Saferoads Faces Execution Risks Despite Strong Cash and Order Book

• Operating cash use of $192k influenced by $311k prepayment to manufacturers
• Successful settlement of Road Safety Rentals asset sale with full repayment of CBA loans
• Payment of a fully franked $4.371m dividend from asset sale profits
• Over $3.5m cash reserves maintained post-dividend and creditor settlements
• Strong product orders from On-Site Rentals and local government for Rapid Stop barriers

Quarterly Cash Flow and Operational Highlights

Saferoads Holdings Limited closed the June 2025 quarter with a reported cash outflow from operations of $192,000. This figure, however, masks a more positive underlying cash position, as it includes a $311,000 prepayment to overseas manufacturers. This prepayment was essential to secure the supply of products ordered by On-Site Rentals, a key customer, and without it, the company would have recorded an operating cash surplus of $119,000 for the quarter.

The company also marked a significant milestone with the successful settlement of the Road Safety Rentals (RSR) asset sale on 1 May 2025. The transaction proceeded on schedule, with the contract amount received less employee entitlements, asset finance debts, and a $390,000 retention for minor asset repairs. This withheld amount was fully received in early July, following the completion of the repairs.

Financial Strength and Capital Management

Following the RSR sale, Saferoads took the opportunity to repay its Commonwealth Bank of Australia (CBA) term loan and overdraft facilities in full, signaling a stronger balance sheet and reduced reliance on external debt. The company retained a $75,000 corporate credit card facility for operational flexibility.

In line with prior announcements, Saferoads paid a fully franked dividend of 10 cents per share, totaling $4.371 million, funded by the profits from the RSR asset sale. Despite this significant capital return to shareholders, the group ended the financial year with robust cash reserves exceeding $3.5 million, further bolstered by the subsequent receipt of the withheld $390,000.

Operational Developments and Growth Prospects

On the operational front, Saferoads exercised a five-year option to extend its lease on the Pakenham premises, securing its current location until late 2030. This move follows an independent rental valuation and reflects confidence in the site’s strategic importance.

Product sales to On-Site Rentals remain strong, with $2.9 million ordered to date against a contractual minimum of $3 million within the first year post-settlement. Deliveries continue into the first half of the 2026 financial year, underpinning ongoing revenue streams.

Additionally, the company reported encouraging demand for its Rapid Stop portable pedestrian protection barrier, receiving two orders totaling over $200,000 from major local government customers. This product’s unique design to safeguard pedestrians during street events positions Saferoads well in a niche market segment.

Governance and Leadership Updates

In governance, Saferoads has transitioned from interim arrangements to appoint experienced contractors as contract CFO and Company Secretary, roles previously managed by non-executive directors during the RSR sale process. This professionalisation of key executive functions supports the company’s operational and strategic ambitions moving forward.

Bottom Line?

With solid cash reserves and strong order momentum, Saferoads is positioned for steady growth, though execution on product delivery and lease commitments will be closely watched.

Questions in the middle?

• Will On-Site Rentals meet or exceed the $3 million product purchase commitment within the year?
• How will Saferoads leverage the Rapid Stop barrier orders to expand into new markets?
• What impact will the lease extension at Pakenham have on operational costs and long-term strategy?