Aa-Plc 2021

AA Limited
Annual Report
and Accounts
2021
Company number: 05149111

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
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. 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 Chairman
OUR AWARDS
Presentation of financial information UK regulations/APM

Forward-looking statements
This 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 statements.
© 2020 Friend Studio Ltd File name: IFC_AtXaXGlance_v121 Modification Date: 13 April 2021 9:52 pm
Making Britain’s drivers’ lives simpler and smarter
Strategic Report
This is our guiding purpose, closely aligned with our longstanding and trusted reputation
as the UK’s leading roadside assistance business. 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.
Governance
Read more on P4-6
FINANCIAL AND OPERATIONAL HIGHLIGHTS
Revenue Profit before tax Personal members and business Diversity across the Group
£967m £52m 32%

customers
20202: £993m 20202: £105m 11.9m Female
Financial Statements
2020: 12.3m
Trading EBITDA1 Adjusted basic EPS1
68%
£341m 13.6p
Total motor and home policies
20202: £348m 20202:13.8p 1,941,000 Male

2020: 31% Female, 69% Male
2020: 1,713,000
1
Operating profit Free cash flow
£218m £40m
Total greenhouse gas emissions
(tonnes carbon dioxide equivalent)
20202: £255m 2020: £83m

33,652
2020: 40,615
RECOMMENDED CASH OFFER APPROVED
In 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 (U.K.) LLP or its affiliates; and (ii) private equity funds managed by
Warburg Pincus LLC or its affiliates (together, the Consortium). 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 2021.
The 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 growth.
CONTENTS
STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS

2 Group at a glance 39 Directors’ report 50 Independent auditors’ report
4 Group performance 42 Directors’ remuneration report 56 Consolidated income statement
9 FY21 review 56 Consolidated statement of comprehensive income
14 Key performance indicators 57 Consolidated statement of financial position
16 Our performance 58 Consolidated statement of changes in equity
20 Financial review 59 Consolidated statement of cash flows
25 AA risk management framework 60 Notes to the consolidated financial statements
28 Stakeholder engagement and s172(1) statement 96 Company statement of financial position
30 Environmental, social and governance 96 Company statement of changes in equity
97 Notes to the Company financial statements
1 Non-Generally Accepted Accounting Principles (GAAP) measures explained on P15.

2 Revenue, Trading EBITDA, operating profit, profit before tax and adjusted basic earnings per share for the year ended 31 January 2020 have been restated. Please see P73 for further details.
AA Limited Annual Report and Accounts 2021 1
STRATEGIC REPORT
Group at a glance
We are the leading provider of roadside assistance services in the UK with a

fast-growing insurance platform.
Roadside Insurance and Financial Services
We are the leading provider of UK Our Insurance Services segment
roadside assistance, with approximately includes our insurance broker business
2,500 patrols attending an average that operates a panel of motor and home
of around 8,000 breakdowns daily. policy distribution. It also includes our
Our Roadside segment also consists of successful in-house underwriter, which
several developing businesses, including started trading in January 2016 and is
our market-leading driving schools, a member of this panel. The segment
AA Driving School and BSM, DriveTech, also includes our Financial Services
the market leader in driver education partnership with the Bank of Ireland and
including driver awareness courses our AA Cars business, which operates
offered by police forces, and Prestige, our online used cars and vans platform.
our growing service, maintenance and
repair (SMR) platform.
Revenue Revenue
£799m £168m
20201: £827m 20201: £166m
Trading EBITDA margin Trading EBITDA margin
35% 36%
2020: 34% 20201: 38%
Trading EBITDA Trading EBITDA
£280m £61m
20201: £285m 20201: £63m
Paid personal members Insurance policies
3.168m 1,941,000
2020: 3.215m 2020: 1,713,000
Business customers Underwritten policies
8.7m 1,006,000
2020: 9.0m 2020: 780,000
Financial Services products
101,000
2020: 90,000
1 See P65 and 73.
2 AA Limited Annual Report and Accounts 2021
The services we deliver
Strategic Report
Breakdown cover Service, maintenance and repair AA Cars
Whether drivers are looking for personal cover, Smart Care allows customers to access our Our trusted online AA Cars platform enables
vehicle cover or even European cover, we have SMR services online in one simple, smart customers to sell their current car or van and
a range of breakdown products to ensure they place. Wherever our customers are, it just takes can help them buy their next. We can even
get the cover they need. In addition, through a few taps to book an MOT, service or repair help with funding their purchase with our large
our market-leading Smart Breakdown platform, online. Our Smart Care service is contact-free panel of lenders giving them greater choice
we can identify 80% of faults in engine-related – customers can book and pay online, with free and flexibility.
breakdowns, which means we can identify collection and return across 87% of the UK –
many faults before the vehicle breaks down. so they don’t need to leave their home. Financial services
We can then either help our customers fix the Our partnership with the Bank of Ireland
fault remotely, send a patrol to repair their Driving school includes AA branded car finance products
vehicle or direct them to our AA approved From learning to drive to finally passing the to sit alongside our successful savings and
garage network, Prestige, using our Smart driving test, our leading driving schools business loan products.
Governance
Care platform. offers a trusted and reliable platform for pupils
and instructors alike. We are enhancing our Leasing
Insurance digital capabilities to deliver a seamless offering In partnership with LeasePlan, we launched
Our insurance broking business sells both that nurtures long-term brand affinity and our AA Smart Lease proposal to our members
motor and home insurance. These policies promotes greater cross-sell opportunities. in January 2021. AA Smart Lease offers AA
are underwritten by a panel of underwriters members a flexible and hassle-free alternative
including the AA’s in-house underwriter. DriveTech to traditional vehicle ownership. For a single
Utilising our proprietary data, we are currently Our DriveTech business is a world-leading monthly price, AA Smart Lease includes an
underwriting 57% of the motor broker policies provider of fleet risk and safety management insured car, service and maintenance and
and 46% of the home broker policies. Through and driver training, which is available online vehicle tax. AA members will be able to choose
our connected services technology, used also and on-road in over 95 countries and in from a range of exclusive vehicles, including
for Smart Breakdown, we are progressing with 35 languages through over 40 partners. electric and hybrid options, which will be
the rollout of our younger driver telematic We are the UK’s largest provider of driver delivered directly to their home. AA members
insurance proposition. offender retraining courses. will also have the peace of mind that if their
circumstances change unexpectedly then they
Claims and accident management will have the option to hand the vehicle back
If customers have been involved in an accident, early without penalty.
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 process.
Our investment case

Trusted brand Sustainable and cash-generative Best-in-class service
The AA is one of the most widely recognised Our purpose is to make Britain’s drivers’ lives We are the UK’s premium roadside assistance
and trusted brands in the UK, building on more simpler and smarter. We generate value service, delivering best-in-class customer
than 116 years of service and innovation. through our high recurring revenue and services 24 hours a day, 365 days a year.
strong cash-generative business model. We have more patrols than our competitors,
Market leader with excellent training, equipment and
The AA is the largest roadside assistance Read more in Group performance P4
technology providing an unparalleled level
provider with c.40% share of the UK consumer of service.
market and c.50% share of the business-to-
business (B2B) market. We have a growing We are at the forefront of conversations around
Insurance business and are well placed to
40m UK drivers the electrification of the UK car parc and are
capture market share through our proprietary Our addressable market. gearing our business towards this positive
data, strength of brand and scale. change (see P7 for further details).
Read more in Group performance P4
Read more in Group performance P4 Read more in Our performance P16
B2B partner of choice

Our operational scale, world class customer Significant barriers to entry
service delivery and breadth of innovative Our scale, brand awareness, proprietary
customer solutions position us firmly as market deployment system, innovation and high levels
leader and the partner of choice for B2B. of customer service pose significant barriers
to entry for new competitors.
Read more in the FY21 review P9
STRATEGIC REPORT
Group performance
Service, innovation and data are at the heart of our strategy to unlock the potential
for the AA. Underpinned by operational and service excellence and an engaged high
performance culture, our strategy will deliver benefits for our members and customers,
while creating sustainable long term value for our stakeholders.
Our Strategy
OPERATIONAL
& SERVICE
EXCELLENCE
1. Growth through 2. A
ccelerated growth
ROADSIDE
SERVICE,
INNOVATION INSURANCE innovation in Roadside in Insurance
Innovate AND DATA Invest to
and grow AT THE HEART accelerate growth
OF THE AA
HIGH 3. O
perational and 4. H
igh performance
PERFORMANCE
CULTURE service excellence culture
Our business model Our outcome and impact A Charitable Trust for Road Safety and the
A
Environment continues to work towards the
Our business relies on critical resources which For our customers preservation and protection of human life and
we manage based on the strategic priorities health on our roads; this year, the Charitable
Delivering outstanding levels of service
of the Group. We generate value through our Trust supported a range of programmes
high recurring revenue and cash generative Awarded top of the table as a ‘Which? including conducting research to be used
Roadside and Insurance businesses. We aim Recommended Provider’ for our third-party to raise awareness of the hazards of driving
to proactively manage the material risks to our breakdown cover for the third year running on rural roads for Britain’s young drivers
business, which helps us achieve our priorities and we were also the breakdown service
uccessful smart motorway campaign
S
and protect our reputation. provider for the top six manufacturer brands
has led to positive policy change and will
for the second year running
Read more in FY21 review on P9 to P13 help save lives
K Business Awards for the Most Customer
U
HS support during COVID-19 – helped
N
Centric Organisation
over 8,000 NHS workers and kept over
Our resources Feefo Platinum Trusted Service award 500 ambulances on the road throughout
People for our AA Driving School and BSM’s the first lockdown
instructor training division in 2021
Brand ree signage offered to around 5,000
F
old award for best digital customer
G temporary COVID-19 community vaccination
Intellectual property and data experience at the Insurance Times centres during the latest lockdown
Technology Awards 2020
For the legislators and regulators
Financial resources 1 in insurance brand consideration for
# ctive members of governmental and
A
motor insurance by Ipsos regulatory forums, including the Government’s
Business areas Motorists’ Forum, and an adviser to the Climate
eefo Platinum Trusted Service award for
F
oadside
R motor and home insurance Assembly UK
Insurance
I ncreasing products and services to meet ctively involved in the FCA’s general insurance
A
the broad range of driver needs to enhance pricing practices market study, responding to
customer experience and promote loyalty information requests and attending meetings
to the brand with the FCA to help it understand the potential
impact of its proposed remedies
ngoing collaborative relationship with the
O
FCA to promote good customer outcomes Total taxes paid: £15m
For our people For industry
ommitment to gender diversity. Currently
C articipated in the SURVIVE Group for
P
female 32%, male 68% of total workforce roadside safety, the Society of Motor
Manufacturers and Traders (SMMT)
High employee engagement score of 71
connected and autonomous vehicle working
xpanded our network of Mental Health First
E group. This year we also supported various
Aiders to 108 and supported them with training initiatives with the Office for Zero Emission
Vehicles to help give a better understanding of
aunched a new mental health e-learning
L
consumer concerns about electric vehicles
module for all people managers and
introduced employee self-referral for Continuing membership of ABI and BIBA
emotional wellbeing support
For our investors
For our environment, communities ecommended cash offer approved by
R
and society shareholders on 14 January 2021 (the Acquisition)
otal greenhouse gas emissions 33,652
T and completed on 9 March 2021
(down 17% from last year) he Acquisition reduces leverage significantly
T
witched to purchasing 100% renewable
S and positions the AA for sustainable long-term
electricity in our offices and other buildings growth
© 2020 Friend Studio Ltd File name: GroupXPerformance_v125 Modification Date: 13 April 2021 9:53 pm
Strategic Report
Roadside
What we do and how we compete

Personal membership Business-to-business Other roadside services
We provide breakdown cover for our consumer For our c.9m B2B customers, breakdown cover Our other roadside services consist of several
members. Vehicle-based policies cover a is available through the following channels: developing businesses which support a range
specific vehicle and personal memberships OEMs as part of the warranty for new cars; of driver needs. Among these, the largest are
cover one or more individuals, including banks for premium added value account our Driving Schools and DriveTech businesses.
families, regardless of the vehicle. We offer a holders (AVAs); fleets including lease companies, The Driving Schools business offers franchises
range of cover types and add-ons to ensure car hire and commercial fleets; and insurance to qualified driving instructors under the AA
Governance
there is the right option for every customer. companies who offer breakdown cover as an Driving School and BSM brands. The DriveTech
add-on for motor insurance customers. In all business is a leading provider of fleet risk
Competitive landscape cases, the service is provided by the AA and and safety management and driver training.
Following a period of stability, the roadside the majority of contracts are pay-for-use. As part of the acquisition of Prestige in 2019,
recovery market contracted in 2020 due to the our SMR platform will be a key driver of growth
impact of COVID-19. According to Mintel, the Competitive landscape for our business, enabling our members and
overall roadside recovery market is expected With new vehicle sales significantly down from wider driver population to benefit from our
to contract in value from £1.77bn in 2019 to last year, the B2B roadside assistance market established and growing AA inspected and
£1.64bn in 2020, representing a reduction of was down overall in FY21. The market, however, approved garage network.
7.3%, principally due to the reduction in car is expected to improve in 2021 as car sales
sales in the business-to-business (B2B) market. begin to recover. Competitive landscape
The overall market, however, is expected to With limited driving on Britain’s roads, the
The B2B roadside assistance market is
improve in 2021 as car sales begin to recover demand for driving lessons, driver education
significantly larger than the consumer market;
and the overall size of the market is expected programmes and SMR was significantly
however, it earns a lower average margin.
to reach £2.01bn in 2025. impacted by COVID-19 during FY21.
As these contracts are sophisticated in their
The consumer market is dominated by three specification, barriers to entry are high and The UK driving schools market is highly
major players, of which the AA is the largest. our leading position is based on our scale, competitive and fragmented. We have a leading
Our competitive advantage is based on our high service levels, strong partnerships, digital market position with our combined AA and
award-winning customer service, trusted brand capability and ability to deliver innovative, BSM brands.
and large distribution platform, as well as our value-adding solutions to our partners.
In our DriveTech business, the AA has strong
digital capability. New trends are emerging in
The AA is the largest B2B provider and has positions in both fleet and police markets.
the automotive sector including electrification
c.60% of the manufacturer segment, c.60% of In the fleet market, the AA is the market leader
of the UK car parc. The AA is investing in
the UK’s largest fleet and leasing companies, and has a range of smaller competitors who
technology and training and forming strategic
and around 50% of the banking AVA segment. compete primarily on price.
partnerships to ensure we are at the forefront
of Britain’s green automotive future. With more than 40,000 vehicle service and
repair locations of all types, the UK aftermarket
The AA is the market leader with c.40% of
is a huge, diverse and highly competitive
the consumer market.
industry. While our share of the market is small,
our strength of brand, loyal customer base and
growing network of inspected and approved
garages means we are well positioned to
continue to grow.
How we measure the value we create

