Aveo Group Limited Policies

This report examines Aveo Group Limited, an Australian retirement community developer and manager, focusing on its financial management policies and practices in relation to corporate social responsibility (CSR). It analyzes the impact of the Four Corners investigation, which revealed allegations of unethical practices, on Aveo's share price and investment proposition. The report evaluates Aveo's financial policies, including Corporate Reporting, Timely and Balanced Disclosure, and Security Holder Engagement, and assesses their effectiveness in promoting ethical conduct and profitability. The study also investigates the causes of volatility in Aveo's share prices, linking it to the negative publicity and the subsequent share buyback. The conclusion highlights the detrimental effects of Aveo's actions on its reputation and financial performance, emphasizing the importance of aligning financial policies with CSR and stakeholder theory.

Running head: AVEO GROUP LIMITED AND ITS POLICIES
Aveo Group Limited and its Policies
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Author Note

1AVEO GROUP LIMITED AND ITS POLICIES
Table of Contents
Introduction................................................................................................................................2
Aveo’s financial management policies and practices with respect to their social responsibility
and social outcomes of their actions:.........................................................................................2
Aveo as an investment proposition............................................................................................3
Causes of volatility in the share prices of Aveo Limited:..........................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

2AVEO GROUP LIMITED AND ITS POLICIES
Introduction
This study is about Aveo Group Limited which has been in the field of re-establishing
retirement communities for the last 25 years. Not only Aveo Group has re-established but
also developed and managed the living of senior community. Aveo Group has
accommodations all over Australia including the suburban areas, main country and coastal
areas.
In this project it has been mentioned that according to the Four Corners study Aveo
was accused of ripping off customers almost all of them elderly and vulnerable at its
retirement villages. There are also allegations that Aveo had in place complex contracts and
exorbitant fees.
Therefore this study aims to look into the inside happenings that lead to such a
shameful result. Here in this project the financial management policies and practices with
respect to their social responsibility and social outcome is evaluated and Aveo as an
investment proposition has also been discussed.
Aveo’s financial management policies and practices with respect to their social
responsibility and social outcomes of their actions:
Financial management policies of Aveo group Limited should be such that, it does not
hamper the social duties performed or the responsibilities towards its environment in which it
operates is not disturbed (Lanis and Richardson 2012). But in reality this might not be the
scenario (Hilson 2012). In present times the situation is such that the economic, social and
environmental concerns are becoming a mandate concern for the companies and in order to
maintain it the entire system or operational hierarchy is required to be integrated or
disintegrated as the case may be (Brigham and Houston 2012).
Generally there exists a positive relationship between financial management policies
and corporate social responsibilities performed, but in case of Aveo Group Limited there
exists an anomaly (Brigham 2014). Aveo Group Limited as a company neither could
maintain financial management policies nor could maintain CSR because the financial
policies were not in accordance to the stakeholder theory that is each and every stakeholder
of business should be treated equally and should be given equal amount of rights in decision
making of the organization (Brigham and Ehrhardt 2013). Now as a stakeholder is a part of

3AVEO GROUP LIMITED AND ITS POLICIES
the company, therefore his or her welfare falls under the domain of Corporate Social
Responsibility, thus the CSR duties of Aveo were also hampered (Higgins 2012). This
ultimately led to reduced profits and increase in the burden of liabilities which very naturally
forced the company to rob its customers out of their money in the form of exorbitant fees and
other means (Petty et al. 2015).
Experts in this domain of study are of the opinion that a good CSR record results in
increase in employment or employment desirability in the company and also an increase in
the rate of investment in the company (Mathuva 2015). But Aveo, in relation to this matter
failed in both respects, that is, it neither had a good CSR record nor did it have a proper
stakeholder theory to utilize, which led to further problems (Aguinis and Glavas, 2012).
Another cause that led to the downfall of Aveo Group Limited is that the statistical
analysis might not be done properly, that is, it might not be free of errors and also the
exclusion of investment from the research and development domain might be another reason
(Epstein and Buhovac 2014). Some of the policies that are implemented by the company are
Integrity in Corporate Reporting, Timely and Balanced disclosure and Security holder
engagement. Integrity in corporate reporting refers to the policy in which the company has
arranged to set up an Audit and Risk Committee which will work according to the laid down
references approved by the Board of Directors. On the other hand Timely and Balanced
Disclosure is another policy set up by the group in which there is a provision of
communication policy as well, both of which are established with the intention of checking
the compliance of the company operations with the periodical disclosure requirements of the
Corporations Act and the ASX Listing rules (Edmans 2012). The last policy that is being
discussed in this study is the Security holder engagement policy which has been established
by the group keeping the stakeholder theory in mind. This policy aims to keep the security
holders informed about the important decisions and major developments that is going on in
the company. Now these three policies though appear to have a strong hold on the ethical and
operational scope of the company did not really help Aveo in reducing its liabilities or
increasing its profit. Though the policies were essentially created with an aim to enhance the
operating profit of the firm and improve the level of CSR as well (Kim, Park and Wier 2012).

