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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of the Macquarie equities desk, its analysts have retained their outperform rating and $21.25 price target on this infant formula company’s shares. The broker notes that a2 Milk Company is looking to acquire a 75% stake in Mataura Valley Milk. It sees value in its plans and believes it could strengthen its relationship with China. I think Macquarie is spot on and would be a buyer of a2 Milk Company’s shares for the long term.

BWX Ltd (ASX: BWX)

Analysts at Citi have retained their buy rating and lifted the price target on this personal care products company’s shares to $5.05. According to the note, the broker was pleased with BWX’s performance in FY 2020 and its guidance for the year ahead. It also appear happy with the company’s growth plans in the European market and its opportunities in the Australian grocery channel. While I think its shares are looking fully valued now, they could be decent long term options.

Redbubble Ltd (ASX: RBL)

A note out of Morgans reveals that its analysts have upgraded this ecommerce company’s shares to an add rating with a massive target price increase from 54 cents to $4.33. The broker made the move after Redbubble reported explosive growth during the pandemic. It believes the company is in the right place at the right time and appears optimistic that its growth will continue in FY 2021 thanks to the accelerating shift to online shopping. I’m sitting on the fence with Redbubble. I’m not as convinced that its strong growth will continue into 2021.

More reading

• Could these 2 ASX growth shares that crashed last week be a buy?
• Four companies that got crushed (and why you had to own them)
• 3 ASX 200 growth shares to buy right now
• 3 ASX share reports I loved this week
• Is the A2 Milk share price still a good buy after strong full year results?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia owns shares of A2 Milk. 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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COVID-19 has created many tailwinds for adaptive sectors such as tech, retail and consumer staples. Here are three ASX shares that could represent good value at today’s prices and continue to deliver shareholder value throughout and post the COVID-19 pandemic. 

1. Dicker Data Ltd (ASX: DDR) 

Dicker Data is a wholesale distributor of computer hardware, software, cloud and emerging technologies in Australia. In the company’s AGM market update on 23 July, it highlighted that the recent surge in remote work has resulted in a significant increase in demand for the company’s remote and virtual working solutions across its hardware and software portfolios. For the company’s unaudited half-year results, its revenue was up 18.1% and net profit after tax up 23.5%. The new status quo of working from home will bring about continued demand for remote and virtual working solutions. I believe Dicker Data’s earnings tailwinds makes it a better pick than similar ASX shares such as Rhipe Ltd (ASX: RHP). 

2. Electro Optic Systems Holdings Ltd (ASX: EOS) 

EOS manufactures products within the aerospace and defence markets. The company has faced a challenging first half as its earnings have been materially impacted by COVID-19. Its customers, suppliers and EOS itself have faced significant volatility around the timing of contracts being signed and delivered. As such, Electro Optic Systems expects to report a first half loss of negative $18.2 million and a net loss after tax of $12.7 million. 

Electro Optic Systems forecasts that the FY20 profit will likely fall in the range of $20-$30 million EBIT. This is somewhat consistent with its prior guidance of $27 million EBIT. Despite the challenges with the timing of contracts and cash flows, it believes the risk-weighted pipeline remains strong at $3 billion, with the order backlog unchanged. Its outlook for FY21 is for strengthening growth as activity deferred from FY20 is caught up, backlog is processed and pipeline awards are made. I believe the near-term volatility of the Electro Optic Systems share price could present a good buying opportunity given the ‘stickiness’ of earnings in the defence market and the upbeat FY21 outlook. 

3. People Infrastructure Ltd (ASX: PPE) 

People Infrastructure provides workforce management and human resources outsourcing services in the health and community care, information technology and general staffing sectors. The business faces potential near-term risks for sectors that are dependent on government funds and employer support schemes, and a broader reduction in demand for staffing services. This could dampen its earnings in 2020.

Notwithstanding the risks, its revenues could also accelerate given an increase in staffing service demand and a recovery of key sectors such as IT and nursing. All things considered, the company currently expects its FY2020 normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) to be in the range of $24 to $25 million. This would represent a year-on-year increase of 34.8% to 40.5%. The company currently trades at a price-to-earnings (P/E) ratio of approximately 12. Given its valuation and growth potential, I believe the People Infrastructure share price could be a cheap ASX share to buy amid COVID-19. 