Personal membership Business-to-business Other roadside services
Consumer Roadside Assistance premiums are B2B fees are either set per breakdown or per The AA and BSM driving schools’ revenue
principally paid through annual or monthly vehicle. The average tenure of the contracts are generated through franchise fees from
subscriptions. Subject to identifying customer varies, ranging from three to five years. instructors for use of branded cars and certain
needs, additional revenue is available from other services. The cars are funded by the AA
We are working on a broad range of innovative
cross-selling (selling other services) or up-selling under a lease arrangement. We also provide
solutions with our B2B partners, including an
(selling higher value products and services) training for driving instructors.
extended range of managed roadside services
following a breakdown.
and solutions, SMR, and continued rollout of In relation to the DriveTech business, our driver
Performance indicators our app, which, combined with our technical training services are delivered under long-term
Paid personal members
know-how, will enable our partners to improve service contracts.
their offering to end customers while generating
3.168m
With regards to our SMR business, we realise
additional revenue for the AA.
a margin on parts and labour for SMR work
(2020: 3.215m) Performance indicators carried out through the garage network.
Business customers Performance indicators
8.7m
Average income per member (new basis)
SMR garage network
£163 (2020: 9.0m) 520

(2020: £165)
Number of breakdowns attended Driving training courses delivered
3.01m 411,958
(2020: 3.42m) (2020: 457,473)
STRATEGIC REPORT
Group performance continued
Insurance and Financial Services
What we do and how we compete

Broking Underwriting Financial Services
The AA’s insurance broking business serves The AA’s in-house underwriter launched motor In 2015, we signed a 10-year exclusive
both personal members and non-members policies in January 2016 followed by home partnership with the Bank of Ireland to provide
selling motor and home insurance. These policies in August 2016. As part of the AA savings and loans on a matched-book basis.
policies are underwritten by a panel of Group, we utilise our extensive proprietary On 31 March 2020, we extended our partnership
underwriters, including the AA’s in-house data as appropriate to hone our pricing. by a further three years to at least 2028. As part
underwriter, AA Underwriting Insurance This enables us to price more competitively of the agreement, our partnership now includes
Company Limited (AAUICL). which supports the broker’s ability to win AA branded car finance products to sit alongside
more business. We are now underwriting the successful savings and loan products.
Competitive landscape 57% of our motor broker policies and 46%
The market competes largely on the price of Our Financial Services business also includes
of our home broker policies.
premiums. This is particularly true of the 88% of AA Cars, our online used cars and vans listings
motor insurance sales which are through price Our underwriter has grown rapidly and is platform.
comparison websites (PCWs). While our brand profitable with a combined operating ratio
(COR) below (and therefore ahead of) our Competitive landscape
consideration is ranked high in motor insurance,
target of 95%. The market for financial services products was
price dominates, and we are delivering strong
significantly impacted by COVID-19 and was
rates of growth in our motor policy book as a Competitive landscape down 3% overall in 2020. The combination
result of our improved price competitiveness.
Underwriters compete primarily on price. of the AA’s brand and distribution platform
In home insurance, PCWs are less dominant, The CORs in this underwriting market are just and the Bank of Ireland’s expertise in service
in part because home specifications vary more, under 100% (thus earning single digit margins) delivery gives our partnership a competitive
and home insurance is less expensive than and the integrated model means that our advantage. We expect to grow our book
motor which reduces the rate of attrition. underwriter drives our higher broker volumes over the life of our agreement with the Bank
which generate better margins. of Ireland.
We currently have a growing share in the motor
and home insurance markets with plans to Our main competitors are Virgin Money, Tesco
accelerate growth through the successful and the high street banks.
execution of our strategy.
In respect of AA Cars, the market for online
vehicle sales was impacted with fewer dealers
able to operate; however, the restrictions have
led to higher online sales. The market is highly
competitive and is dominated by Autotrader.
How we measure the value we create

Broking Underwriting Financial Services
As an insurance broker, the AA acts as an The underwriter retains between 10% and 20% The AA and Bank of Ireland remain committed
intermediary between those seeking insurance of gross written premiums after coinsurance to process improvements and these, together
cover and the insurance underwriters. The AA and reinsurance. The in-house underwriter is with enhancements to analytics and marketing,
has the ability to earn commission on new required to maintain certain levels of solvency are expected to deliver improved profitability
business sales and renewing policies as well as capital; as at 31 January 2021, our solvency in the future.
income from add-ons and premium finance. capital was £36.1m.
In respect of AA Cars, income is generated
Performance indicators Performance indicators through its core business: dealer subscriptions
Total motor and home policies Motor policies underwritten
to a car listing web platform. However, a nominal
income is generated from regulated consumer
1,941,000 600,000 credit introductions to a credit broker that
operates a panel of lenders.
(2020: 1,713,000) (2020: 448,000)
Performance indicators
Average income per policy Home policies underwritten Financial Services products
£78 406,000 101,000

(2020: £84) (2020: 332,000) (2020: 90,000)
Embracing Britain’s green future
Strategic Report
The future of motoring in the UK is changing
New zero emission cars and vans by 2030 Some have questioned the new role of the AA in
We are likely to see more change in the next this brave new electrified world. EVs do have far When will drivers switch?*
ten years than we have seen in the last century. fewer moving parts, but all the evidence to date
shows that the main reasons for EV breakdowns Almost half of drivers (49%) in an AA
The Government’s Road to Zero Strategy which survey in October 2020 said they
was first published in 2018 set the ambition that are similar to those for combustion engine
cars. Our data suggests that one third of EV would consider buying an electric car
by 2050 almost every car and van will be zero when they next changed their car.
emission. The Government has since brought breakdowns are linked to punctures, wheels
and the 12-volt battery. This was a 2% increase compared to
forward this commitment and announced that February 2020.
the sale of new petrol and diesel cars and vans Others have stated that EVs are difficult to tow
Governance
will cease in 2030, with some new hybrids and will cause problems if they run out of charge Younger respondents were most likely to
being allowed to be sold until 2035. or that they are dangerous and difficult to fix. consider buying an electric car (18-24s:
58%; 25-34s: 60%; and 35-44s: 59%).
This means that most new cars and vans must We have addressed all these issues.
be zero emissions at the tailpipe within nine Londoners were the most likely region
years. Most of these will be electric vehicles On the towing question, our technical research (60%) to consider buying an electric car.
(EV), although there is still a case for further convinced some manufactures to reassess
their claims that their vehicles could not be Women were also slightly more likely to
uptake of hydrogen fuel cell vehicles, consider an electric car (51%) than men
particularly in the HGV and bus sectors. towed. For other vehicles, our technicians have
developed a state-of-the-art freewheeling hub (49%), as were wealthier respondents
Against this backdrop and further efficiencies which can be used by patrols to enable them (ABs: 57%).
being realised in the cost of manufacturing EV to tow EVs to a safe location for recharging Of those who would not consider buying
batteries, manufacturers are gearing up and without the need for a larger recovery truck. an electric vehicle, almost two thirds
consumer interest is growing in parallel – there (64%) said they are too expensive,
were only approximately 20 pure EV models We installed the first EV/hybrid training rig in the
UK at our Oldbury training centre and now have followed by concerns about battery
in 2018 and now there are some 130. It is
the largest capability of trained EV technicians range (62%) and not having enough
estimated that by 2025, there will be 400 EV charging points available (61%). Half
models available globally. compared to any other company in Europe
(all patrols trained to EV level 2). of members (50%) who would not
The electric car market is growing quickly, with consider an electric car worry about
more than 164,100 pure-electric cars on UK In the UK our B2B teams are supporting four the resell value.
roads at the end of September 2020 and over significant charging point operators with their
373,600 plug-in models, including plug-in back-end systems with tasks such as customer
* Yonder received 16,201 responses from AA
hybrids (PHEVs). Figures from the SMMT show call support. In addition, we are assisting members to its online poll between 13 and
that pure-electric models accounted for 6.7% Gridserve customers utilising the UK’s first EV 19 October 2020. Yonder is a member of the British
charging forecourt. We were also a founding Polling Council and abides by its rules. For more
of total new car registrations, while adding in details, please go to www.yonderconsulting.com.
PHEVs takes that figure up to 10.5%. partner of World EV Day and are regular
contributors to the influential EV Café forum.
Charging network
Our Deputy Chairman and President also drive
As the penetration of EV vehicles increases in EVs and our President has been test-driving
the UK car parc, the infrastructure required to and blogging about EVs for many years.
support its growth will also need to increase.
The UK network of EV charging points has The Energy Saving Trust in a recent audit
increased from a few hundred in 2011 to confirmed that there is still not a suitable Customer Review
more than 12,400 charging locations, 19,700 electric patrol van that meets our towing
charging devices and 34,400 connectors by and payload requirements, but we continue Perfect service! On time and
October 2020. The proportion of charger types to liaise with potential future suppliers as we couldn’t have done more to
has also changed dramatically during that time too look to embrace an electric future for our
with an increase in high power (rapid) units recovery vehicles. help, definitely went the extra
being installed across the UK. We are seeing The electrification of the UK car parc forms mile to get me and my van
more on-street chargers and the rollout of an integral part of our external Cleaner, Safer, back on the road fixing boilers
some high-tech charging forecourts such
as the Gridserve development near Braintree,
Smarter ESG strategy (please see P30-37 this weekend. Aden Welford
for further details).
Essex which opened in December 2020. from Whitby came to the
Conclusion rescue, brilliant service,
AA’s role In summary, while many obstacles lie ahead,
This changing automotive landscape is we are in a great position to promote and
wouldn’t hesitate to
business as usual for the AA. We’ve been on UK support drivers through the transition to zero recommend to anyone
drivers’ side since 1905 – advising, campaigning
and continuing to build our expertise to ensure
emission vehicles. Our business is also leading Thumbs up”
the way by supporting charging infrastructure
that we keep drivers on the road with confidence providers with their customer service. @nickdale1
and reassurance. Indeed, in the past the AA Twitter
opened the first petrol filling station in the UK
and placed the first directional signs.
The AA has been at the forefront of EV
conversations with the government,
manufacturers, charge-post companies and
the media for at least a decade. We continue
to poll AA members on their views of EVs and
potential barriers to take-up. Last year, almost
half (49%) told us that they would consider an
EV when they next change their car.
STRATEGIC REPORT
Group performance continued
Claims Frequency vs Driving Journeys Distance

