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A body representing the biggest public companies in Australia has welcomed changes to JobKeeper that will allow employers to cut staff working hours.

In normal circumstances, employers are not allowed to reduce hours for full- and part-time employees.

But the COVID-19 relief legislation currently passing through parliament that extends JobKeeper to March would allow this practice.

And even companies that are not struggling enough to receive JobKeeper would be eligible to take such action.

The Business Council of Australia is a lobby group that represents the largest companies in the nation, including ASX-listed Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking GrpLtd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG), AGL Energy Limited (ASX: AGL), BHP Group Ltd (ASX: BHP), Coca-Cola Amatil Ltd (ASX: CCL), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), Telstra Corporation Ltd (ASX: TLS), Scentre Group (ASX: SCG), Qantas Airways Limited (ASX: QAN), and even ASX Ltd (ASX: ASX) itself.

Its chief executive Jennifer Westacott endorsed the “flexibility measures” in the bill.

“This package will save tens of thousands of jobs by giving still struggling businesses who are not eligible for payments room to move, adapt and ramp up quickly,” she said Wednesday.

“Extending temporary flexibility measures will give businesses floored by COVID-19 but not receiving JobKeeper payments a welcome alternative to closing their doors, lay-offs and redundancies.”

How the hours reduction would work

The new rules would allow employees to have their hours cut to a minimum of 60% of what their work hours were before March.

The Coalition government did make one concession to ensure Labor support. Originally any business would’ve been allowed to reduce hours, but now they have to have lost 10% turnover.

The criteria for JobKeeper is a 30% drop in turnover.

The government was forced to backtrack when the current reporting season saw some ASX-listed companies posting profits while receiving JobKeeper welfare.

Premier Investments Limited (ASX: PMV) was one example that had the unions fired up, forecasting earlier this month its full-year EBIT to be up 11% on the previous year.

The company put up the strong numbers after receiving millions of dollars in JobKeeper payments plus refusing to pay rent after the COVID-19 pandemic hit.

The Motley Fool has contacted Australian Council of Trade Unions for comment.

Westacott said the ability to reduce worker hours would help the economy, especially in Victoria.

“The worst form of insecurity is unemployment, so as we emerge we have to pull out all stops to keep people working and create new jobs,” she said.

“Co-operation between unions and employers has saved tens of thousands of jobs, if we move too quickly to return to inflexibility we run the risk that tens of thousands will be lost.”

More reading

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• New research sheds light on consumer spending outlook
• Hydrix and Zip were among the most traded shares on the ASX last week
• How to boost your share market gains
• Should you wait for a market crash to invest, or just use dollar-cost averaging?

Motley Fool contributor Tony Yoo owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Premier Investments Limited, and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Codan Limited (ASX: CDA) share price has surged 33% up since the beginning of August, despite today’s 3% share price fall.

In comparison, the S&P/ASX 300 Index (ASX: XKO) has gained 3.2% so far this month and is down 0.6% today.

Like most ASX companies, Codan’s share price was hammered during the COVID-19 market rout earlier this year. Codan shares plummeted 53% from February 21 to March 23.  

Following that low, Codan’s share price has gained a whopping 177% to date. That rebound has put the company’s shares up 51% year-to-date.

What does Codan do?

Codan Limited was founded in 1959 and has its headquarters in Adelaide, South Australia. The company manufactures and supplies communications equipment, metal detection, and mining technology.

Codan has offices in Canada, the United States, Ireland, the United Arab Emirates and South Africa. Its customers include humanitarian organisations, security and military groups, mining companies and governments. The company’s global network of dealers enables its products to be sold in more than 150 countries.

Codan shares began trading on the ASX in 2003.

Why has the Codan share price leapt 33% in August?

Following the strong rebound from the March 23 low, Codan’s share price stayed level during the first 2 weeks of August. In fact, the share price moved precisely 0% in the first 2 weeks of the month.

