UNDER-FIRE AVEO DOUBLES FY PROFIT, SHARES SURGE NEARLY 10 PER CENT

UNDER-FIRE AVEO DOUBLES FY PROFIT, SHARES SURGE NEARLY 10 PER CENT

SHARES in retirement village operator Aveo Group (ASX: AOG) have surged 10 per cent after announcing its profit after tax had more than doubled in the 2017 financial year.

Aveo Group was at the centre of a Four Corners/Fairfax investigation in June which alleged the company engaged in poor practices including the charging of excessive fees through complex contracts.

Aveo says its full year profit increased by 118 per cent to $252.8 million for the year to June 30, despite the negative media coverage, and the public outrage from accusations it adopted a "bleed them dry" approach to its elderly customers.

"We know there is a lot of discussion in the market at the moment about retirement living and about Aveo generally," says Aveo CEO Geoff Grady (pictured).

"We understand people have concerns about the retirement and aged care industry. We acknowledge that some residents have been confused by their contracts.

"We are genuinely distressed when we fall short of the standards our consumers expect of us. I know that some consumers feel that we have let them down."

The company says inquiry rates in July had dropped by 60 per cent compared to the same month last year because of the media coverage of its operations, but were now starting to increase.

Grady says Aveo is now focused on improving the simplicity of its contracts and will introduce a new six-month money-back guarantee permanent in all states.

Aveo's revenue fell by 5.4 per cent to $421.3 million, while underlying profit after tax was up 22 per cent at $108.4 million.

The company paid a dividend of nine cents a share, up by one cent. At around 2.30pm (AEST) AOG shares were trading at $2.67, up by nearly 10 per cent from opening trade.

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