1.5
1.2
0.9
0.6
0.3
0.0
Jan Feb March April May June July August Sept Oct Nov Dec Jan 8 Feb
2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021
Smart Distance per Day Index Smart Journeys per Day Index AAUICL Claim Frequency Index
Building scale in a competitive across the broker panel and through our people to avoid situations in the home from
insurance landscape in-house underwriter. Our in-house underwriter which a claim may arise.
is also delivering profitable growth and remains
Insurance has been part of the AA since 1967 Where we see the opportunity
focused on achieving a combined operating
and is core to the delivery of our simpler and The AA is embracing this technological change
ratio below our long-term target of 95%.
smarter strategy. Our focus is on the £18bn and capitalising on its leading brand position.
market for personal lines motor and home Distribution Our existing proprietary data on roadside
insurance. The targeted investments that we Overall quote volumes fell during the year as members gives us a distinct advantage compared
have made in developing our capital-light a result of COVID-19; however, there was no with other underwriters in respect of current
underwriter and increasing the pricing material shift in insurance distribution channels, members and ex-members. Our underwriter
capability of our broker, have enabled us with PCWs continuing to supply most new uses this information and we also share some of
to successfully return both the motor and business policies. it with our other panel members, which supports
home policy book to growth and deliver good the growth of our broker. Additional investments
outcomes for our customers. Our recently We have seen an increase in digital adoption, in insurer-hosted pricing, as well as in connected
launched in-house motor claims management with more customers interacting online and services technology, will give us real-time pricing
proposition, Accident Assist, is performing through email and webchat. We’ve also capabilities and additional data on the car and
strongly and means that we are now able to launched online renewals to give customers the driver, to enable us to apply technology and
operate across the value chain, providing more channel choice when interacting with price more competitively across both motor and
end-to-end services for our customers. us. Our plans build on our leading brand home insurance. Last year, we also launched
consideration, proprietary data and unique our younger driver proposition, which uses
Emerging trends distribution platform. With our strong cash data from our connected services technology.
Claims and premium inflation generation, we can continue to fund the
additional levels of investment and policy Looking ahead, we are building on our claims
Motor premiums remained steady in 2020 as and accident management proposition and
lower claims frequency resulting from COVID-19 acquisition costs required to grow the broker
and the underwriter. Our solvency capital for expect this to be a key differentiator for our
enabled insurers to contain the impact of claims Roadside and Insurance businesses.
inflation on premium increases. our in-house insurer will be predominantly
funded utilising internally generated cash,
Home premiums also remained stable, reflecting and from the profits of the underwriter.
FCA pricing practices review
the absence of severe weather events and a The FCA’s pricing practices consultation paper
slightly lower claims frequency as more people By improving our pricing agility through the was released on 22 September 2020, outlining
stayed at home during COVID-19. continued rollout of insurer hosted pricing proposed remedies to support effective
across our motor panel and introducing this competition and lead to good consumer
Our underwriter’s indexed claims frequency is to our home panel next year, we are well outcomes, with the final rules expected in the
shown above against data from AA telematics. positioned to accelerate growth in the motor second quarter of 2021. There are several
Although the data comes from different sources and home book. proposals, including requirements to ensure
within the AA, there is a strong correlation, renewal prices offered are no higher than the
indicating that in 2020 as drivers took fewer Technology-led disruption equivalent new business price, as well as
trips and travelled shorter distances, claims One of the biggest emerging areas of technology requiring firms to assess fair value of the
frequency reduced. The largest reductions in in the insurance sector is the use of web-connected products they sell. If implemented as intended,
travelling and frequencies were seen in early devices to measure and manage risk. In consumer the pricing remedies may have a material impact
April at the start of the first lockdown. insurance, the most obvious application is on the motor and home insurance market in the
telematics in vehicles which enables insurers to UK for both insurers and insurance intermediaries,
Where we see the opportunity
know if a driver is driving safely and, if appropriate, which could lead to a disrupted market.
We are trading profitably and growing ahead of to change premiums in real time. The device
many of our competitors. While margins have However, we are in a good position to be able to
also helps reduce fraud by enabling companies implement these requirements while continuing
been squeezed in recent months, especially to assess if accident damage is consistent with
in home insurance, we are poised to continue to meet growth and profitability objectives.
how the vehicle was driven. In the home insurance
to grow, given the investments we have made market, the uptake of smart home devices will The AA welcomes the FCA’s proposals and
and continue to make to improve our price give insurers new opportunities to develop their agrees with the importance of delivering good
competitiveness and deliver profitable growth relationships with their customers, by helping outcomes to customers.
FY21 review
Making Britain’s drivers’ lives simpler and smarter
Strategic Report
In line with expectations, we delivered a robust set of results in FY21. This is despite
the significant challenges that have arisen due to the COVID-19 pandemic and is
testament to the essential nature of our services, resilience of our business model and
the commitment of our people to go above and beyond to support our customers and
members and keep the country moving.
Our focus from the onset of the pandemic to innovate and deliver a range of fantastic In line with our expectations, we generated
Governance
was to protect the health and wellbeing of products and services through intuitive £40m of free cash flow (pre-dividends, bond
our colleagues, members, customers and digital channels. buybacks and refinancing) compared with
suppliers, by taking the necessary steps to £83m in the prior year. The figure this year
Finally, the investments we have made in our
ensure that our operations could run as was lower for several reasons, including the
Insurance business continue to deliver strong
smoothly and as safely as possible. While this lower Trading EBITDA as outlined above and a
rates of policy growth and, with our Accident
inevitably led to some disruption, in particular working capital and provisions outflow of £6m
Assist proposition now fully established, we are
for our colleagues, who had to adjust quickly compared to an inflow of £17m last year. The
well positioned to deliver profitable growth.
to new ways of working, it is an incredible free cash flow figure was also impacted this
achievement that we were able to rise to the Whilst the decision to take the business private year by higher tax payments reflecting the
numerous challenges and deliver the high levels was difficult, it was clear that, without the timing of corporation tax payments mandated
of service that our customers and members support of significant additional equity, the by HMRC, as well as higher interest paid on
expect from us. Nowhere was this more clearly process of refinancing our debt would have borrowing of £137m compared to £129m last
evidenced than the numerous awards for remained challenging. An early proof point on year, related to the refinancings in the year (see
customer service excellence that we achieved the benefits of the decision to take the business Financial review on P20-24 for further details).
this year across our Roadside and Insurance private was evidenced in the pricing of our
operations (see P17–18). new Class B3 Secured Notes on 29 January Proud to keep Britain moving
2021, which were priced at 6.5%, below our The AA is a much-loved and trusted British
The completion of the Acquisition by Basing brand and in a time of national crisis, we
expectations from last year and which was
Bidco Limited (Bidco), a newly incorporated demonstrated our resolve to go above and
significantly oversubscribed.
company indirectly wholly owned by a beyond through several initiatives to keep
consortium of (i) funds advised by TowerBrook Following the completion of the Acquisition on the country moving and contribute to the
Capital Partners (U.K.) LLP or its affiliates; and 9 March 2021, we successfully refinanced our national cause.
(ii) private equity funds managed by Warburg Class B2 Secured Notes using £261m of new
Pincus LLC or its affiliates (together, the equity from the Consortium and £280m raised Within 10 days of the first lockdown in March,
Consortium) on 9 March 2021 was a key from the issuance of the Class B3 Secured we provided free breakdown assistance to
milestone in our history. It has enabled us to Notes. This led to an overall reduction in all NHS workers travelling to and from work.
significantly reduce leverage and the risk of leverage from 7.6x as at 31 January 2021 to Over the three month campaign, we helped
future refinancing, thereby allowing all our 6.9x following the refinancing. more than 8,000 NHS workers at the roadside
stakeholders to benefit from the positive and reached more than 30m people with our
With ongoing operational delivery and support offer of support, receiving overwhelmingly
operational momentum that the business is from our new investors, we will continue
generating, including ongoing debt reduction. positive feedback from the NHS, the public
to target further reduction in our debt. and politicians alike.
As we enter FY22, the rollout of the UK
COVID-19 vaccination programme promises Robust results in line with During the first lockdown, we provided
to return our lives to some level of normality; expectations several services to the ambulance trusts
however, it would be premature to suggest that In line with our expectations, we delivered a including breakdown cover, new ambulance
the experiences of the last year won’t shape robust performance in FY21 with revenue falling commissioning support, logistical support,
our personal and business lives for many years slightly by 3% to £967m (2020: £993m) and management infill support and on-site
to come. We look forward to another year of Trading EBITDA down 2% to £341m (2020: vehicle servicing and maintenance services.
outstanding customer service delivery and to £348m). The reduction largely reflects the Most notably, we directly supported the London
delight our customers and members with our impact of COVID-19 on our developing roadside Ambulance Service, with more than 200 of
increasingly broad range of products and businesses, such as Driving Schools and our people helping to keep 500 ambulances
services as we maintain our pursuit of making DriveTech partially offset by the savings on the road throughout the lockdown period
Britain’s drivers’ lives simpler and smarter. generated from lower patrol related costs, and beyond.
including third-party garaging. Group Trading We were also able to provide a range of
Steering a course for the future EBITDA margins remained steady at 35% additional services and support to our B2B
As we look back over the last three years, it is (2020: 35%). partners to ensure their customers were able to
clear that the AA today is a much more engaged,
Operating profit fell by £37m to £218m, a remain operational and on the road. Most motor
resilient and dynamic business.
year-on-year reduction of 15%. This was manufacturers extended their warranty periods
Our Roadside operations are significantly more principally due to the decrease in Trading through the lockdown giving customers peace
resilient and able to deliver consistently high EBITDA, an increase in adjusting operating of mind. However, with numerous dealerships
levels of customer service. We have stabilised items of £17m (which included £4m emergency and garages closed, we were able to step in
the decline in our paid membership base, which IT-related costs due to COVID-19, offset by £7m and work closely with our partners to provide
held up remarkably well despite the impact of furlough support from the Government (see customers with the additional warranty repair
COVID-19 and is a testament to the value of our Note 5) and a £4m increase in amortisation and support allowing their customers to stay
premium proposition. In B2B, we are building on depreciation charges reflecting the historic mobile. We also supported Toyota in their
our strong customer base and continue to form and ongoing investments in IT. initiative to offer free breakdown cover to Toyota
new strategic partnerships such as Nationwide, and Lexus customers during the lockdown.
which will enable us to generate additional Profit after tax fell to £40m (2020: £85m) and Additionally, we extended free At Home cover
future value. basic earnings per share decreased by 7.3p, to Lloyds Banking Group customers for the
from 13.8p to 6.5p. month of June as people started to get back
We have invested significant time and
Our business maintains good levels of liquidity on the road.
resources over the last few years in stabilising
our core IT infrastructure so to enable us to and continues to deliver positive free cash flow.
© 2020 Friend Studio Ltd File name: ChiefXExecutiveXReview_v109 Modification Date: 13 April 2021 9:54 pm
STRATEGIC REPORT
FY21 review continued

Strategic objectives
In our Driving Schools business, we waived the mood of the nation and a universal desire to Putting service, innovation and data
franchise fees for a period of 14 weeks during return to the freedom of driving. The campaign at the heart of the AA
the initial lockdown to support our Driving has received an exceptionally positive response
We made good progress with the delivery of our
Instructors. During the second half of the and has delivered a strong return on investment,
strategy in FY21 which prioritises investment
year, we continued to support our instructors contributing to an increase in new member
across our four strategic pillars. Our strategy
through a combination of competitive pricing, volumes in the second half.
aims to deliver significant benefits for our
discounts and payment holidays.
The resurgence of the pandemic during the customers and members, while creating
In our Insurance business, we implemented second half of the year and the decision by long-term sustainable value for our
several actions to support our customers, the Government to implement further local stakeholders by:
including prioritisation of key workers in the and national lockdown measures, including a
I ncreasing our addressable market:
event of an accident. We provided additional third national lockdown in January, presented
As we expand our product and service
support for customers in financial distress, additional challenges. However, our learnings
offering, we see our addressable market
including waiver of fees and extension of policy from the first lockdown and the resilient nature
grow to cover all of Britain’s drivers
terms and conditions. of our business model meant that the impact of
the additional restrictions during the second xpanding the awareness of our products:
E
We remain committed to serving the needs
half were less profound on our core operations Our marketing strategy will increasingly
of our customers during these challenging
than during the first half. That said, the outlook span the breadth of our product and service
times. With an already established and highly
remains far from certain. offering, to target a broader set of driver needs
refined homeworking capability in place for
our call centre workers, we were able to scale In January 2021, our AA Signs business took eeping customers for longer: Through our
K
this model at pace to transition most of our swift action in offering immediate support for user-friendly digital interface, we will be able
colleagues to homeworking within two weeks the nation’s COVID-19 vaccination programme to engage more regularly and effectively
of the first lockdown and were able to maintain by providing free directional road and location with our customers and members while
high levels of customer service. We also signs to help drivers, riders and pedestrians find offering a better overall experience
introduced new digital contact capabilities their way to local vaccination centres. In total,
educing our cost of customer acquisition:
R
across our Roadside and Insurance business we offered free signage to more than 5,000
As our customers and members buy more
to ensure we were always there for customers, temporary COVID-19 community vaccination
products from us, our acquisition costs will go
and we adjusted our policies and processes to centres such as sports halls, religious venues
down thereby helping us to deliver significant
support customers facing financial hardship. and community buildings.
operational and cost efficiencies
As the national lockdown restrictions began To minimise the impact of COVID-19 on trading
ptimising the cost to service our customers:
O
to lift at the end of June, and the British public in FY21, we executed several operational and
End-to-end digital journeys and self-service
began thinking about local journeys and financial changes to our business that resulted
options will reduce costs for us and deliver
staycations, we launched a new marketing in the deferral and reduction of a range of
better experiences for our customers
campaign called ‘That Feeling’, tapping into operating costs across the Group.
and members
Innovate and grow Roadside

Our strategy builds on the strong foundation of our Roadside business, in particular, our strong service ethos and commitment to delivering outstanding
customer service for our customers and members 24/7, 365 days a year. Recognising the changes facing the automotive sector, including the
Government’s proposal to bring forward the electrification of the UK car parc, we have adopted a multi-faceted approach to innovating and growing
our roadside business which will help to build on our market leading position and establish a clear point of differentiation from our competitors.
Strategic objectives: Transform our breakdown service to be fully connected What to look forward to: Our forward connected
car strategy will be multi-faceted and will involve
What we achieved in FY21: The rollout of Smart Breakdown, our premium connected car
direct outreach to customers through our
offering, was affected this year by COVID-19. Despite this, over 11,000 new and existing
Smart Breakdown proposition, as well as through
customers have Smart Breakdown.
strategic partnerships with OEMs and major
We have utilised the data from our connected services technology to further refine our young Fleets which either leverages our technology
driver proposition which we successfully launched in FY21. and existing onward mobility solution or utilises
We also started providing some basic connected services to our Original Equipment an OEM’s or Fleet’s existing capabilities.
Manufacturer (OEM) customers, such as Diesel Particulate Filter (DPF) monitoring. We will also continue the phased rollout
of our younger driver telematic insurance
proposition utilising our existing connected
services technology.
Strategic objectives: Ongoing innovation to differentiate our products and services What to look forward to: We will continue to
invest in innovating and developing our pipeline
What we achieved in FY21: We made good progress with the rollout of our consumer
of differentiated products and services to
SMR proposition (Smart Care) this year; however, our plans to scale up were impacted by
meet a broader range of customer needs while
COVID-19. Despite this, we saw steady uptake throughout the year and conversion rates have
maintaining a firm focus on cost management
continued to improve. Following the end of the first lockdown in August, we reinitiated our
and return on investment.
web-based marketing offers and member benefit offers for Smart Care which are available
on the AA app and on our website.
In relation to our B2B proposition for SMR, we supported our partners this year in areas
where the preferred SMR provider was unavailable and as a result successfully signed
several new B2B SMR contracts. We can now redirect SMR work for our Driving Schools
business through our platform and into our network. We are also moving ahead with our
plans to expand our network of AA inspected and approved garages.
We also launched and scaled our Recalls proposition which supports OEMs in maximising
their reach of recall programmes. This is a fully managed service, from customer contact and
booking through to replacement of faulty parts at the customer’s home or place of work.
Despite being impacted by COVID-19, we replaced over 10,000 faulty airbags during the year.
What we achieved in FY21: continued
Strategic Report
We are also innovating in other areas of our operations such as the high-speed freewheeling
hub. This is an ingenious solution to the issue of dealing with the towing of vehicles that
normally cannot be towed on two wheels, including vehicles with seized brakes, failed wheel
bearings, four-wheel drives or Electric Vehicles (EVs). The invention is now being used by
more than 900 patrols and will be rolled out to all patrols in the coming months. It means
shorter waiting times and reduced CO2 emissions for breakdown recoveries, as AA vans
can now be used to tow more cars, freeing up large recovery trucks for complex breakdowns
involving heavier or more damaged vehicles.
The freewheeling hub works in conjunction with the AA’s Multi-Fit wheel and new heavy-duty
Multi-Fit wheel for larger vehicles, enabling patrols to fit temporary spare wheels to
almost any vehicle. It has its own heavy-duty high-speed bearing making the wheel turn
independently from the car.
Governance
Strategic objectives: Growing our base with key segments What to look forward to: Our future marketing
strategy will be centered on making Britain’s
What we achieved in FY21: Our marketing campaign ‘That Feeling’, which we launched in
drivers’ lives simpler and smarter and will
July 2020, has been positively received both internally and externally. The campaign was
increasingly span the breadth of our offering.
our most effective to date and contributed to improvements at every stage of the customer
journey from consideration to purchase. The campaign is a fantastic stepping stone to allow Beyond marketing we are continuing to
us to act more confidently in our communications while broadening our approach to take expand our base of new segments through our
the business forwards with multiple product offerings and an ever-changing UK audience. non-member insurance channel, younger driver
insurance proposition and through strategic
B2B partnerships like Admiral and Nationwide.
Strategic objectives: Digital adoption and innovation to drive broader member engagement What to look forward to: Looking ahead,
we are planning to launch significant
What we achieved in FY21: We made good progress with developing our digital channels
enhancements to our customer experience
this year which continue to perform in line with expectations. A key highlight of the year
through the development of our digital journeys
was the improvement to self-serve journeys including online renewal capability for our
including the app, which will enable additional
roadside and insurance customers which has significantly enhanced our customer’s digital
self service and cross sell capabilities, therefore
experience. Of note, the improvements to our insurance digital journeys have received
increasing revenue per customer and reducing
external recognition and we were pleased to have won a gold award for best digital customer
our cost base.
experience at the Insurance Times Awards 2020.
We will also continue to extend and roll out
Our digital breakdown reporting channels continue to perform well. This capability has been
digital journeys to our B2B customers.
expanded to our 2.2m Lloyds Bank customers, who are now able to report a breakdown via
app or web. They are also able to log in via these channels to view the details of their cover.
We will continue to roll out this functionality to other customer groups through FY22, in order
to further reduce our cost to serve and improve our market leading customer service.
Approximately 589k users accessed our app on a monthly basis during the year. This is down
from 611k last year, principally due to fewer member benefits, such as cinema tickets and
discounts on meals at restaurants, that we were able to offer our customers as a result
of COVID-19 and the impact of the lockdown measures.
Strategic objectives: Membership systems investment to drive retention What to look forward to: The investments
we have made and will continue to make in
What we achieved in FY21: We are making progress with building our fit for the future tech
marketing and pricing capabilities, as well as in
estate, including continuing to build out CATHIE, our membership system. We plan to
our online offerings including our app, will give
continue with the migration of existing policies, with an implementation programme that
us important capabilities to improve retention
minimises the risk of this transition to our members and business.
performance, grow our membership base, as
well as drive cost reduction.
Accelerate growth in Insurance

