FY19 RESULTS 3 April 2019 DEFINITIONS The following definitions - - PowerPoint PPT Presentation

FY19 RESULTS

3 April 2019

DEFINITIONS

1

The following definitions apply throughout

Trading EBITDA (earnings before interest, tax, depreciation and amortisation): excludes share-based payments, pension service charge adjustment, contingent consideration remeasurement movements and exceptional operating items. Cash conversion: net cash flow from continuing operating activities before tax and exceptional items divided by Trading EBITDA. Adjusted EPS: Earnings per share adjusted for a number of one-offs of which the largest are exceptional operating items, share-based payments, contingent consideration remeasurement movements, pension service charge adjustment, the write-off of debt issue fees, penalties on early repayment of debt and transfer from cash flow hedge reserve. Personal members and business customers: measured as the number at the year end.

AGENDA

2

Introduction Simon Breakwell Finance review Martin Clarke Strategic review Simon Breakwell and outlook

AA INVESTMENT HIGHLIGHTS

3

The UK’s most trusted commercial brand1 Market leadership position Mature market with significant barriers to entry Excellent standards of service delivery Partner of choice for B2B customers High recurring revenue with strong cash generation

OUR SERVICE EXCELLENCE IS OUR BEDROCK – WHICH? 2018 REVIEW

4

75 72 69 78 66 66 THIRD-PARTY COVER OVERALL SCORE

2014 2018 2014 2018 2014 2018

Green Flag

REPAIRED AT THE ROADSIDE

Green Flag

91% (1st ) 84% (2nd) 80% (3rd) 73% (4th) 72% (5th)

TOP 5 OEM-BRANDED COVER PROVIDED BY AA1

WE ARE THE PARTNER OF CHOICE FOR THE AUTOMOTIVE INDUSTRY

5

Car Manufacturers Fleet & Leasing Companes Financial Institutions & Partnerships

0–5 5–10 >10

SELECTED B2B CLIENT BASE BY LENGTH OF RELATIONSHIP AND TYPE OF CUSTOMER

• No. of years

AA customer

ROADSIDE – AA’S BEST-IN-INDUSTRY APP

RANKING IN TRAVEL

22nd

APP STORE RATING

4.8

NUMBER OF RATINGS

37k

RANKING IN TRAVEL

96th

APP STORE RATING

4.4

NUMBER OF RATINGS

2k

RANKING IN TRAVEL

45th

APP STORE RATING

4.8

NUMBER OF RATINGS

15k

• One third of our personal members have registered
• Used in 31% of breakdowns, up from 29% last year

6

VISION FOR THE AA

7

FY19 HEADLINES IN LINE WITH GUIDANCE

8

Solid operational progress across key strategic initiatives in Roadside and Insurance Successful renewal or extension of all key B2B contracts including LBG; new contract win with Arval and JLR mobility Continued strong cash conversion S&P ratings reaffirmed; strong balance sheet with effective maturity of debt extended to 2022 Well positioned to execute our strategy and deliver on our medium-term growth targets Putting service, innovation and data at the heart of the AA

FINANCE REVIEW

FY19 FINANCIAL HEADLINES

10

Revenue up 2% at £979m

• Roadside up 3% – strong performance from B2B and consolidation of AA Cars
• Insurance down 5% – motor policies up 16%, home policies returned to growth up 1.5%

Trading EBITDA down 13% at £341m

• Roadside down 12% – additional opex for growth
• Insurance down 18% – reflecting acquisition marketing spend to accelerate growth

Trading EBITDA margin 35% (FY18: 41%) Adjusted EPS 14.9p (FY18: 21.8p) Cash conversion 87% (FY18: 94%) Rating reaffirmed from S&P; successful refinancing with extension of maturities to January 2022; £20m bond buyback programme successfully completed Net debt of £2.7bn (FY18: £2.7bn) Proposed final dividend of 1.4p, total proposed dividend for FY19 of 2.0p (FY18: 5.0p)