More reading

• 3 exciting small cap ASX shares to watch in FY 2021
• 2 high yield ASX dividend shares to buy today
• Buy these generous ASX dividend shares for income in 2021
• 2 top ASX tech shares to buy and hold beyond 2026
• 3 ASX dividend shares offering generous yields

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited and People Infrastructure 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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The identitii Limited (ASX: ID8) share price surged 77% higher in morning trade, after the company signed an agreement with Mastercard.

What does Identitii do?

Identitii is an Australian financial technology (FinTech) company. It is based in Sydney and was founded in 2014. Identitii uses blockchain and tokenisation technologies to connect banks and businesses with data to process, reconcile and report on payments. Its core Overlay+ platform collects and shares information on financial transactions.

It creates an ecosystem in which suppliers, buyers, banks and regulators can access their required data. Identitii reduces the exposure to regulatory risk for these companies, without replacing existing technology systems.

The Mastercard agreement

Identitii has signed a five-year master services agreement (MSA) with Mastercard International Incorporated (Mastercard). Under the agreement, Identitii will license its Overlay+ platform to Mastercard. This will enable Identitii to sell to and work with any Mastercard-linked business in the world.

Identitii CEO John Rayment said:

We are thrilled to announce that we have signed an agreement with Mastercard, who we have had a relationship with since participating in their Start Path program in 2018. What the MSA does is give us the opportunity to license our Overlay+ platform to any Mastercard business globally.

It is the first step in a process, following which we agree specific statements of work which outline how Overlay+ will be used to address particular needs in their business. We look forward to providing an update on specific projects in due course.

How has the Identitii share price performed lately?

Back in late July, Identitii announced that an entitlement issue had raised $1.908 million in Q4. The company will raise an additional $1.908 million in Q1 FY 2021.

Cash receipts from customers during Q4 amounted to $0.183 million. This was down 62% from Q3, mainly due to short term delays in professional services contracts as a result of the coronavirus pandemic.

The Identitii share price has trended downward since it launched October 2019 at $0.34, falling to below $0.09 in July. Today it rose 72% to 0.49 in early morning trade, and is currently trading at $0.31.

More reading

• Could these 2 ASX growth shares that crashed last week be a buy?
• 2 ASX shares to buy for growth and income
• Top fund manager sees sharp fall in global dividend payouts
• Why Australian Ethical Investment’s share price has slid 32% in August
• Is today’s Santos share price a buy for its dividend?

Motley Fool contributor Phil Harpur 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 A2 Milk Company Ltd (ASX: A2M) and Audinate Group Ltd (ASX: AD8) both experienced challenging trading sessions last week following their FY20 results.

Could these 2 ASX growth shares present a buying opportunity at today’s prices? Or could the subtle sell-off mean that more time is needed?

Well-rounded result from a2 Milk

The a2 Milk share price fell 5% last week following its FY20 full year report. The company reported that COVID-19 has had a modest positive impact on its revenue, while favourable foreign exchange movements further propped up earnings. The company highlighted a 32.8% increase in revenue to NZ$1.73 billion and 34.1% increase in net profit after tax (NPAT) to NZ$385.8 million. 

From a geographic perspective, a2 Milk continues to build its market leading position in Australia within fresh milk and infant nutrition segments. The ANZ segment revenue increased 14.6% to NZ$965.7 million. China still represents a significant runway for a2 Milk’s growth with its investments in brand, trade activities and people driving strong sales momentum. Its ‘China and other’ segment revenue did the heavy lifting for its FY20 earnings and soared 65.1% to NZ$699.4 million.

The US market continues to scale meaningfully, with a distribution and national footprint of over 20,000 stores. Its revenue was up 91% to NZ$66.1 million, however, increased marketing investment and distribution growth resulted in an earnings before interest, taxes, depreciation and amortisation (EBITDA) loss of NZ$50.5 million. The impact of COVID-19 in the US market is significant as consumers become more value conscious. 

The a2 Milk share price had a considerable run up leading into earnings season. Being priced to perfection combined with the uncertainty of FY21 performance may have led to the sell-off last week. Its Asia-Pacific segment will continue to be a growth engine for the business, while the US market will require more time. All things considered, I believe a2 Milk represents fair value at today’s price, but feel that more time is needed to see where the share price is headed, post-earnings. 

Underwhelming earnings from Audinate 

Audiante develops and sells digital audio visual networking solutions that distribute high-quality digital audio and video signals over computer networks. The company announced its FY20 results on Thursday last week, which then saw its share price fall more than 8%. 