Strategic objective: Driving more competitive premiums What to look forward to: Looking ahead, the
coming year will bring significant change to the
What we achieved in FY21: The uniqueness of the AA’s proprietary data has continued to
insurance market with the implementation of
give us a competitive advantage in what has been a unique year for the Insurance industry.
the FCA’s pricing practices remedies. At the AA,
Whilst rates and market demand have reduced, the AA has been able to deliver significant
we believe we are well placed to navigate this
growth through its broking and in-house underwriter businesses.
through various actions:
We delivered strong rates of growth on both the motor and home portfolios this year,
1) Pricing capability – Our investment in pricing
reflecting the continued strong growth of the in-house underwriter, the strength of the
technology and Insurer Hosted Pricing (IHP)
broker panel and the investments made in improving our pricing capability.
will support our competitive positioning
2) Policy administration replacement
programme – This is the enabler to support
agile product development and full self-serve
capability
3) Cost to serve – We have a strong programme
to reduce the cost to serve through
digitisation and call centre efficiency
4) D
ata enrichment – Additional sharing of
member data with the panel to further
improve net rate differentiation
STRATEGIC REPORT
FY21 review continued

Strategic objectives
Accelerate growth in Insurance continued

Strategic objective: Broaden footprint to include non-members and younger customers What to look forward to: Looking ahead,
we expect pricing practices to result in a
What we achieved in FY21: Following the launch of our non-members insurance scheme
distribution shift in the market between new
two years ago, we have successfully onboarded 272k non-members, representing 45%
business and renewing business. The AA
of the total underwritten motor policy book and 26% of the total motor policy book.
is well placed to continue to deliver strong
The non-member claim frequency rate is tracking in line with our member and ex-member
growth as we continue to broaden our
base and gives us the confidence that the non-member base will continue to drive profitable
quotability to reach more customer and
policy growth. The strong growth of the non-member motor book and improvements in our
member cohorts with a competitive quote
customer journeys are also helping to deliver consistent and healthy conversions into our
through 1) footprint expansion and 2)
Roadside business, with 34% of new insurance customers taking roadside membership
seeking to add new members to the panel.
at the point of sale.
Notably, given the competitive advantage of
In addition to the non-member growth channel, we were pleased to have launched our young
the AA member base, we will look to actively
driver proposition in FY21, which will help to significantly broaden our demographic footprint
increase our cross-sell penetration levels
and support volume growth of the motor book.
within the member base.
Strategic objective: Insurance and Financial Services innovation What to look forward to: We will continue to
develop our young driver and Accident Assist
What we achieved in FY21: We launched our young driver insurance scheme this year
propositions, which we believe can be a
utilising our connected services technology. This is a key part of our growth strategy as
significant value driver for our Insurance
we look to expand our footprint into key customer cohorts.
business and help to promote cross-sell
Accident Assist, our recently launched in-house claims management proposition, is opportunities. In addition, we will develop our
performing strongly. Following the implementation of a new claims handling platform from app to support cross-sell rates, and continue
ICE InsureTech and the consolidation of our claims operations into Royal Tunbridge Wells this to optimise insurance self service capability
year, we continue to see positive momentum building. We successfully completed the rollout to improve customer experience and reduce
of this new capability across our motor insurance panel members ahead of schedule and in cost to serve.
December we were pleased to extend this service to our Roadside members, which is a key
Despite the challenging market backdrop
differentiator for our Roadside business and represents a significant growth opportunity in
presented by COVID-19, we remain optimistic
our ambitious plan to become the natural ‘first call’ after an accident.
about the growth prospects for our Financial
In March 2020, we extended our Financial Services Distribution Agreement with the Bank Services business and increasing breadth of
of Ireland UK by three years to at least 2028. As part of the agreement, our partnership now value added propositions such as leasing that
includes AA branded car finance products to sit alongside savings and loans products. we can offer to members via our AA Cars
In January 2021, in partnership with LeasePlan, we launched our AA Smart Lease proposal to proposition.
our members. AA Smart Lease, offers AA members a flexible and hassle-free alternative to
traditional vehicle ownership. The combination of our brand with LeasePlan’s established
presence and distribution platform gives us the confidence that we can meaningfully grow
our presence in the lease market.
Deliver operational and service excellence

Strategic objective: Deliver operational and service excellence What to look forward to: Encouraged by
our resilient performance this year, we have
What we achieved in FY21: The AA continues to deliver best-in-class customer service.
identified several areas of digital innovation
In June 2020, we were awarded top of the table as a ‘Which? Recommended Provider’
and cost management that will enable us to
for our third-party breakdown cover for the third year running. We were also the breakdown
continue delivering operational and service
service provider for the top six manufacturer brands for the second year running.
excellence while ensuring we are making the
We also won the UK Business Awards for the Most Customer Centric Organisation, heading necessary investments to support our
off competition from a number of leading industry players across a range of sectors. sustainability goals.
In February 2021, The AA Driving School and BSM’s instructor training division received a
Feefo Platinum Trusted Service award for 2021. Feefo’s Trusted Service awards recognise
businesses who deliver outstanding customer service, as rated by the customers themselves.
In respect of our Insurance business, the improvements to our digital journeys this year have
also received external recognition and we were pleased to have won a gold award for best
digital customer experience at the Insurance Times Awards 2020. We were ranked #1 in
insurance brand consideration for motor insurance by Ipsos in 2020. In January 2021, our
home and motor insurance won the Feefo Platinum Trusted Service award in recognition of
the exceptional experiences we provide to our customers.
Nurture a high performance culture
Strategic Report
Strategic objective: Nurture a high performance culture What to look forward to: How we behave is just
as important as what we do and our culture is
What we achieved in FY21: Our priority this year for our people was to ensure their safety and
shaped by these behaviours. We want all of our
wellbeing and to be able to provide them with the support they needed in order to be able
people to be really clear on what is expected of
to carry out their responsibilities safely and securely. In doing so, our levels of engagement
them. To support this, we’re launching a new
improved during the year and we were able to maintain the high levels of customer service
performance management framework across
that our members and customers expect of us.
our business. The new framework will ensure
We measured our engagement levels this year through two ways of working surveys, which performance and behaviour is taken into
we conducted in May and December. Overall employee engagement in December was 71%, account, using the AA Code of Conduct as
which improved by 1 point from May’s survey. The biggest score increase was around the the benchmark. Employees and leaders will
theme of safety at work and the single question with the biggest score increase related to review performance, behaviour and wellbeing
having the appropriate PPE for the job. regularly throughout the year and end of year
ratings will assess the ‘what’ and the ‘how’ –
Governance
The wellbeing of our people has been incredibly important during the pandemic; as part of
our wellbeing strategy, we’ve expanded our network of Mental Health First Aiders to 108 and driving high performance and supporting a
supported them with training. We’ve launched a new mental health e-learning module for all healthy culture.
people managers and introduced employee self-referral for emotional wellbeing support. For our leaders, we’re introducing ‘Leadership
In light of the pandemic and the Acquisition, the expectations on our people have been high. Drivers’ – these set clear expectations for
Our Senior Leadership team have significantly stepped up to support our people in these leaders across all levels of the business and
challenging times as well as delivering strong business results and ultimately achieving the support a high performance culture by focusing
right outcome for the business. on: continuous improvement; developing our
people; demanding high performance; acting
As a business, we are committed to make Britain’s drivers’ lives simpler and smarter, and this with integrity, and being accountable.
starts with our employees. A diverse and inclusive workforce that is representative of our
customers is the key to delivering the fantastic customer service we pride ourselves on. We’re embedding these with specific skills
We believe in doing the right thing, and while we don’t have all the answers, we are committed training for leaders to ensure they are equipped
to working with our employee networks, allies and all employees to continue to make the to bring the leadership drivers to life and embed
AA a great place to work. a high performance culture.
We recently refreshed our diversity and inclusion strategy, targeting six key communities to We’re continuing to support our people with
fully embrace the diversity of our employees and enable the AA to be an even more inclusive their wellbeing by partnering with a new
place to work. These communities include those with visible and invisible disabilities, gender occupational health provider and increasing
balance, age, carers, those from our BAME communities and vocational backgrounds, support for people managers. We will be
and our LGBT employees. continuing to provide mental health support
for our employees who are placed on furlough
As part of our commitment to drive better gender balance across our business and specifically or working remotely and will be offering free
within our senior leadership team. This year, we have developed a targeted talent development flu jabs to all employees.
programme that supports the development of high potential women in our management
population and their career progression into senior management roles within our business. As a business, we are committed to listening to
the views of our colleagues and learning from
their experiences throughout the pandemic.
We are considering our approach to flexible
working which meets both the needs of our
people as well as the business and will be
communicating more on this later in FY22.
Creating shared prosperity Project (CDP) environmental assessment,

We are making considerable progress in our an improvement from ‘B-’ in the prior year.
quest to becoming a more sustainable business Total GHG emissions fell by 17% and while this
In a time of national crisis, and one that is able to deliver shared prosperity was largely attributable to reduced traffic
volumes due to the lockdown measures, we are
for all our stakeholder groups.
I am very proud that our To help our Environmental, Social and
committed to reducing our carbon footprint and
to helping the nation meet its zero emissions
colleagues exemplified the Governance (ESG) activities be better target. Furthermore, in order to improve our
understood and co-ordinated, we have a twin levels of transparency, we are putting in place
true culture of the AA by framework covering both internal and external a structured framework to ensure future
matters. Internally, the issues related to our
going above and beyond people, health, safety and security always
compliance with the recommendations by
the Task Force Climate-related Financial
for our members and by come first, alongside our efforts to manage our
environmental impact, prepare for a changing
Disclosures (TCFD).
supporting thousands customer car parc and govern our business The road ahead
ethically and responsibly. Externally, we This has been a year unlike any other.
of NHS employees and communicate our safety and sustainability The devastation caused by COVID-19 to human
campaigns via our cleaner, safer, smarter life, our society and to the world economy
several ambulance services strategy. This is promoted by the AA Trust and has been far beyond what anyone could have
in our public affairs campaigning and work
across the country.” in the communities.
imagined and has been a profoundly humbling
experience. Our thoughts remain with all those
Rick Haythornthwaite There were a number of notable achievements affected and we hope that with the rollout of
Chairman this year across our ESG activities, including the COVID-19 vaccination well underway, we
the various initiatives outlined above as part of can look forward to a bright year and future
our COVID-19 response to support the nation. ahead, as we maintain our course of making
We were also proud to have achieved a sector Britain’s drivers’ lives simpler and smarter.
leading ‘B’ rating in the Carbon Disclosure
STRATEGIC REPORT
Key performance indicators
Robust strategic performance in changing markets

Our key performance indicators (KPIs) measure progress against our strategy. Further details can be found in the Our performance and Financial review sections.
Adjustments this year: To better reflect the average income earned from the paid membership base, we changed the basis of the calculation of the
average income per member this year so that it would now be expressed as the average income earned from the paid membership base over the last
12 months as a proportion of the average paid personal membership holdings rather than as a proportion of the closing paid membership holdings on
which it was previously determined. The comparatives have been restated to reflect the new definition.
Roadside
Innovate and grow Roadside
KPI Definition Relevance for the AA
Average income Average income This measures the average income we generate
2021 163
per member per paid personal from our personal member base as a proportion of
(£) member excluding the average paid personal membership holdings.
free memberships 2020 165 Longer term, as we look to move beyond breakdown
and capture an increasingly larger share of the car
2019 160 ownership value chain, we expect the average
0 25 50 75 100 125 150 175 200 income to trend upwards.
Average income per Average income per This measures the average income we generate
2021 23
business customer business customer from our business customers. Alongside growing
(£) the business customer base, we are targeting a
2020 22 growth in the average income per business customer
through the launch of new services such as vehicle
2019 21 recalls and onward mobility solution through our
0 5 10 15 20 25 Agile platform.
Paid personal Number of personal This demonstrates our ability to build on our
2021 3,168
members members excluding market-leading position in the consumer market.
(thousands) free memberships Our strategy to innovate and differentiate our core
at the period end 2020 3,215 Roadside proposition will enable us to grow our
paid personal membership base in the long term.
2019 3,207
0 500 1,000 1,500 2,000 2,500 3,000 3,500
Business customers Number of business We are market leaders in the business-to-business