ROADSIDE AND INSURANCE SEGMENTAL REPORTING

11

Revenue Trading EBITDA

FY19 FY18 £m £m Roadside Assistance 778 747 Driving Services 63 67 Roadside Revenue 841 814 Insurance Services 119 133 Insurance Underwriting 19 12 Insurance Revenue 138 145 Group Trading Revenue 979 959 Trading EBITDA Margin FY19 FY18 FY19 FY18 £m £m Margin % Margin % Roadside Assistance 322 345 41 46 Driving Services 17 22 27 33 Head Office costs (56) (47) na na Roadside Trading EBITDA 283 320 34 39 Insurance Services 62 79 52 59 Insurance Underwriting 6 1 32 8 Head Office costs (10) (9) na na Insurance Trading EBITDA 58 71 42 49 Group Trading EBITDA 341 391 35 41

INCOME STATEMENT

12 Revenue 2% higher due to strong performance

• f B2B and consolidation of AA Cars

EBITDA 13% lower in line with guidance due to additional opex for growth and higher cost of servicing additional breakdowns during H1 19

• IFRS 16 adoption in FY20 expected to add c£4m

to Trading EBITDA

Operating profit lower due to lower EBITDA and impact of non-cash pension past service adjustments in FY18 (credit £34m) and FY19 (cost £22m) Finance cost broadly flat due to cost of refinancing in July 2018. Finance cost expected to be lower in FY20

£m FY19 FY18 YoY Revenue 979 960 2% Trading EBITDA 341 391 (13)% Share based payments (5) (7) (29)% Pension past service charge adjustment (5) (10) (50)% Contingent consideration remeasurement gain 1

• 100%

Depreciation & amortisation (73) (70) 4% Exceptional operating items (40) 3 na Operating profit 219 307 (29)% Net finance cost (166) (166)

• Profit before tax

53 141 (62)% Tax expense (11) (30) (63)% Profit for the period 42 111 (62)% Basic EPS – continuing operations (p) 6.9 18.2 (62)% Adjusted Basic EPS1 – continuing operations (p) 14.9 21.8 (32)%

RECONCILIATION OF ADJUSTED PROFIT AFTER TAX

13 FY19 FY18 Profit after tax 42 111 Adjusted for: Exceptional operating items 40 (3) Share based payment 5 7 Contingent consideration remeasurement gain (1)

• Pension service charge adjustment

5 10 Exceptional finance cost 13 9 Tax expense 11 30 Adjusted profit before tax 115 164 Tax at the effective rate of 20.8% (FY18: 19.1%) (24) (31) Adjusted profit after tax 91 133

ROADSIDE

14 Revenue up 3% reflecting strong performance of B2B and consolidation of AA Cars Average income per paid member up £5 broadly in line with inflation and reflecting improved product mix and an increase in new members taking monthly subscriptions Paid membership down c2% to 3.21m and retention was just above 80%. Targeting broadly flat membership in FY20 and a return to growth in FY21 Average income per business member up 5% to £21 reflecting revenue from new contract wins and additional revenue from pay-for-use due to higher demand in H1 19 B2B members down 1% – AVAs; new vehicle sales Trading EBITDA down 12%

• Additional opex for growth
• Increased costs due to higher demand

FY19 FY18 YoY Revenue (£m) 841 814 3% Trading EBITDA (£m) 283 320 (12)% Trading EBITDA margin (%) 34 39 (13)% Personal paid Members (m) 3.21 3.29 (2)% Average income per paid Member (£) 162 157 3% Business members (‘000s) 9,793 9,928 (1)% Average income per business member (£) 21 20 5% Breakdowns attended (‘000s) 3,730 3,679 1%

INSURANCE

15

Revenue Strong growth in motor book

• Commenced underwriting a new motor insurance scheme with

Munich Re targeting non-members

• Insurer Hosted Pricing (IHP) installed across six motor panel

members has significantly improved pricing agility

Home book returned to growth ahead of expectations Average income per policy reduced to £69

• Reflects investment in new business growth

Financial Services performing well

• Bank of Ireland partnership continues to develop strongly

Trading EBITDA Higher acquisition marketing spend and competitive pricing strategy to accelerate growth in motor book and home book Underwriter profitable but lowers Trading EBITDA margins on consolidation

Note: Average income per policy no longer includes FS revenue.

