TIDMAA.
RNS Number : 1267I
AA PLC
31 March 2020
31 March 2020
AA plc
Trading update
Further to the announcement made by AA plc (the AA or Group) on
23 March 2020 on the delay of the publication of the Group's
preliminary results for the year ended 31 January 2020 (FY20) at
the request of the Financial Conduct Authority, the Group today
publishes a summary of unaudited financial information in respect
of FY20 and an update on current trading.
Covid-19 update
The outbreak of Covid-19 has been unprecedented in its impact on
society and the global economy, and our priority is to protect the
health and wellbeing of our staff, customers and suppliers.
The AA provides an essential service and we have initiated a
number of actions across our Roadside and Insurance businesses to
ensure the continuity of our operations and services. We have put
in place appropriate safety protocols across the Group including
the implementation of an extensive programme of home working which
has enabled the temporary closure of all of our offices with the
exception of Oldbury, our emergency contact centre.
To date, the spread of Covid-19 has not impacted the Group
materially but there continue to be risks, including disruptions to
our operations and, consistent with the rest of the market, there
can be no certainty as to the future impact. We are planning and
executing changes to our operations that include the deferral or
reduction of operating costs and capital expenditure across the
Group to ensure we limit as much as possible the impact to our
Trading EBITDA and cash flow forecasts.
The AA has proved resilient through previous economic downturns
and the steps we are now taking will help us maintain that
resilience. The management team has successfully turned the
operational and commercial performance of the AA around in the last
two years and remains focused on navigating the challenges
ahead.
Proactive balance sheet management
The Group remains committed to the proactive management of its
capital structure and reduction of debt and will continue to assess
all options. Consistent with this approach, and also in light of
the Covid-19 outbreak, the Board has made a decision to suspend the
final dividend in respect of FY20. Total dividend payments in FY20
will therefore remain 0.6p per share, representing the amount paid
in respect of the interim dividend.
As at 31 January 2020, the Group had cash and cash equivalents
of GBP149m(6) and an available Working Capital Facility of GBP50m.
We remained well within our financial covenants at year end.
Summary of unaudited financial results
Today we are releasing the following key unaudited financial
information for the year ending 31 January 2020 (FY20) and do not
expect material deviation once the audit is complete.
Year ended
Jan 20 Year ended
(FY20) Jan 19
(unaudited) (FY19) Change
-------------------------- -------------- --- ------------ --- --------
GAAP measures
Revenue (GBPm) 995 979 +2%
Operating profit (GBPm) 257 219 +17%
Profit before tax (PBT)
(GBPm) 107 53 +102%
Basic EPS (pence) 14.1 6.9 +104%
Non-GAAP measures
Trading EBITDA(1,5)
(GBPm) 350 341 +3%
Trading EBITDA(2) margin
(%) 35 35 Flat
Free cash flow(4) (GBPm) 83 12 +592%
Adjusted profit before
tax(3) (GBPm) 107 115 -7%
Adjusted basic EPS(3)
(pence) 14.1 14.9 -5%
-------------------------- -------------- --- ------------ --- --------
Operational highlights
-- Roadside
o Membership base returned to growth during the second half and
rose 0.2% on the year to 3.215m (FY19: 3.207m); Retention of 80%
(FY19: 80%) reflects strength of service proposition and
pricing
o All key B2B contracts retained or extended. New strategic
partnerships with Admiral and Uber delivering incremental new
revenue streams
o Average income per member up 2% to GBP165 (FY19: GBP162) and
average income per B2B customer up 5% to GBP22 (FY19: GBP21)
-- Insurance
o 19% growth in motor policies to 869,000 (FY19: 731,000) and 2%
growth in home policies to 844,000 (FY19: 830,000), benefiting from
investment in marketing, incremental sales and renewals through our
in-house underwriter as well as systems investments including
Insurer Hosted Pricing
o Strong conversion rates of 36% (FY19: 25%) into our Roadside
business
o Average income per motor and home policy including income from
underwriter and Accident Management business up 4% to GBP83 (FY19:
GBP80)
Financial highlights
-- Trading EBITDA up 3% to c.GBP350m (FY19: GBP341m), in line
with market expectations; PBT more than doubled to c.GBP107m (FY19:
GBP53m)
-- Capex of c.GBP69m (FY19: GBP82m) in line with guidance
-- Free cash flow (pre-dividends, refinancing costs and bond
buy-back) up significantly to c.GBP83m (FY19: GBP12m), in line with
guidance
-- Completion of the triennial review of UK defined benefit
pension scheme to 31 March 2019 results in a significant reduction
to the technical provisions deficit of 64% to GBP131m (31 March
2016: GBP366m). Annual cash saving expected to be c.GBP6m per annum
year on year
-- Completion of a consultation process to close the CARE
section of the UK defined benefit pension scheme to future accruals
reduces the pension cash costs by c.GBP4m per annum. The
consultation has resulted in an enhancement to the defined
contribution scheme being agreed for affected employees which will
cost c.GBP11m over three years starting from 1 April 2020
-- Continued proactive debt management underpinned by improving operational performance
o GBP32m of bond buybacks completed, A notes GBP3m and B notes
GBP29m
o Average debt maturities extended from 3.3 years to 3.9 years
following refinancing in February 2020 of GBP325m of A5 notes with
new A8 notes at 5.5% interest rate
Further information on a revised timetable for publication of
our preliminary financial statements will follow when further
guidance from the FCA and other regulatory authorities is
available.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Ends.
Enquiries
Investors +44 20 7395 7301
Zeeshan Maqbool zeeshan.maqbool@theaa.com
Media (FTI Consulting)
Alex Le May
John Waples
Nick Hasell +44 20 3727 1340
Notes
1. Earnings before net finance costs, tax, depreciation,
amortisation, adjusting operating items, share-based payments,
contingent consideration remeasurement gain and pension service
charge adjustments.
2. Trading EBITDA divided by Revenue arising within operating segments.
3. Adjusted for a number of one-offs of which the largest are
adjusting operating items, share-based payments, pension service
charge adjustment, contingent consideration remeasurement gain, the
write off of debt issue fees, penalties on early repayment of debt
and transfer from cash flow hedge reserve.
4. Net increase in cash and cash equivalents pre-dividends,
re-financing costs and bond buy-back.
5. Trading EBITDA as at 31 January 2020 includes a GBP3m benefit
from the adoption of IFRS 16 during the year. The comparative
figure for last year does not have any IFRS 16 impact included.
6. Included within cash and cash equivalents is restricted cash
of GBP69m which is restricted for contractual or regulatory
purposes.
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Authority to act as a Primary Information Provider in the United
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END
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