Retirement village provider Aveo has lifted its full-year guidance after posting a strong profit increase for the first half of the financial year.
Aveo profit after tax rose to $30.1 million for the six months to December 31, a substantial increase on the $2.2m it posted for the first half of fiscal 2014.
Underlying profit lifted 26 per cent compared to the previous corresponding half to $24.1m, reflecting a strong improvement in cash generation, Aveo said.
An increased contribution from the retirement businesses and reduced interest expense boosted earnings, Aveo said.
Aveo shares surged on the news, gaining 5.04 per cent to $2.50 at 11am (AEDT) against a benchmark index rise of 0.3 per cent.
Revenues also lifted, hitting $145.2m, for an increase of 23.9 per cent year on year.
The group declined to pay a dividend as Aveo's dividend and distribution reinvestment plan remained suspended.
Aveo said its retirement development pipeline is well progressed and on track to meet profit and unit delivery targets for 2015 and 2016, while resident take-up of increased care and support services continues to strengthen.
The group upgraded its guidance for the full-year, forecasting that underlying profit after tax will increase by more than 20 percent, compared to a previous range of 15 to 20 per cent.
Aveo reaffirms guidance of a full year distribution of 5c per security.