FY19 RESULTS. 3 April 2019

Transcription

1 FY19 RESULTS 3 April 2019

2 DEFINITIONS 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. 1

3 AGENDA Introduction Finance review Strategic review and outlook Simon Breakwell Martin Clarke Simon Breakwell 2

4 AA INVESTMENT HIGHLIGHTS The UK s most trusted commercial brand 1 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 Notes: (1) Y&R Brand Asset Valuator Survey (2014) 3

5 OUR SERVICE EXCELLENCE IS OUR BEDROCK WHICH? 2018 REVIEW THIRD-PARTY COVER OVERALL SCORE REPAIRED AT THE ROADSIDE Green Flag TOP 5 OEM-BRANDED COVER PROVIDED BY AA 1 Green Flag 91% (1 st ) 84% (2 nd ) 80% (3 rd ) 73% (4 th ) 72% (5 th ) Sources: Which? Recommended Breakdown Provider June 2018 Notes: (1) Overall Which? score relating to carmaker-branded cover 4

6 WE ARE THE PARTNER OF CHOICE FOR THE AUTOMOTIVE INDUSTRY SELECTED B2B CLIENT BASE BY LENGTH OF RELATIONSHIP AND TYPE OF CUSTOMER Financial Institutions & Partnerships Fleet & Leasing Companes Car Manufacturers No. of years AA customer >10 5

7 ROADSIDE AA S BEST-IN-INDUSTRY APP RANKING IN TRAVEL 22 nd RANKING IN TRAVEL 96 th RANKING IN TRAVEL 45 th APP STORE RATING 4.8 APP STORE RATING 4.4 APP STORE RATING 4.8 NUMBER OF RATINGS 37k NUMBER OF RATINGS 2k NUMBER OF RATINGS 15k One third of our personal members have registered Used in 31% of breakdowns, up from 29% last year Source: Apple App store as at 29 March

8 VISION FOR THE AA 7

9 FY19 HEADLINES IN LINE WITH GUIDANCE 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 8

10 FINANCE REVIEW

11 FY19 FINANCIAL HEADLINES 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) 10

12 ROADSIDE AND INSURANCE SEGMENTAL REPORTING Revenue FY19 FY18 m m Roadside Assistance Driving Services Roadside Revenue Trading EBITDA Trading EBITDA Margin FY19 FY18 FY19 FY18 m m Margin % Margin % Roadside Assistance Driving Services Head Office costs (56) (47) na na Roadside Trading EBITDA Insurance Services Insurance Underwriting Insurance Revenue Insurance Services Insurance Underwriting Head Office costs (10) (9) na na Insurance Trading EBITDA Group Trading Revenue Group Trading EBITDA

13 INCOME STATEMENT m FY19 FY18 YoY Revenue % Trading EBITDA (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 (29)% Net finance cost (166) (166) - Profit before tax (62)% Tax expense (11) (30) (63)% Profit for the period (62)% Basic EPS continuing operations (p) (62)% Adjusted Basic EPS 1 continuing operations (p) (32)% Revenue 2% higher due to strong performance of 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 Finance cost expected to be lower in FY20 Notes: 1 Adjusted for operating exceptional items, share-based payments, pension service charge adjustment, contingent consideration remeasurement gain, penalties on early repayment 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 12

14 RECONCILIATION OF ADJUSTED PROFIT AFTER TAX FY19 FY18 Profit after tax 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 Adjusted profit before tax Tax at the effective rate of 20.8% (FY18: 19.1%) (24) (31) Adjusted profit after tax

15 ROADSIDE FY19 FY18 YoY Revenue ( m) % Trading EBITDA ( m) (12)% Trading EBITDA margin (%) (13)% Personal paid Members (m) (2)% Average income per paid Member ( ) % Business members ( 000s) 9,793 9,928 (1)% Average income per business member ( ) % Breakdowns attended ( 000s) 3,730 3,679 1% 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 14

