Is AA’s Restructuring On Track?

Road recovery firm AA said this week that it is on track to deliver on expectations — yet market reaction was not great, to put it mildly.

aaAA’s net leverage is worrisome, its interim results on Tuesday showed, but a few other elements also caught our attention. The group is still in restructuring mode, so we should give it time to meet its forecasts — but does it get any better when it comes to evaluating its online presence?

IT Investment

The company doesn’t provide any details about its online strategy in its trading update, although it talks about the introduction of a new IT system. “The first phase of the IT investment is firmly on track and expected to be in place in July 2016,” said executive chairman Bob Mackenzie.

The 5.9% reduction in group trading Ebitda to £199.2m is distorted by factors amounting to more than £15m which were not in last year’s results: the early phasing of investment in brand marketing; the rollout of diagnostic technology; the runoff of a former credit card within Financial Services; the FX impact on the Ireland results; and public company operating costs.”

How about its online digital strategy, though?

Preliminary SEO Audit

  • Websitewww.theaa.com
  • Technical: the canonical tag has not been implemented on the majority of the website’s pages. As a result, duplication issues could harm its rankings. Moreover, many 404 errors (“page not found”) related to the URLs of several images have been detected.
  • Speed: speed for Mobile is below average, while Desktop is above average.
  • Hierarchy structure: the platform is not fully optimised, and hierarchy needs some basic SEO work. On-page and path journey would require optimisation, too.

Our full SEO audit will be published on Thursday.

Financials

AA’s results for the six months ended 31 July pointed to a company that is still working hard to get things right.

  • Trading was in line with expectations for the full year
  • Overall revenue declined 1.4% to £484.6m
  • Net debt to trading Ebitda fell from 6.9x to 6.7x
  • A 5.9% reduction in trading Ebitda to £199.2m was recorded
  • Adjusted EPS were down to 8.2p from 11.6p
  • Working capital management led to a rise in the cash conversion cycle from 100.9% to 111.8%

If you want to discuss the details of our premium audit of www.theaa.com or you have any additional questions concerning our preliminary findings please contact our team at info@hedgingbeta.com

(Alessandro Pasetti and Hedging Beta are not invested in AA.)

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