2021 8,702
(thousands) customers at the (B2B) market, with c.9m business customers. A key
period end tenet of our strategy in B2B is defending our core
2020 9,049 base as well as growing that base through new
contract wins and generating new sources of
2019 9,793 income that improve the average income per
0 2,000 4,000 6,000 8,000 10,000 business customer.
Insurance
Accelerate growth in Insurance
Average income Average income per Broker only Broker and additional The first measure shows the average income
per policy insurance policy for businesses generated by our insurance broking business.
(£) motor and home As we continue to grow and increase our investment
2021 59 2021 78 in new business, we expect the second measure of
average income per policy, including revenue from
2020 68 2020 84 our underwriter and Accident Assist business, to
increase overall.
2019 69 2019 80
0 100 0 100
Insurance policies Total motor and home Growing our Insurance business through the total
2021 1,941
(thousands) policies sold in the number of policies we broker is a key component
last 12 months by our of our strategy. We will deliver this through new
insurance broker 2020 1,713 insurance innovation, driving more competitive
premiums and broadening our footprint to include
2019 1,561 non-members and younger customers.
0 500 1,000 1,500 2,000
Underwritten Total motor and A key tenet of growing our Insurance business is
2021 1,006
insurance policies home policies sold, growing our in-house underwriting business
(thousands) including renewals, utilising our proprietary member data. We are
2020 780
in the last 12 months continuing to increase our penetration levels
by our in-house within the non-member and existing member base.
insurance 2019 598
underwriter 0 100 300 500 700 900 1,100
Roadside operations
Operational and service excellence
Breakdowns Number of This is a key driver of our cost base and also
2021 3,014
attended breakdowns attended demonstrates utilisation of our service by our
(thousands) members and customers.
2020 3,423
2019 3,730
0 1,000 2,000 3,000 4,000

© 2020 Friend Studio Ltd File name: KPIs_v73 Modification Date: 13 April 2021 9:55 pm
Strategic Report
Financial sustainability
Profitability and cash flow generation
Trading EBITDA Trading EBITDA is the This is a key measure of our underlying trading
2021 341
(£ millions) performance measure performance as defined in our debt covenants.
most closely aligned
20201 348
to that required by
our debt documents
(see Note 3) 2019 341
Governance
0 100 200 300 400
Operating profit Statutory measure Alongside Trading EBITDA, this is a key measure
2021 218
(£ millions) of profit before tax, of our underlying trading performance and is a
finance income and 1
GAAP measure. As we execute our plans for
finance costs, including 2020 255 growth, we expect to drive a meaningful growth
adjusting operating in operating profit.
items 2019 219
0 100 200 300
EPS (earnings per Statutory measure of This measures the allocation of our profitability on a
2021 6.5
share, pence) profit after tax divided per share basis. Following the Acquisition in March
by the weighted 2021, this measure is no longer relevant and will not
20201 13.8
average number of be reported.
shares outstanding,
including adjusting 2019 6.9
operating items 0 5 10 15
Free cash flow Net cash flow before This measures the level of free cash flow generated
2021 40
(£ millions) bond buy-backs, by the Group and which is available for investment,
refinancing costs debt management and distribution to our
and distribution to 2020 83 shareholders, subject to the restrictions of the WBS.
shareholders
2019 12
0 25 50 75 100
Reduce borrowings and associated interest costs

Leverage Ratio of net debt to Proactive debt management remains a key focus for
2021 7.6
(ratio) Trading EBITDA for the Group.
continuing operations
2020 7.6
for the last 12 months
(see Note 30)
2019 8.0
0.0 2.5 5.0 7.5 10.0
Interest cover Ratio of Trading This measures the extent to which our earnings
2021 2.5
(ratio) EBITDA to total cover interest payments on our debt.
ongoing cash finance
2020 2.6
costs (see Notes 6
and 30)
2019 2.6
0 1 2 3
Sustainability
Total greenhouse Our total Group Market-based Location-based Our emissions are material to our environmental
gas emissions emissions are reported impact on issues such as climate change, with our
(tonnes carbon under the Companies 2021 33,652 2021 35,398 operational fleet accounting for 94% of our total
dioxide Act 2006 (Strategic emissions.
equivalent)* Report and Directors’ 2020 40,615 2020 42,757
Reports) Regulations
2013. Calculations 2019 44,604 2019 44,323
follow the GHG
0 46,000 0 46,000
Protocol Corporate
Accounting and
Reporting Standard
(revised edition), using
market-based and
UK location-based
emissions factors
1 Please see P73.
* Please note that prior year estimates have been adjusted as necessary. This has not resulted in any material changes.
© 2020 Friend Studio Ltd File name: KPIs_v73 Modification Date: 13 April 2021 9:55 pm
STRATEGIC REPORT
Our performance
Our core Roadside business continues to deliver a solid

Roadside and performance, responding well to the challenges of
Insurance, our two COVID-19. Overall revenue in the roadside segment fell
core segments by 3% in the year to £799m, reflecting the impact of the
Roadside pandemic on our developing roadside businesses.
Revenue
£799m
2020¹: £827m
Business-to-consumer pay-for-use income from the breakdowns we
In line with management expectations, the paid serviced and the additional services that we
Trading EBITDA margin personal membership base fell by 1% during provided during the lockdown in supporting
35% the year to 3.168m (2020: 3.215m) with the

retention rate down 3% to 78% (2020: 80%).
This was a strong performance considering
our motor manufacturing partners and the
London Ambulance Service. We also made
good progress in the year with our vehicle
2020: 34%
the 2.0% decline in the paid membership Recall proposition with OEMs, which received
a 99.7% customer satisfaction score and
Trading EBITDA base during the first half of the year due to the
delivered over 10,000 repairs despite a pause
national lockdown in March, which limited
£280m driving on Britain’s roads and led to a decline in
new business volumes. Following the gradual
for COVID-19. We also introduced a new service
to deliver managed support to EV chargepost
networks, providing help to end customers
2020¹: £285m lifting of the lockdown restrictions in June,
we took swift action to support our existing and the ability to remotely monitor and
Breakdowns attended members and a new above-the-line marketing reset chargeposts.
3.01m
campaign in July led to progressive improvement In March 2021, we were pleased to announce
in new business volumes and retention rates. the award of a new five-year contract with
During the second half, the paid membership Nationwide through which we will offer
2020: 3.42m
holdings grew by 1%. This is despite the Nationwide’s Flexplus customers our
additional continuing lockdown measures award-winning roadside assistance services,
Paid personal members and demonstrates the resilience of our which they will be able to access fully through
3.168m award-winning membership proposition.

During the year, we revised the basis of the
our digital channels including the AA app.
The service will go live from the first quarter of
2020: 3.215m average income per paid member to reflect 2022. The partnership builds on our success
the average income earned from the paid last year with Admiral. Our partnership with
Average income per paid membership base over the last 12 months Admiral continues to go from strength to
member as a proportion of the average paid personal strength and since our launch in September
2019, we have successfully on-boarded
£163
membership holdings as opposed to the closing
paid membership holdings on which it was over 0.5m customers.
previously calculated. Under the new basis, the We are also leading the way in developing
2020: £165
average income per paid member fell in the year ground breaking and unique digital services for
by £2 to £163 (2020: £165), and under the old our customers in B2B, including SPARX which
Business customers basis, the average income per paid member we launched in collaboration with ARC, our
8.7m was flat at £164 (2020: £164). The reduction

this year under the new basis was principally
due to the impact of COVID-19 on new business
European partner. SPARX is an integrated digital
network connecting the leading European
roadside assistance clubs. This platform
2020: 9.0m
volumes during the first half of the year, as well enables the real-time transfer of breakdown
Average income per business as the impact of lower European Breakdown information between breakdown clubs,
Cover revenues. The average income per paid meaning customers can track and report a
customer member was also impacted by the continued breakdown digitally across the whole of Europe
£23 strong performance of our cross-sell channels,
including our Insurance business, which are
(cross-border). We also launched our digital
mobility service which enables a patrol to
2020: £22 typically transacted at a lower average revenue. identify and book a replacement like-for-like
(rental) vehicle from an app on their phone,
Business-to-business providing a quick and seamless experience for
We successfully retained or extended all of our customers in the event that their car cannot
core roadside contracts this year, including be repaired at the roadside. This capability has
VWG, Porsche, Honda, Hyundai, Jaguar Land now been extended beyond B2B to include
Rover, MG, Bentley UK, DAS and LeasePlan. all members as well.
Total business customers fell to 8.7m (2020:
9.0m) on account of the significant reduction Looking ahead, we will continue to develop and
in new car registrations due to the impact of extend our range of managed services for OEMs
COVID-19, as well as the anticipated decline in as well as enhancing our fleet proposition with
the number AVAs with our banking partners. telematics and full incident management-based
This fall in holdings was partially offset by services, including B2B accident management.
the growth in our insurance partnership with
Admiral. Overall income for B2B grew, with the
average income per business customer up 5% to
£23 (2020: £22) reflecting the benefit of higher
1 See P65 and P73.
© 2020 Friend Studio Ltd File name: OurXPerformance_v107 Modification Date: 13 April 2021 9:56 pm
Trading EBITDA was down 2% to £280m and the
Strategic Report
Trading EBITDA margin was up 1% to 35%, in line with
our expectations, reflecting the operational resilience of
our core Roadside business and our ability to act swiftly
to protect profitability.
Customer service and operations Developing businesses In February 2021, The AA Driving School and
Governance
Operationally, FY21 has been dominated by With limited driving on Britain’s roads and a BSM’s instructor training division received a
the challenge of COVID-19. Workload has been number of independent garages closed during Feefo Platinum Trusted Service award for 2021.
variable as national lockdowns and restrictions the lockdowns this year, the rollout of our Feefo’s Trusted Service awards recognise
across Britain have changed driver behaviour in consumer SMR proposition (Smart Care) was businesses who deliver outstanding customer
terms of when, how and why they use their car. adversely impacted. Notwithstanding this, service as rated by their customers.
As lockdown measures have been introduced, we saw steady uptake throughout the year and With fewer people driving over the course of the
and then eased, we have also seen short-term conversion rates have continued to improve. year, the number of police referrals for speeding
spikes in workload. The challenge of COVID-19 We have also continued to make good progress was down across the country. Coupled with the
has also been to adopt our safe systems of with our product development plans for Smart temporary cessation of courses in March and
work both for our people, and customers – Care which included the launch of a consumer the cessation of in-vehicle driver training during
a challenge we are proud to say we have collection and delivery option, digital authorisation the lockdown periods, our DriveTech business
risen to as a team, maintaining supply of PPE for additional work and an enhanced customer generated significantly lower revenues in the
throughout FY21. journey. In relation to our B2B proposition for year. However, DriveTech was the first provider
SMR, we supported our partners this year in in the market to launch and deliver online
The AA continues to deliver best-in-class
areas where the preferred SMR provider was speed awareness courses as an alternative
customer service, and in June 2020, we
unavailable and, as a result, successfully signed to classroom based courses, and also saw a
were awarded top of the table as a ‘Which?
several new B2B SMR contracts. We can now steady increase in police referral volumes
Recommended Provider’ for our third-party
redirect SMR work for our Driving Schools during the second half of the year as more
breakdown cover for the third year running.
business through our platform and into our people took to the road. In total, DriveTech
We were also the breakdown service provider
network. Following the national lockdown delivered 411,958 courses in FY21. DriveTech
for the top six manufacturer brands for the
in August, we reinitiated our web-based also launched a number of online Certificate of
second year running. This is a strong validation
marketing offers, and member benefit offers Professional Competence and driver training
of our business model and the outstanding
for Smart Care which are available on the courses that service the corporate market.
customer service delivery we provide to our
AA app and on our website. We are also moving
personal members and business customers.
ahead with our plans to expand our network
This year, we also won the UK Business Awards of AA inspected and approved garages.
for the Most Customer Centric Organisation,
Our Driving Schools and DriveTech businesses
heading off competition from a number of
were significantly impacted this year due to
leading industry players across a range of Customer Review
COVID-19, and in aggregate, revenue declined
sectors. These awards are an incredible
by 21% to £49m (2020: £62m).
achievement and a testament to the hard work The man who rescued me
that our patrols, contact centre colleagues The performance of our Driving Schools
and support teams do, to deliver outstanding business was significantly impacted this year by (Phil) was so polite, explained
customer service to our customers. COVID-19 and our decision to waive franchise everything clearly and really
fees for instructors for 14 weeks to support made me feel reassured
Total breakdowns fell by 12% in the year to
them during the first lockdown. On 4 July, the
3.01m (2020: 3.42m) due to the reduced traffic
Government announced that driving lessons with two little ones in the
on Britain’s roads. This in turn meant that we
incurred significantly lower third-party garaging
could restart again in England which was a back! Impressive service.
welcome relief for thousands of instructors Thanks again.”
and patrol-related costs compared to last year.
and pupils. However, the introduction of tiered
Despite overall reduced breakdown volumes,
lockdowns across England from October and mama_and_the_peas
there were a higher number of B2B related
further restrictions since December have Instagram
breakdowns as a proportion of our total
meant we have been unable to offer lessons.
workload. As a result, overall pay-for-use
Therefore, the trading environment remains
income was up compared to last year.
challenging despite the continued strong
Ancillary sales including battery sales were
demand for driving lessons, as evidenced
also significantly higher than last year as a
through pupil bookings being up year-on-year
considerable number of our members and
following the first lockdown and provisional
customers experienced flat batteries due to
licence applications remaining steady. We
their cars not being driven as frequently.
continue to support our instructors during these
Despite the operational challenges presented challenging times through a combination of
by COVID-19, we were pleased to have competitive pricing, discounts and payment
delivered outstanding customer service in the holidays.
year, with overall call-to-arrive times averaging
45.8 minutes in the period, against our target
of 45 minutes. We were able to keep all of
our call centres open as we transitioned to
home working in response to COVID-19 and
responded to a majority of calls to our call
centre in 20 seconds. Our repair rates and
average repair times were also strong and
ahead of last year.
STRATEGIC REPORT
Our performance continued
The Insurance division remained resilient during COVID-19