4AVEO GROUP LIMITED AND ITS POLICIES
Aveo as an investment proposition
After the investigation conducted by the Four Corners, it came into light that the 11.5
percent plunge in share price of the company was due to the unreasonable fees claimed by the
group from its customers. Shares of Aveo Group have observed a fine change of -0.40% or -
0.01 in the most recent times. With time as the earning season comes to an end, investors
look for companies which have a steady track record. Aveo Group Limited will surely loose
on a huge base of investors for the negative feedback that has been published. Currently, the
14-day Average Directional Index (ADX) for Aveo Group is presently at 20.98. Generally an
ADX ranging from 0-25 would mean that it is an absent or weak trend. A value of 25-50
would mostly interpret a strong trend. A value of 50-75 would mean a strong trend, and lastly
a range of 75-100 would result in an extremely strong trend. ADX is particularly utilized to
measure trend strength but not direction. The data calculates as per the exhibit has been given
in Appendix (CSRHub - Sustainability and Corporate Social Responsiblity
(CSR) ratings on over 17,487 of the world’s largest public and private
companies., 2017).
In addition as per the data calculated on stock prices, the price has been taken from
September 2015 till August 2017. There has been a vital fluctuation in the stock prices.
However, as per the base line of 5% in the stock return, the fluctuation has been within the
limit except the fluctuation in June which had crossed the base line and then further
decreased as it has been accused of ripping the retirement villages which extended its
volatility. On the contrary, the volatility has been received maximum in the last month that is
August 2017, explaining the investment is not clear because of their fees and confusing
contracts.

5AVEO GROUP LIMITED AND ITS POLICIES
9/1/2015
9/28/2015
10/25/2015
11/21/2015
12/18/2015
1/14/2016
2/10/2016
3/8/2016
4/4/2016
5/1/2016
5/28/2016
6/24/2016
7/21/2016
8/17/2016
9/13/2016
10/10/2016
11/6/2016
12/3/2016
12/30/2016
1/26/2017
2/22/2017
3/21/2017
4/17/2017
5/14/2017
6/10/2017
7/7/2017
8/3/2017
8/30/2017
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
Stock Returns
Stock Returns
Figure 1: Stock Returns of Aveo
On the other hand, the traded volume of Aveo has been fluctuating and showing the
changes to be 92.69% in traded volume which creates an unpleasant environment for
investment and that is why the fluctuations has been rampant. Also, because of the stock
prices being wildly ranging the change in trade volumes has been irregular.
9/1/2015
10/14/2015
11/26/2015
1/8/2016
2/20/2016
4/3/2016
5/16/2016
6/28/2016
8/10/2016
9/22/2016
11/4/2016
12/17/2016
1/29/2017
3/13/2017
4/25/2017
6/7/2017
7/20/2017
0
4000000
8000000
12000000
16000000
Traded Volume
Traded Volume
Axis Title
Axis Title
Figure 2: Traded Volumes of Aveo

6AVEO GROUP LIMITED AND ITS POLICIES
Causes of volatility in the share prices of Aveo Limited:
Mulpha an well known investor in Australia has suffered a loss due to the negative
feedback going on, that came into exposure due to the publishing of Four Corners. Mulpha’s
22.6% strategic stockholding in Aveo did not prove to be profitable (Hu et al. 2015).
The report presented by Four Corners stated that the company had enough loopholes
to fail drastically. The report also brought into light the fact that a number of policies and
reforms that were established by the management of the company in the last ten years were
not put into consideration that is they were not even implemented (Eyles, Wild and Eversole
2014). Aveo’s shares on the stock exchange of Australia saw a plunge of 11.5% after the
exposure of the report. This forced Aveo to arrange for an emergency board meeting and
hence announced a buy-back of 9%. It has also been claimed by the higher authorities of
Aveo that no board meeting was held in reality. Mulpha though is of the opinion that the
volatility of shares is the primary reason for the decision of buying back the shares.
Conclusion
Aveo Group Limited, as a result of the misdeed committed by the company led to
total disaster both in terms of its goodwill and total revenue incurred or operating profit. As it
has been observed in the study Aveo Group Limited though had implemented financial
management policies but they were not in accordance with the corporate social
responsibilities or duties that the company had to perform in the due course of time.
Moreover the management policies introduced by the company like Corporate Reporting and
Timely Balanced Disclosure were not implemented properly. All these factors added with the
poor company regulations led the company to commit the unethical activity of robbing its
customers off exorbitant fees and wrongly trying to remove the old tenants in order to bring
new ones with more money. All these led to the downfall of Aveo Group Limited, one of the
leading firms in Australia in the field of re-establishing retirement communities (McDougall,
Barrie and Lange, 2017).