FY19 FY18 YoY Revenue1 (£m) 138 145 (5)% Trading EBITDA1 (£m) 58 71 (18)% Trading EBITDA margin (%) 42 49 (14)% Total insurance policies2 (‘000s) 1,561 1,447 8% Total Motor policies (‘000s) 731 629 16% Motor policies underwritten (‘000s) 339 223 52% Total Home insurance policies (‘000s) 830 818 1% Home policies underwritten (‘000s) 259 184 41% Average income per policy (Motor and Home) (£) 69 74 (7)% Financial Services products (‘000s) 112 142

STRONG CASH CONVERSION

16

£m FY19 FY18 Trading EBITDA 341 391 Working capital excluding provisions and pensions (26) (11) Pension deficit reduction contributions (24) (21) Other items 5 9 Cash flow from continuing activities before exceptional items and taxation 296 368 Capex (82) (63)

• f which Transformation capex

(30) (34)

• f which Growth capex

(13)

• f which Maintenance capex1

(40) (30)

• f which Capex accruals

1 1 Finance lease capital repayments net of proceeds from sale of fixed assets (22) (23) Exceptional items and tax paid (38) (52) Acquisitions and disposals (10) 1 Net interest paid2 (132) (140) Free cash flow to equity (pre-refinancing and dividends) 12 91 Net financing adjustments (34) (96) Free cash flow to equity (pre-dividends) (22) (5)

Strong cash conversion at 87% Cash flow from continuing activities before exceptional items and taxation lower due to lower Trading EBITDA Total capex including finance lease capital payments net of proceeds from vehicle sales in line with guidance reflecting additional amounts spent on growth capex and higher IT maintenance Acquisitions and disposals balance largely relates to the acquisition of AA Cars

• Prestige Fleet Servicing acquired post year

end for £11m

Net interest lowered as a result of refinancing in July 2018

• utstanding

• Jul-23

• Class A Net Debt

• 4.26%

• 4.52%

• Total Debt

• 4.52%

PROACTIVE DEBT MANAGEMENT

17

The Company has maintained a disciplined and pro-active approach to its capital structure as well as the investment-grade credit rating of the Class A debt (rated BBB- by S&P) Four refinancings since IPO in 2014, allowing a 1.6% reduction in the blended interest rate (equivalent to an annual saving of over £80m in interest payments) and maintenance of an average debt maturity of close to four and a half years Total and junior debt reduced by over £600m and £400m, respectively, since IPO. All PIK notes have been repaid Run-rate cash interest cover1 improved from 2.1x to 2.6x

• utstanding

• Class A Net Debt

• 4.64%

• 6.08%

• Total Debt

• 6.08%

Capital structure at IPO (31-Jul-14) Capital structure (31-Jan-19)

S&P RATINGS REAFFIRMED, EFFECTIVE MATURITY OF DEBT EXTENDED

18 Net Debt

S&P ratings reaffirmed: A notes: BBB-; B2 notes B+ Blended cost at 4.52% following July 2018 refinancing No immediate refinancing requirements

• Weighted average maturity just below 5 years
• Effective near term maturity extended to January

2022 Working Capital Facility of £60m in place (£15m drawn) Dividend gating ratio: Class A notes only permit the

release of cash providing the senior leverage ratio after payment is less than 5.5x

Facility Amount

• utstanding

Effective maturity Effective interest rate Class A3 notes £200m Jul-20 4.25% Class A5 notes £700m Jan-22 2.88% Class A6 notes £250m Jul-23 2.75% Class A7 notes £550m Jul-24 4.88% Class A2 notes £500m Jul-25 6.27% Cash in WBS (£20m)

• Class A Net Debt

£2,180m

• 4.26%

Class B2 notes £570m Jul-22 5.50% Finance lease £61m na na WBS Net Debt £2,811m

• 4.52%

AA plc cash (£96m)

• Total Net Debt

£2,715m

• 4.52%

Forward starting new STF available

Key metrics

FY19 FY18

Net debt/EBITDA1 8.0x 6.9x Interest cover2 2.6x 2.8x Financial covenants

FY19 FY18

Class A FCF to DSCR3 (covenant > 1.35x) 2.6x 3.3x Class B FCF to DSCR3 (covenant > 1.0x) 1.9x 2.4x