Insurance and continued to deliver strong rates of policy growth.
Overall insurance revenue was up 1% to £168m
Revenue
(FY20: £166m). This was principally driven by the strong
£168m performance of our new Accident Assist business and
20201: £166m
our in-house underwriter.
Trading EBITDA margin
36%
20201: 38%
Insurance Broking and Financial Renewal rates have remained broadly steady
Services and our claims costs in our in-house underwriter
Trading EBITDA have been tracking in line with the broader
£61m
Revenue decreased by 7% to £128m (2020:
market and were lower due to motorists
£138m) principally due to the anticipated
driving less as a consequence of the COVID-19
decline in commissions resulting from our
20201: £63m lockdown measures.
ongoing investment in marketing to position
the business for long-term growth, our decision
Policy numbers to absorb costs to help customers during
Broker the year as well as low trading activity in our
1,941,000 AA Cars business. The decrease in Revenue

was partially offset by the strong performance
of our new Accident Assist and Financial Customer Review
2020: 1,713,000
Services businesses.
The lady I spoke with yesterday,
In-house underwriter The motor policy book grew by 21% to
Kirsty, was absolutely brilliant.
1,006,000
1,052,000 policies (2020: 869,000) and the
home book grew by 5% to 889,000 (2020: I was taking a lot of her time
2020: 780,000
844,000), reflecting the continued strong asking lots of questions
growth of our in-house underwriter, AA
Underwriting Insurance Company Limited regarding my insurance
Motor policies (AAUICL), as well as the benefit of ongoing change over.
Broker investment in pricing systems to enhance the
I then received the same high
1,052,000 competitiveness of the broker. The strong
growth in policies of the in-house underwriter,
which currently underwrites more than half of
standard of service today
2020: 869,000
the motor policy book and close to half of the from a lady called Elle and she
In-house underwriter total home policy book, as well as ongoing completed everything for me.
improvements in our customer journey, are
600,000 helping to deliver consistent and healthy
cross-sell conversions into our Roadside
I just wanted to acknowledge
the two of them for being
2020: 448,000 business, with 34% (2020: 33%) of new
insurance customers taking Roadside
polite, professional and
Home policies membership. having patience with me.”
Brokers The continued investment in our brand and Lesley Cooper
889,000 improvements to our digital journeys have also

received external recognition and we were
pleased to have been ranked #1 in insurance
Trustpilot
2020: 844,000
brand consideration for motor insurance by
Accident Assist, our recently launched in-house
Underwriter Ipsos in 2020 and we also won a gold award
claims management proposition, is performing
for best digital customer experience at the
406,000 Insurance Times Awards 2020.
In January 2021, our home and motor insurance
strongly, and, following the implementation
of a new claims handling platform from ICE
InsureTech and the consolidation of our claims
2020: 332,000
won the Feefo Platinum Trusted Service award. operations into Royal Tunbridge Wells this
Average income per policy Feefo gives Platinum Trusted Service awards to year, we continue to see positive momentum
businesses that have achieved the Feefo Gold building. We successfully completed the
(Motor and home policies only) standard for three consecutive years or more. rollout of this new capability across our motor
Brokers It is a highly valued badge of approval, as it’s insurance panel members ahead of schedule
£59 based purely on genuine, verified, customer

feedback about excellent service.
and in December 2020 we were pleased to
extend this service to our Roadside members,
2020: £68 The ongoing investment in acquiring new which is a key differentiator for our roadside
business volumes, which have a lower average business and represents a significant growth
Including underwriter commission compared with the rest of the opportunity in our ambitious plan to become
£78 book, and our decision to help our customers the natural ‘first call’ after an accident.
during the year through reduction in
2020: £84 administrative and processing fees, led the
average income per motor and home policy
Financial Services products including our in-house underwriter to fall to
£78 (2020: £84).
101,000
2020: 90,000
1 See P65 and P73.
Trading EBITDA fell by 3% to £61m (FY20: £63m), with the
Strategic Report
Trading EBITDA margin slightly down from 38% to 36%, as we
continue to invest in accelerating the growth in policies of the
broker and in-house underwriter, leveraging our strong brand,
large distribution platform and proprietary data to deliver future
value and Trading EBITDA growth.
In March 2020, we extended our Financial Insurance Underwriting Our in-house underwriter continues to grow
Governance
Services Distribution Agreement with the Bank Our Insurance Underwriting business grew rapidly and benefit from our strength of brand,
of Ireland UK by three years to at least 2028. strongly in the year, with revenue up £12m to distribution scale and proprietary members’
As part of the agreement, our partnership now £40m (2020: £28m). Gross written premiums data to deliver competitive premiums. This year,
includes AA branded car finance products before adjusting for coinsurance arrangements we grew the motor book by 34% from 448,000
to sit alongside savings and loans products. were £188m (2020: £130m), while the to 600,000 policies, driven largely by our
The loan book continued to grow well despite gross written premiums net of coinsurance non-member channel which grew by 50% to
the significant impact of COVID-19 with the arrangements were £131m (2020: £90m). 272,000 (2020: 181,000) policies, and the
combination of the AA’s brand and distribution In line with our expectation, gross earned underwritten home book also grew strongly
platform and the Bank of Ireland’s expertise in premiums were lower in comparison to the by 22% from 332,000 policies to 406,000
service delivery offering a distinct competitive gross written premiums due to the impact of policies. Our underwritten portfolio currently
advantage compared to peers and which, deferred premiums on our growing policy book represents 57% (2020: 46%) of the total motor
in turn, enabled us to increase the quality of and were £115m (2020: £70m). There was no policy book and 46% (2020: 31%) of the total
our loan book and increase market share. reduction in revenue from deferral of broker home policy book.
By the end of January 2021, we had 101,000 commissions (2020: £3m). Revenue is reported Alongside the non-member policy growth, we
(2020: 90,000) Financial Services products
after accounting for the broker deferral are actively developing strategies to increase
across our personal loans and savings portfolio. adjustment, where the broker commission is our online competitiveness and cross-sell
This represents a balance sheet size of recognised over the life of the policy along capabilities to increase the penetration levels
approximately £1.5bn up from £1.4bn last year with the underwriter premium for policies within our existing member base. Consistent
across the loans and savings book held on underwritten by our in-house underwriter. with our ambition to broaden our competitive
the balance sheet of Bank of Ireland. The AA
footprint, we launched our young driver
membership base and brand are also benefiting
insurance proposition late last year utilising
the business, with 55% (2020: 38%) of the
our connected services technology.
non-ISA savings books held by members and
35% (2020: 38%) of our personal loans being Our combined operating ratio was in line with
written for vehicles. our long-term target of 95%. We achieved
Customer Review stable rates of retention across our motor and
During the year, we reclassified AA Cars,
home policies book and net claims paid were
our online used cars and vans platform with My thanks and appreciation £23m (2020: £23m).
a growing financial service offering, into our to John in your motor vehicle
Insurance segment. As expected, AA Cars was In line with expectations, Trading EBITDA was
affected by significantly lower demand during technical support – which is up £13m to £22m (2020: £9m), reflecting the
the year, as well as our decision to help dealers a fantastic “member only” solid growth this year.
through the initial three-month lockdown service as I needed The in-house underwriter business remains
with proactive discounting. Despite this, the well capitalised under the Solvency II capital
business was able to maintain its base of confirmation as to how the
requirements. As at 31 January 2021, the
dealers and the performance through the problem likely occurred in my solvency coverage headroom was 63%
second half was more encouraging. car. I highly recommend it!” over requirement and can be funded from
A significant highlight of the year was the the profits of the underwriter and AA Limited
launch of AA Smart Lease in partnership with @FilmswithT available cash.
LeasePlan in January 2021. AA Smart Lease Twitter
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, and are
able to terminate their lease early if specific life
events occur. The combination of our brand
with LeasePlan’s established presence and
distribution platform gives us the confidence
that we can meaningfully grow our presence
in the lease market.
STRATEGIC REPORT
Financial review
“Despite the challenges presented by COVID-19, we delivered a strong set of results with
Trading EBITDA only slightly below that of last year and positive free cash flow generation
in line with our expectations. This reflects the resilience of our business model and the
essential nature of the services we provide to our members and customers. Looking
ahead, supported by a rebalanced capital structure and an improved outlook for the
UK economy, there is reason to be confident that we can carry our positive momentum
forward and deliver on our plans for long-term growth.”
Kevin Dangerfield
Chief Financial Officer
Group Revenue
2021 20201
£m £m
Roadside 799 827
Insurance 168 166
Revenue 967 993
Group revenue was £967m, down 3% compared to last year (2020: £993m), a strong performance given the impact of COVID-19 and a testament to
the resilient nature of our business.
Overall Roadside revenue was down 3% at £799m (2020: £827m). This was largely due to the impact of the initial lockdown restrictions in the first
half of the year which led to lower business-to-consumer (B2C) income, as well as reduced income from our developing Roadside businesses such as
Driving Schools and DriveTech. While some of this was offset by growth in business-to-business (B2B) income, the implementation of additional tiered
lockdown measures during the second half meant that overall Roadside revenue was down compared to last year.
Insurance Revenue was up 1% to £168m (2020: £166m), driven by the strong performance of our Accident Assist business as well as the growth of our
in-house underwriter, AA Underwriting Insurance Company Limited (AAUICL). This more than offset the anticipated decline in commissions received
by the broker, due to our ongoing investment in marketing to accelerate the growth in motor and home policies.
Group Trading EBITDA
2021 20201
£m £m
Roadside 280 285
Insurance 61 63
Trading EBITDA 341 348
Trading EBITDA margin 35.3% 35.0%
In line with our expectations, Group Trading EBITDA was down slightly at £341m compared to £348m in the prior year. This was a strong performance
considering the operational challenges due to COVID-19 and is testament to the resilience of our core businesses and our ability to act swiftly to manage
our costs and protect profitability. Roadside Trading EBITDA was down £5m to £280m (2020: £285m), reflecting the impact of COVID-19 on our
developing roadside businesses offset partly by the benefit of reduced workload to third-party garaging and patrol related costs. Insurance Trading
EBITDA was down £2m to £61m (2020: £63m), reflecting the ongoing investment in marketing to accelerate the growth in policies of the broker offset
partly by strong performance of our Accident Assist business and in-house underwriter.
Trading EBITDA margin was stable at 35% (2020: 35%), with resilient Roadside Trading EBITDA margins despite the impacts of COVID-19 offsetting
the anticipated reduction in Insurance Trading margins due to the accelerated investment in new business volumes.
Reconciliation of Trading EBITDA to operating profit
Trading EBITDA is a performance measure required under the terms of our debt documents and is used for calculating our debt covenants. The Group
also shows Trading EBITDA as a measure of underlying trading performance. Trading EBITDA is calculated as operating profit before adjustments as
shown in the table below:
2021 20201
£m £m
Share-based payments (4) (5)
Pension service charge adjustment (5) (4)
Contingent consideration remeasurement gain – 9
Amortisation and depreciation (93) (89)
Adjusting operating items (21) (4)
Operating profit 218 255
In the current year, adjusting operating items comprised £5m related to the closure costs of the CARE section of the AAUK pension scheme and the
transitional agreement made with employees in that scheme, £16m related to transaction fees related to the Acquisition, £2m related to strategic review
projects, a £2m loss on disposal of subsidiaries (see note 12), a £1m impairment of investments in joint ventures, £1m of additional property dilapidation
costs and £4m related to emergency IT expenditure incurred setting up home working for our people due to the pandemic, offset by £7m related to
government furlough support in respect of COVID-19, a £2m release of a provision for conduct and regulatory costs and a £1m profit on disposal of
non-current assets.
1 See P65 and P73.
© 2020 Friend Studio Ltd File name: FinancialXReview_v90 Modification Date: 13 April 2021 9:56 pm
Operating profit
Strategic Report
2021 20201
Roadside Insurance Group Roadside1 Insurance1 Group
£m £m £m £m £m £m
Trading EBITDA 280 61 341 285 63 348
Share-based payments (3) (1) (4) (2) (3) (5)
Pension service charge adjustment (4) (1) (5) (4) – (4)
Contingent consideration remeasurement gain – – – – 9 9
Amortisation and depreciation (81) (12) (93) (79) (10) (89)
Operating profit before adjusting items 192 47 239 200 59 259
Adjusting operating items (21) (4)
Governance
Operating profit decreased by £37m to £218m, a year-on-year decrease of 15%. This was attributable to the reduction in Trading EBITDA, the £17m
increase in adjusting operating items of £21m (which included £4m emergency IT-related costs due to COVID-19, offset by £7m furlough support from
the Government (see note 5) and a £4m increase in amortisation and depreciation reflecting the historic and ongoing investments in IT. The operating
profit figure last year included a favourable adjustment, a contingent consideration remeasurement gain of £9m related to the acquisition of Used Car
Sites Limited (trading as AA Cars) which we acquired in 2017.
Revenue, gross profit, operating profit, profit before tax, profit for the year and earnings per share for the year ended 31 January 2020 have been
restated to correct a prior year error. There has been a corresponding restatement to the deferred income balance for the year ended 31 January 2020.
Deferred income in respect of certain roadside assistance policies had been understated in the opening and closing statement of financial position for
the year ended 31 January 2020. See note 19 for further details.
Net finance costs
2021 2020
£m £m
Interest on external borrowings 136 129
Finance charges payable on lease liabilities 3 5
Interest receivable from financial assets held for cash management purposes – (1)
Total ongoing cash net finance costs 139 133
Ongoing amortisation of debt issue fees 9 14
Fair value movement on interest rate swaps 1 1
Net finance expense on defined benefit pension schemes (3) 5
Contingent consideration movements – 1
Total ongoing non-cash net finance costs 7 21
Adjusting finance costs 20 –
Adjusting finance income – (4)
Total net finance costs 166 150
Net finance costs increased by £16m to £166m (2020: £150m) resulting from adjusting finance costs namely; the early repayment premium and
transaction costs of £11m as well as a £9m write-off of unamortised issue costs related to the February 2020 issue of £325m Class A8 Notes in
exchange for £325m of Class A5 Notes.
Profit before tax
On account of the adjustments outlined above, profit before tax in the year fell to £52m (2020: £105m).
Taxation
The tax charge for the year decreased by £8m to £12m (2020: £20m), reflecting the lower profitability. The tax charge consisted of a current tax
charge of £14m (2020: £16m) and a deferred tax credit of £2m (2020: charge of £4m). The effective tax rate increased to 23.1% (2020: 19.0%).
Profit after tax and earnings per share
Profit after tax was down at £40m (2020: £85m) and basic earnings per share reduced by 7.3p from 13.8p to 6.5p.
Adjusted profit after tax and adjusted basic and diluted earnings per share decreased to £83m (2020: £85m), 13.6p (2020: 13.8p) and 13.4p
(2020: 13.4p) respectively reflecting the slightly lower underlying trading result.
Pension liabilities
The defined benefit pension deficit increased by £26m during the year. This was principally due to the financial markets experiencing a reduction
in corporate bond yields which drive the discount rate, in combination with increasing future inflation expectations. This was partially offset by the
performance of plan assets being above expectations.
In February 2020, the triennial actuarial review was completed for the AAUK pension scheme as at 31 March 2019. This resulted in a significant
reduction to the technical provisions deficit of 64% from £366m as at 31 March 2016 to £131m. The agreed recovery plan with the pension trustees aims
to eliminate the technical provisions deficit by July 2025. The Group has committed to paying an additional (above the Asset-Backed Funding scheme
payments) £10m per annum from April 2020 to March 2021, £11m per annum from April 2021 to March 2022 and £12m per annum from April 2022 to
July 2025. From 1 February 2020, the trustee has also met its own costs of running the scheme. As a result of our actions, we expect to make around
£6m in annual cash savings relative to the previous agreement.
On 18 March 2020, we concluded our 60-day pension consultation with around 2,800 members through their union/management representatives
in respect of our proposal to close the CARE section of the AAUK defined benefit pension scheme. Closure of the scheme took effect from 31 March
2020 and protects against the ongoing build-up of defined benefit risk for the Group and reduces the pension cash costs by c.£4m per annum.
The consultation has resulted in an enhancement to the defined contribution scheme being agreed for affected employees which will cost £11m
over three years starting from 1 April 2020 (see note 27).
STRATEGIC REPORT
Financial review continued
Cash flow and liquidity

