AA shares drop with £63.6m loss
The motoring company, which is sometimes referred to as the 'fourth emergency service' have had huge debts. Earlier this year, they raised £935m to try and cut them down, but sadly for them, revenues are down. Now, they've still got £484.6m (in the six months to the end of July), but compared with £491.7m for the same period last year, they can't carry on like this.
Earnings before interest, tax, depreciation and amortisation fell 5.9%.
The AA were saddled with a £3bn debt after they separated with Saga in 2013. Costs rose to £202.2m, of which £87.4m were exceptional, according to the company.
This hasn't been helped by the government's decision to increase insurance premium tax by 58% from November, which the AA say "is likely to create additional churn in both insurance and roadside assistance". They added: "Secondly, EU legislation on holiday pay may increase operating costs.”
Executive chairman Bob Mackenzie said: "On IPO we set ourselves three objectives: to turn the AA into the UK's pre-eminent motoring services organisation, to revolutionise customer experience through investing and embracing new technology and, finally, to reduce group borrowing and the associated interest cost."
"I am pleased to report early and positive signs that our strategy will deliver our expectations of the AA brand. The AA has once again demonstrated its fundamental strength, stability and hugely cash generative characteristics. We are confident that we are in line with expectations for the full year and that we will position the AA as the digital brand for all motorists' needs."