Audiante is a very challenging company to value, given its $400 million market cap, 7.1% increase in revenue to $30.3 million and EBITDA of $2.0 million. Despite what appears like stretched valuations and lacklustre growth, the company is a leader in the digital media networking space with a total addressable market of more than A$1 billion. Its products have 8x market adoption versus its closest competitor.

I believe the way in which the market could value this company is very similar to the likes of Altium Limited (ASX: ALU) in its early days. However, despite Audinate’s position in the market, I would like to see the company deliver better growth figures before considering it an ASX growth share to buy.

More reading

• 3 ASX 200 growth shares to buy right now
• 3 exciting small cap ASX shares to watch in FY 2021
• 3 ASX share reports I loved this week
• Is the A2 Milk share price still a good buy after strong full year results?
• The ASX 200 fell 0.1% today, Suncorp shines

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of A2 Milk and Altium. The Motley Fool Australia has recommended AUDINATEGL 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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Finding ASX shares that offer both growth and income prospects today is a lot harder than it used to be.

Former dividend growth stars like Ramsay Health Care Limited (ASX: RHC) and Medibank Private Ltd (ASX: MPL) have been forced to cut their dividend this year, breaking multi-year (multi-decade in Ramsay’s case) streaks of growth.

Other former dividend heavyweights like Westpac Banking Corp (ASX: WBC) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have canned their dividend completely in 2020 so far.

So where to find the kind of dividend growth shares that can offer both growth and income in 2020? Well, I’ve found 2 ASX shares that I think offer just that

2 ASX growth and income shares:

1) Washington H. Soul Pattinson & Co Ltd (ASX: SOL)

Soul Patts (as its more commonly known) is one of the oldest companies on the ASX. It was incepted prior to Federation and officially listed on the ASX (then the Sydney Stock Exchange) back in 1903. What attracts me to Soul Patts is the company’s unrivalled history as a dividend payer. The company has paid a consistent dividend for over 40 years and has increased this dividend every year since 2000 (including in 2020). It is able to pull this off because it has a wide asset base of its own.

Soul Patts is an investing conglomerate, holding its own portfolio of ASX shares. These include substantial stakes in TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC) and Brickworks Limited (ASX: BKW). It also has a portfolio of unlisted assets, which include retirement villages and swimming centres.

If Soul Patts can pay a dividend through the global financial crisis as well as the 2020 coronavirus crisis, I think it can handle anything. Thus, I think Soul Patts’ shareholders can expect plenty of dividends as well as some growth for many years into the future.

2) iShares S&P 500 ETF (ASX: IVV)

This exchange-traded fund (ETF) is another option for investors to consider for both growth and income. IVV tracks the S&P 500 index, which is the most popular index in the world. It holds 500 of the largest companies listed in the United States.

Legendary investor Warren Buffett has called it a ‘slice of America’. Any US company you can think of is probably in the S&P 500. The FAANG stocks like Apple and Amazon.com are there, as well as established companies like Coca Cola, American Express, Visa, Microsoft, Johnson & Johnson, Procter & Gamble and (of course) Buffett’s own Berkshire Hathaway. Even Tesla might be joining its ranks soon.

The S&P 500 is an index known for prioritising growth over dividend income. Indeed, IVV’s trailing dividend yield today is only around 1.73%. But that hasn’t stopped IVV returning an average of 16.38% per annum over the past 10 years. As the index grows into the future, the dividends should follow. So for a growth and income share today, I think IVV is another top choice for ASX investors.

More reading

• 3 must-have ASX income shares for your portfolio
• Here’s how much money you can actually make from investing in ASX shares
• Where to hunt for ASX dividend share income in 2020
• 3 Warren Buffett ASX dividend shares you can buy right now
• I think Soul Patts is the best ASX dividend share

Sebastian Bowen owns shares of American Express, Coca-Cola, Johnson & Johnson, Ramsay Health Care Limited, Tesla, Procter & Gamble, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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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Leading fund manager Janus Henderson has reported a sharp fall in global dividends declared in the June quarter. Australia was reported to account for a significant amount of the decline in the Asia Pacific region.

Global dividends fall by 24% in June quarter

According to a study undertaken by Janus Henderson, global dividends fell by $129.02 billion to $527.8 billion in the June quarter. The 24% decline (in AUD) was the worst since Janus Henderson first launched the dividend study back in 2009.

