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AA Limited Annual Report

AA Limited Annual Report and Accounts 2021 Company number: 05149111AA Limited Annual Report and Accounts 2021 2020 Friend Studio Ltd File name: IFC_AtXaXGlance_v121 Modification Date: 13 April 2021 9:52 pmOUR AWARDSA ppointment of new Chairman and Chief executive OfficerUnder new ownership, in March 2021, the AA announced the future appointments of Rick Haythornthwaite as Non- executive Chairman and Jakob Pfaudler as Chief executive Officer as the Group gears up for an exciting period of growth and fantastic delivery for its customers and members. Simon Breakwell will continue to support the business in his new role as Deputy Chairman. I would like to thank John Leach, my predecessor, and his Board colleagues for their service. I am hugely excited to be joining the AA, which is one of Britain s most iconic companies with a skilled and committed workforce and a proud history of exceptional customer service. Like a number of the companies I have been fortunate enough to lead, the AA has a critical and trusted role in the lives of its many customers up and down the country.

Appointment of new Chairman and Chief Executive Officer Under new ownership, in March 2021, the AA announced the future appointments of Rick Haythornthwaite as Non-Executive Chairman and Jakob ... started trading in January 2016 and is a member of this panel. The segment ... . AA Limited Annual Report and Accounts 2021 . Annual Report and ...

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Transcription of AA Limited Annual Report

1 AA Limited Annual Report and Accounts 2021 Company number: 05149111AA Limited Annual Report and Accounts 2021 2020 Friend Studio Ltd File name: IFC_AtXaXGlance_v121 Modification Date: 13 April 2021 9:52 pmOUR AWARDSA ppointment of new Chairman and Chief executive OfficerUnder new ownership, in March 2021, the AA announced the future appointments of Rick Haythornthwaite as Non- executive Chairman and Jakob Pfaudler as Chief executive Officer as the Group gears up for an exciting period of growth and fantastic delivery for its customers and members. Simon Breakwell will continue to support the business in his new role as Deputy Chairman. I would like to thank John Leach, my predecessor, and his Board colleagues for their service. I am hugely excited to be joining the AA, which is one of Britain s most iconic companies with a skilled and committed workforce and a proud history of exceptional customer service. Like a number of the companies I have been fortunate enough to lead, the AA has a critical and trusted role in the lives of its many customers up and down the country.

2 We now have an exciting opportunity to unlock the full potential of the business. I have no doubt that the AA will go from strength-to-strength in the years ahead, and I look forward to working closely with the Company s leadership team and stakeholders to achieve our ambitions for this wonderful business. Rick Haythornthwaite, Non- executive ChairmanPresentation of financial information UK regulations/APMF orward-looking statementsThis Annual Report contains forward-looking statements. These forward-looking statements are not guarantees of future performance, rather they are based on current views and assumptions as at the date of this Annual Report . These assumptions are made in good faith based on the information available at the time of the approval of this Report . These statements should be treated with caution due to the inherent risks and uncertainties underlying any such forward-looking statements, and the Board has no obligation to update these ReportFinancial StatementsGovernanceAA Limited Annual Report and Accounts 2021 1 2020 Friend Studio Ltd File name: IFC_AtXaXGlance_v121 Modification Date: 13 April 2021 9.

3 52 pmCONTENTSSTRATEGIC REPORT2 Group at a glance4 Group performance9 FY21 review14 Key performance indicators16 Our performance20 Financial review25 AA risk management framework28 Stakeholder engagement and s172(1) statement30 Environmental, social and governanceGOVERNANCE REPORT39 Directors report42 Directors remuneration reportFINANCIAL STATEMENTS50 Independent auditors report56 Consolidated income statement56 Consolidated statement of comprehensive income57 Consolidated statement of financial position58 Consolidated statement of changes in equity59 Consolidated statement of cash flows60 Notes to the consolidated financial statements96 Company statement of financial position96 Company statement of changes in equity97 Notes to the Company financial statementsRevenue 967m20202: 993mTrading EBITDA1 341m20202: 348mOperating profit 218m20202: 255mProfit before tax 52m20202: 105mAdjusted basic cash flow1 40m2020: 83mPersonal members and business : motor and home policies1,941,0002020: 1,713,000 Total greenhouse gas emissions (tonnes carbon dioxide equivalent)33,6522020: 40,615 Diversity across the Group32%Female68%Male 2020: 31% Female, 69% Male FINANCIAL AND OPERATIONAL HIGHLIGHTSRECOMMENDED CASH OFFER APPROVEDM aking Britain s drivers lives simpler and smarterThis is our guiding purpose, closely aligned with our longstanding and trusted reputation as the UK s leading roadside assistance business.

4 We have always been passionate about driving and the freedom that comes with it. However, the experience of owning and managing a vehicle is increasingly complex as customers demand greater convenience and better access to technology. Recognising these and the emerging trends in the automotive sector, we are looking to build on our leading market position to deliver a range of exciting products and services to support a broad range of driver needs and to make these available to customers through simple, intuitive, digital channels. Read more on P4-6In recognition of the challenges posed by the Group s level of indebtedness and the need to reduce this significantly, on 25 November 2020, the Board of AA plc recommended to its shareholders a cash offer of 35p per share from Basing Bidco Limited (Bidco), a newly incorporated company indirectly wholly owned by a consortium of (i) funds advised by TowerBrook Capital Partners ( ) LLP or its affiliates; and (ii) private equity funds managed by Warburg Pincus LLC or its affiliates (together, the Consortium).

