Owner of AA and Saga posts £529m annual loss after interest payments

Acromas, which employs more than 12,500 people, posted a pre-tax loss of 529m for the year to January 31 as an operating profit of 183.5m was dwarfed by interest payments of 705m.

The company's net debt stood at 6.4 billion, an increase of 3.5 per cent on a year earlier, after a consortium including Charterhouse, Permira and CVC acquired the group in June 2007 in a deal that was funded by 4.8 billion of bank borrowings and 1.5 billion of shareholder loans. Before the merger, the AA and Saga had 2.8 billion of debt between them, the Sunday Times said.

Despite Acromas's growing losses and huge debt pile, chief executive Andrew Goodsell said the company traded strongly in its second full year of trading since the merger of AA and Saga into one organisation.

Turnover increased 2.3 per cent to 1.65 billion after a strong performance from Saga, the specialist insurance and travel group that serves the over 50s.

Growth in financial services meant Saga contributed sales of 793m, up nearly 6 per cent, while AA sales were down slightly at 855.1m. Gross profits excluding one-off items were flat at 882m.

Mr Goodsell said the "robust" performance was achieved despite difficult economic conditions and specific issues such as the "dramatic" rise in personal injury claims costs in the motor insurance market and the worst winter weather experienced by its roadside patrols in 30 years.

The company is in the process of diversifying into the care sector, although its plans suffered a setback last week when an approach worth 102m for Nestor Healthcare was rejected by its target.

Buying Nestor will speed up its strategy to build a national branded business in a growing but fragmented market, as people live longer but want to stay at home. Firms currently provide around three million hours of social care a week at home.

Acromas is regularly seen as a contender to be floated on the stock market, although City institutions have recently shown a reluctance.

The company's private equity owners have almost 76 per cent of the business, with a further 20.1 per cent in the hands of employees.