Janus Henderson found that 27% of companies that paid a dividend during the June quarter cut their dividends. And of this subset of companies, more than half made the decision to totally cut any dividend payment at all.

Financial services and consumer discretionary were the most impacted industries. Within Europe and the UK, some financial companies were impacted by regulatory bans on dividends. In Australia, the industry was subject to regulatory pressures.

In contrast, companies in the healthcare and communications sectors displayed a much higher degree of resilience to any dividend cut due to COVID-19.

Janus Henderson anticipates headline global dividends to fall by around 17% in a best-case scenario in 2020. A worst-case scenario could see them drop by 23%.

Australia heads the Asian dividend decline

Australia suffered the greatest impact within the Asian region, and more dividend cuts are anticipated in Australia in the September and December quarters. In comparison, the Japanese market was relatively insulated from any dividend cuts.

The decision of Australian retail bank giant Westpac Banking Corp (ASX: WBC) to scrap its interim dividend accounted for a staggering 60% of the entire dividend decline across the APAC region. Westpac did, however, note in its third quarter results that it would consider issuing a dividend when finalising its annual results. Westpac’s financial year ends 30 September 2020.

The dividends decision was made under new APRA guidelines to provide a buffer to banks from any excessive COVID-related impact. Meanwhile, Commonwealth Bank of Australia (ASX: CBA) cuts its dividend by 50%

Rio Tinto leads the list of top Aussie dividend payers

Janus Henderson also noted the top the top 6 dividend payers in Australia, with Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG)  and Woolworths Group Ltd (ASX: WOW) topping the list. They were followed by CSL Limited (ASX: CSL), QBE Insurance Group Limited (ASX: QBE) and Brambles Limited (ASX: BXB).

Jane Shoemake, investment director, global equity income for Janus Henderson, said:

Despite it being a quiet period for Australian dividends, our most recent report shows the lower payouts in Australia made a significant impact. This is where the benefits of taking a globally diversified approach to income investing becomes clearest. Some payments were just deferred, and we have already seen some returning, albeit with a wide margin of uncertainty. Some of those that have been deferred will be paid in full, some will be paid but at a reduced level, and others will be cancelled outright.

More reading

• 6 ASX giants pay $1 billion for ripping off customers
• Here are the highlights of this ASX reporting season
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• The Westpac share price is on the slide today. Here’s why
• Which ASX bank share is the best buy for dividend income?

Phil Harpur owns shares of CSL Ltd. and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Woolworths Limited. 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 Australian Ethical Investment Limited (ASX: AEF) share price holds the unfortunate title of being the worst performer on the S&P/ASX 300 Index (ASX: XKO). Down 1.8%  at the time of writing, Australian Ethical’s share price has dropped 32% so far in August. That compares to a 3% gain for the ASX 300.

Like most shares trading on the ASX, Australian Ethical was savaged by the COVID-19 driven market rout. Australian Ethical’s share price tumbled 59% from February 18 to March 23. From that low, shareholders enjoyed meteoric rise through June 19. The share price gained 316% to reach an all-time high of $9.07 per share. Shares have dropped 54% since that high, but the Australian Ethical share price is still up 5% year-to-date.

What does Australian Ethical do?

The company is one of Australia’s leading ethical wealth managers. It has provided investors with ethical wealth management products since 1986. Its investments are guided by the Australian Ethical Charter which underpins the company’s culture and vision.

As at June 30 2020, Australian Ethical had more than $4 billion in funds under management, across superannuation and managed funds.

The company listed on the ASX in 2002.

Why is the share price down 32% in August?

Australian Ethical’s share price began its slide in late June, after the fund manager released its guidance for FY 2020. While still forecasting an increase in underlying profit after tax before performance fees, the forecast profit growth was less than half the 38% delivered in its first half.

The selloff continued after financial services company IOOF Holdings Limited (ASX: IFL), announced on August 7 that it had sold approximately 14.2 million shares or 72% of its holdings in Australian Ethical. At a total consideration of $74.5 million, IOOF received an average of $5.25 per share. That’s well above the current share price of $4.14.

Atop its reduced forward guidance and IOOF’s major divestment, it’s worth noting that momentum works in both directions. When a company’s share price is falling, it may trigger investor’s pre-set stop losses. It will also likely raise red flags for other shareholders, who may be drawn to the companies making headlines, like gold and technology shares.