7AVEO GROUP LIMITED AND ITS POLICIES
References
Aguinis, H. and Glavas, A., 2012. What we know and don’t know about corporate social
responsibility: A review and research agenda. Journal of management, 38(4), pp.932-968.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Brigham, E.F. and Houston, J.F., 2012. Fundamentals of financial management. Cengage
Learning.
Brigham, E.F., 2014. Financial management theory and practice. Atlantic Publishers &
Distri.
CSRHub - Sustainability and Corporate Social Responsiblity (CSR) ratings
on over 17,487 of the world’s largest public and private companies.
(2017). CSR information for Harvey Norman Holdings. [online] Available
at: https://www.csrhub.com/CSR_and_sustainability_information/Harvey-
Norman-Holdings [Accessed 11 Sep. 2017].
Edmans, A., 2012. The link between job satisfaction and firm value, with implications for
corporate social responsibility. The Academy of Management Perspectives, 26(4), pp.1-19.
Epstein, M.J. and Buhovac, A.R., 2014. Making sustainability work: Best practices in
managing and measuring corporate social, environmental, and economic impacts. Berrett-
Koehler Publishers.
Eyles, K.J., Wild, A.L. and Eversole, R., 2014. Retirement Living in Tasmania: Expanding
choices, informing decisions.
Higgins, R.C., 2012. Analysis for financial management. McGraw-Hill/Irwin.
Hilson, G., 2012. Corporate Social Responsibility in the extractive industries: Experiences
from developing countries. Resources Policy, 37(2), pp.131-137.

8AVEO GROUP LIMITED AND ITS POLICIES
Hu, X., Xia, B., Buys, L., Skitmore, M., Kennedy, R. and Drogemuller, R., 2015. Stakeholder
analysis of a retirement village development in Australia: insights from an interdisciplinary
workshop. International Journal of Construction Management, 15(4), pp.299-309.
Kim, Y., Park, M.S. and Wier, B., 2012. Is earnings quality associated with corporate social
responsibility?. The Accounting Review, 87(3), pp.761-796.
Lanis, R. and Richardson, G., 2012. Corporate social responsibility and tax aggressiveness:
An empirical analysis. Journal of Accounting and Public Policy, 31(1), pp.86-108.
Mathuva, D., 2015. The Influence of working capital management components on corporate
profitability.
McDougall, K., Barrie, H. and Lange, J., 2017. South Australia Retirement Village Survey
2016.
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin, J.D. and Burrow, M., 2015.
Financial management: Principles and applications. Pearson Higher Education AU.
Appendix
Date Prices
Change in
Prices
Traded
Volume
Change in
Traded
Volume
9/1/2015
2.53992
6 1109080
9/2/2015
2.49271
6 -1.86% 1235996 11.44%
9/3/2015
2.46438
9 -1.14% 7285653 489.46%
9/4/2015
2.46438
9 0.00% 1015853 -86.06%
9/7/2015
2.53992
6 3.07% 699923 -31.10%
9/8/2015
2.53048
4 -0.37% 753553 7.66%
9/9/2015
2.60602
1 2.99% 864365 14.71%
9/10/2015
2.52104
2 -3.26% 1150196 33.07%
9/11/2015 2.5116 -0.37% 507421 -55.88%
9/14/2015
2.50215
8 -0.38% 497781 -1.90%
9/15/2015
2.52104
2 0.75% 733060 47.27%

9AVEO GROUP LIMITED AND ITS POLICIES
9/16/2015 2.5116 -0.37% 1011555 37.99%
9/17/2015
2.53048
4 0.75% 1329799 31.46%
9/18/2015
2.53048
4 0.00% 1754117 31.91%
9/21/2015
2.50215
8 -1.12% 796763 -54.58%
9/22/2015
2.50215
8 0.00% 677737 -14.94%
9/23/2015
2.46438
9 -1.51% 1171479 72.85%
9/24/2015
2.50215
8 1.53% 651922 -44.35%
9/25/2015
2.52104
2 0.75% 558790 -14.29%
9/28/2015 2.55881 1.50% 740230 32.47%
9/29/2015
2.49271
6 -2.58% 1171450 58.25%
9/30/2015
2.53048
4 1.52% 1048766 -10.47%
10/1/2015
2.57769
5 1.87% 506557 -51.70%
10/2/2015
2.58713
7 0.37% 303073 -40.17%
10/4/2015
2.66267
4 2.92% 462349 52.55%
10/5/2015
2.70044
2 1.42% 534243 15.55%
10/6/2015
2.68155
8 -0.70% 512844 -4.01%
10/7/2015
2.67211
6 -0.35% 745929 45.45%
10/8/2015 2.691 0.71% 604567 -18.95%
10/11/2015
2.63434
7 -2.11% 565276 -6.50%
10/12/2015
2.59657
9 -1.43% 1799985 218.43%
10/13/2015
2.66267
4 2.55% 702825 -60.95%
10/14/2015
2.68155
8 0.71% 358557 -48.98%
10/15/2015
2.63434
7 -1.76% 683700 90.68%
10/18/2015
2.71932
6 3.23% 345097 -49.53%
10/19/2015
2.70988
4 -0.35% 413740 19.89%
10/20/2015
2.71932
6 0.35% 345130 -16.58%
10/21/2015 2.70988 -0.35% 538096 55.91%

