Saferoads Faces Pressure to Deliver After Rental Business Exit and Inventory Spend
Saferoads Holdings Limited has reported a return to profitability with a $504k half-year net profit, driven by strong product sales following the sale of its Road Safety Rentals business. The company also announced a fully franked interim dividend of 0.5 cents per share.
- Half-year profit after tax of $504k, reversing prior loss
- Revenues from continuing operations surged 104% to $6.82 million
- Sale of Road Safety Rentals business in May 2025 boosted cash and reduced debt
- Interim dividend of 0.5 cents per share declared, fully franked
- Over $1 million invested in inventory to meet growing demand
Strong Turnaround Driven by Product Sales
Saferoads Holdings Limited has posted a significant financial turnaround for the half-year ended 31 December 2025, reporting a net profit after tax of $503,764 compared to a loss of $19,433 in the previous corresponding period. This improvement reflects a 104% increase in revenues from continuing operations, which rose to $6.82 million, largely due to product sales to the On-site Rental group.
Strategic Sale and Recapitalisation
The company’s positive momentum follows the strategic sale of its Road Safety Rentals business assets in May 2025 for $10.8 million. Proceeds from this transaction were used to repay bank borrowings, pay a substantial dividend, and recapitalise the group. This move has allowed Saferoads to focus on strengthening its product range and building a sustainable business model centered on product sales rather than rental operations.
Dividend Declaration and Capital Management
Reflecting confidence in its financial position, Saferoads declared a fully franked interim dividend of 0.5 cents per share, payable on 27 March 2026. The company has suspended its Dividend Reinvestment Plan for this payout. The dividend signals management’s commitment to returning value to shareholders while maintaining a prudent capital structure.
Operational Investments and Outlook
During the half-year, Saferoads invested over $1 million in inventory to better meet spot order demand, addressing previous supply constraints. This inventory build-up is a strategic initiative aimed at supporting future sales growth and improving customer responsiveness. The directors remain optimistic about the group’s prospects, emphasizing ongoing initiatives to enhance product offerings and operational efficiency.
Financial Health and Governance
The company’s net tangible asset backing per share increased slightly to 11.3 cents, up from 10.8 cents a year earlier, reflecting improved balance sheet strength. The financial statements were reviewed by Crowe Audit with no qualifications, and the directors confirmed the group remains a going concern. No significant changes or contingent liabilities were reported post-reporting period.
Bottom Line?
Saferoads’ pivot to product sales and disciplined capital management set the stage for sustained growth, but investors will watch closely how inventory investments translate into future earnings.
Questions in the middle?
- How will Saferoads sustain revenue growth without its former rental business?
- What impact will the $1 million inventory investment have on margins and cash flow?
- Will the company reinstate its Dividend Reinvestment Plan in future periods?