While Australian Ethical’s share price kept climbing in the first months of the global pandemic, it’s also possible that investors have temporarily shifted their ethics to the backburner.

More reading

• Opthea share price bounces with Nasdaq listing on the cards
• What’s driving Arena REIT’s huge weekly share price gain?
• These were the worst performing ASX shares last week
• Why Australian Ethical, Northern Star, ResMed, & TPG Telecom are dropping lower
• Australian Ethical share price crashes 15% lower after IOOF selldown

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment 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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The Santos Ltd (ASX: STO) share price goes ex-dividend tomorrow. This when shares start selling without the value of its dividend payment. But before you rush out to buy at today’s Santos share price, let’s look a little closer at what the the natural gas producer’s dividend offers.

What’s the dividend yield on today’s Santos share price?

Santos announced a disappointing half year result last week on the back of tumbling oil prices. The interim dividend was similarly disappointing, slashed by 65% on the same period last year to just US 2.1 cents per share (cps).

This means that Santos shares currently yield around 1.8% at the current exchange rate, fully franked. Although I wouldn’t be lining up for a 1.8% dividend yield, there are some positive signs for the Santos dividend going forward.

Are good things coming for the Santos dividend?

As the major global economies start to spool up again following their COVID-19 forced holding patterns, it is fair to assume that demand for energy, and energy prices, will continue to recover. The price of brent crude oil has been steadily ticking upwards over the last few months and currently sits around US$44 per barrel.

In addition, guidance provided by Santos has the company targeting record production for the full 2020 year of up to 88 million barrels of oil equivalent (mmboe). Year on year, this would be production growth of up to 16.5%.

Because Santos offers a ‘sustainable’ dividend policy which aims to pay out between 10% and 30% of free cash flow, if these factors can drive higher sales revenue going forward, investors may be in for a jump in the dividend pay-out.

A history of poor dividend returns

Still, 10% to 30% of free cash flow seems to me like poor recompense for investors who have helped to fund billions of dollars in risky capital expenditure. In fact, since 2016, Santos has paid out just US$459 million in dividends and has written down its assets by a staggering US$3.4 billion. In this light, Santos looks like little more than a fiery furnace of capital destruction.

Commodity producers are often prone to cyclical earnings fluctuations which can make dividends unpredictable and Santos is no exception. There may be good things coming for the company, but I won’t be rushing to add Santos to my dividend portfolio today.

Fortunately, there are several other big companies going ex-dividend on 25 August to consider, including:

• Domino’s Pizza Enterprises Ltd. (ASX: DMP)
• InvoCare Limited (ASX: IVC)
• Netwealth Group Ltd (ASX: NWL)

More reading

• 5 things to watch on the ASX 200 on Monday
• These beaten down ASX energy shares could mirror the tech share price boom
• 5 things to watch on the ASX 200 on Friday
• Why CSL, Iress, Santos, & Webjet shares are dropping lower
• Santos share price slumps as interim dividend slashed

Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests. 

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Netwealth. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and InvoCare Limited. 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 RPMGlobal Holdings Ltd (ASX: RUL) share price is charging higher on Monday after the release of its full year results.

In fact, at one stage today the mining software company’s hit a multi-year high of $1.34.

At the time of writing they have given back some of these gains but are still up a solid 4% to $1.30.

How did RPMGlobal perform in FY 2020?

For the 12 months ended 30 June 2020, RPMGlobal delivered a $1.2 million or 1.5% increase in revenue to $80.7 million.

This was driven by a 317% increase in software subscription revenue during FY 2020, which offset declines in perpetual licence revenue, maintenance revenue, and advisory & consulting services revenue.

This strong demand for software subscriptions led to the company’s total contracted value (TCV) of software subscriptions sold increasing by $24.2 million or a massive 235% to $34.5 million during the year. Of this, only $6.1 million was recognised in this year’s financial accounts, with $28.4 million from this year plus $6.3 million from prior years ($34.7 million in total) to be recognised across the remaining duration of the committed term customer contracts. In most cases this is a period of 3 years.

RPMGlobal’s operating contribution (EBITDAR before Foreign Exchange and one-off COVID-19 costs/provisions) came in at $8.4 million. This was down slightly from $8.5 million in FY 2019.

And while the company made another loss this year, it was a big improvement year on year. RPMGlobal posted a loss after tax of $0.7 million for FY 2020, compared to a $5.2 million loss in FY 2019. Last year’s result included a sizeable tax expense.