The Codan share price began to track higher the following week, and really took off on Thursday 20 August. That came after the company released its full year 2020 results, which saw shares close up more than 15% on the day.

Investors were clearly cheered by the company’s 40% increase in its record statutory net profit after tax. Codan also achieved its highest full sales in its history, of $348 million, with new records in both its metal detection and communications branches. That enabled the company to maintain a net cash balance of $92.8 million.

The company noted that its gold detector sales remained strong, a reminder that in these days of revived gold fever, it’s the companies selling picks and shovels (and gold detectors) that stand to make some of the biggest profits.

Though Codan’s share price is down today, its business model should see continued strong demand for its product line.

More reading

• These ASX shares were top performers last week
• Why Afterpay and these ASX shares just hit record highs
• Codan share price soars 16% thanks to record sales
• Why Afterpay, Codan, IDP Education, & Sonic shares are charging higher
• Why Kogan and these ASX shares just hit record highs

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Achieving proper diversification in your ASX share portfolio can take a lot of time and money. We Fools think that in order to hit a beneficial level of diversification, an ASX share portfolio should have at least 12–15 individual companies within it. That can be an off-putting amount of capital for a new investor to reach for. Luckily, you can always use the exchange-traded fund (ETF) shortcut if you want to quickly bump up your portfolio’s diversification.

ETFs work well for this purpose because an ETF at its core already holds a basket of individual shares. Thus, one extra investment can add dozens, hundreds or even thousands of different companies indirectly to your portfolio. So, below are 2 ASX ETFs that I think would work well for this purpose. Because, to paraphrase a certain surfing film, if you want to achieve the ultimate level of diversification, you don’t have to pay the ultimate price.

2 ASX ETFS for portfolio diversification 

1) BetaShares Asia Technology Tigers ETF (ASX: ASIA)

This ETF is a great pick in my view because it holds 50 companies from the Asian region, including China, Korea, and India. Asia is an area that most ASX investors have little exposure to, so I think this ETF is a great remedy for that. ASIA doesn’t just hold any company though, it only selects those businesses that are at the forefront of technology in the region. Some of its top holdings include Alibaba Group, Tencent Holdings and JD.com — all massive e-commerce businesses in China. This ETF charges a management fee of 0.67% per annum and has returned an average of 27.77% per annum since its inception in 2018.

2) iShares Global Consumer Staples ETF (ASX: IXI)

This ETF is a whole different kettle of fish in that it eschews technology in favour of the companies that make consumer staples goods. Consumer staples are everyday needs that most of us can’t really go without. Think foods, drinks, household essentials and cleaning products. Vices like alcohol and tobacco are also included. So it makes sense that some of IXI’s major holdings include Nestle, Procter & Gamble, Walmart, Coca-Cola and Altria as well as almost 100 other holdings. These companies are typically very resilient and defensive shares to own, and thus I think this ETF is a great option for portfolio diversification in today’s uncertain times. IXI charges a management fee of 0.47% per annum and has returned an average of 11.84% per annum over the past 10 years.

Foolish takeaway

If you’re worried about your portfolio not being adequately diversified, then I think these 2 ETFs are a great shortcut solution. Both have reasonable long-term prospects as investments and, in my view, can lend extra diversification to any ASX portfolio today.

More reading

• These ASX ETFs will give you exposure to China’s growing middle class
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• Where to invest $25,000 into ETFs right now
• 3 high quality international ETFs for ASX investors to buy right now
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Motley Fool contributor Sebastian Bowen owns shares of Coca-Cola, Procter & Gamble, and Altria. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of iShares Global Consumer Staples ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re interested in adding a blue chip ASX share to your portfolio in September, then you’re in luck.

There are currently a number of quality blue chips that I believe are trading at attractive prices for long term investments.

