FY20 RESULTS 7 May 2020 DISCLAIMER This presentation contains - - PowerPoint PPT Presentation

FY20 RESULTS

7 May 2020

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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DEFINITIONS

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

TODAY’S PRESENTERS

Joined the AA’s Board as Non-Executive Director in September 2014, and appointed Acting Chief Executive in August 2017. Subsequently appointed as permanent Chief Executive Officer on 25 September 2017 Previously a Partner at TCV, a leading global mid cap fund and a Non-Executive Director of HomeAway Inc. Previously responsible for establishing the European

• perations for Uber

Simon was also a founder of Expedia and had responsibility for the company’s North American operations

Kevin Dangerfield

Chief Financial Officer, AA plc

Simon Breakwell

Chief Executive Officer, AA plc

3

Kevin joined the company on 6 January 2020 A qualified chartered accountant with more than 25 years’ experience in the technology and manufacturing industries Kevin has held various CFO roles in other public listed companies, including Laird plc and Morgan Advanced Materials plc

Opening remarks and COVID-19 update

Simon Breakwell

Financial review

Kevin Dangerfield

Strategy update and Business review

Simon Breakwell

AGENDA

4

Trusted Brand Mature, attractive market with significant barriers to entry Partner of choice for B2B customers Leading market position High recurring revenue and EBITDA growth with strong cash generation Excellent standards of service delivery

A UNIQUE INVESTMENT PROPOSITION

AA top of What Car? 2019 and 2018 for best breakdown cover provider AA top of Which? 2019 for breakdown cover and awarded Recommended Provider status Feefo Gold Trusted Service Award 2019 and 2018 for delivering exceptional experiences Defaqto 5 star rating 2019 for our comprehensive car insurance

5

UNLOCKING OUR POTENTIAL

6

KEY PROOF POINTS FOR FY20

7

Objectives FY20 expectation FY20 performance

Turnaround Roadside membership

Membership broadly flat Membership growing +0.2% y-o-y

Continue Insurance acceleration

Continued strong policy growth +10% total policy growth

Deliver Trading EBITDA growth

Consensus1 £349m £350m

Strong free cash flow generation

Guidance c.£80m £83m

FY20 HIGHLIGHTS

8

Strong financial and operational performance Roadside membership now returned to growth Insurance delivering strong rates of profitable policy growth Roll-out of new differentiated products and services underway – Smart Breakdown, Smart Care Continuing to build industry leading strategic partnerships. Bank of Ireland partnership extended by an additional three years to at least 2028 Ongoing proactive debt management; FY20 final dividend suspended Putting service, innovation and data at the heart of the AA

COVID-19 – ORGANISATIONAL RESPONSE – MAINTAIN SERVICE FOR CUSTOMERS

9

Number one priority is to protect the health and wellbeing of our staff, customers and suppliers Initiated a number of actions across the business to maximise business continuity

• Implemented our Gold/Silver/Bronze emergency management/meeting protocols to drive daily

command and control decision making

• Whole organisation was homeworking in less than 3 weeks, except very small number of staff in

Oldbury

• Established appropriate safe working protocols for all staff and secured all required PPE
• Daily communication from CEO to organisation, recently moving to three times a week
• Participating in the Government’s furloughing scheme

10

COVID-19 – DECISIVE ACTION TO DEMONSTRATE RESILIENCE

11

Measures in place to flex costs and preserve cash including deferral and reduction of a range

• f operating costs
• Dividend suspended
• Pay and hiring freezes
• Suspension of normal bonus scheme
• Board have agreed to take a 15% reduction to their base salary for 3 months
• Further tightening of cost controls across the business

We remain comfortably within our financial covenants and supported by predictable cash flow and liquidity Given the resilient business model combined with the benefits of the actions we have taken and are taking, we expect current year performance to be robust and only slightly below FY20

COVID-19 – CURRENT BUSINESS STATUS CHECK

12

Roadside

Good service on the road and in call centres Breakdowns volume dropped, but picked up recently – low garaging, PFU and ancillary offset drop in workload Expect B2C membership to be down H1 and then some recovery Driving School has seen reduced trading

Insurance

Good service in call centres New Business marginally down Renewal retention rates holding up well Reduced claims offsets lower Accident Management income Demonstrated good resilience Softness in Financial Services

