AA puts brakes on membership slide

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The AA brought its long-running slide in membership numbers to a halt in the year to January 31, eking out a slight annual increase in members for the first time in eight years.

The roadside assistance company had 3,335,000 paid personal members at the end of January, compared to 3,331,000 last year.

The group’s insurance business also reversed some of its recent declines, recording its first increase in motor policy numbers since 2008.

However, the business is expected to suffer from changes to insurance premium tax, which will hit 12 per cent from June compared to 6 per cent in November 2015.

The company, which carries a big debt burden built up during its years in private equity ownership before it returned to the stock market in 2014, also said its latest debt refinancing in December reduced its annual costs £10m, greater than initially reported, and bringing its cumulative savings since its IPO to £75m per year.

The company said the reduction in costs and lower capital spend after a period of increased investment “means that we should begin to see significant improvements in the cash flows available for debt repayment.”

It added:

The resilience and underlying strength of the AA is clearly evident and the outlook remains positive. We are confident of achieving further progress in the 2018 financial year.

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