Acromas shareholders’ deficit leaps to £2.2bn

AA Insurance and Saga parent Acromas, created by private equity at the peak of the leveraged buyout boom, has revealed a debt-fuelled after-tax loss of £512.1m.

Acromas, seen as a candidate for flotation, had its shareholders’ deficit increase 25% to £2.2bn in the year to 31 January 2011.

Acromas was created from a huge private equity deal involving Charterhouse, Permira and CVC in 2007, funded by £4.8bn bank borrowings and £1.5bn in shareholder loans.

Charterhouse also owns majority stakes in broking consolidator Giles and credit hire firm Drive Assist, which, like Acromas, are in a financial position where interest payments exceeded operating profits in most recently filed accounts.

No date is set for the flotation or sale of Acromas and Drive Assist, although 2012 has been suggested.

Acromas accounts reveal that the latest loss followed a slightly larger £531.4m loss in the 2009/10 financial year. The shareholders’ deficit for 2009/10 was £1.7bn.

Acromas paid £696.5m in interest on its borrowings in 2010/11, which, while lower than 2009/10’s £705m, was more than enough to wipe out a £241.6m operating profit, resulting in a loss before tax of £458.1m.

While interest payments fell slightly, net debt rose 3% to £6.6bn in 2010/11 from £6.4bn in 2009/10. Total borrowings for the year were £8.3bn, up 5% from £7.9bn the previous financial year. Some £787.7m is due to be repaid in one year, while the remaining £7.5bn is longer term.

The latest loss was despite an 11% turnover increase to $1.8bn from $1.6bn. Cost of sales rose 20% to £935m from £781m, while expenses, excluding interest payments, fell 4% to £678.4m from £704.1m.

Companies House filings show Saga’s performance improved in the year to January. Profit after tax rose 3% to £96.2m from £93m. Turnover was up 6% to £225.3m from £213.3m.