Current Priorities

Ongoing mitigation of commercial impacts Planning for phased restrictions ease Broad-based marketing initiatives for post lockdown, capturing COVID operational learnings Re-prioritising efficiency and cost to serve improvement initiatives

FINANCIAL REVIEW

FY20 FINANCIAL HEADLINES

14 Revenue up 2% at £995m (FY19: £979m) Trading EBITDA up 3% at £350m (FY19: £341m) and Trading EBITDA margin stable at 35% (FY19: 35%) Operating profit up 17% at £257m (FY19: £219m) PBT up 102% to £107m (FY19: £53m) Free cash flow generation of £83m (FY19: £12m) Net debt post IFRS 16 of £2,645m (FY19: £2,715m)

• £32m bond buy-backs completed for £28m cash consideration

February 2020 refinancing increases average expected maturity of debt from 3.3 years to 3.9 years

• £325m exchange offer of A5 notes significantly oversubscribed

Early drawdown of STF fully de-risks July 2020 refinancing of £200m A3 Notes

• S&P rating confirmed for A notes (BBB-)

INCOME STATEMENT

15 Revenue up 2%, reflecting solid performance across both Roadside and Insurance Trading EBITDA 3% higher, in line with market expectations Operating profit 17% higher principally due to lower adjusting operating items and gain from the early settlement of deferred consideration related to AA Cars acquisition Net finance cost 10% lower due to the early repayment penalty of £15m last year PBT and PAT ahead of last year; adjusted EPS lower due to lower adjusting

• perating items

remeasurement movements, penalties on early repayment of debt, net gains on the settlement of debt, transfer from cash flow hedge reserve for extinguishment of cash flow hedge, write-off of debt issue fees following refinancing, and tax expense.

£m FY20 FY19 YoY Revenue 995 979 2% Trading EBITDA 350 341 3% Share based payments (5) (5)

• Pension service charge adjustment

(4) (5) 20% Contingent consideration remeasurement gain 9 1 800% Depreciation & amortisation (89) (73) (22%) Adjusting operating items (4) (40) 90% Operating profit 257 219 17% Net finance cost (150) (166) 10% Profit before tax 107 53 102% Tax expense (20) (11) (82%) Profit for the period 87 42 107% Basic EPS (p) 14.1 6.9 104% Adjusted Basic EPS1 (p) 14.1 14.9 (5)%

ROADSIDE PERFORMANCE REVIEW

16 Revenue Revenue flat with the benefit of higher B2C income as well as the acquisition of AA Prestige offset by lower B2B revenues Paid membership up 0.2%, reflecting return to growth during second half of the year Average income per paid member up 2%, tracking in line with inflation B2B customer holdings in line with expectations, 207k Admiral customers added since September Average income per business customer up 5% to £22, reflecting margin improvement across B2B base Trading EBITDA Up 2% in line with our expectations with margins remaining stable

£m FY20 FY19 YoY Revenue (£m) 841 841

• %

Trading EBITDA (£m) 290 283 2% Trading EBITDA margin (%) 34 34

• %

Personal paid members (k) 3,215 3,207 0.2% Average income per paid member (£) 165 162 2% Business customers (m) 9.05 9.79 (8)% Average income per business customer (£) 22 21 5%

INSURANCE PERFORMANCE REVIEW

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Revenue Continued strong growth in motor book

• Supported by profitable growth of the

in-house insurer

• Insurer Hosted Pricing (IHP) has significantly

improved real-time pricing agility Home book growing in line with expectations

• Ongoing investment in improving pricing agility

Average income per policy including income from insurer and Accident Assist businesses up from £80 to £83 Financial Services - Bank of Ireland partnership reset concluded and extended by a further 3 years to 2028 Trading EBITDA Trading EBITDA up 3% reflecting solid performance of broker and insurer. Margin decline due to investment in marketing to grow policies and drive future value

£m FY20 FY19 YoY Revenue (£m) 154 138 12% Trading EBITDA (£m) 60 58 3% Trading EBITDA margin (%) 39 42 (7)% Total insurance policies1 (‘000s) 1,713 1,561 10% Total Motor policies (‘000s) 869 731 19% Motor policies underwritten (‘000s) 448 339 32% Total Home insurance policies (‘000s) 844 830 2% Home policies underwritten (‘000s) 332 259 28% Average income per policy2 (Motor and Home) (£) 83 80 4% Average income per policy3 (Motor and Home) (£) 68 69 (1)%

