCC Board of Directors Chairperson Fritz Jacobs who took over the reins last year November with his team, is determined to turn the financial woes into a profitable entity over the next three to five years.
He pledged to turn RCC from a historic financially challenged company to a flagship Namibian dividend-paying contractor, provided they are given an opportunity.
He said by the end of the 2017/18 financial year the RCC hopes to reduce its negative cash flow position by two thirds to about N$30 million, while their five-year cash flow forecast indicates a possible cash flow of over N$400 million by the end of the 2020/21 financial year.
In the same vein, the RCC’s five-year income statement is quite optimistic, predicting an increase in net profit of approximately N$2 million by the end of the 2017/18 financial year to over N$200 million by end of the 2021/22 financial year.
“We are committed to financial outflows and that is a dream for any investor to say – you put money in a company and you are able to take it from a minus, an overdraft … to a position of having N$400 million as a contractor and still going forward. RCC will be in a dividend paying position within the next three to five years once given the opportunity,” Jacobs pledged.
He blamed RCC’s financial woes on past administrators, saying there was no lack of corporate governance committees dealing with financial auditing and risks.
He said since he took over they managed to secure enough funds and roped in Deloitte & Touche to conclude audits for 2012 to 2014.
He is hopeful, if given some cash injection, they would update all RCC financial audits up to 2015/16.
“Our balance sheet is very challenging and is not the one that any investor or bank would want to say this is my client. But we are confident that if banks give us a chance and help us turn this business case around, we will make them proud of having us as customer if given a chance. We will take our assets from N$300 million to about N$1 billion and this a conservative prudent outlook because there are other projects which we already kicked off,” he said.
Some projects he mentioned include the N$64 million mass urban land servicing of Goreangab Extension 4 and the N$758 million construction of the 90km Swakopmund-Henties Bay road.
“RCC has not been focusing on the business issues necessary to deliver services. We are planning to have a growth in revenue in the next three to five years. We are focusing to have N$600 million by 2019/20 compared to the current N$92 million. In terms of gross revenue, we have potential to grow in revenue from next year due to participation in almost N$2.6 billion worth of projects. If we are going to get all those bids (N$2.6 billion) successfully, then we can grow, but is not in our hands. So we can’t say we have it now. We must wait until the awards are made. The moment you are a confident and capacitated contractor, people and the market will have confidence and will be able to award you with contracts,” he noted.
In the past, he said, RCC was “very much lumped in the way it was functioning, therefore we want to ensure RCC has specific profit centre units functioning on a profitable basis”.