CAPEX GUIDANCE TO FY20

£m FY19 FY20 COMMENTS IT transformation 30

• Original IT transformation programme completed

Additional IT and new initiatives 10 28

• App and digital development, membership

systems investment, onward mobility solutions and investment in insurance business Connected car 3 4

• Smart Breakdown and other connected car

propositions Growth capex 13 32 IT maintenance 28 23

• Reflects reduction in personnel capitalised costs

to do with the legacy IT transformation Property & equipment 12 12

• In line with FY19

Maintenance capex1 40 35 Total capex1 83 67

Capex (including finance lease capital payments net of proceeds from sale of vehicles) in line with guidance for FY19 Capex guidance to exclude finance lease capital repayments net of proceeds from sale of vehicles

• FY19 £22m (FY18: £23m)

FY20 Capex guidance of £67m

• Original IT transformation

programme capex completed

• Total growth capex of £32m in

FY20 largely related to new digital products and services including Smart Breakdown

• Maintenance capex at £35m

19

SUMMARY

20

Solid financial performance in line with guidance Successful refinancing demonstrates support for our strategy and provides a clear runway to execute our plans Total full year proposed dividend 2.0p, as previously guided Medium term targets maintained Reduction in leverage over time through EBITDA growth and cash generation: targeting 3x - 4x net debt to EBITDA in the medium to long term

• Free cash flow generation c£80m in FY20

STRATEGIC REVIEW

Brent Pugh Recovery Patrol

OVERVIEW

22

Review of our Strategic plan Roadside

• Update on strategic priorities
• Differentiation through innovation
• Going beyond breakdown

Insurance

• Update on strategic priorities
• Non-members’ scheme
• Delivering insurance growth

Engagement

• Driving engagement across all our teams

Delivery targets for FY20

DELIVERING OUR STRATEGIC PLAN – ONE YEAR IN

Roll-Out and Scale Innovation New AA marketing New product launches into the base New B2B service and product investments Membership stabilisation Continued insurance investment and growth Continued employment engagement improvements FY20/21 Accelerate Growth via Differentiation Further new product innovations New B2B services embedded Roadside membership growth Insurance EBITDA growth Improved business and

• perational efficiencies

Highly engaged and performing company FY21/22 Invest in Foundations New strategy New management team New product and marketing strategy Insurance growth acceleration Service resilience improvements IT stabilisation People engagement improvements FY19 23

DELIVERING MEMBERSHIP GROWTH

24

• Nearly 300,000 policies live on CATHIE. Migration commenced

Q4 2019; phased migration approach

Membership systems investment to drive retention

• New digital products being built for FY20 roll-out integrating

telematics learnings

• Expanding digital breakdown journey using app flow on website

for non app users

Greatly accelerate digital adoption and innovation to drive broader member engagement

• Marketing and product strategy – market tested before roll-out
• Work commenced on re-branding strategy for FY20

Market to grow our base with new segments

• Launched our premium onward mobility solution with JLR
• Prioritising onward mobility for other B2B partners in FY20
• Commenced the roll-out of our app and connected car solutions

to our B2B partners (LBG, VWG)

Ongoing innovation to differentiate

• ur products and services

Strategic priorities Progress to date TARGETS Membership growth by FY21 50% members using digital breakdown

solutions 20% reduction in breakdown calls into the contact centres

• Good progress in testing the market for connected car solutions

across B2B and B2C

• Smart Breakdown membership proposition launched in January
• Insurance telematic propositions being developed

Transform our breakdown service to be fully connected

Upside from Connected Car excluded

Investment in 65 patrols Investment in >200 contact centre staff Aim to absorb inflation in FY20 and FY21 Maintain improvement in roadside repair rate 10% pa increase in ancillary sales Improve consistency of call-to-arrive time at 45 mins Improve consistency of call handling with at least 80% answered in 20 seconds

DEEPENING OPERATIONAL RESILIENCE AND SERVICE EXCELLENCE

25

Road Operations

Enhance proposition on ancillary sales Improve drive times - dispatch and traffic based routing technology Improve roadside repair rate - more granular task- based performance measurement and training Reduce garaging - targeted patrol recruitment and utilisation improvements Improve flexibility and utilisation - new roster for Recovery Patrols

