MENU

Japara Healthcare Ltd downgrades FY18 guidance

Japara Healthcare Ltd (ASX: JHC) is one of the largest aged care providers in Australia.

The company made a late announcement regarding its status of capital refurbishment and also updated its FY18 guidance.

In 2015 Japara introduced a ‘capital refurbishment deduction’ following legal advice from its solicitor and subsequently supported by a senior barrister’s opinion. Japara decided that the capital refurbishment deduction was supported by relevant legislation and provided a direct benefit to residents.

However, a recent Federal Court found that the asset replacement charge implemented by Regis Healthcare Ltd (ASX: REG) was not consistent with relevant legislation. Japara has reviewed its position and decided to refund all capital refurbishment deductions, including any accrued interest.

Revenue from capital refurbishment deductions totalled $1.84 million in the 8 months to the end of February and totalled $2.82 million in previous financial years.

After the non-recurring refund of the capital refurbishment deductions, Japara anticipates that FY18 earnings before interest, tax, depreciation and amortisation (EBITDA) is likely to be 14% to 19% below FY17’s.

Foolish takeaway

Obviously, this isn’t good for Japara and impacts the FY18 result. However, it doesn’t affect the long-term outlook for Japara so any short-term negative effects should finish by the end of FY18. It could be a long-term opportunity if the share price falls tomorrow.

These growth stocks could be better options for long-term growth.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison owns shares of JAPARA DEF SET and Regis Healthcare 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.