AVEO BEGINS A SLOW PROCESS OF RECOVERY
Written on the 15 November 2017 by David Simmons
RETIREMENT village operator, Aveo Group (ASX: AOG) has shown signs of improvement following in the four months since a takedown by ABC's Four Corners and two threats of class action law suits.
The listed retirement home operator has reaffirmed its full-year earnings guidance as its sales continue to improve.
The improvement follows the joint Four Corners and Fairfax Media probe into Aveo which aired concerns by former residents and staff about high exit and maintenance fees.
Speaking at the group's AGM this morning, chief executive Geoff Grady (pictured) says enquiries into units are showing signs of improvement.
"Enquiries have steadily improved since mid-August mostly as a result of the improved product offers, the money back guarantees, the improved buybacks we began to put into the market from late August," says Grady.
"On the back of that improved enquiry, sales have also steadily improved most notably since mid-September."
Grady also sayssales rates are expected to recover to normalised rates by December 31, and will remain at that level through the second half of the 2018 financial year.
The group is maintaining its profit guidance of 20.4 cents per security and continues to target a full-year distribution payout based on 40 per cent to 60 per cent of underlying profit in the current financial year.
These announcements follow the group's attempts to defend two law suits lodged by its elderly residents.
In September, the retirement village operator denied taking advantage of its elderly residents following the news that Maurice Blackburn and Maddens Lawyers had begun legal investigations into the group.
Maddens was the first firm to start legal investigations, announced shortly after the Four Corners episode aired.
The class action principal at Maurice Blackburn, Brooke Dellavedova, says that her firm's investigation could be the best avenue for holding Aveo accountable.
"We don't think it's fair or legal to subject elderly people to complex and confusing contracts that contain unfair terms," says Dellavedova.
"If enough people want to take action against Aveo, then we will look to step in and stand up for these people."
Aveo Group CEO Grady says the company is prepared to stand its ground in the face of any allegations that it acted wrongly.
At the time of writing, shares in Aveo Group are up 3.02 per cent to $2.73 per share.
Business News Australia
Author: David Simmons