Strong balance sheet.

Another positive was the company’s strong balance sheet. RPMGlobal had a cash balance of $40 million with no debt at the end of June.

This includes the final acquisition earnout payments of $2.6 million for the iSolutions and MinVu acquisitions during the year. Pleasingly, this means the company will no longer be required to share revenues from these products going forward.

Outlook.

The company is expecting challenges in FY 2021 because of the pandemic, but remains very positive on its longer term prospects.

Management notes that at the end of FY 2020 the annual recurring revenue (ARR) from software subscriptions reached $12.7 million and the ARR from perpetual maintenance revenue stood at $20.5 million. This means RPMGlobal starts the year with total ARR of $33.2 million.

It commented: “This $33.2m in TARR for FY2021 represents 68% of all software revenue reported by the company in FY2020 delivering revenue certainty and resilience for the company even during uncertain times.”

It added: “We continue to see solid growth in the software sales pipeline however currently we are experiencing delays in finalising deals as miners reprioritise both their capital and operating expenditure in response to COVID-19. While these delays are understandable, we believe these deals will be concluded in the fullness of time.”

Nevertheless, management remains confident in its future prospects and expects its investment in software development to help it win market share in the coming years.

It explained: “The continued heavy investment in our products now (when it may be hard for others to do the same) will we expect result in strong market share growth over the next three to four years.”

“With $33.2m already in TARR for FY2021, $40m in cash (and no debt) and $15.8m in operating cashflow in FY2020 the Board has very few concerns about the company’s financial viability and will continue investing in the company’s products while making value accretive acquisitions where strategic opportunities present themselves,” it concluded.

More reading

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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 RungePincockMinarco Limited. The Motley Fool Australia has recommended RungePincockMinarco Limited. 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 oOh!media Ltd (ASX: OML) share price is surging higher following the release of the media company’s half-year (H120) results this morning.

At the time of writing, the oOh!media share price is up by 10.4% to 98 cents per share.

oOh!media’s half-year results 

For the half-year ended 30 June 2020, oOh!media delivered revenue of $205 million. This was down by 33% on the $304.9 million recorded in the prior period, driven by the economic fallout from the coronavirus pandemic.

The company reported a net loss after tax of $23 million, a staggering fall of 355%.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $10.8 million, down 81% on the prior period.

oOh!media’s operating cash flow before financing increased for the first-half to $77.8 million, while underlying earnings per share fell 257% to 5.7 cents.

Cash on hand was $125.1 million at 30 June 2020, a 104% increase complemented by the company’s recent capital raising in March. Further facilities of another $232 million is available, should oOh!media need to access these funds.

The company unsurprisingly decided against declaring an interim dividend in H120. The board will revisit this decision in future periods based on the prevailing market conditions.

COVID-19 impact

Difficult trading conditions have severely affected the company’s revenue in the first half of 2020.

oOh!media reports that a reduction in passenger numbers and CBD audiences caused a decline across all its segments, most noticeably in the locate, fly and commute sectors.

Retail was mixed, with smaller grocery and weighted shopping centres performing better than major centres like Westfield.

In New Zealand, where oOh!media’s presence is mostly represented by bus shelters, revenue accelerated to 80% of the prior period, after initial lockdown.

Although new waves of the virus could result in recurring restrictions complicating recovery plans, management reports it has achieved $80 million in cost savings to see the business through. This has come from savings in fixed rent expenses, operating expenditure, and capital expenditure reductions.

FY20 outlook

oOh!media advised that due to trading conditions remaining uncertain, no forecast for FY20 could be given.

The company reported that business is slowly starting to return to normal levels with Q3 building on the momentum from Q2, pacing at 60% of the prior period compared to 25% for the month of May.

oOh!media will continue to manage costs and liquidity to preserve business expenditure when growth cycles bounce back.

Commenting on oOh!media’s H120 results, CEO Brendon Cook said:

We have maintained market share while strengthening our balance sheet, having responded quickly to the challenges presented by COVID-19. While revenue and profits predictably declined, our decisive early action to raise additional equity, reduce costs and capital expenditure and manage cash flows has reduced debt by 67 per cent and positioned the company well for the future.

About the oOh!media share price

oOh!media shares have recovered somewhat since their March lows of 55 cents, lifting 78% since then.  However, the oOh!media share price is still trading 67% lower, year-to-date, and 60% down on this time last year.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended oOh!Media 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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