Two that I think would be top options for investors next month are listed below. Here’s why I would buy them:

Cochlear Limited (ASX: COH)

The first blue chip ASX share to consider buying is Cochlear. I think the global leader in implantable hearing devices could be a top buy and hold investment option. This is thanks to its exposure to the ageing populations tailwind. As hearing tends to fade as we get older, I expect hearing products demand to increase strongly over the next couple of decades.

Other positives are the industry’s high barriers to entry and its material investment in research and development. I believe these put the company in a position to capture this growing demand and deliver strong long term earnings growth. This could make the Cochlear share price a long term market beater.

Goodman Group (ASX: GMG)

Another blue chip ASX share I’m a big fan of is Goodman Group. I think the integrated commercial and industrial property group could be a great long term buy and hold option. This is due to the quality of its properties that span 17 counties and include warehouses, large scale logistics facilities, and business and office parks.

It is the company’s warehouses and logistics facilities that I find most attractive. This is because they give the company exposure to the rapidly growing ecommerce market through tenants such as Walmart, DHL, and Amazon. In fact, the latter has just signed a 20-year lease for another distribution centre in Western Sydney. This property is owned by its joint venture with Brickworks Limited (ASX: BKW).

More reading

• Here are the highlights of this ASX reporting season
• Buy CSL and these quality ASX blue chip shares today
• Why it may not be too late to chase ASX reporting season record breakers
• The Dexus share price edges higher following FY20 results
• ASX 200 rises 0.8%, Treasury Wine Estate shares turn sour

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Today, the Ridley Corporation Ltd (ASX: RIC) share price was flat at 71 cents after the company released its financial results for the year to 30 June 2020.

How did Ridley fare in FY20?

Ridley Corp reported revenue of $967.94 million for FY20. This was down 3.5% compared to the 2019 financial year.

The animal nutrition company pointed to three factors for the revenue drop. They included the expiry of a supply agreement with Inghams, the pass through of raw material movements and lower sales due to the coronavirus pandemic. 

Net profit after tax (NPAT) for the 2020 financial year was -$8.64 million. Significant items that affected NPAT were the closure and replacement of 3 feedmills with one large facility, together with restructuring costs, asset impairments and the settlement of a legal claim. 

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) from ongoing operations were $64.3 million in FY20, an increase of 8.2% compared to FY19.

Ridley had earnings per share (EPS) of -2.8 cents in the 2020 financial year compared to 7.6 cents in FY19. Earnings per share before significant items were 7.1 cents in FY20.

The company reported a 13% improvement in financial  performance from ongoing operations in FY20.

Ridley invested $42.9 million in capital expenditure which included an investment in Novacq production in Thailand. 

Ridley’s net debt at 30 June 2020 was $147.2 million. The company’s board suspended its final dividend to pay down debt.

However, company said its growth strategy was expected to deliver improved earnings in the 2021 financial year.

About the Ridley share price

The animal nutrition company is Australia’s largest livestock feed producer. It has a history dating back to 1987.

In June 2020, Ridley opened a new mill in Wellsford, Victoria. This was part of the company’s recent rationalisation and asset renewal program.

The Ridley share price was trading at 71 cents at the close of trade today, up 7.58% since its 52-week low of 66 cents. However, the Ridley share price has dropped 31.07% since the beginning of 2020 and is 29% lower than this time last year.

More reading

• ASX giants say cutting staff hours will save jobs
• Why Codan’s share price has leapt 33% higher so far in August
• 2 ASX ETFs to buy for instant portfolio diversification
• Why I would buy these blue chip ASX shares for the long term
• How to become rich by investing $1,000 into ASX shares

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you can afford to invest $1,000 into the share market on a quarterly basis, then I think it would be well worth doing. Especially if you have a long investment time horizon.

This is because over the last 30 years, the Australian share market has generated an average total return of 9.2% per annum.

If the local share market were to do that over the next 30 years and you invested $1,000 every three months (and earned the same return), your investments would be worth a cool $626,000 at the end of the period.

And if you can beat the market over that time, your investments could be worth even more.

