The AA's share price is in reverse despite the firm appointing Simon Breakwell as its permanent chief executive

 
Rebecca Smith
The AA also said there were no roadbumps in its half-year results
The AA also said there were no roadbumps in its half-year results (Source: Getty)

Shares in the AA dropped over eight per cent this morning, despite the firm announcing the appointment of a new permanent chief executive after the tense departure of executive chairman Bob Mackenzie in August.

Shares dropped more than eight per cent at the time of writing to 153.80p, as the firm also said today that full-year performance would be affected by higher investment costs due to delays on its IT transformation programme.

Simon Breakwell has been made the new chief executive of the firm, after the AA confirmed last month that Mackenzie had been removed for gross misconduct, which sent shares sliding at the time. The circumstances of Mackenzie's departure are currently the subject of legal action.

Mackenzie's role had been split in two, with senior independent director John Leach appointed as chairman, while former Uber Europe boss and Expedia founder Simon Breakwell became acting chief executive.

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Now Breakwell has been officially appointed to take the reins, and the AA said the new boss is "reviewing the business to ensure that we strengthen the platform for sustainable growth, building on our foundations".

Leach said Breakwell had invested his full energy and skills into the firm and "identified the means of strengthening it, reinvigorating our people, and rebuilding the culture under his leadership".

It recently emerged that the AA held abandoned talks about combining its insurance business with rival Hastings earlier in the summer.

The news came as the roadside assistance firm unveiled its half-year results, saying they were in line with market expectations. Membership rose to 3.3m, boosted by a 13 per cent rise in new members.

Trading revenues edged up one per cent to £471m, which the company said reflected growth in both insurance broking and underwriting. Trading earnings before interest, tax, depreciation and amortisation was up one per cent to £193m.

The interim dividend will be maintained at 3.6 pence per share.

The AA said an immediate priority now was addressing the inflexibility of its operations "to improve the management of the impact of volatility on our performance thereby reducing costs".

It also said additional capitalised labour costs will be incurred due to the firm's IT transformation programme, and forecasted additional capital expenditure of around £35m.

Looking forward, the AA is predicting Ebitda for the current financial year of £390m-£395m.

Read more: AA confirms Hastings merger talks did happen... but are now over

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