Retirement village operator Aveo has lifted full-year profit by 44 per cent, boosted by a major property sale and asset revaluations.
Aveo has posted a net profit of $365.1 million for the year to June 30, although revenue was down 5.4 per cent to $425.3 million.
The company benefited from the sale of its Brisbane residential development, Gasworks, for $53.7 million, as well as the revaluation of its investment properties, to the value of $177 million.
Aveo's profit was also boosted by the creation of 506 new units during the financial year and the company's latest community in Brisbane achieving higher than expected development margins.
Aveo shares rose on Wednesday and by 1339 AEST were up 8.6 per cent to $2.40.
However the stock remains well below its 2016 high of $3.65 and CEO Geoff Grady said the current price did not reflect the company's underlying value.
Aveo has announced a strategic review, which may include a new major investor partner, to boost the company's market valuation.
"We are trading well under (net tangible assets) due to concerns around sustainable sales levels, perceived industry regulatory risk and to a lesser extent the class action," he said in a call to analysts on Wednesday.
Aveo is facing a class action launched in the wake of allegations made in a Fairfax Media-Four Corners joint investigation in 2017 that residents were subjected to exorbitant fees and complex contracts - claims the group rejected.
"As a leading owner, operator and manager of retirement communities, we routinely attract interest in the growth potential of the section in Australia and overseas," Mr Grady said.
Despite the jump in profit, revenue from the company's established retirement business, which includes older units, was down 20 per cent to $164.3 million.
Occupancy rates dropped three per cent to 90 per cent - a figure Mr Grady labelled "abnormal".
While the company have already simplified their contracts in the wake of the 2017 scandal - including allowing a six-month buyback guarantee on units - Mr Grady said the company would provide further flexible options for customers from September 1.
Mr Grady said 33 units have been bought back by Aveo under the six-month buyback guarantee so far.
AVEO PROFIT UP BUT REVENUE DOWN:
* Net profit up 44 per cent to $365.1 million
* Revenue down 5.4 per cent to $425.3 million
* Final dividend of 9 cents, unfranked
Share
