23rd Sep 2014 07:33
LONDON (Alliance News) - AA PLC Tuesday reported a substantial fall in first-half pretax profit, due to GBP33.6 million cost of its initial public offering in June and higher finance costs as a result of a refinancing by the company's previous owners last year.
In a statement, the UK roadside assistance provider said it made a GBP10.2 million pretax profit in the six months ended July 31, compared with GBP121.2 million in the corresponding period last year.
Revenue increased to GBP491.7 million from GBP484.1 million, driven by roadside assistance growth arising from "stable" retention rates and an increase in average income per personal member.
Administrative and marketing expenses rose to GBP171.5 million from GBP144.6 million.
Along with other operating income and the AA's share of profit on joint ventures, the changes in revenue and expenses contributed to a fall in operating to GBP148.5 million from GBP168.2 million.
Finance costs rose to GBP138.6 million from GBP47.1 million, primarily due to higher interest on external borrowings. On July 2, 2013, the AA raised more than GBP3.0 billion of debt in the bank and capital markets under a refinancing.
"Since arriving at the AA less than three months ago, the new executive team has focused on getting to know the business in detail, assessing the business operations and infrastructure and developing the strategy for future long term growth," Executive Chairman Bob Mackenzie said in a statement.
"Progress has been made on all fronts but there is more to be done. In terms of the future, our task is to better capitalise on the strength of the AA brand; make the right investments to enhance our service to members and customers, and reduce the leverage of the business," Mackenzie added.
"The business continues to perform satisfactorily and the board expects the full-year to be in line with market expectations," the executive chairman added.
The AA did not pay a dividend, as set out in its IPO prospectus.
AA shares were Tuesday quoted up 1.4% at 296.12 pence.
By Samuel Agini; [email protected]; @samuelagini
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