• Completed recruitment of

more than 65 additional patrols

• Completed recruitment of more

than 200 additional contact centre staff

• Improved rostering and

resourcing in the front line

• Managed to absorb inflationary

cost pressures through

• perational efficiencies
• Driving ancillary sales (e.g.

additional battery sales during cold weather)

• Service levels have stabilised,

majority of calls now handled in 45 minutes or less Contact Centres

Drive app usage in breakdown Deflect routine admin calls online Implement ‘end to end’ case management and ‘next best action’ techniques Cross-skill teams to improve resilience during high demand

Progress to date TARGETS

AGILE - DIFFERENTIATION THROUGH INNOVATION

26 JLR onward mobility solution launched in 2018

Patrols DVLA check & initiate driver insurance instantly via tablet or iPhone Patrol takes member to nearest dealer to collect replacement car AA team coordinate the end-to- end vehicle repair and return process between dealers, repair centres and members Patrols select a relevant replacement vehicle Replacement car sorted in less than 30mins versus c120mins today

1 2 3 4 5

Agile is the AA’s most flexible and tailored mobility service Available 24/7 – the same Agile experience at any time of the day or night Responsive – with our dedicated team, customers have immediate access to mobility, minimising any disruption Flexible – managing every scenario no matter how complex, customer needs are always met in a flexible way Simple – our digital capability transforms booking a hire car into the tap of a button

GOING BEYOND BREAKDOWN – SERVICE MAINTENANCE AND REPAIR

27

Small businesses: SMR Product B2C: SMR Product B2C: BRC Breakdown repair Fleet SMR Product (Prestige core) OEM: Recall Bookings ALL: Patrol Tow-Ins

Demand generation channels Supply channels

Garage Services Network Scheduled Patrols OEM Franchise Dealers Prestige Garage Network

The AA ‘Technical Services’ Network

Prestige AA Today Future Opportunity

GOING BEYOND BREAKDOWN – DRIVING DIGITAL ADOPTION AND BROADER MEMBER ENGAGEMENT

28 Digital Breakdown Reporting & Tracking

As % of B2C Breakdowns

0% 10% 20% 30% 40% 50% 60%

Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Jun-18 Nov-18

Reported

• n App

Tracked

• n App

Tracked

• nline from

SMS

Use of Member Benefits (Mobile App)

# of unique monthly users

50,000 100,000 150,000 200,000 250,000 300,000 350,000

Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19

SMART BREAKDOWN - DIFFERENTIATION THROUGH INNOVATION

Next iteration of our connected B2C proposition, now available as an upgrade to AA breakdown cover Provides early warnings of vehicle faults, with easy to understand alerts helping to avoid potential breakdowns Where a breakdown does occur, our smarter ‘report a breakdown process’ allows us to know what’s wrong in advance so we can dispatch the right support And with our patrols knowing what’s wrong before they arrive, we can get our members back on the road quicker DRIVING A BETTER CUSTOMER EXPERIENCE AND A LOWER COST TO SERVE FOR THE AA

29

GOING BEYOND BREAKDOWN – TAKING DIGITAL REPORTING TO THE NEXT LEVEL

Additional online digital journeys via theaa.com Today we have breakdowns via the AA app Digital options via voice channels

• 1. Customer selects ‘2’ to

indicate that they are on a smartphone

• 2. The AA sends an SMS

containing a link to report a breakdown journey

• 3. Customer reports their

breakdown quickly online

• 4. Customers can still opt to talk

to a call handler

• 5. AA patrols receive accurate

breakdown information

Today our customers are able to report breakdowns via the AA app. This year, we will be expanding our digital capabilities so customers can also report breakdowns via a browser, as well as offering digital options on voice channels to reduce time to report, for example by leveraging location data Today Q2 2019 Q2-Q3 2019

30

Strategic priorities Progress to date FY19 TARGETS

STEP-CHANGING GROWTH IN INSURANCE

Drive more competitive premiums New insurance innovation

• New in-house underwriter motor insurance scheme

launched for non-members with Munich Re

• Unrivalled expertise at utilising proprietary data

provides unique understanding of members – to be enhanced by Smart Breakdown proposition Broaden underwriting footprint

