Financial highlights

Overall, Trading Revenue increased 1.6% to £940m with 2.5% growth in Roadside Assistance. Revenue from Insurance Services was flat on the prior year while Driving Services declined.

The turnaround of paid Memberships from decline to growth is a significant milestone in the transformation of the Roadside Assistance business and the AA Group, as Roadside represents 79% of Group Trading EBITDA. Roadside Assistance Trading Revenue grew 2.5% and Trading EBITDA 1.1%, against the background of major transformation, the increased burden of IPT and increased breakdown incidents. This strong performance reflects not just the AA’s resilient business model and demand for our services, but also the significant benefits already evident in the first two years of the transformation.

Group Trading EBITDA rose by 0.2% to £403m with organic revenue growth offset by costs associated with increased breakdown incidents, higher insurance aggregator spend and the anticipated increase in IT maintenance costs. As a result, the Trading EBITDA margin was slightly lower than last year at 42.9% (2016: 43.5%).

Exceptional operating items were £31m, comprising largely £14m of costs associated with the business restructuring. Of the £10m provided for duplicate breakdown cover, £7m is exceptional operating costs and the balance, which is related to accrued interest for refunds, is allocated to exceptional finance costs. While dealing with this issue has involved a considerable commitment of management time, it has enabled us to incorporate fairer treatment of our customers and Members into our systems and processes.

Finance costs at £185m (2016: £289m) fell by £104m of which £62m was related to penalty costs incurred in the prior year’s refinancing and £31m was due to lower interest on external borrowings following this exercise. The tax charge for the period was £26m (effective tax rate of 22%) with a current tax charge of £20m and deferred tax impact of £6m.

Profit for the period from continuing operations was £74m compared with a £1m loss in the previous period. Basic earnings per share from continuing operations were 12.2p compared with a loss per share in the previous period of 0.2p.

Adjusting for exceptional items, adjusted profit after tax was £130m, in line with the prior year (2016: £130m) and adjusted earnings per share were 21.3p (2016: 21.8p), down marginally on the prior year as a result of an increased number of ordinary shares in issue.

Operational cash flow was strong and cash conversion from continuing operations before tax and exceptional items was 92%. Net cash flow was £42m after dividends (2016: outflow of £136m). This was achieved despite the additional capital expenditure relating to the transformation.

  • Trading Revenue1

    1.6%

  • Trading EBITDA2

    0.2%

  • Basic EPS

    12.2p

  • Adjusted basic EPS

    21.3p

  • Cash conversion

    92%

  • Dividend per share

    9.3p

  • Key KPIs

     

  • Personal Members (Paid)

    3.3m

  • Business customers

    10.0m

  • Insurance policies

    1.9m

  • Driving instructors

    2,607