Authorization

AA chief bullish on strategy as ousted former boss claims ?225m in damages

The AA's new boss has reaffirmed his support for the company's strategy with his firstpurchase of shares and dismissed the idea of asset sales, as the breakdown service gears up foralegal battle with its former chairman.
Chief executive Simon Breakwell bought 142,249 shares for an aggregated cost of?169,000 - thefirst time he has purchased its stock.
The company known for its bright yellow vans also confirmed that ex-executive chairman Bob Mackenzie was seeking ?225min damages along with a claim to retain shares that he lookedto have lost when he was dismissed for gross misconduct after a punch-up with a colleague in a hotel bar,which was caught on camera.
Mr Mackenzie blamed the attack on colleague Mike Lloyd last summer on a cocktail of alcohol and pills as the pressure of leading the AA took its toll on him.
News of Mr Mackenzies dismissal following the altercation caused AA shares to plunge, wiping ?200m off the value of the business.
In its annual results, the AA said that it had considered any potential financial impact of the claim, but had not made a provision for these amounts as the group expects to be successful in rigorously defending itself.
The board said it expects legal costs of about ?1m to defend against Mr Mackenzies claims over the coming two years, but would try to recover these in damages from him.
The company has tried to move on since the headline-grabbing events of last summer and the full-year figures revealed whatMr Breakwell called a solid performance.
Annual revenue edged up 2pc to ?959m and pre-tax profit was ?41m higher at ?141m. Revenue from the dominant roadside operation rose 1pc to ?814m. New memberships rose 7pc and retention was broadly flat.
The shares jumped 15pc in afternoon trade to 131p. The stock has risen 57pc since the company issued a profit warning in February that sent its shares down 30pc in one day.
AA chief bullish on strategy as ousted former boss claims ?225m in damages

Ex-executive chairman Bob Mackenzie is seeking damages along with a claim to retain shares which he looksto have lost when he was dismissed for gross misconduct
At the time of its February update, the AA slashedits dividend and said it would rampup spending as part of a new strategy.
Mr Breakwell reaffirmed the company's expectation that earnings before interest, tax, depreciation and amortisation (ebitda) would be between ?335m and ?345m in the year to next January, compared with analysts estimates of ?390m.
The company is trying to use new technology to improve efficiency and has developed an app for members to alert the AA to breakdowns, rather than using call centres. Theapp was used in29pc of breakdowns during the year.
The AAs attempts to leverage its trusted brand and grow its insurance business paid off, with insurance revenue up 11pc at to ?145m. Average income per motor and home policy rose 6pc.
Mr Breakwell added that the company had made a "positive start" to the current financial year, butwarned that the results of a strategic review he launched after his appointment last autumn would mean investment in staff, products and systems that would lower profits in the short term.
Theseinvestments, while reducing our short-term profitability, are vital to our long-term success, Mr Breakwell said.
AA share price
Reflecting this, the full-year dividend was cut 46pc to 5p.
The company has beentrialing its Car Genie service, which aims topredictwhen customers will break down. Mr Breakwell said that in an initial trial of about 5,000 users, the AA was able to predict a third of breakdowns before they happened, and it plans to roll out thetrial to "tens of thousands" of customers this year.
Martin Clarke, chief financial officer,confirmed that the company had attracted interest from otherprivate equity firms and other potential bidders last year but that there had been "no substantive approach". Mr Breakwell added that the company was not considering any other M&A activity, such as disposals ofdivisions.
He said: "Were very, very fixed on delivering and driving the strategy that we outlined back in February and thats it. Were heads down trying to accelerate our insurance business, grow our membership business, get some more operational resilience in.And the complexity of the task at hand means that thats all were focused on."
The AA was floated in 2014 after a complex buyout from private equity ownershipthat left it with a ?3bn-plus debt pile. At the end of the period covered by the results thathad been reduced to ?2.7bn.
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«     2018    »
1234567
891011121314
15161718192021
22232425262728
293031