Aveo Group boss Geoff Grady acknowledges there is more to do to repair trust broken by allegations the company ripped off its retirement village residents.
Aveo’s half year underlying profit dropped one third from a year ago to $36.3 million as sales fell following claims the company used exorbitant fees and complex contracts to fatten profits.
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 dropped 25 per cent, and the value of units sold or developed fell 16 per cent.
Mr Grady said sales volumes were significantly weaker in the first quarter of the financial year, but sales deposits had returned to normal levels by the end of December after contract changes and a $3 million advertising campaign.
Aveo’s survey of residents showed four in five were either satisfied or very satisfied in 2017 and over the previous 12 months.
But residents were unlikely to recommend others buy into an Aveo village.
“What they are very reluctant to do is to recommend to other people to come in; not because they are not enjoying the experience but because … they’re just being cautious about making that recommendation to friends and family,” Mr Grady said.
“It certainly suggests that there is improvement to be done.”
Aveo reiterated its guidance for full year earnings per share of 20.4 cents, up from 18.9 cents in 2016/17.
It wants to deliver 506 major new units for the full year, after delivering 50 in the first half.
Aveo is facing a class action from residents related to the allegations made by Fairfax Media and the ABC in June, and the matter is due before the Federal Court in March.
Mr Grady said he understood fewer than 100 residents have signed up to the class action.
Aveo has previously acknowledged some residents could have been confused by its contracts, and has since simplified them and extended its money back guarantee.
Shares in Aveo, which lost one third of their value in the six weeks following last year’s allegations, were up 8.5 cents, or 3.3 per cent, at $2.665 at 1515 AEDT.
AVEO’S SALES DIVE AFTER REPUTATIONAL DAMAGE
* Net profit up 23 pct to $149.3m
* Revenue down 10.5pct to $208m
* No dividend, unchanged