16 INSURANCE Note: Average income per policy no longer includes FS revenue. FY19 FY18 YoY Revenue 1 ( m) (5)% Trading EBITDA 1 ( m) (18)% Trading EBITDA margin (%) (14)% Total insurance policies 2 ( 000s) 1,561 1,447 8% Total Motor policies ( 000s) % Motor policies underwritten ( 000s) % Total Home insurance policies ( 000s) % Home policies underwritten ( 000s) % Average income per policy (Motor and Home) ( ) (7)% Financial Services products ( 000s) 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 Notes: 1 Includes Home Emergency Services consumer book which was sold in January Under the terms of the agreement, approximately 70,000 consumer policies will migrate to HomeServe Plc from May 2018 under the AA brand over the next three years. 2 Includes Motor and Home only. 15

17 STRONG CASH CONVERSION m FY19 FY18 Trading EBITDA 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 Capex (82) (63) of which Transformation capex (30) (34) of which Growth capex (13) - of which Maintenance capex 1 (40) (30) of 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 paid 2 (132) (140) Free cash flow to equity (pre-refinancing and dividends) Net financing adjustments (34) (96) Free cash flow to equity (pre-dividends) (22) (5) Notes: 1 Includes IT maintenance and property and equipment, excludes finance lease capital net of proceeds from sale of vehicles 2 Includes net interest paid on debt and finance lease interest 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

18 PROACTIVE DEBT MANAGEMENT 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 cover 1 improved from 2.1x to 2.6x Facility Capital structure at IPO (31-Jul-14) Amount outstanding Effective maturity Effective interest rate Class A1 Notes 475m Jul % Senior Term Facility 663m Jan % Class A4 Notes 250m Jul % Class A3 Notes 500m Jul % Class A2 Notes 500m Jul % Cash in WBS ( 204m) - - Class A Net Debt 2,184m % Class B Notes 655m Jul % PIK notes 350m Nov % Finance lease 39m NA NA WBS Net Debt 3,228m % AA plc cash Total Debt 3,228m % Facility Capital structure (31-Jan-19) Amount outstanding Effective maturity Effective interest rate Class A3 Notes 200m Jul % Class A5 Notes 700m Jan % Senior Term Facility - Jul % Class A6 Notes 250m Jul % Class A7 Notes 550m Jul % Class A2 Notes 500m Jul % Cash in WBS ( 20m) - - Class A Net Debt 2,180m % Class B2 Notes 570m Jul % Finance lease 61m NA NA WBS Net Debt 2,811m % AA plc cash ( 96m) - - Total Debt 2,715m % Notes: 1 Run rate cash interest: Trading EBITDA 17

19 S&P RATINGS REAFFIRMED, EFFECTIVE MATURITY OF DEBT EXTENDED Forward starting new STF available Facility Net Debt Amount outstanding Notes: 1 Total Net debt to AA plc Trading EBITDA for the last 12 months 2 Run rate cash interest: Trading EBITDA 3 Free cash flow: debt service cover ratio Effective maturity Effective interest rate Class A3 notes 200m Jul % Class A5 notes 700m Jan % Class A6 notes 250m Jul % Class A7 notes 550m Jul % Class A2 notes 500m Jul % Cash in WBS ( 20m) - - Class A Net Debt 2,180m % Class B2 notes 570m Jul % Finance lease 61m na na WBS Net Debt 2,811m % AA plc cash ( 96m) - - Total Net Debt 2,715m % 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 Key metrics FY19 FY18 Net debt/ebitda 1 8.0x 6.9x Interest cover 2 2.6x 2.8x Financial covenants FY19 FY18 Class A FCF to DSCR 3 (covenant > 1.35x) 2.6x 3.3x Class B FCF to DSCR 3 (covenant > 1.0x) 1.9x 2.4x 18

20 CAPEX GUIDANCE TO FY20 m FY19 FY20 COMMENTS IT transformation 30 - Additional IT and new initiatives Connected car 3 4 Original IT transformation programme completed App and digital development, membership systems investment, onward mobility solutions and investment in insurance business Smart Breakdown and other connected car propositions 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) Growth capex IT maintenance Property & equipment Maintenance capex Total capex Reflects reduction in personnel capitalised costs to do with the legacy IT transformation In line with FY19 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 Notes: *Excludes capex accrual of 1m **Solvency capital for growth of underwriter of c 20-25m to be funded by AA plc and is excluded from the breakdown above. (1) Excludes finance lease capital repayments net of proceeds from sale of fixed assets of 22m in FY19 and 23m in FY18. 19