• Strong growth in motor policies and a return to

portfolio stability in home, benefiting from increased acquisition marketing spend, incremental sales and renewals through our in-house underwriter as well as panel systems investments including Insurer Hosted Pricing (IHP) and address level rating

2m+ motor and home polices by end FY23 9-14% EBITDA CAGR FY19-23

31

AA insurance quote requests, % Non-Members In-force Policies, 000s Claim Rate Comparison

BROADEN UNDERWRITING FOOTPRINT - NON-MEMBERS SCHEME

• 25

50 75 100

May 2018 Feb 2019  Members 6%  Ex-Members 7%  Non-Members 87%

4.3%

Members & Ex-Members

4.4%

Non-Members

Non-members represent 87% of all insurance quote requests In May 2018, AAUICL launched a new scheme backed by Munich Re specifically targeting non-members The scheme has seen strong growth since launch, targeting only a small proportion of the non-members market Early claims performance is very similar to existing members and ex-members, giving confidence in our ability to write profitably Breakdown cross-sell rate of 29% brings additional growth to the membership business

32

Strategic priorities FY20 Plans TARGETS

DELIVERING INSURANCE GROWTH

Drive more competitive premiums New insurance innovation

• Extend non-members footprint as underwriting

performance is proven

• Test young driver footprint
• Use driving data from Smart Breakdown to cross-sell

insurance

• Launch telematics young driver insurance product

Broaden underwriting footprint

• Aviva to join AA Panel in Autumn 2019, expected to

bring both price competitiveness and a broader footprint

• Insurer Hosted Pricing (IHP) for home, replicating the

success seen in FY19 for motor

2m+ motor and home polices by end FY23 9-14% EBITDA CAGR FY19-23

33

DRIVING ENGAGEMENT ACROSS ALL OUR TEAMS

What have we achieved... Year on year all question scores show a positive increase Highlights include:

• I strive to improve the way I work 83.4 (+4.6)
• My manager is a role model for team work and mutual support 67.2 (+5.0)
• I am proud to work for the AA 68.7 (+6.1)
• People I depend upon understand how we must treat & deliver for our

customers 63.3 (+9.1)

• In our team, celebration of achievements is appropriate & timely 50.1 (+11.9)

What we will continue to focus on Our Vision Learning & Development Team Working

+6.8

pts

Cultural index

34

PRODUCT INNOVATION DAY | 20 MAY 2019

35

Deep dive into AA’s pipeline of innovative products and services to make Britain’s driving life better

SMART BREAKDOWN ONWARD MOBILITY SERVICE MAINTENANCE AND REPAIR

REMOTE RESOLUTIONS DIGITAL REPORTING

DELIVERY TARGETS FOR FY20

36

EBITDA growth Greatly improved free cash flow generation of c£80m in FY20 New products and services across Roadside and Insurance New marketing and branding strategy to be launched this year Insurance books growing B2C membership stabilising Further and continuous operational efficiencies rooted in maintaining service excellence Further employee engagement improvement Putting service, innovation and data at the heart of the AA

Q&A

APPENDIX

GROUP REVENUE

39

£m FY19 FY18 Change % of Group Roadside Assistance 778 747 4% 79%

• Strong B2B performance and consolidation
• f AA Cars

Driving Services 63 67 (6)% 6%

• Reduction in franchise instructor mix to

increase competitiveness in Driving Schools business and reduction in speed awareness courses in Drive Tech business Roadside Revenue 841 814 3% 86% Insurance Services 119 133 (11)% 12%

• Additional acquisition marketing spend to

accelerate growth of motor book and return home book to growth Insurance Underwriting 19 12 58% 2%

• Continued strong growth across motor and

home book Insurance Revenue 138 145 (5)% 14% Group Revenue 979 959 2% 100% Exceptional revenue

• 1
• Group Revenue

979 960 2%

TRADING EBITDA

40

£m FY19 FY18 Change % of Group Roadside Assistance 322 345 (7)% 79%

• Additional strategic opex for growth
• Higher cost of attending breakdowns during

H1 19 Driving Services 17 22 (23)% 4%

• Decline in speed awareness courses and

reduction in lower margin instructor franchises Head Office costs (56) (47) 19% Roadside Trading EBITDA 283 320 (12)% 83% Insurance Services 62 79 (22)% 16%

