Saferoads Managing Director Darren Hotchkin has outlined the difficulties the company faced in 2024 during his managing director’s speech, and has called the past 12 months “one of the most challenging years in the company’s 32-year history”.
Saferoads is headquartered in Packenham, Victoria and has representation across Australia, New Zealand and the USA for the providing of road safety solutions.
It provides state government and local council departments, road construction companies and equipment hire companies with a range of products to improve road safety outcomes around maintenance and construction sites.
Some of the challenges of the year, according to Chairman David Ashmore, include the finalisation of a WorkSafe claim and a reduction in Victorian roadwork funding.
“The WorkSafe case resulting from the tragic November 2021 workplace fatality was concluded with an unexpectedly heavy fine of $650,000 that was double what we have provided for in 2023,” Ashmore says.
“We were, however, able to present to Fines Victoria a compelling proposal and we were granted a $10,000 per month repayment plan that we will obviously continue to comply with.
“The poor economic environment resulted in a fall of $2.958m in product sales that is offset to a degree by a $939k increase in rental income resulting in an overall fall in revenue of $2.0m.”
“The lack of profit and the capital constraints have prevented us from effectively investing further in the growth of the rental aspect of our overall products business.”
As a result of the difficulties endured over the year, Ashmore says the company will divest from its rental business.
“A strategic review being carried out resulted in our decision to proceed with the divestment of our rental business.
“We have received a number of attractive non-binding indicative offers and the current position is that we have selected a potential buyer and are proceeding to a due diligence phase.
“This should be followed by a period of sale contract negotiation. This process should be completed by the end of January 2025.”
Despite the challenges faced during the year, Ashmore says he expects a large increase in business as a result of the huge funding commitment from the Victorian government to improve its roads.
It was recently announced the state government had committed almost $1 billion across a large range of road maintenance and improvement projects across the state to be undertaken over a nine-month period starting in late 2024.
“It has been well publicised by the Victorian Department of Planning and Infrastructure in their 2024 Annual Report that their actual spending in FY24 on road maintenance was only five per cent of their usual spending targets,” Ashmore continues.
“This has impacted significantly on both our product sales and their margins.
“The Victorian government has fortunately picked up on the public outcry and has pledged to increase the effort to fix the seriously deteriorating state of our roads; a decision we totally agree with.”
The asset sale of the Road Safety Rental business does not include ownership of the intellectual property of the barrier products, and Saferoads will be in a position to continue to develop and sell those products moving forward.
Overall, the company registered a normalised EBITDA profit of $1,092,809, with the additional $325,000 WorkSafe provision, non-cash depreciation and amortisation charges of $1,923,902 and interest expense of $341,760 led to a trading loss of $1,497,853.
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