AA OK

Discussing the original equity-raising last June that bought out its former leading shareholder, private-equity backed Acromas, chief financial officer Martin Clarke admits the company "would have liked to have raised more money". But the timeframe of the deal limited the marketing to institutional investors, he explains. The ownership change left the management team with an indebted but hugely cash-generative business - last year AA converted 100 per cent of its profits into cash. Returning to the market will allow the company to settle some unfinished business by paying off a second and final £175m tranche of 'payment in kind' notes, which carry a stinging interest rate of 9.5 per cent.

Patient shareholders should be rewarded. The company's debt restructuring is expected to reduce interest costs by £45m a year, which will pay for dividends worth at least £50m in the current financial year. This would represent around 8.25p per share. The company is also investing £128m over the next three years in renewing its IT infrastructure, and £10m in marketing its brand, which is desperately needed: the company has not released a television advert for more than five years.

Analysts expect adjusted EPS of 27p this year, on average, according to Bloomberg.