But which shares could be long term market beaters? Below are two ASX shares which I think could beat the market and may be top options for a $1,000 investment today:

Altium Limited (ASX: ALU)

I think this award-winning printed circuit board (PCB) design software provider could be a great ASX share to buy. Altium has been growing at a rapid rate over the last few years. This has been driven by the proliferation of electronic devices globally, which has led to increasing demand for its software. The good news is that with the Internet of Things and artificial intelligence markets still growing strongly and underpinning further electronic device growth, I think the future looks very bright for Altium.

IDP Education Ltd (ASX: IEL)

Another option to consider investing $1,000 into is IDP Education. It is a leading provider of international student placement services and English language testing services. I was very impressed with the way the company overcame the negative impacts of the pandemic to deliver strong profit growth in FY 2020. Looking ahead, I believe its market position is strengthening and expect it to come out of the crisis with a greater market share. Combined with its sizeable opportunity and growing software business, I believe its long term growth outlook is very positive.

More reading

• Where to invest $5,000 into ASX shares immediately
• Is the Altium share price in the buy zone?
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• 2 of the best ETFs for investing in ASX shares

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Moneyme Ltd (ASX: MME) share price was a standout performer on Wednesday.

The digital consumer credit company’s shares were up as much as 21% at one stage before ending the day 11% higher at $1.60.

Why did the Moneyme share price zoom higher?

Investors were buying Moneyme shares following the release of its full year results for FY 2020.

For the 12 months ended 30 June 2020, Moneyme delivered a 49.5% increase in revenue to $47.7 million. This was ahead of its prospectus forecast of $45.8 million.

Key drivers of this growth were strong increases in loan originations and its gross loan book.

Moneyme reported a 52.8% increase in loan originations to $178.5 million and a 52.7% lift in its gross loan book to $133.6 million. The former was ahead of its prospectus forecast of $168.2 million, but the latter fell short of its prospectus forecast of $141.9 million. Management blamed the miss on an increase in customers making early repayments.

Nevertheless, this didn’t stop the company’s earnings outperforming expectations.

Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $3.2 million and statutory EBITDA was $1.1 million. These were ahead of forecast by 10.5% and 20.8%, respectively.

Finally, statutory net profit after tax more than quadrupled to $1.3 million from $0.3 million in FY 2019.

A significant year.

MoneyMe’s Managing Director and Chief Executive Officer, Clayton Howes, was very pleased with the company’s performance.

He said: “The financial year ended 30 June 2020 was a significant year in the history of MoneyMe. We successfully completed our initial public offering, enabled Freestyle with a virtual Mastercard, launched ListReady and RentReady, entered new verticals, achieved accelerated growth, and exceeded our Prospectus forecasts while also outperforming credit risk expectations.”

“Throughout the year, our team contributed to delivering an outstanding set of results while meeting the operational challenges created by COVID-19 and successfully transitioning to operating as an ASX-listed company,” he added.

Outlook.

Mr Howes appears positive on the company’s prospects in FY 2021 and beyond.

He commented: “The MoneyMe brand has gone from strength to strength. I am truly excited about the future for this business that is well positioned to build upon its record achievements from FY20 throughout and beyond the current COVID-19 environment, and be the favourite credit partner for Generation Now.”

While no guidance was given for FY 2021, management expects to “continue to deliver growth and profit, expand our customer base, leverage our new products and launch more innovation across new verticals.”

One of those new products is its recently launched MoneyMe+ product. It joins the likes of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) in the buy now pay later space, but with a focus on larger purchases.

Management intends to provide regular performance updates through the year.

More reading

• MoneyMe share price surges, but is it sustainable?
• ASX stock of the day: Moneyme share price surges 36% as lender enters buy now, pay later space

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Objective Corporation Limited (ASX: OCL) share price has been a very strong performer on Wednesday.

In late afternoon trade the content, collaboration, and process management software solutions company’s shares are up 11% to a record high of $12.20.

How did Objective Corp perform in FY 2020?