5 On 14 January 2021, the shareholders approved the acquisition of AA plc (the Acquisition), which successfully completed post year-end on 9 March 2021. Following the completion of the Acquisition, AA plc delisted from the London Stock Exchange and was re-registered as AA Limited on 17 March Acquisition by the Consortium has enabled the Group to significantly reduce leverage, rebalance its capital structure towards long-term sustainable leverage levels and, as a result, has helped to reduce the risk and cost of future refinancing. The expected cash savings that this will generate, in combination with the Consortium s extensive investment and operational expertise, will enable the Group to accelerate its plans for long term Non-Generally Accepted Accounting Principles (GAAP) measures explained on Revenue, Trading EBITDA, operating profit, profit before tax and adjusted basic earnings per share for the year ended 31 January 2020 have been restated.

6 Please see P73 for further AA Limited Annual Report and Accounts 2021 2020 Friend Studio Ltd File name: IFC_AtXaXGlance_v121 Modification Date: 13 April 2021 9:52 pmSTRATEGIC REPORTG roup at a glanceWe are the leading provider of roadside assistance services in the UK with a fast-growing insurance are the leading provider of UK roadside assistance, with approximately 2,500 patrols attending an average of around 8,000 breakdowns daily. Our Roadside segment also consists of several developing businesses, including our market-leading driving schools, AA Driving School and BSM, DriveTech, the market leader in driver education including driver awareness courses offered by police forces, and Prestige, our growing service, maintenance and repair (SMR) 799m20201: 827mTrading EBITDA margin 35%2020: 34%Trading EBITDA 280m20201: 285mPaid personal members : customers : and Financial ServicesOur Insurance Services segment includes our insurance broker business that operates a panel of motor and home policy distribution.

7 It also includes our successful in-house underwriter, which started trading in January 2016 and is a member of this panel. The segment also includes our Financial Services partnership with the Bank of Ireland and our AA Cars business, which operates our online used cars and vans platform. Revenue 168m20201: 166mTrading EBITDA margin 36%20201: 38%Trading EBITDA 61m20201: 63mInsurance policies 1,941,0002020: 1,713,000 Underwritten policies 1,006,0002020: 780,000 Financial Services products 101,0002020: 90,0001 See P65 and 73. Strategic ReportFinancial StatementsGovernanceAA Limited Annual Report and Accounts 2021 3 2020 Friend Studio Ltd File name: IFC_AtXaXGlance_v121 Modification Date: 13 April 2021 9:52 pmThe services we deliverBreakdown coverWhether drivers are looking for personal cover, vehicle cover or even European cover, we have a range of breakdown products to ensure they get the cover they need.

8 In addition, through our market-leading Smart Breakdown platform, we can identify 80% of faults in engine-related breakdowns, which means we can identify many faults before the vehicle breaks down. We can then either help our customers fix the fault remotely, send a patrol to repair their vehicle or direct them to our AA approved garage network, Prestige, using our Smart Care insurance broking business sells both motor and home insurance. These policies are underwritten by a panel of underwriters including the AA s in-house underwriter. Utilising our proprietary data, we are currently underwriting 57% of the motor broker policies and 46% of the home broker policies. Through our connected services technology, used also for Smart Breakdown, we are progressing with the rollout of our younger driver telematic insurance and accident managementIf customers have been involved in an accident, our in-house claims and accident management systems for our personal members and customers will aim to deliver a smooth end-to-end experience by ensuring they are taken care of by the AA throughout the , maintenance and repair Smart Care allows customers to access our SMR services online in one simple, smart place.

9 Wherever our customers are, it just takes a few taps to book an MOT, service or repair online. Our Smart Care service is contact-free customers can book and pay online, with free collection and return across 87% of the UK so they don t need to leave their home. Driving schoolFrom learning to drive to finally passing the driving test, our leading driving schools business offers a trusted and reliable platform for pupils and instructors alike. We are enhancing our digital capabilities to deliver a seamless offering that nurtures long-term brand affinity and promotes greater cross-sell r i veTe c hOur DriveTech business is a world-leading provider of fleet risk and safety management and driver training, which is available online and on-road in over 95 countries and in 35 languages through over 40 partners. We are the UK s largest provider of driver offender retraining courses. AA CarsOur trusted online AA Cars platform enables customers to sell their current car or van and can help them buy their next.

10 We can even help with funding their purchase with our large panel of lenders giving them greater choice and servicesOur partnership with the Bank of Ireland includes AA branded car finance products to sit alongside our successful savings and loan partnership with LeasePlan, we launched our AA Smart Lease proposal to our members in January 2021. AA Smart Lease offers AA members a flexible and hassle-free alternative to traditional vehicle ownership. For a single monthly price, AA Smart Lease includes an insured car, service and maintenance and vehicle tax. AA members will be able to choose from a range of exclusive vehicles, including electric and hybrid options, which will be delivered directly to their home. AA members will also have the peace of mind that if their circumstances change unexpectedly then they will have the option to hand the vehicle back early without investment case Trusted brandThe AA is one of the most widely recognised and trusted brands in the UK, building on more than 116 years of service and leaderThe AA is the largest roadside assistance provider with share of the UK consumer market and share of the business-to- business (B2B) market.


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