AA puts brakes on dividend as it reports jump in full-year earnings

(Sharecast News) - The AA is to pull its dividend, despite the coronavirus outbreak not yet having a material impact, the motoring group said on Tuesday.
The breakdown and insurance group said that, to date, the spread of Covid-19 had not impacted the group materially "but there continue to be risks, including disruption to our operations and, consistent with the rest of the market, there can be no certainly as to the future impact".

It continued: "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."

As part of that, the AA said it would suspend its final dividend for the 2020 full year.

The company also released unaudited financial information for the the full year to 31 January. Revenues rose 2% to ?995m, while trading earnings before interest, tax, deductibles and amortisation rose 3% to ?350m. Pre-tax profits surged 102% to ?107m.

The membership base returned to growth during the second half, enabling it to improve 0.2% over the year to 3.215m. Retention remained at 80%, while average income per member rose 2% to ?165.

In its insurance arm, there was 19% growth in motor policies and 2% rise in home premiums.

The AA said it did not expect a "material deviation" from the published figures once the audit once complete.

As at 31 January, AA had cash and cash equivalents of ?149m and available working capital facility of ?50m. It confirmed: "We remained well within our financial covenants at the year end."

It added: "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."