Monday 23 April 2018

AA Ireland paid €82m dividend to UK parent in advance of €156m sale

Spokesman Conor Faughnan, the public face of the AA in Ireland
Spokesman Conor Faughnan, the public face of the AA in Ireland
John Mulligan

John Mulligan

AA Ireland paid an €82.6m dividend to its UK parent in advance of the Irish arm's €156.6m sale to Carlyle Cardinal, new accounts for the business show.

The accounts show that turnover at AA Ireland rose 6.5pc last year to €51.4m, while operating profits fell 8.5pc to €11.8m as it continued to invest in the business and incurred a one-off administration charge.

Of its turnover, €26.7m was generated from its roadside assistance membership programme, with €24.2m from its insurance business.

AA Ireland had 128,000 customers at the end of 2015, up 8pc in 2014. The customer base for its combined insurance portfolio rose 5pc to over 205,000.

Chief executive Brendan Nevin said that the number of breakdowns the company attended during 2015 was 5pc higher than in 2015. But 78pc of breakdowns were resolved at the roadside without vehicles having to be towed to garages.

He said that the fundamentals of the business, which employs 440 people, "remain strong".

Mr Nevin and other senior AA Ireland management are investing in the business as part of its sale.

The Irish arm's operating profit last year was negatively impacted by a €900,000 increase in exceptional administrative expenses, the accounts note.

They also reveal that the company wrote off bad debts of just over €1m last year, compared to €179,000 in 2014. Restructuring and redundancy costs totalled €885,000 in 2015, compared to just under €1.1m in 2014, the accounts note.

Total directors' pay jumped to €802,000 last year from €438,000 the previous year.

AA plc confirmed last month that it had reached agreement to sell its Irish unit to Carlyle Cardinal, a €292m private equity fund that is a joint venture between Carlyle and Cardinal Capital.

The AA agreed to provide certain transitional services to AA Ireland and will retain responsibility for the defined benefit pension plan of AA Ireland.

AA plc said that as an insurance broker-led business, AA Ireland differs significantly from the AA's UK business, and that synergies and cross-sell opportunities are limited.

AA plc is using the proceeds of the sale to reduce its own debt. AA plc's executive chairman, Bob Mackenzie, said the sale was a "good result". He added: "I would like to thank our 450 Irish colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of a great business.

"I am confident that the agreement with Carlyle and CCI presents an exciting opportunity for their continued success."

AA plc had expected the sale to close in July.

It has not yet been cleared by the Competition and Consumer Protection Commission.

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