STRONG FREE CASH FLOW GENERATION IN LINE WITH GUIDANCE

18 Cash conversion pre-capex remains strong and just below 100% Working capital and non-adjusting provisions movement mainly due to timing

• f payments and receipts, cash

receipt from HMRC following settlement of historic claims and increase in the underwriter claims provision Capex of £69m in line with guidance Debt interest flat at £128m Acquisitions and disposals predominantly relates to the acquisition of AA Prestige £8m Adjusting operating items significantly lower including strategic/cost initiatives Strong free cash flow generation of £83m in line with guidance

£m FY20 FY19

Trading EBITDA 350 341 Working capital and provisions excluding adjusting operating items 17 (17) Pension deficit reduction contributions (26) (24) Other items (4) (4) Cash flow from continuing operating activities before taxation, adjusting operating items and capital expenditure 337 296 Tax paid (11) (15) Capital expenditure (69) (82) Lease payments net of proceeds from sale of fixed assets (29) (26) Operating free cash flow after capital expenditure 228 173 Interest on borrowings less interest receivable (128) (128) Operating free cash flow before adjusting operating items 100 45 Acquisitions and disposals (8) (10) Adjusting operating items (9) (23) Free cash flow 83 12 Refinancing costs (28) (34) Dividends (12) (12) Net cash movement 43 (34)

PROACTIVE DEBT MANAGEMENT

Continued proactive approach to refinancing including buying back bonds using available free cash flow; final dividend suspended February 2020 refinancing extends average debt maturity to 3.9 years. Refinancing significantly oversubscribed Purchase of £29m B2 notes and £3m A5 Notes completed for total cash consideration of £28m S&P rating confirmed at BBB- for A Notes and early drawdown of STF completed in

• April. Fully de-risks July 2020

refinancing of A3 notes Next maturity due 2022

Expected Weighted Average Maturity 3.3 years Expected Weighted Average Maturity 3.9 years

Overview of transaction(1)

 A2 notes ('25)  A3 notes ('20)2  A5 notes (‘22)4  A6 notes ('23)  A7 notes ('24)  B2 notes (‘22)3  New A8notes (‘27)

500 372 250 200 325 570 2019 2020 2023 2024 2025 2026 2027 2028 500 200 697 570 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

New 7-year A8 Notes

550 550 2021 2022 200 250 200 STF drawdown completed

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SIGNIFICANT LIQUIDITY AND COVENANT HEADROOM

20 Cash and cash equivalents of £159m

• f which £57m is at AA plc level

Net Debt for covenant purposes is the net debt in the WBS, presented

• n a pre-IFRS 16 basis
• Lease adjustment is required to

reconcile balance sheet Net Debt to Net Debt for covenant reporting

• B2 bond buy-back and AA plc cash

are outside of WBS

Significant covenant headroom available

• £165m liquidity facility
• £50m working capital facility

£m FY20 FY19 Total Net Debt per accounts 2,645 2,715 Less: lease adjustment for IFRS 16 (24)

• Less: AA plc group lease obligations

(3)

• Add: bond buy-back

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• Add: AA plc cash

57 96 Net Debt for covenant reporting 2,704 2,811

Key metrics FY20 FY19 Net Debt/EBITDA1 7.6x 8.0x Interest cover2 2.6x 2.6x Financials covenants FY20 FY19 Class A FCF to DSCR3 (covenant > 1.35x) 3.4x 2.6x Class B FCF to DSCR3 (covenant > 1.0x) 2.5x 1.9x

PENSION LIABILITY MANAGEMENT

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Group Pension Scheme IAS 19 deficit of £162m (FY19: £218m) Triennial review of AA UK pension scheme

• Deficit reduced to £131m as of 31 March 2019 (from £366m on 31 March 2016)
• Annual cash savings of c.£6m
• Pension deficit funding reduces to c.£25m for FY21 increasing by c.£1m p.a. in FY22 and FY23

Closure of defined benefit scheme for CARE employees will save c.£4m cash annually

• Transitional arrangements for those employees transferring to a defined

contribution scheme will cost c.£11m in total paid over 3 years

SUMMARY

22

Strong financial performance in FY20 Continued proactive management of debt; focus on refinancing options in FY21. July 2020 refinancing de-risked with early drawdown of STF Proactive measures in place to minimise impact of COVID-19 and as a result we expect current year performance to be slightly below FY20

