(Corrects paragraph 12 to clarify identity of buyers of AA's
LONDON, Sept 28 Motoring group AA is
considering a bulk annuity deal with an insurer as it weighs how
to deal with its ballooning pension deficit, its chief financial
officer said on Wednesday.
The group's trading revenue rose to 467 million pounds ($607
million) in the six months to end-July from a year earlier,
slightly ahead of a company-supplied consensus forecast of 461
But the firm's defined benefit, or final salary, pension
scheme deficit widened to 622 million pounds, from 296 million
at end-January, as a result of falling bond yields following
Britain's vote to leave the European Union.
"We are looking at ways of mitigating current and future
liabilities," chief financial officer Martin Clarke told Reuters
"We are looking at a range of options to see what we can
do," he added, without giving further details.
AA has one of the largest pension deficits as a percentage
of equity capital among FTSE 250 companies, Thomson
Reuters data shows.
Some companies have carried out bulk annuity deals -
transferring the risk of part or all of the pension scheme to an
insurer, to remove it from their balance sheets.
Pension deficits can affect companies' capital positions or
even their ability to pay dividends.
Small-cap plastic component maker Carclo said last
month it would likely not be able to pay a final dividend
declared in June because of its pension deficit.
AA, however, said on Wednesday it would pay an interim
dividend of 3.6 pence per share, up from 3.5 pence a year
Trading earnings before interest, tax, depreciation and
amortisation were unchanged at 192 million pounds because of
increased costs associated with higher number of breakdowns in
The results strip out any contribution from AA Ireland,
which AA agreed to sell to Carlyle Cardinal Ireland (CCI) and
Carlyle Global Financial Services Partners II in June for 156.6
AA's shares rose 0.84 percent to 287.4 pence at 0836 GMT.
Analysts at Liberum reiterated their buy rating on the
stock, pointing to AA's reversal of a decline in members of its
roadside recovery service.
($1 = 0.7687 pounds)
(Reporting by Carolyn Cohn in London and Noor Zainab Hussain in
Bengaluru; Editing by Sunil Nair and Alexandra Hudson)