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Aveo H1 sales dip but recovery in sight

Melissa Jenkins  |  14 Feb 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] Aveo Group's (AOG) first-half underlying profit dropped 33 per cent to $36.3 million after sales fell following allegations the retirement village operator was ripping off residents.

Revaluation of properties and a one-off tax benefit helped lift net profit for the six months to December by 23 per cent to $149.3 million, but retirement sales volumes fell 25 per cent and the value of units sold or developed fell 16 per cent to $196.1 million.

Chief executive Geoff Grady blamed the downturn on "negative media sentiment" following allegations Aveo used exorbitant fees and complex contracts to fatten profits.

He said sales volumes were significantly down in the first quarter but that retirement sales deposits had returned to normalised levels by the end of December after contract changes and a corporate advertising campaign.

"While we, and the industry as a whole, encountered a challenging period mid last year with significant negative media sentiment, an increasingly positive response from existing and new residents to the new contract initiatives we introduced has seen a strong recovery," Mr Grady said on Wednesday.

Aveo reiterated its full-year guidance for earnings per share of 20.4 cents, up from 18.9 in 2017.

Aveo is facing a residents' class action related to the allegations in last July's joint Fairfax and ABC Four Corners investigation, with the matter due before the Federal Court next month.

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It previously acknowledged some residents could have been confused by its contracts and simplified them, as well as extending its money back guarantee.

Shares in Aveo, which fell by a third in the six weeks following last year's allegations, were up 9.5 cents, or 3.7 per cent, at $2.675 at 1200 AEDT.

AVEO H1 SALES DIP

* Net profit up 23pc to $149.3m

* Underlying profit down 33pc to $36.3m

* Revenue down 10.5pc to $208m

* No dividend declared, dividend/distribution reinvestment plan remains suspended

 

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