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Delayed Quote. Delayed London Stock Exchange - 02/15 11:35:07 am
92.16 GBp   -0.75%
02/12AA : Pre-close trading update
02/07AA : wins Lloyds Banking Group contract
01/18AA : Sir John Kingman questioned on the future of audit
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AA : Pre-close trading update

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02/12/2019 | 02:05am EST

12 February 2019

AA plc

Pre-close trading update

FY Results in line with previous guidance

The AA will announce results for the financial year ending 31 January 2019 on 3 April 2019

· Trading EBITDA expected to be not less than £340m, in line with our guidance range of £335m to £345m

· Solid operational performance across Roadside and Insurance

· Successful renewal or extension of all key FY19 B2B contracts, including Lloyds Banking Group (LBG), Volkswagen Group (VWG), Suzuki and Jaguar Land Rover (JLR)

· Delivery of the strategic plan remains on track


The AA retained or extended all its key FY19 B2B contracts, including LBG, VWG, Suzuki and JLR, in line with commercial expectations. In addition, the AA won a three-year contract with Arval, a significant new business win in the Fleet and Leasing sector.

The contract renewals, extensions and wins are an endorsement of our strategy and performance, which is underpinned by our operational scale, service excellence and innovative customer solutions. The AA is the market leader in providing breakdown services to B2B customers, who account for c10 million of the AA's c13 million total members.

Average income per business customer increased by c5% to c£21, reflecting the new contract wins and additional revenue recognised under our pay-for-use contracts.

Paid personal memberships declined by c2% to 3.21m during the year and retention wasjust over 80% as at 31 January 2019. The decline in paid personal memberships was as anticipated and was principally due to our previously announced decision to re-phase our summer marketing campaign as well as the impact of regulatory pressures and continued competitor activity. It is our intention that with increased marketing spend, supported by continuing investment in our differentiated proposition, we can achieve a broadly flat membership base in FY20 and return this to growth by FY21.

Average income per paid member rose to c£162, up c3% since last year. The increase, which is broadly in line with inflation, includes the shift in new personal members taking up monthly subscriptions and selecting higher levels of service coverage with their subscriptions.

The acquisition of Prestige Fleet Servicing post year end gives the AA a strong and profitable platform from which to further strengthen our presence in service, maintenance and repair, working with fleet and leasing companies and supporting our OEM partners. The acquisition will also deliver synergies and deliver new revenue streams without significant capital expenditure.


Our Insurance business, comprising the broker, in-house underwriter and our financial services business, continues to perform in line with our expectations. Our motor policy book, in particular, demonstrated strong growth through our new never member channel, which we commenced in May 2018.

During the year, the motor policy book grew by c16% to c731,000 and ahead of our expectations we have managed to return the home policy book to growth, achieving a modest increase ofc1.5% to c830,000. In line with our expectation for FY19, average income per motor and home policy fell to c£69, reflecting the investment in new business growth, which has on average lower commissions compared to the rest of the book.Our in-house underwriter continues to deliver strong levels of growth. In FY19, our underwritten motor book increased by c50% to c339,000, driven largely by our never member channel and the home book increased by c40% to c259,000.

Supported by our in-house underwriter and our investment in systems, including Insurer Hosted Pricing, we expect further growth in our motor and home policy books in FY20.

Strong and stable cash conversion, capex in line with guidance

Our business continues to experience strong and predictable levels of cash conversion. As a result of the successful July 2018 refinancing and reaffirmation of our credit rating by S&P, we have extended our effective near-term maturities until January 2022. With an average maturity of debt of just over four years, we have the flexibility to execute our strategic plans to deliver profitable growth in our Roadside and Insurance businesses.

We expect total capex spend for FY19 to be broadly in line with our guidance of £105m, reflecting the investments we are making in our people, products, systems and operations to reposition the AA as the pre-eminent membership services organisation.

Product Innovation Day

The Company is pleased to announce that it will host a Product Innovation Day for analysts and investors in May to provide further insight into our product innovation pipeline. Further details will be provided with our FY Results on 3 April 2019.



Zeeshan Maqbool

+44 20 7395 7303

Media: Finsbury

Jenny Davey

Philip Walters

+44 20 7251 3801


AA plc published this content on 12 February 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 12 February 2019 07:04:06 UTC

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Financials (GBP)
Sales 2019 963 M
EBIT 2019 263 M
Net income 2019 62,0 M
Debt 2019 2 722 M
Yield 2019 2,82%
P/E ratio 2019 9,20
P/E ratio 2020 7,30
EV / Sales 2019 3,41x
EV / Sales 2020 3,31x
Capitalization 565 M
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Income Statement Evolution
Mean consensus HOLD
Number of Analysts 7
Average target price 1,19  GBP
Spread / Average Target 29%
EPS Revisions
Simon John Breakwell Chief Executive Officer & Director
Edmund King President
John Leslie Leach Chairman
Martin Andrew Clarke Chief Financial Officer & Executive Director
Ollie Holden Chief information Officer
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HOMESERVE PLC10.98%4 111