• Increased marketing spend by the broker

and falling contribution from the Home Emergency consumer book Insurance Underwriting 6 1 500% 1%

• Strong growth of underwriter supported by

good overall loss ratios Head Office costs (10) (9) 11% Insurance Trading EBITDA 58 71 (18)% 17% Trading EBITDA 341 391 (13)% 100%

RECONCILIATION OF TRADING EBITDA TO OPERATING PROFIT

41

£m FY19 FY18 Trading EBITDA 341 391 Pension service charge adjustment (5) (10) Share based payments (5) (7) Contingent consideration remeasurement gain 1

• Amortisation and depreciation

(73) (70) Exceptional operating items (40) 3 Operating profit 219 307

INCOME STATEMENT

£m FY19 FY18 Group Revenue 979 960 Cost of sales (399) (360) Gross profit 580 600 Administrative & marketing expenses (361) (292) Share of loss of joint ventures and associates, net of tax

• (1)

Operating profit 219 307 Finance costs (166) (166) Profit before tax 53 141 Tax expense (11) (30) Profit for the year 42 111 Basic EPS (p/share) 6.9 18.2 Adjusted Basic EPS (p/share) 14.9 21.8

42

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

£m FY19 FY18

Goodwill and other intangible assets 1,331 1,300 Property, plant and equipment 123 127 Investments in joint ventures and associates 5 8 Other receivables

• 3

Deferred tax assets 22 31 Non-current assets 1,481 1,469 Inventories 4 7 Trade and other receivables 223 201 Cash and cash equivalents 116 150 343 358 Assets classified as held for sale 6

• Total assets

1,830 1,827 Trade and other payables (511) (528) Current tax payable (3) (10) Provisions (3) (13) Current liabilities (517) (551) Borrowings and loans (2,724) (2,736) Finance lease obligations (12) (16) Defined benefit pension scheme liabilities (218) (240) Provisions (4) (4) Deferred consideration (10) (11) Insurance technical provisions (30) (24) (2,998) (3,031) Liabilities classified as held for sale (5)

• Total liabilities

(3,520) (3,582) Net liabilities (1,690) (1,755)

43

CONSOLIDATED STATEMENT OF CASH FLOWS

£m FY19 FY18

Profit before tax 53 141 Depreciation and amortisation 78 70 Net finance costs 166 166 Difference between pension charge and cash contributions 2 (44) Other adjustments to profit before tax 3 23 Change in working capital (29) (17) Net cash flows from operating activities before tax 273 339 Tax paid (15) (23) Net cash flows from operating activities 258 316 Investing activities Capital expenditure net of finance leases capital and proceeds from sale of fixed assets (104) (86) Other investing activities (10) 1 Net cash flows used in investing activities (114) (85) Financing activities Refinancing transactions (34) (96) Net interest paid on borrowings (128) (135) Payment of finance lease interest (4) (5) Dividends paid (12) (56) Net cash flows from financing activities (178) (292) Net increase/(decrease) in cash and cash equivalents (34) (61)

44

DISCLAIMER

This presentation contains “forward-looking statements” which are prospective in nature and are not based on historical facts, but rather on current expectations and projections about future events. Such statements are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as “plans”, “expects” or “does not expect”, “is expected”, “is subject to”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements, including business, economic and regulatory changes as well as the risks set out in the Company’s annual report and accounts, which can be found on its website (www.theaaplc.com/investors). Such forward-looking statements should therefore be construed in the light of such factors. Neither the Company, nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the events expressed or implied in any forward- looking statements in this announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking

• statements. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation, the Listing Rules

and the Disclosure Guidance and Transparency Rules), the Company is not under any obligation to update, revise or correct any forward- looking statements, whether as a result of new information, future events or otherwise. No statement in this presentation should be construed as a profit forecast or relied upon as a guide to future performance.

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Lisa Shailer IR Assistant +44 207 395 7442 Lisa.Shailer@theaa.com Zeeshan Maqbool Head of Investor Relations and Corporate Finance +44 207 395 7303 Zeeshan.Maqbool@theaa.com

IR TEAM CONTACTS