Shares down £200m after profit warning

THE AA have suffered a £700million breakdown since being flogged by private equity firms that left them loaded with a mountain of debt. Shares in the roadside assistance and insurance giants crashed 28 per cent yesterday as the company unveiled a plan to “transform” the business. New boss Simon Breakwell aims to beef up patrol numbers and call centre staff and focus on new technology. But the overdue investment will be costly. Profits for 2019 are now expected to be in the range of £335million to £345million, down on forecasts of up to £395million. PROFITS at Scottish Power’s supplier arm dived 53 per cent to £122million last year after 200,000 customers ditched the utilities firm. Scottish Power also blamed rising costs and “challenging market conditions”. Customer numbers fell to 5.1million. Dividends will also be capped at 2p a share – down from 9.3p previously.

Yesterday’s slump knocked another £200million off the AA’s stock market value, taking the total lost since their 2014 market flotation to £700million.

The listing delivered a windfall for private equity owners CVC, Permira and Charterhouse at the time. CVC and Permira brought them from Centrica in 2004 and, after merging them with over-50s specialists Saga in 2007 to form Acromas, left them with £4.8billion of debt. AA and Saga were later split. The AA still owe £2.7billion, though finance boss Martin Clarke said: “We don’t feel under any pressure.”

Their breakdown customer numbers have stabilised at 3.3million after earlier falls but the market’s growing overall.

Breakwell, a former Expedia executive, plans to target younger members, use fewer costly outside garages at busy times and adopt technology that tells drivers when their car is about to break down.

Executive chairman Bob Mackenzie, who helped float the AA in 2014, was sacked last year after a row with Mike Lloyd, who heads the AA’s insurance division.