21 SUMMARY 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 20

22 STRATEGIC REVIEW Brent Pugh Recovery Patrol

23 OVERVIEW 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 22

24 DELIVERING OUR STRATEGIC PLAN ONE YEAR IN FY19 New strategy Invest in Foundations New management team New product and marketing strategy Insurance growth acceleration Service resilience improvements IT stabilisation People engagement improvements FY20/21 New AA marketing Roll-Out and Scale Innovation New product launches into the base New B2B service and product investments Membership stabilisation Continued insurance investment and growth Continued employment engagement improvements FY21/22 Accelerate Growth via Differentiation Further new product innovations New B2B services embedded Roadside membership growth Insurance EBITDA growth Improved business and operational efficiencies Highly engaged and performing company 23

25 DELIVERING MEMBERSHIP GROWTH Strategic priorities Progress to date TARGETS Ongoing innovation to differentiate our products and services Market to grow our base with new segments Greatly accelerate digital adoption and innovation to drive broader member engagement Membership systems investment to drive retention 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) Marketing and product strategy market tested before roll-out Work commenced on re-branding strategy for FY20 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 Nearly 300,000 policies live on CATHIE. Migration commenced Q4 2019; phased migration approach Membership growth by FY21 50% members using digital breakdown solutions 20% reduction in breakdown calls into the contact centres Transform our breakdown service to be fully connected 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 Upside from Connected Car excluded 24

26 DEEPENING OPERATIONAL RESILIENCE AND SERVICE EXCELLENCE Road Operations Enhance proposition on ancillary sales Improve drive times - dispatch and traffic based routing technology Improve roadside repair rate - more granular taskbased performance measurement and training Reduce garaging - targeted patrol recruitment and utilisation improvements Improve flexibility and utilisation - new roster for Recovery Patrols 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 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 operational 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 TARGETS 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 25

27 AGILE - DIFFERENTIATION THROUGH INNOVATION JLR onward mobility solution launched in 2018 Agile is the AA s most flexible and tailored mobility service 1 Patrols DVLA check & initiate driver insurance instantly via tablet or iphone Available 24/7 the same Agile experience at any time of the day or night 3 5 Patrols select a relevant replacement vehicle Patrol takes member to nearest dealer to collect replacement car AA team coordinate the end-toend vehicle repair and return process between dealers, repair centres and members Replacement car sorted in less than 30mins versus c120mins today 2 4 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 26

28 GOING BEYOND BREAKDOWN SERVICE MAINTENANCE AND REPAIR Demand generation channels Fleet SMR Product (Prestige core) B2C: BRC Breakdown repair OEM: Recall Bookings ALL: Patrol Tow-Ins Small businesses: SMR Product The AA Technical Services Network Supply channels Prestige Garage Network Garage Services Network Scheduled Patrols OEM Franchise Dealers B2C: SMR Product Prestige AA Today Future Opportunity 27

29 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Jun-18 Nov-18 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 GOING BEYOND BREAKDOWN DRIVING DIGITAL ADOPTION AND BROADER MEMBER ENGAGEMENT Digital Breakdown Reporting & Tracking As % of B2C Breakdowns 60% 50% 40% 30% 20% 10% 0% Tracked online from SMS Tracked on App Reported on App Use of Member Benefits (Mobile App) # of unique monthly users 350, , , , , ,000 50,

30 SMART BREAKDOWN - DIFFERENTIATION THROUGH INNOVATION DRIVING A BETTER CUSTOMER EXPERIENCE AND A LOWER COST TO SERVE FOR THE AA 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 29

31 GOING BEYOND BREAKDOWN TAKING DIGITAL REPORTING TO THE NEXT LEVEL 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 we have breakdowns via the AA app Additional online digital journeys via theaa.com 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 Q Q2-Q

32 STEP-CHANGING GROWTH IN INSURANCE Strategic priorities Progress to date FY19 TARGETS Drive more competitive premiums 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 New in-house underwriter motor insurance scheme launched for non-members with Munich Re 2m+ motor and home polices by end FY % EBITDA CAGR FY19-23 New insurance innovation Unrivalled expertise at utilising proprietary data provides unique understanding of members to be enhanced by Smart Breakdown proposition 31

