The AA says it has not put any money aside for a £220m claim from sacked former executive chairman, Bob Mackenzie (pictured)
AA‘s share price has shot up on the back of strong annual results and an appeal for its ‘achievements’ not to be overshadowed by sacking of former executive chairman, Bob Mackenzie.
The breakdown recovery firm saw an eight per cent increase in operating profit in the year ending January 2018, up to £307 million from £284 million the year before.
While its strategic review and investment into the company saw dividends slashed by almost half, the firm said it had delivered a ‘strong performance’ in line with guidance.
It also said it was ‘important’ that the achievements of the year were ‘not overshadowed by the removal of Bob Mackenzie’, in its results published on Tuesday.
Mackenzie was sacked from his executive chairman role last August following a punch up with the AA’s insurance head Mike Lloyd in a five-star Surrey hotel and is now suing his former employer for £225 million he claims he is owed in bonuses.
The 65-year-old says the attack on Lloyd was brought on by months of deteriorating mental health as a results of the ‘toxic’ boardroom culture at the AA and that he should never have been sacked.
The AA is fighting Mackenzie’s claims that he was ‘victimised’ and picked on by fellow staff members and said it was not setting aside any provisions for a claim by Mackenzie to retain shares. CEO Simon Breakwell branded the case as ‘without merit’.
Mackenzie’s departure and claims that the bust up was over a potential sale of the business sent the share price soaring 15 per cent in March, with shares enjoying another seven per cent bounce on Tuesday following the company’s latest set of results.
Shareholders have been buoyed by assurances that a strategic review of the firm has left it well placed to grow in future.
Chief financial officer at the AA, Martin Clarke (pictured), said the company had received no ‘substantive’ offers from private equity firms wanting to takeover the firm when its share price tumbled. Shares jumped seven per cent higher today following the latest results
The plan ‘will deliver front-line resource to improve the efficiency, predictability and resilience of our roadside operations as well as investment in game-changing growth drivers’, the firm said.
It has revealed a bold aim to use its Car Genie and connected car developments to one day be able to predict when a car might breakdown in the first place in order to schedule repairs ahead of time.
Its lower earnings guidance for 2019 of between £335 million and £345 million has only been hit by higher levels of capital investment, the AA said.
Simon Breakwell, CEO, said: ‘The AA has delivered a solid performance, in line with guidance, despite the difficult weather conditions.
‘Trading revenue grew 2 per cent.
‘Roadside continues to attract new members at a good rate, with encouraging take up of our digital products, including the breakdown app and Car Genie.
AA has delivered a solid performance, in line with guidance, despite the difficult weather conditions. Trading revenue grew 2 per cent
He added: ‘We have made a positive start to the 2019 financial year as we begin to execute on our new strategy to put service, innovation and data at the heart of the AA with additional investments to grow roadside and to accelerate the growth of insurance.’
Liberum analysts reiterated their buy rating on the stock, highlighting strong performance in the insurance division.
AA’s largest shareholders include hedge fund Parvus and famous fund management firm run by Neil Woodford, Oxford-based Woodford Investment Management.
Its share slump over the past year has prompted speculation of takeover bids by private equity firms but chief financial officer Martin Clarke said the company had received no ‘substantive’ approaches.
Five hedge funds had outstanding short positions in AA above 0.5 percent, the level above which European regulators require disclosure, according to the latest filing from Britain’s Financial Conduct Authority.