STRATEGY UPDATE

The AA’s vision is to “Make Driving Life Simpler + Smarter Every day”

We’ll do this by delivering the best human & digital expertise, To remove the unnecessary hassles from every stage of drivers’ lives And, in doing so, retain what cars have always promised: The Freedom Of Driving

Market/share

STRATEGIC GROWTH FROM MAKING BRITAIN'S DRIVERS’ LIVES SIMPLER AND SMARTER

40% of Consumer market 50% of Business (B2B) market 12m customers 32m UK drivers

Capabilities:

Digitally engaged customers Connected cars Flexible partner platform Group-wide 3600 customer view

Brand strength

Purchase consideration at the highest level for three years Unprompted brand awareness double closest competitor Greater share of the high value market than all other providers combined

Progress to date

Smart Breakdown Digital reporting Smart Care Young Driver telematics 25

STRATEGIC DELIVERY AND EXECUTION

26

We have invested in the foundations of our business - our team, our operational strength, our IT development and our culture Driving real growth in our core membership and insurance businesses We have rolled out innovative new products that go to the heart of an improving and broader service offering to our members and customers We will continue to innovate and accelerate the differentiation in product and service

• ffering backed by a focus on an ever improving efficient and effective cost to serve

Focussed on delivery of long term sustainable Trading EBITDA growth and cash generation through solid business execution

BUSINESS REVIEW

CUSTOMER SERVICE IMPROVEMENT PLAN DELIVERED; INDUSTRY LEADERSHIP POSITION RECOGNISED

28

FY18 Improvements Planned FY19 Actions Taken FY 20 Performance Delivered

Road Operations

• Leadership
• Customer perception of AA Service
• Roadside repair rate
• Garaging costs
• Job times
• Accountable leaders in front line
• Targeted nationwide recruitment
• Investment in training

Centre of Excellence (Oldbury)

• Continuous investment in deployment
• Call to Arrive 46 mins (was >50mins)
• Breakdown NPS 75 (was 62)
• Garaging % <8% (was >12%)
• Repair rate 84.7% (was 83.7%)
• Average job time 29.5mins (was 30.1mins)

Contact Centres

• Service levels
• Remote fix
• App usage for breakdown
• Level of automation
• Recruitment
• New remote fix process and training
• App awareness, functionality

improved

• Robotic process automation investment
• 81% Service level (was 58%)
• 63,000 Remote fixes (was 43,000)
• c.50% of personal member breakdowns

now reported or tracked digitally

AA takes top spot in What Car? Reliability Survey 2019 & 2018 for best breakdown cover provider AA top of Which? 2019 table for breakdown cover and awarded Recommended Provider status

B2C MEMBERSHIP RETURNED TO GROWTH DURING H2 FY20

29 Marketing Sales Cross-sales Retention

FY20

New marketing campaign and channel

• ptimisation doubled

acquisition effectiveness Record breaking Black Friday promotion Continued optimisation of pricing model for 3yr Life-Time-Value Strong cross-sales growth of breakdown cover from AA Insurance (36% vs 25% (FY19)) Retention at 80% reflects strength of service proposition and pricing

FY21

New above the line summer campaign to support members returning to ‘normal’ and enjoying driving Popular new member benefits Continued roll out of Pay for Use (‘Standby’) proposition to Driving School customers Continued cross-sales growth across AA Group (AA Cars, AA Driving School, AA Financial Services, AA Warranties) Trialling the roll out of cardless renewals (environmental & cost savings) Trialling enhanced loyalty benefits for members

BUILDING ON OUR STRONG B2B PLATFORM

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FY20 Achievements

Business wins Extended / Renewed Recalls / Warranty repairs

Digital Roadside Mobility B2B & B2C (Agile) B2B Online Sales Journey Integrated European Breakdown

SPARX

Roadmap

BREAKDOWNS WITH A ‘DIGITAL INTERACTION’ – EXTERNAL REPORTING

Digital Capabilities and improvements:

Web reporting of Breakdowns launched in FY20 The ability for customers to transfer from the call centre Interactive Voice Response (IVR) to digital reporting, also launched in FY20 Operational benefits continue to be realised from improved location accuracy and reduced calls

Future plans

We will launch further capabilities for B2B customers Visual IVR launched with Lloyds customers in early FY21 Digital breakdown App for Lloyds customers to be launched soon 31

