17 February 2016, Written by Brisbane Business News

AVEO Group's (ASX: AOG) profit is up 89 per cent, buoyed by exits from non-retirement developments and the promise of an ageing population.

Australia's leading owner, operator and manager of retirement communities has grown its profit to $45.6 million and is on track to meet targets of more than $80 million at the end of the financial year.

This result comes with the announcement of Aveo's $215.5 million acquisition of Freedom Aged Care, which owns and operates more than 1000 units in 15 retirement communities across Australia and has a pipeline of another 387 units. 

Aveo CEO Geoff Grady (pictured) says the company is on track for a return on retirement assets of 6 to 6.5 per cent.

Non-retirement activities lifted profits 220 per cent to $37.1 million from the prior corresponding period, driven by the performance of three major land estates and the settlement of The Milton apartments.

"In the first half we achieved a significant increase in the pricing of retirement units, and our active portfolio management is reflected in the higher numbers of both buyback purchases and buyback sales," says Grady.

"We have strong momentum across the Group and total sales volumes in the second half are expected to exceed the first half."

Aveo's established retirement assets produced record returns, with revenues increasing 15 per cent and profits 18 per cent to $28.1 million.

Construction is on schedule at five projects, including Clayfield and Peregian Springs, that will deliver 153 units in the second half.

The pipeline in total has increased to 5423 units, including 2384 units being developed at Springfield.

With hopes of becoming a full-service retirement provider, Aveo has recently appointed a general manager in care who will reposition the company's overall care offering which is being trialled at a number of villages. Aveo aims to deliver at least one 100-bed aged care facility every year from fiscal year 2017 onwards. 

Aveo's gearing is at 8.8 per cent, versus 13.8 per cent at 30 June 2015 and below its target range of 10 to 20 per cent.

The company confirms strong sales and cash proceeds from non-retirement exits is well supporting further development.

Author: Brisbane Business News Connect via: Twitter





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