The AA has said it is fighting a £225 million claim from its former boss Bob Mackenzie, who was sacked last year for gross misconduct.

Mr Mackenzie, former executive chairman of the AA, filed a claim against the company and a number of its directors in the High Court on March 6.

The AA said on Tuesday it will incur costs of £1 million over the next two financial years as it fights the claim, but that it hopes to recoup the costs from Mr Mackenzie when the case closes.

Reports have linked Mr Mackenzie’s dismissal to an attempted spin-off of the AA’s insurance arm, which led to a physical altercation between Mr Mackenzie and insurance chief Michael Lloyd.

There have also been reports of an earlier altercation in a public place with someone not thought to be an employee of the company.

Trading profits at the roadside recovery firm fell 3% in the year to January 31 2018, down from £403 million to £391 million. Revenues grew 2% to £959 million.

Sales from the AA’s roadside services grew 1% year-on-year to £814 million. Insurance revenue climbed 11% to £145 million, driven by growth in the AA’s in-house underwriter, which made £12 million.

The AA’s share price rose by more than 6% following the results announcement.

Chief executive Simon Breakwell said: “The AA has delivered a solid performance, in line with guidance, despite the difficult weather conditions.

“We have made a positive start to the 2019 financial year as we begin to execute on our new strategy to put service, innovation and data at the heart of the AA with additional investments to grow roadside and to accelerate the growth of insurance.”

Liberum analyst Joe Brent said it was “disappointing” that the company had reported a £29 million cash hit from exceptional items.

The one-off costs meant the firm’s net debt was higher than expected for the year, although debt levels did decrease, falling from £2.70 billion to £2.68 billion. Liberum had expected debt to come in at £2.64 billion.