30% 40% 50% 60% 70% Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20

Total Digital Interactions - Personal members

Web Reporting launched Visual IVR launched

SMART BREAKDOWN – HELPING OUR MEMBERS UNDERSTAND WHAT'S WRONG WITH THEIR CAR

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Available as an upgrade to all levels of AA breakdown cover Updates on car health sent directly to members via the AA app Fault information uniquely surfaced throughout the operation – preventing breakdowns and helping get members back on the road Currently live online and in the call centre with over 4,500 new and existing members Above the line campaign commenced – now paused

INSURANCE - SUCCESSFUL DELIVERY AGAINST STRATEGIC PRIORITIES

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Non-members footprint driving growth with 174,000 motor policies, c.40% of total Claims performance in line with members and on plan Young Driver proposition soft launched

Broaden underwriting footprint

Aviva joined panel in Q3 bringing a more competitive footprint for higher premium business Ongoing investment in improving pricing agility

Drive more competitive premiums

Accident Management services brought in-house Q4, developing a service led proposition (AA’s Accident Assist) for motor claims customers and the member portfolio

New Insurance innovation

‘ACCIDENT ASSIST’ – LEVERAGING OUR CAPABILITIES TO BETTER SERVICE DRIVER NEEDS AA Accident Assist

(First Notification of Loss)

Tow Repair Mobility

AA Insurance Customers Members

Arrange recovery to an AA Approved Repairer Take the customer home or to a safe place for

• nward travel

AA Approved Repairer authority to repair customer vehicles from their insurer AA provides a 5yr repair guarantee Courtesy car provided by AA Approved Repairer ‘Like-for-like’ replacement hire vehicle for non-fault claims

FY21 develop for scale, ready for digital integration

Customer Experience Services

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STRONG AND PROFITABLE INSURANCE GROWTH

In-year motor policy growth accelerated to 19%, continued home stability Retention rates for motor and home on plan In-house insurer volume CAGR since FY18 39% for motor and 31% for home Roadside membership cross sell rate at 36% with 112k policies sold1 Income per policy2 increased 4% across Insurance division 844,000 869,000

Feb-17 Jul-17 Dec-17 May-18 Oct-18 Mar-19 Aug-19 Jan-20

Broker Home Broker Motor

332,000 448,000

Feb-17 Jul-17 Dec-17 May-18 Oct-18 Mar-19 Aug-19 Jan-20 Insurer Home Insurer Motor

Broker Insurer

Performance on track to deliver longer term strategic targets

35

ACCELERATING INSURANCE GROWTH

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Broker on track for 2m policies by FY22 (ahead of plan) Broker on track for 1m motor policies by FY21 (ahead of plan) In-house insurer expanding footprint profitably New Accident Assist service driving value for customers and increasing revenue Revenue per policy increasing with contribution from insurer and Accident Assist Digital platform development supports Insurance acquisition and cross sell

SUMMARY

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FY20 strong delivery across all metrics – Trading EBITDA, Cash, Roadside and Insurance Excellent, swift, decisive and definitive response to COVID Our current expectation is for our performance in FY21 to be robust and only slightly below FY20 Business demonstrating resilience around Trading EBITDA and Cash generation Consistent, methodical and relentless execution of business strategy – now increasing focus on efficiency and cost to serve improvements and growth post lockdown

Q&A

APPENDIX

GROUP REVENUE

40

£m FY20 FY19 Change % of Group Roadside Revenue 841 841

• 85%

Reflects benefit of higher B2C income and acquisition of AA Prestige offset by the impact

• f lower B2B income and the impact of the part

disposal of AA Media Insurance Revenue 154 138 12% 15% As expected, increase reflected the continued strong growth of our insurer and benefit from

• ngoing investment in systems

Group Revenue 995 979 2% 100%

TRADING EBITDA

41

£m FY20 FY19 Change % of Group Roadside Trading EBITDA 290 283 2% 83% Increase in EBITDA reflects the benefit of higher average income per paid member, reduction in cost of acquiring new personal paid members and benefit of reduced third-party garaging costs as well as £3m benefit due to IFRS 16 conversion Insurance Trading EBITDA 60 58 3% 17% Increase reflects solid performance of broker and insurer Trading EBITDA 350 341 3% 100%

