Saferoads Holdings - Quarterly Activity Report for Q4 2024
SRH (SRH) Share Update July 2024 Tuesday 16th
Saferoads Holdings Reports 27% Decline in Trading Revenue for Q4 2024
Saferoads Holdings Limited (ASX: SRH) has released its quarterly activity report for the period ending 30 June 2024, revealing a notable decline in trading revenue.
Instant Summary:
- Trading revenue of $2.48 million, down 27% compared to the prior corresponding period.
- Rental income increased by 11% to $1.38 million.
- Product revenue fell by 49% to $1.10 million.
- Net core borrowings reduced by $228,000.
- Exclusive distribution agreement for HV2 Barrier in North America.
- Sentenced to pay $650,000 in fines related to a 2021 workplace fatality.
- Continued support from bankers despite breach of lending ratio covenant.
Financial Highlights
Saferoads Holdings Limited reported a trading revenue of $2.48 million for the fourth quarter of 2024, representing a 27% decline from the prior corresponding period (PCP). This decrease is primarily attributed to a significant drop in product revenue, which fell by 49% to $1.10 million. On a positive note, rental income saw an 11% increase, reaching $1.38 million.
The company also managed to reduce its net core borrowings (excluding overdraft) by $228,000 during the quarter. This is a positive sign of improved financial management despite the challenging revenue environment.
Group Activity & Business Updates
Saferoads Holdings has entered into an exclusive agreement with TrafFix Devices to distribute the HV2 temporary barrier in the USA, Canada, and Mexico. The product has garnered strong industry interest following its launch at the American Traffic Safety Services Association Convention & Traffic Expo. The company is optimistic about significant orders from the North American market in the 2025 financial year.
WorkSafe Case
In a previously announced update, Saferoads Holdings was sentenced to pay fines totaling $650,000 related to a workplace fatality in November 2021. Fines Victoria has agreed to a payment plan of $10,000 per month, starting in August 2024, with no interest payable on the outstanding balance.
Finance Facility
Despite being in breach of its lending ratio covenant, Saferoads Holdings continues to retain the support of its bankers. The company can still make drawdowns on its asset finance facility for rental fleet purchases required for long-term contracted opportunities. However, no drawdowns were made during the quarter ending 30 June 2024.
The 27% decline in trading revenue is a significant concern for investors, particularly the 49% drop in product revenue. However, the increase in rental income and the reduction in net core borrowings are positive signs. The exclusive distribution agreement for the HV2 Barrier in North America could provide a substantial revenue boost in the coming financial year. The fines related to the workplace fatality and the breach of the lending ratio covenant are potential risks that investors should monitor closely.
Investor Reaction:
Analysts have mixed reactions to the report. Some are concerned about the significant decline in product revenue, while others are optimistic about the potential revenue from the HV2 Barrier distribution agreement. The continued support from bankers despite the covenant breach is seen as a positive sign of financial stability.
Conclusion:
Investors should keep a close eye on Saferoads Holdings' performance in the next few quarters, particularly the potential revenue from the HV2 Barrier distribution agreement in North America. The company's ability to manage its financial obligations and navigate the challenges posed by the fines and covenant breach will be crucial in maintaining investor confidence.