33 BROADEN UNDERWRITING FOOTPRINT - NON-MEMBERS SCHEME 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 AA insurance quote requests, % Members 6% Ex-Members 7% Non-Members 87% Non-Members In-force Policies, 000s May 2018 Feb 2019 Claim Rate Comparison 4.3% Members & Ex-Members 4.4% Non-Members 32

34 DELIVERING INSURANCE GROWTH Strategic priorities FY20 Plans TARGETS Drive more competitive premiums 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 Extend non-members footprint as underwriting performance is proven Test young driver footprint 2m+ motor and home polices by end FY % EBITDA CAGR FY19-23 New insurance innovation Use driving data from Smart Breakdown to cross-sell insurance Launch telematics young driver insurance product 33

35 DRIVING ENGAGEMENT ACROSS ALL OUR TEAMS +6.8 pts Cultural index 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 34

36 PRODUCT INNOVATION DAY 20 MAY 2019 Deep dive into AA s pipeline of innovative products and services to make Britain s driving life better TODAY WE HAVE BREAKDOWNS VIA THE AA APP ADDITIONAL ONLINE DIGITAL JOURNEYS VIA THEAA.COM DIGITAL OPTIONS VIA VOICE CHANNELS Remote Resolution Opportunity Today Q Q2-Q REMOTE RESOLUTIONS DIGITAL REPORTING SMART BREAKDOWN ONWARD MOBILITY SERVICE MAINTENANCE AND REPAIR 35

37 DELIVERY TARGETS FOR FY20 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 36

38 Q&A

39 APPENDIX

40 GROUP REVENUE m FY19 FY18 Change % of Group Roadside Assistance % 79% Strong B2B performance and consolidation of AA Cars Driving Services (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 % 86% Insurance Services (11)% 12% Additional acquisition marketing spend to accelerate growth of motor book and return home book to growth Insurance Underwriting % 2% Continued strong growth across motor and home book Insurance Revenue (5)% 14% Group Revenue % 100% Exceptional revenue Group Revenue % 39

41 TRADING EBITDA m FY19 FY18 Change % of Group Roadside Assistance (7)% 79% Additional strategic opex for growth Higher cost of attending breakdowns during H1 19 Driving Services (23)% 4% Decline in speed awareness courses and reduction in lower margin instructor franchises Head Office costs (56) (47) 19% Roadside Trading EBITDA (12)% 83% Insurance Services (22)% 16% Increased marketing spend by the broker and falling contribution from the Home Emergency consumer book Insurance Underwriting % 1% Strong growth of underwriter supported by good overall loss ratios Head Office costs (10) (9) 11% Insurance Trading EBITDA (18)% 17% Trading EBITDA (13)% 100% 40

42 RECONCILIATION OF TRADING EBITDA TO OPERATING PROFIT m FY19 FY18 Trading EBITDA 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

43 INCOME STATEMENT m FY19 FY18 Group Revenue Cost of sales (399) (360) Gross profit Administrative & marketing expenses (361) (292) Share of loss of joint ventures and associates, net of tax - (1) Operating profit Finance costs (166) (166) Profit before tax Tax expense (11) (30) Profit for the year Basic EPS (p/share) Adjusted Basic EPS (p/share)

44 CONSOLIDATED STATEMENT OF FINANCIAL POSITION m FY19 FY18 Goodwill and other intangible assets 1,331 1,300 Property, plant and equipment Investments in joint ventures and associates 5 8 Other receivables - 3 Deferred tax assets Non-current assets 1,481 1,469 Inventories 4 7 Trade and other receivables Cash and cash equivalents 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

45 CONSOLIDATED STATEMENT OF CASH FLOWS m FY19 FY18 Profit before tax Depreciation and amortisation Net finance costs 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 Tax paid (15) (23) Net cash flows from operating activities 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

46 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 ( 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 forwardlooking 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 forwardlooking 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. 45

47 IR TEAM CONTACTS Zeeshan Maqbool Head of Investor Relations and Corporate Finance Lisa Shailer IR Assistant