Market leading roadside assistance division is
the core of the business
Roadside Assistance Insurance Services Driving Services AA Ireland
£359m £84m £20m £15m
Leading provider across the UK 3.8m personal members and 9.6m B2B customers 3,000 dedicated patrols, reaching an average of 10,000 breakdowns per day
No. 1 market share ( c.40%)
High personal member retention rate (80% in FY15)
Leading UK insurance broker
Offers Motor, Home, Travel and other specialist insurance policies
Significant cross sell to existing personal members and B2B customers
Provides educational driver awareness courses, fleet management and professional driver training Largest driving school in the UK2 (AA and BSM
brands)
Leading branded
breakdown provider and leading insurance broker in Ireland
2
1 Trading EBITDA is defined as profit after tax as reported adjusted for depreciation, amortisation, net finance costs, taxation, exceptional items, acquisition earn-out costs, items not allocated to a segment and profit on sale of joint ventures. Items not allocated to a segment relate to transactions that do not form part of the on-going segment performance and include transactions which are one-off in nature. 2 By total UK driving pupils.
3 Y&R Brand Asset Valuator Survey (2014).
FY15 T ra di ng EBI TD A % 1 H ighl ights 75% 18% 4% 3% Se gm ent
A trusted brand - the UK’s ‘4th Emergency Service’
75%72%
69%
AA RAC Green Flag
3
1.
UK’s top 5 most trusted brands
(1)Source: Company information, BrandAsset Valuator 2014. 1 Excludes charities and armed forces.
2.
3.
4.
5.
Highest test score for a major provider from ‘Which?’ every year since 2007
September 2014: AA ‘Recommended provider’ in “Which?” survey for both consumer and manufacturer cover Ninth consecutive year AA has held ‘Which?’ accolade “AA is still the mainstream breakdown provider of choice” – ‘Which’ Breakdown Services survey, September 2014 Widely recognised and trusted brand with over 100
years of operating history and high level of customer satisfaction
AA has significant economies of scale – Over 3,000 patrols
– Over 13 million customers and 3.7 million breakdowns attended annually
Sophisticated deployment systems
– Significant investment required from a new entrant in information and logistics systems
B2B relationships
– The AA has 9.6m B2B customers – Partner of choice for major OEMs Significant start-up costs for new entrants
Large and resilient roadside market...
…and led by the AA
Source: Industry sources (January 2015).
AA 42% RAC 28% Green Flag 17% Other 13% AA 67% Other 33%
Leading positions in a large roadside market with
significant barriers to entry
Relatively stable market with defensive characteristics Strong customer engagement
Attractive customer demographics
Recession-resilient product with high recurring income
4
…with significant barriers to entry…
Overall UK Roadside Assistance
…with a loyal customer following
Number of personal members who have been an AA member for:3.8m Personal members
Stable membership over medium/longer term – UK recession had no material impact
on membership
Proprietary long-standing database of c.20.6m
individuals provides competitive advantage particularly for cross-selling of products
Sophisticated customer rating and pricing capability based on proprietary information
Large personal membership base…
Personal Members demonstrate loyalty to the brand with an average tenure of approximately 12 years c.1.5 million Personal Members have been with the AA for more than 10 years
– Of which 800,000 have been Personal Members for more than 20 years
Stable personal member retention rate in FY15; 80%1
Management focus in FY14 & FY15 on retention of existing profitable members
1 Personal membership retention rate defined by reference to the number of customers renewing at the point of invitation.
Large personal membership base with high retention
levels and a proprietary database of information
1,500,000
800,000 > 10 years >20 years
Long standing relationships with major car manufacturers
2014 new contract wins include Volkswagen Group (including Audi), Porsche and Hyundai
Largest customer, Lloyds Banking Group, renewed its contract in February 2014 for an additional 5 years Other recent contract renewals include Bentley, Ford, Honda and Jaguar Land Rover
0–5 5-10 >10 No. of years AA customer Car Manufacturers Fleet & Leasing Companes Added Value Accounts
Selected B2B client base by length of relationship and type of customer
Leading market positions in ancillary divisions
Long history of offering motor and home insurance to members and non-members
Built on strength of AA brand and consumer trust in it Significant scale and high market share
– More than 2.1m policies currently in force in UK – Motor insurance: 636,000 policy sales in FY15 – Home insurance: 901,000 policy sales in FY15 – Home Services offering includes cover for
emergencies such as defective plumbing, blocked drains and power loss as well as boiler breakdown – Also offer Travel & other insurance types
“Value-adding” broker – underwriting panel supported by proprietary data from the roadside assistance business
7
The broker of choice for underwriters...
1 Source: Industry sources.
#1 market share in UK Driving services market
Driving services market share (January 2015)1
11%
Other 89%
AA/BSM is largest driving school in the UK Highly fragmented space
Significant cash flow generation with exceptional
cash conversion rates
395 423 430 93.9% 102.4% 100.1% 0% 30% 60% 90% 120% 100 200 300 400 500
FY13A FY14A FY15A
Trading EBITDA Cash Conversion
8
Note: Financial year end is 31 Jan (i.e. represents the month period to 31 Jan 2015).
1 Trading EBITDA is defined as profit after tax as reported adjusted for depreciation, amortisation, net finance costs, taxation, exceptional items, acquisition earn-out costs, items not allocated to a segment and profit on sale of joint ventures. Items not allocated to a segment relate to transactions that do not form part of the on-going segment performance and include transactions which are one-off in nature.
2 Cash Conversion is defined as net cash flow from operating activities before tax and exceptional items as a percentage of Trading EBITDA. 3 Net cash flow from operating activities before tax and exceptional items is defined as the cash generated from operating activities before returns
on investments and servicing of finance, taxation, capital expenditure and financial investments and acquisitions and disposals.
1 2
Increasing EBITDA y-o-y
Favourable working capital dynamics as a function of upfront payments by customers
Net cash flow from operating activities before
tax and exceptional items3
371 433 431
Segment summary financials
2
9
Note: Financial year end is 31 Jan (i.e. represents the month period to 31 Jan 2015) .
1 Trading EBITDA is defined as profit after tax as reported adjusted for depreciation, amortisation, net finance costs, taxation, exceptional items, acquisition earn-out
costs, items not allocated to a segment and profit on sale of joint ventures. Items not allocated to a segment relate to transactions that do not form part of the on-going segment performance and include transactions which are one-off in nature.
2 During the year ended 31 January 2015, our Media Business was transferred from Driving Services to Roadside Assistance. As a result, the results for the year
ended 31 January 2014 have been restated to show the results of Media within the Roadside Assistance segment. The results for the year ended 31 January 2013 have not been restated.
Roadside Assistance
Insurance Services
Driving Services
AA Ireland
679 713 728 319 348 359 0 200 400 600 800
FY13A FY14A FY15A
Revenue Trading EBITDA1 Trading EBITDA margin (%) 46.9% 48.9% 49.3% 162 149 142 93 89 84 0 50 100 150 200
FY13A FY14A FY15A
Revenue Trading EBITDA1 Trading EBITDA margin (%) 57.4% 60.0% 58.9% 91 73 74 18 16 20 0 20 40 60 80 100
FY13A FY14A FY15A
Revenue Trading EBITDA1 Trading EBITDA margin (%) 20.2% 21.5% 27.7% 38 40 39 13 15 15 0 10 20 30 40 50
FY13A FY14A FY15A
Revenue Trading EBITDA1 Trading EBITDA
margin (%) 33.9% 37.9% 38.2%
