7th May 2020 13:17
(Alliance News) - AA PLC on Thursday said its performance improved in its most recently ended financial year, and it is confident going forward.
The company, which provides vehicle insurance, driving lessons and breakdown cover, said revenue in the year to the end of January rose by 2% to GBP995 million from GBP979 million a year earlier, with pretax profit more than doubling to GBP107 million from GBP53 million.
AA reported solid performances by the Roadside and Insurance businesses.
The company noted that, with fewer cars on the road, total breakdowns are materially lower, whilst new membership sales have softened overall and retention rates have been marginally down.
Meanwhile, in the Insurance unit, renewal rates remain steady and the company said its claims cost exposure, which is limited to its in-house underwriter, also is performing in line with expectations.
During the year, AA completed the buyback of GBP32 million of bonds including GBP3 million of A notes and GBP29 million of B notes. However, the company previously announced the suspension of the final dividend for the recent financial year.
"Financial 2020 was a year of strong operational and financial performance for AA and further delivery on our strategic plan. The business continued to perform in line with our expectations through February and March of this year but as we entered April we started to see greater variance as a result of Covid-19," said Chief Executive Simon Breakwell.
Looking forward, Breakwell added: "Given the recurring nature of many of our income streams, the benefit of the actions already taken and our flexibility to adjust to further changes in trading, we currently expect our performance this year to be robust in the circumstances and only slightly below that of financial 2020."
AA shares were trading 13% higher in London on Thursday afternoon at 29.84 pence each.
By Evelina Grecenko; [email protected]
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