Free cash flow
2021 20201
£m £m
Working capital and provisions excluding adjusting operating items (8) 19
Pension deficit reduction contributions (25) (26)
Other items (1) (4)
Cash flow from continuing operating activities before taxation, adjusting operating items 307 337
and capital expenditure
Tax paid (15) (11)
Capital expenditure including capital and interest payments on leases less proceeds (93) (98)
from sale of fixed assets
Operating free cash flow after capital expenditure 199 228
Interest on borrowings less interest receivable (137) (128)
Operating free cash flow before adjusting operating items 62 100
Acquisition of own shares (2) –
Acquisitions, disposals and investment in joint ventures (4) (8)
Adjusting operating Items (16) (9)
Free cash flow 40 83
Purchase of Bonds/Debt refinancing activities (14) (28)
Free cash flow to equity 26 55
Dividends paid – (12)
Net increase in cash and cash equivalents 26 43
We remain well within our financial covenants, have good levels of liquidity and are generating positive free cash flow. In FY21, we generated £40m
of free cash flow (2020: £83m) before the costs of purchasing bonds, refinancing and dividends. This figure was lower partly due to the reduction in
Trading EBITDA as well as the working capital and provisions excluding adjusting operating items outflow of £8m in the year compared to an inflow
of £19m last year, which included a cash receipt from HMRC following settlement of historic partial exemption claims and an increase in the claims
provisions in our underwriter. The working capital outflow this year was caused by the impact of COVID-19 on cash receipts and also included a
payment made in respect of the extension of our Financial Services Distribution Agreement with Bank of Ireland. The free cash flow figure was also
impacted by higher tax payments in the year reflecting the change to the timing of corporation tax payments mandated by HMRC, as well as higher
net interest paid on borrowings of £137m compared to £128m last year following the February 2020 refinancing. Total capex, was however, down
£5m at £64m (FY20: £69m) due to the impact of COVID-19 on the timing of project spend, reduction in labour costs and the re-prioritisation of
IT resource spend.
Pension deficit reduction payments of £25m (2020: £26m) were in line with the agreement made with the Pension Trustees in February 2020.
Proceeds from the issue of £280m Class B3 Notes in January 2021 are not shown in the cash flow statement presented above because they were
placed into an escrow account (see note 20) and held until the refinancing of the Class B2 Notes in March 2021, see next page.
We are required to hold segregated funds as ‘restricted cash’ to satisfy requirements governing our regulated businesses, including the Insurance
Underwriting business. These restricted cash balances have decreased to £40m (2020: £70m) due the becoming available of a restricted cash balance
of £32m which was held due to a requirement in the Group’s debt documents to deposit a calculated amount of ‘excess cash’ at the year end when
within an ‘accumulation period’ (the 12 months before which any borrowings become due). This applied to the Class A3 Notes which were due on 31 July
2020. On 31 July 2020, the Group completed the refinancing of the £200m outstanding Class A3 Notes using the £200m proceeds from drawing
down the Senior Term Facility (see note 21). Therefore, as it was no longer required, the excess cash was returned to available cash on 31 July 2020.
Interest cover is calculated as the ratio of Trading EBITDA to total ongoing cash finance costs (see note 30) and was 2.5x (2020: 2.6x).
Capital management
The Group capital is a combination of net debt and equity. As at 31 January 2021, net debt was £2.6bn while the equity market capitalisation was £0.2bn.
The Directors have sought to achieve an appropriate balance between the higher return that is possible with borrowings and the advantages and
security of equity funding. We aim to reduce both the amount of net debt and the cost of servicing it over time through the successful delivery of our
strategy as well as a proactive approach to managing our debt. We continue to have significant headroom in respect of our covenants and in addition to
the Senior Term Facility the Group has a Working Capital Facility available of £60m, of which £56m remained undrawn at 31 January 2021.
As part of our commitment to proactively manage our debt this year, in February 2020 we exchanged £325m of Senior Secured A5 Notes into new
longer dated Senior Secured A8 Notes at coupon rate of 5.5%. On 31 July 2020, the Group completed the refinancing of the remaining £200m Class A3
Notes through its £200m Senior Term Facility which was drawn down in April 2020. As part of the Senior Term Facility draw down, S&P Global Ratings
confirmed the credit rating of the Class A Notes at BBB-. On 29 January 2021, we completed the pricing of a new Class B3 Secured Notes at an interest
rate of 6.5%. The pricing was at a substantially lower rate than our previous expectations and gives us the confidence that we can accelerate our plans
for growth and continue reducing our leverage. As part of this process, S&P Global Rating confirmed the credit rating of the Class B Notes at B+.
Our leverage ratio was flat at 7.6x but following the Acquisition and subsequent refinancing in March 2021 (see note 39) we are moving towards a
rebalanced capital structure. Adjusting for the £261m cash injection from the Consortium, our leverage ratio is 6.9x.
In light of the Group’s continued positive performance, the Group intends to continue to proactively manage its capital structure subject to market conditions.
Capital structure as at 31 January 2021
Strategic Report
Interest rate Principal
Expected maturity date % £m
Senior Term Facility 31 July 2023 2.72 200
Class A2 Notes 31 July 2025 6.27 500
Class A5 Notes 31 January 2022 2.88 372
Class B2 Notes 31 July 2022 5.50 570
Class B3 Notes 31 January 2026 6.50 280
Less proceeds of Class B3 Notes held in escrow (280)
4.88 2,767
Governance
Class B2 Notes Repurchased (5.50) (29)
Total loan notes 4.87 2,738
Lease liabilities 52
Cash and cash equivalents (185)
Total net debt 2,605
Equity (valued at close on 31 January 2021) 217
Total capital as at 31 January 2021 2,822
The weighted average interest rate for all borrowings of 4.87% has been calculated using the effective interest rate and carrying values as at 31 January 2021.
At 31 January 2021 the £280m Class B3 Notes were contingent on the completion of the Acquisition (see note 20) and as such have been presented as
a current liability at the year end even though the expected maturity date is 31 January 2026.
On 9 March 2021, Basing Bidco Limited (‘Bidco’), a newly formed joint venture company indirectly owned in equal shares by (i) funds advised by
TowerBrook or its affiliates (the ‘TowerBrook Funds’) and (ii) private equity funds managed by Warburg Pincus or its affiliates (the ‘Warburg Pincus
Funds’, and together with the TowerBrook Funds, the ‘Consortium’) acquired the entire issued and to be issued ordinary share capital of the Group
(the ‘Acquisition’).
Following the Acquisition of the Group in March 2021 , the Company released AA Bond Co Limited from the £29m Class B2 notes and refinanced
the remaining £541m outstanding Class B2 notes using £261m cash injected as new equity from the Consortium and the £280m proceeds from
the issuance of the Class B3 notes. In addition, the Group entered into a new £150m Senior Term Facility which it immediately drew down and used,
in combination with £50m of cash, to refinance its existing £200m Senior Term Facility. As a result, gross borrowings have reduced by £311m since
31 January 2021. See note 39 for post year end borrowings table and further details of an additional £100m of equity committed by the Consortium
to be used towards the refinancing of the Class A5 Notes in FY22.
On 10 March 2021 the Group also refinanced its Working Capital Facility and Liquidity Facility. See note 39 for further details.
As part of the Acquisition, both the Group and Bidco have incurred transaction fees and expenses in an aggregate amount of c.£77m. See note 39
for further details.
The Directors propose a refinancing of the Class A5 Notes in advance of their maturity on 31 January 2022 and drawing upon the remaining £100m
of committed new equity referred to above. Given the significant deleveraging of the debt at both A Notes and B Notes level, the current pricing of
A Notes in the secondary debt markets and the existing Investment Grade rating of BBB- of the A Notes to be issued, the Directors are, on this basis,
confident that this refinancing will be successful. At the date of approval of these financial statements, the Class B3 Notes are no longer contingent on
the completion of the Acquisition and considering each of these points along with the projected cash flows for a period of one year from the date of
approval of these consolidated financial statements, the Directors have concluded that they have confidence that the Group will have sufficient funds
to continue trading for this period and will be able to secure financing so as to be able to continue to meet its liabilities as they fall due. Notwithstanding
the above, the refinancing of the Class A5 Notes, due on 31 January 2022 is not committed at the date of issue of these financial statements. These
circumstances indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern for a
period of in excess of a year from the date of issue of these financial statements.
The Company continues to evaluate the optimal refinancing strategy of its debt maturities and coupon payments, including the A Notes, B Notes and
Senior Term Facility. Early redemption of the Class A Notes would result in make-whole interest penalties up to the expected maturity date, except the
Class A5, Class A6, Class A7 and Class A8 Notes which can be settled without penalty within three months, two months, three months and six months
respectively of the expected maturity date. The Class B3 Notes would attract a make-whole payment if redeemed before 31 January 2023, thereafter
any voluntary repayment would be made at a fixed premium until 31 January 2025 after which there would be no premium to pay on redemption.
Our going concern assessment shown on P60, highlights our cash generative nature, our ability to service the interest obligations on our debt and
the risks associated with refinancing.
The Group remains committed to the proactive management of its capital structure and will continue to assess all options as we go through FY22.
STRATEGIC REPORT
Financial review continued
Net debt
2021 2020
Year ended 31 January £m £m
Senior Term Facility 200 –
Class A Notes 1,997 2,197
Less: AA Intermediate Co Limited group cash and cash equivalents (119) (102)
Net Senior Secured Debt1 2,078 2,095
Class B Notes 850 570
Less: Proceeds of Class B3 Notes issuance held in escrow (280) –
Lease obligations for covenant reporting2 27 39
Net WBS debt3 2,675 2,704
IFRS 16 lease adjustment for WBS lease obligations4 22 24
The Company’s group lease obligations5 3 3
Class B2 Notes repurchased by the Company (29) (29)
Less: the Company’s cash and cash equivalents6 (66) (57)
Total net debt 2,605 2,645
AA Limited Trading EBITDA 341 350

AA Intermediate Co Limited Trading EBITDA7 319 340
Net debt ratio8 7.6x 7.6x

Class B leverage ratio9 8.4x 8.0x
Senior leverage ratio10 6.5x 6.2x
Class A free cash flow: debt service11 2.5x 3.4x

1 Principal amounts of the Senior Term Facility and Class A Notes less AA Intermediate Co Limited group cash and cash equivalents.
2 The lease obligations for covenant reporting value is presented based on frozen GAAP pre-IFRS 16, as required by the debt documents. The figure above is therefore different to the lease liabilities
value shown in the statement of financial position.
3 WBS debt represents the borrowings and cash balances within the WBS structure headed by AA Intermediate Co Limited. This includes the principal amounts of the Senior Term Facility, Class A
Notes, Class B Notes and lease obligations for covenant reporting less AA Intermediate Co Limited group cash and cash equivalents.
4 Difference between lease obligations for covenant reporting based on frozen GAAP and the lease liabilities value shown in the statement of financial position having adopted IFRS 16 from 1 February 2019.
5 Total lease obligations for the Group excluding the value reported as the AA Intermediate Co Limited group lease obligations.
6 Total cash and cash equivalents for the Group excluding the value reported as the AA Intermediate Co Limited group cash and cash equivalents.
7 AA Intermediate Co Limited group Trading EBITDA including discontinued operations as required by the debt documents based on frozen GAAP.
8 Ratio of Total Net Debt to AA Limited Trading EBITDA for the last 12 months.
9 Ratio of Net WBS Debt³ to AA Intermediate Co Limited Trading EBITDA for the last 12 months.
10 Ratio of Net Senior Secured Debt¹ to AA Intermediate Co Limited Trading EBITDA for the last 12 months.
11 Ratio of last 12 months free cash flow to proforma debt service relating to the Senior Term Facility and Class A Notes as calculated by the debt documents.
The Class A Notes only permit the release of cash providing the senior leverage ratio after payment is less than 5.5x and providing there is sufficient
excess cash flow to cover the payment.
The Class B2 Note restrictions generally only permit the release of cash providing the fixed charge cover ratio after payment is more than 2:1 and
providing that the aggregate payments do not exceed 50% of the accumulated consolidated net income.
The Class A and Class B2 Notes therefore place restrictions on the Group’s ability to upstream cash from the key trading companies to pay external
dividends and undertake those other finance activities which are not restricted.
The Group tests investment balances for impairment annually, which in the current year has resulted in an impairment to the carrying value of the
Company’s investment in subsidiaries (see note 2 to the Company Financial Statements).
Key cash release metrics
2021 2020
Senior Leverage ratio1 6.5x 6.2x
Excess cash flow2 £228m £195m
Fixed charge coverage ratio3 2.4x 2.6x
Consolidated net income4 £352m £321m
1 Ratio of Net Senior Secured Debt to Trading EBITDA of AA Intermediate Co Limited group for the last 12 months. This excludes AA Limited cash and cash equivalents.
2 Cumulative free cash flow, since 1 February 2013, reduced by dividends paid by the AA Intermediate Co Limited group and adjusted for items required by the financing documents.
3 Ratio of fixed finance charges to Trading EBITDA of AA Intermediate Co Limited group for the last 12 months.
4 Cumulative profit after tax, since 1 May 2013, adjusted for items required by the financing documents and reduced by dividends paid by the AA Intermediate Co Limited group.
Note that the above table relates to the financial activities of the AA Intermediate Co Limited group and therefore the metrics therein will differ from
those of the Group. Each of these metrics are required by the financing documents.
At 31 January 2021 the Senior Leverage ratio was 6.5x. In order for this to reduce to 5.5x thus enabling dividends to be paid up to AA Limited, either
the AA Intermediate Co Limited group Trading EBITDA would need to increase by £59m or the AA Intermediate Co Limited group cash and cash
equivalents would need to increase by £324m.
Kevin Dangerfield
13 April 2021
AA Risk Management Framework
Governance Incidents and near misses