GROUP REVENUE AND TRADING EBITDA SUMMARY

42

Revenue Trading EBITDA

FY20 FY19 £m £m Roadside 841 841 Insurance 154 138 Group 995 979 Trading EBITDA Margin FY20 FY19 FY20 FY19 £m £m Margin % Margin % Roadside 290 283 34 34 Insurance 60 58 39 42 Group 350 341 35 35

RECONCILIATION OF TRADING EBITDA TO OPERATING PROFIT

43

£m FY20 FY19 Trading EBITDA 350 341 Pension service charge adjustment (4) (5) Share-based payments (5) (5) Contingent consideration remeasurement gain 9 1 Amortisation and depreciation (89) (73) Adjusting operating items (4) (40) Operating profit 257 219

RECONCILIATION OF ADJUSTED PROFIT AFTER TAX

44 Adjusted profit after tax broadly flat due to lower adjusting operating items; which are added back into the Adjusted EPS figure Basic earnings per share 14.1 pence (FY19: 6.9 pence). Adjusted earnings per share 14.1 pence (FY19: 14.9 pence)

£m FY20 FY19 Profit after tax 87 42 Adjusted for: Adjusting operating items 4 40 Share-based payments 5 5 Contingent consideration remeasurement gain (9) (1) Pension service charge adjustment 4 5 Adjusting finance income (4)

• Adjusting finance costs
• 13

Tax expense 20 11 Adjusted profit before tax 107 115 Tax at the effective rate of 18.7% (2019: 20.8%) (20) (24) Adjusted profit after tax 87 91 FY20 FY19 Weighted average number of shares (m) 615 612 Basic earnings per share (pence) 14.1 6.9 Adjusted basic earnings per share (pence) 14.1 14.9

INCOME STATEMENT

45

£m FY20 FY19

Group Revenue

995 979

Cost of sales

(393) (399)

Gross profit

602 580

Administrative & marketing expenses

(346) (361)

Other income

1

• Operating profit

257 219

Finance costs

(155) (167)

Finance income

5 1

Profit before tax

107 53

Tax expense

(20) (11)

Profit for the year

87 42

Basic EPS (p/share)

14.1 6.9

Adjusted Basic EPS (p/share)

14.1 14.9

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

46

£m FY20 FY19

Goodwill and other intangible assets 1,354 1,331 Property, plant and equipment 52 123 Right-of-use-assets 69

• Investments in joint ventures and associates

5 5 Financial assets at amortised cost 4

• Deferred tax assets

9 22 Non-current assets 1,493 1,481 Inventories 4 4 Trade and other receivables 257 223 Cash and cash equivalents 149 116 410 343 Assets classified as held for sale 12 6 Total assets 1,915 1,830 Trade and other payables (495) (462) Current tax payable (8) (3) Borrowings and loans (200)

• Lease liabilities

(23) (49) Provisions (5) (3) Current liabilities (731) (517) Derivative financial instruments (2,506) (2,724) Borrowings and loans (2)

• Finance lease obligations

(43) (12) Defined benefit pension scheme liabilities (162) (218) Provisions (6) (4) Deferred consideration

• (10)

Insurance technical provisions (43) (30) (2,762) (2,998) Liabilities classified as held for sale (3) (5) Total liabilities (3,496) (3,520) Net liabilities (1,581) (1,690)

CONSOLIDATED STATEMENT OF CASH FLOWS

47

£m FY20 FY19

Profit before tax 107 53 Depreciation and amortisation 89 78 Net finance costs 150 166 Difference between pension charge and cash contributions (22) 2 Other adjustments to profit before tax (11) 3 Change in working capital and provisions 15 (29) Net cash flows from operating activities before tax 328 273 Tax paid (11) (15) Net cash flows from operating activities 317 258 Investing activities Capital expenditure (69) (82) Other investing activities (7) (9) Net cash flows used in investing activities (76) (91) Financing activities Refinancing transactions (28) (34) Interest paid on borrowings (129) (129) Lease capital repayments net of proceeds from sale of fixed assets (25) (22) Payment of lease interest (4) (4) Dividends paid (12) (12) Net cash flows from financing activities (198) (201) Net increase in cash and cash equivalents 43 (34)

COVID RESPONSE – LEARNING INFORMING PLANNING PRIORITIES Clarity of focus was empowering Pace of action – speed of decision making Bypassing ordinary decision making structures – and still good decisions were made! Enabled by our recent investment in upgrading our IT estate and the power it has to transform our Company New business priorities informed by COVID

48