10AVEO GROUP LIMITED AND ITS POLICIES
4
10/22/2015
2.77597
9 2.44% 936830 74.10%
10/25/2015
2.79486
3 0.68% 728759 -22.21%
10/26/2015
2.82318
9 1.01% 851191 16.80%
10/27/2015
2.82318
9 0.00% 612796 -28.01%
10/28/2015
2.84207
4 0.67% 907107 48.03%
10/29/2015
2.90816
8 2.33% 745423 -17.82%
11/1/2015
2.90816
8 0.00% 1550194 107.96%
11/2/2015
2.92705
3 0.65% 604955 -60.98%
11/3/2015
2.92705
3 0.00% 635553 5.06%
11/4/2015
2.88928
4 -1.29% 1257071 97.79%
11/5/2015
2.88928
4 0.00% 940884 -25.15%
11/8/2015
2.84207
4 -1.63% 812492 -13.65%
11/9/2015
2.77597
9 -2.33% 1828349 125.03%
11/10/2015
2.84207
4 2.38% 483054 -73.58%
11/11/2015
2.80430
5 -1.33% 879305 82.03%
11/12/2015
2.76653
7 -1.35% 868756 -1.20%
11/15/2015
2.76653
7 0.00% 825226 -5.01%
11/16/2015
2.80430
5 1.37% 1006992 22.03%
11/17/2015
2.83263
2 1.01% 5117515 408.20%
11/18/2015
2.88928
4 2.00% 1061950 -79.25%
11/19/2015
2.92705
3 1.31% 1279995 20.53%
11/22/2015
2.96482
1 1.29% 946426 -26.06%
11/23/2015
2.93649
5 -0.96% 464154 -50.96%
11/24/2015
2.95537
9 0.64% 931731 100.74%
11/25/2015 2.95537 0.00% 616941 -33.79%

11AVEO GROUP LIMITED AND ITS POLICIES
9
11/26/2015
2.96482
1 0.32% 389443 -36.88%
11/29/2015
3.02147
4 1.91% 1241522 218.79%
11/30/2015
3.07812
6 1.87% 1140694 -8.12%
12/1/2015
3.00258
9 -2.45% 1486537 30.32%
12/2/2015
3.01203
2 0.31% 1251592 -15.80%
12/3/2015
2.94593
7 -2.19% 1000819 -20.04%
12/6/2015
2.93649
5 -0.32% 406672 -59.37%
12/7/2015 2.91761 -0.64% 404336 -0.57%
12/8/2015
2.86095
8 -1.94% 1039442 157.07%
12/9/2015
2.85151
6 -0.33% 880348 -15.31%
12/10/2015
2.79486
3 -1.99% 1250166 42.01%
12/13/2015
2.73821
1 -2.03% 1082070 -13.45%
12/14/2015
2.72876
9 -0.34% 1300761 20.21%
12/15/2015
2.86095
8 4.84% 986038 -24.20%
12/16/2015
2.89872
6 1.32% 1435097 45.54%
12/17/2015
2.94593
7 1.63% 674878 -52.97%
12/20/2015
2.93649
5 -0.32% 787279 16.66%
12/21/2015
2.97426
3 1.29% 797490 1.30%
12/22/2015 2.91761 -1.90% 567974 -28.78%
12/23/2015
2.93649
5 0.65% 246444 -56.61%
12/27/2015
2.93649
5 0.00% 0 -100.00%
12/28/2015
2.95537
9 0.64% 809030 100.00%
12/29/2015
2.95537
9 0.00% 488528 -39.62%
12/30/2015
2.97426
3 0.64% 494639 1.25%
1/3/2016
2.92705
3 -1.59% 359535 -27.31%
1/4/2016 2.86095 -2.26% 338903 -5.74%