As you might have guessed from the positive share price reaction, Objective Corp was a strong performer in FY 2020.

For the 12 months ended 30 June 2020, the company reported group revenue growth of 13% to $70 million.

Approximately 75% of this revenue is now classed as recurring, up from 70% a year earlier. Annualised recurring revenue (ARR) now stands at $56.6 million, up 22% from $46.6 million a year earlier.

This was driven by strong ARR growth across all its core subscription software products. This includes the doubling of ECMaaS ARR, a 34% lift in Connect ARR, a 51% increase in Trapeze ARR, a 49% jump in AlphaOne ARR, and an 8% increase in Keystone ARR.

Pleasingly, although its cost base has increased following a series of acquisitions, it didn’t stop the company’s margins from expanding.

This led to Objective Corp delivering a 22% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $17.2 million and a 22% lift in net profit after tax to $11 million.

Also growing strongly was its operating cash flow, which lifted 24.8% to $29.2 million. This ultimately led to the company finishing the period with a healthy cash balance of $51 million with no external borrowings.

In light of this result and its strong balance sheet, the Objective Corp board declared a fully franked 7 cents per share dividend.

Management commentary.

Objective Corporation’s CEO, Tony Walls, commented: “In FY2020 we successfully met the challenges we were presented; those that we had expected and those that demanded we change course and address immediately.”

“In this unprecedented environment, our business delivered a strong financial performance with 13% revenue growth, 22% growth in EBITDA and 22% growth in ARR. The results reflect our uncompromised commitment to transitioning our business to subscription-based revenue models and growing our annual recurring revenue base,” he added.

Outlook.

The good news is that the company is expecting more of the same in FY 2021.

Mr Walls said: “In FY2021, we expect a material lift in revenue and profitability. We will extend our market reach with increased global digital marketing capacity and invest further in broadening our offerings to every customer.”

“Further we continue to seek opportunities to introduce new, strategically aligned products through acquisition where these can be acquired at reasonable valuations,” he concluded.

More reading

• Bigtincan joins list of junior ASX tech companies adapting to COVID-19
• 3 top small cap ASX shares to buy now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Objective Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AGL Energy Limited (ASX: AGL) share price hasn’t been having a great time on the markets of late. Over the past month, AGL shares are down more than 10% and are going for $15.03 at the time of writing.

The catalyst for this move? Earlier this month, AGL reported its earnings for the 2020 financial year, and it wasn’t a pretty sight. AGL reported a 22% drop in profits after tax and told investors it expects things to get worse before it gets better in the coming years.

Some investors might be sceptical on AGL shares today — and for good reason. This is a share that has gone absolutely nowhere over the past 5 years. Just have a look at the share price graph below for a visual illustration:

Not a graph you want to see as a shareholder, that’s for sure.

Despite this stick-out-like-a-sore-thumb underperformance, I still think AGL is a perfect share for a retiree today for ASX dividend income. Here’s why.

AGL as a dividend share

In its earnings report, one of the sole pieces of good news for investors was the announcement that dividend payments would continue uninterrupted in 2020. By 25 September, AGL shareholders will have received a 47 cents per share interim dividend and a 51 cents per share final dividend this year, both franked at 80%. That is down from 2019’s 55 and 64 cents per share payouts, respectively, but a lot better than what many other ASX dividend shares have delivered in 2020 so far.

The sum of 98 cents per share in dividends for 2020 gives AGL shares a trailing dividend yield of 6.52% on current prices. That’s a far better yield than most other ASX dividend shares out there right now and runs rings around the kind of yield you could expect from a term deposit or government bond these days.

But the company also (rather unusually) announced its plans for the next few years in terms of dividends. This will be headlined by a ‘special dividend plan‘, which will involve AGL paying special dividends of up to 25% of underlying profits over the 2021 and 2022 financial years. Since AGL already has a 75% payout ratio policy, this will effectively mean the company is paying out 100% of its profits over these 2 years.

Unfortunately, these dividends won’t be coming with any franking credits attached, as AGL is instead focusing on utilising historical tax losses. But it hopes to return to paying a franked dividend by FY2023.

Foolish takeaway

I wouldn’t expect much in the way of capital appreciation along the road, but it looks as though AGL is offering a consistent dividend yield above 6% for years into the future. Because of this generous dividend policy, I think AGL shares are a perfect option for a retiree to consider today.

More reading

• What are dividend shares and how do you find them?
• Low interest rates the new normal? 3 ASX dividend shares to buy today
• Afterpay and Mesoblast were among the most traded shares on the ASX last week
• These were the worst performing ASX 200 shares last week
• 2 ASX dividend shares with yields over 6% today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Japara Healthcare Ltd (ASX: JHC) share price has fallen more than 4% today after the aged care provider revealed a $292 million loss. The loss was a result of a large impairment charge, combined with higher expenses and lower occupancy rates. 

What does Japara Healthcare do?

Japara Healthcare owns, operates, and develops aged care facilities. One of Australia’s largest aged care providers, Japara has more than 4,000 people in its care and more than 5,000 staff caring for them. The company’s aged care portfolio comprises 50 homes across five states and 180 independent living units co-located with five of its aged care homes. 

What did the company report? 

Japara reported statutory revenue of $427.5 million, a 6.9% increase on FY19. This was mainly due to increased development earnings and increased revenue per resident. Average occupancy was 92.2% in FY20, weaker than anticipated due to the impacts of the COVID-19 pandemic. Four of Japara’s 21 metropolitan Melbourne homes have active coronavirus outbreaks affecting residents and staff.

The trend of increasing resident numbers over the first nine months of FY20 was impacted by the pandemic from April onwards. At 30 June 2020 the company reported 4,102 residents, but this had fallen to 3,977 residents by 21 August 2020. 

Japara says it is difficult to quantify the ongoing financial impact of COVID-19 given uncertainties around its future prevalence and the success of measures to control its spread. Indirect impacts include reduced occupancy due to limitations on tours and reduced consumer preference to enter residential aged care. Direct COVID-19 related costs incurred in FY20 were ~$1 million, with spending on infection control measures and protective equipment. 

Japara’s recurring EBITDA fell 24.1% in FY20 to $36.9 million largely due to lower occupancy and cost inflation greater than revenue inflation. A non-cash impairment of $291.9 million was incurred due to an impairment in goodwill. This led to a statutory net loss of $292.1 million for the year, attributed to the impairment, lower occupancy, and higher staff and other costs.

This compares to a profit of $16.4 million in FY19. No final dividend was declared and Japara ended the financial year with net debt of $190.7 million. 

Declines in occupancy have resulted in an oversupply of places, causing challenges in maintaining resident numbers at older style homes. Growth in the potential resident cohort has been offset by declining utilisation rates. This has resulted in net place additions exceeding annual increases in residents in recent years. Revenue and cost growth imbalance and declining occupancy has seen the aged care sector show decreasing EBITDA and margin from operations. 

What is the outlook for Japara Healthcare? 

Japara Health’s guidance remains suspended as cost and revenue implication from COVID-19 remain uncertain. Recently completed developments are expected to contribute to FY21 EBITDA, but interest and depreciation expenses are also expected to increase.

Delivery of developments under construction is expected to add ~250 new places in FY21, but decisions on future developments have been deferred until the impacts of the pandemic and economic outlook is more certain. 

The Japara Healthcare share price slumped 4.2% to 0.46 cents at the time of writing.

More reading

• Objective Corp share price rockets to record high on strong FY 2020 result and positive outlook
• Why I think AGL is a perfect retiree dividend share today
• Lovisa share price falls as fashion retailer reports sharp drop in profits
• What’s sent WiseTech’s share price up 36% so far in August
• This ASX dividend share offers a 9% fully franked yield

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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