Principal Risk: Debt leverage
Strategic Report
An important part of the Risk Management
The Company operates a ‘three Framework is the identification and reporting The risk that we are unable to manage our debt
lines of defence’ model. The of incidents and near misses including root Risk trend: Reducing
model distinguishes between cause analysis. This helps to inform the
Description: The Company is unable to repay
assessment of risk and highlights areas
functions that have prime for control improvement actions. The AA or refinance its debt at an acceptable price.
responsibility for identifying, encourages and fosters a culture of open Mitigation: We have strong recurring cash
and honest incident and near miss reporting. flows which support the current capital
owning and managing risks structure, and which will enable us to reduce
(first line), oversight and control Principal Risks and uncertainties leverage over the long term in line with our
COVID-19 has within the last year emerged stated strategy.
functions (second line) and as a new Principal Risk for the Group, with the
functions providing independent impact evolving over the last twelve months. Change in the year: During the year, we issued
The remaining Principal Risks identified are £280m of Class B3 Secured Notes as part of
assurance (third line). All three the same as last year. All of the risks below the refinancing of our Class B2 Secured Notes
Governance
lines of defence have specific may have an adverse impact on our brand which we completed in March 2021 with the
and reputation. Acquisition. The Class B3 Secured Notes
tasks in the internal control were issued at a lower interest rate than our
governance framework. To previous expectations.
support this model, we have Principal Risk: COVID-19 Impact, likelihood and trend: Following the
The risk that COVID-19 will materially impact our issue of £280m Class B3 Notes on 29 January
risk policies, risk oversight ability to provide service and/or performance 2021 (see note 21), the completion of the
committees, and clearly Risk trend: New for FY21 Acquisition on 9 March 2021, and the
subsequent refinancing of the Class B2 Notes
documented accountabilities Description: COVID-19 could cause significant on 10 March 2021, we have £372m of debt
and responsibilities from the disruptions to our operations, impacting our to refinance by 2022. Although our current
ability to maintain service to an expected level.
business, through to the Board. COVID-19’s short, medium and long term
refinancing enabled us to secure interest rates
lower than our previous expectations, the
economic impact could affect our ability to current macro-economic environment could
Identification and assessment execute our strategy, and our performance. affect this trend and there is a risk that interest
of risks Mitigation: During the first half of FY21, our rates could increase. In addition, any refinancing
The AA undertakes a top down and bottom up immediate focus was on operational risks, will, as with previous refinancings, require cash
approach in respect of the identification and with several changes to working practices resources to be allocated to the associated
assessment of risks. Principal Risks facing the implemented, including homeworking to ensure one-off costs of enabling these transactions.
Group are assessed by the Risk Committee. the safety of our employees and customers. Consistent with our approach to proactive debt
A summary of these risks is detailed below, As the pandemic progressed, we took additional management and with the backing of our new
together with the key mitigating actions/ steps to manage any potential conduct risks shareholders, we will continue to regularly
controls, a summary of changes during the and ensure customer vulnerability was take independent advice assessing a range of
year and the primary KPIs. identified and appropriate measures put in strategic options. Modelling indicates that, even
Our Risk Management Framework Policy place. To minimise the impact of COVID-19 at higher interest rates, the business remains
requires all areas of the business to maintain on trading this year, we executed several cash generative and able to meet its financing
a risk register which is reviewed on at least a operational and financial changes to our commitments.
quarterly basis. Risks from this ‘bottom up’ risk business that resulted in the deferral and
identification exercise are linked to the main reduction of a range of operating costs across
the Group. Principal Risk: Regulatory and legal
principal risks identified by the Board which
environment
are documented in this report. We continue to monitor our activities to ensure The risk that a changing regulatory environment
Risks are assessed and scored for probability that the risks and issues posed by COVID-19 may adversely affect our activities
and impact, both inherently (i.e. without on the business are appropriately addressed.
controls) and residually (i.e. with controls). The risk of material litigation against the AA
Change in the year: New for FY21
A target risk score is also set. If the residual Risk trend: Increasing
risk score is higher than the target score, then Impact, likelihood and trend: The COVID-19
either appropriate action is agreed to ensure pandemic continues to have a material Description: The changing regulatory
that the risk exposure is returned to the desired impact within the UK and internationally, environment could cause currently compliant
target level, or the increased risk exposure is both operationally for the AA, as well as at a services to become non-compliant, with
formally accepted. macroeconomic level. The resilient nature of material implications for customer offerings,
our business model has meant that we have pricing and profitability. Failure to comply with
Risk appetite been able to continue to serve customers regulatory obligations could result in claims,
Risk appetite is linked to Principal Risks and and deliver expected performance. However, fines and reputational damage. Changes in
is documented and presented to the Risk although the outlook is improving with the regulatory rules or guidance, legislation or
Committee for review and debate and rollout of vaccinations, the long term economic taxation could impact the business model.
presented to the Board for approval. impact of COVID-19 is still unknown.
Management information provides regular
updates to ensure that the risk exposure
remains within the desired tolerance level
or is brought to the attention of the relevant
management for corrective actions to be taken.
A formal risk acceptance process is in place
to ensure that any request for material risk
acceptance is documented, reviewed and
agreed at an appropriate level of authority.
© 2020 Friend Studio Ltd File name: RiskXManagementXFramework_v36 Modification Date: 13 April 2021 9:57 pm
STRATEGIC REPORT
AA Risk Management Framework continued
Mitigation: The AA has no appetite for Change in the year: We have continued to
deliberately breaching any regulatory or maintain favourable call to arrive times, partly Principal Risk: Insurance broking
licensing requirements. Close engagement driven by lower levels of traffic during COVID-19 The risk that we are unable to achieve desired
with regulatory objectives is coupled with good lockdowns. Our call to arrive time, repair rate, margin, remain competitive and achieve our
governance and strong monitoring processes to single-task-completion and under-bonnet times growth and profitability objectives
ensure that we continue to focus on delivering are improved since last year. Our continued
Risk trend: Same as last year
products and services that result in good investment has increased the flexibility of the
customer outcomes. Our regulated Boards patrol force and improved our forecasting in Description: Consumers’ ongoing use of price
continue to actively review pricing practices the areas of planning and delays, to ensure that comparison websites (PCWs) may continue to
in line with guidance from the FCA. Regular we are better placed to respond to extreme transfer value away from our insurance broking
dialogue is maintained with the FCA, the weather events and the impacts of COVID-19. business. The FCA’s proposed pricing remedies
Gibraltar Financial Services Commission and could inhibit growth and the ability to remain
Impact, likelihood and trend: Delivering
other regulatory bodies. The AA has in-house competitive.
outstanding service remains fundamental to
Legal and Compliance teams and takes external Mitigation: We continue to use our strengths
our future and our brand. The impact of failure
legal advice, where deemed necessary. in the brand, channels and data to mitigate
to deliver the best service in the market would
Change in the year: The insurance industry has be very high. The actions we have taken to this risk, to extend our panel of insurers and to
seen significant activity from the FCA in the increase the flexibility of the patrol force, engage with regulators in a collaborative way.
areas of pricing practices, vulnerable customers increase contact centre capability and improve Change in the year: The insurance business
and product value considering COVID-19. The our forecasting will reduce the probability of remains on track to deliver forecast growth
AA has worked collaboratively with the FCA in this risk crystallising. in customer numbers. By maintaining a
responding to the ‘Dear CEO’ letters and data competitive panel of insurers and innovating
requests sent out to intermediaries. The FCA’s through developments such as insurer hosted
Pricing Practices Consultation Paper was Principal Risk: Roadside market share
pricing, analytics support and fraud detection,
released on 22 September 2020, outlining and margin
we continue to increase our motor and home
proposed remedies to support effective The risk that we are unable to maintain our policy numbers. We continue to look to innovate
competition and lead to good consumer market share and an ability to command a and expand our offerings, and we launched
outcomes. There are several proposals, price premium on our roadside services our Young Driver proposition to broaden our
including requirements to ensure renewal footprint and support growth within motor
prices offered are no higher than the equivalent Risk trend: Same as last year
insurance.
new business price as well as requiring firms Description: Competitors that provide roadside
to assess fair value of the products they sell. services at a lower price or have a different Impact, likelihood and trend: The competitive
The AA welcomes the FCA’s proposals and business model, together with changes in car threat from PCWs remains unchanged.
agrees with the importance of delivering good technology, threaten our market share. If we However, the success of our panel model in
outcomes for customers. charge a price premium that is above what the broker and the adoption of insurer hosted
our service can sustain, we will not grow pricing enables us to better respond to this
Impact, likelihood and trend: As in previous threat. The FCA’s recent pricing practices
years, the regulatory environment continues to our member or business-to-business (B2B)
customer base and, in the long term, proposals, if implemented as intended, may
be dynamic, with a continuing and demanding have a material impact on the motor and home
programme of regulatory initiatives. The FCA’s sustainably grow profits.
insurance market in the UK for both insurers
recent pricing practices proposals, if implemented Mitigation: We are continuing to improve and insurance intermediaries, which could lead
as intended, may have a material impact on the our Roadside membership proposition by to a disrupted market. However, we are in a
motor and home insurance market in the UK strengthening our product offerings and good position to be able to implement these
for both insurers and insurance intermediaries, engaging more members in additional benefits. requirements and be able to continue to meet
which could lead to a disrupted market. We have improved our communications with growth and profitability objectives.
The FCA’s final rules are expected to be both new and existing members, engaging
published in mid-2021. members in their existing services and benefits
to drive loyalty. We have robust pricing and Principal Risk: Insurance underwriting
product governance processes in place to
Principal Risk: Outstanding service The risk that we have higher claims costs
ensure that our pricing models are in line with
than anticipated
The risk that we are unable to maintain regulatory expectations and deliver value
outstanding service to customers. Risk trend: Same as last year
Risk trend: Same as last year Change in the year: Personal paid membership Description: There are risks of higher than
fell slightly due to the impact of recurring expected claims frequency, higher average
Description: The AA’s brand and its continued cost per claim or catastrophic claims.
COVID-19 lockdown restrictions since March
success, and the loyalty of its customers,
2020. We retained or extended all core B2B Mitigation: Underwriting guidelines are used
relies on delivering outstanding service that is
contracts in the year. There is still uncertainty to ensure that claims frequency and costs
superior to the rest of the market. Inadequate
in respect of the long-term COVID-19 impact remain within expected levels. The reinsurance
investment in technology, systems, people
on the business, especially should there be a structure using co-insurance and quota share
and processes would place this objective at
prolonged period of recurring waves. proportionately reduces the AA’s risk. Excess of
increasing risk.
Impact, likelihood and trend: In the long term, loss and catastrophe reinsurance is also used
Mitigation: The AA continues to invest to ensure to protect against costly individual claims
the AA will continue to find it challenging to
that we have the optimal patrol and call centre and events.
grow profit sustainably if its membership is
headcount to meet demand, together with
declining. Therefore, the impact of membership Change in the year: This business remains on
training and support to make sure we are well
growth is critical in the long term, as is track to deliver growth with sustainable and
placed to provide a premium service to our
maintaining key business relationships and profitable return on capital.
customers throughout the year. We carry
other B2B contracts, including with major car
out ongoing monitoring of complaints, press Impact, likelihood and trend: The occurrence
manufacturers. The business is focused on
reports and social media through structured of very large one-off claims is expected to
realising a sustainably growing membership
processes, including first line business be low in volume, but we have reinsurance
and recognises the need for a more distinctive
assurance. arrangements in place which caps our
and differentiated offering to mitigate
competitive pressures. maximum exposure per claim. The occurrence
of smaller claims is built into our pricing models
and is carefully monitored.
Change in the year: The AA’s information Impact, likelihood and trend: The impact
Principal Risk: Change management & IT
Strategic Report
security programme has delivered significant of failure to look after our employees’ and
transformation improvements in technology, data, colleague customers’ safety could be very high and could
We are unable to successfully complete and third-party supplier risks, and we continue result in not only an increase in civil claims,
essential business transformation to invest in this area to further strengthen but also in enforcement action against the
controls. We have increased our proactive Company and/or its Directors. AA working
Risk trend: Same as last year
detection capabilities, minimising the time practices are designed to reduce the probability
Description: We must continue to transform between discovery and remediation to of accidents to a minimum, although given the
the AA to achieve the required efficient decrease the risk and the opportunities for environment in which we provide Roadside
customer-centric services and to develop any security event to be exploited by cyber service, it is not possible to eliminate this risk.
the business. criminals. Visibility of system and user
Mitigation: There is an ongoing delivery behaviour remains key to improving our ability
to orient our security posture to the real-world Principal Risk: Pensions
capability and technology improvement
programme in place with progress tracked risks, and improving our visibility has been a The risk we are unable to meet our pension
at regular Management Business Reviews. key focus for this year. liabilities
Governance
A rigorous approach is taken in implementing Impact, likelihood and trend: Cyber crime Risk trend: Stable
changes to achieve satisfactory control, with continues to present a significant risk to the AA.
ongoing monitoring and reporting. We have a While our ability to detect and respond to Description: The Company has a large defined
talent management model in place, where skills security events and data breaches continues benefit (DB) pension scheme, currently in
gaps are identified, and development and/or to improve, there is a commensurate increase deficit, whose assets and obligations are
recruitment initiatives are actioned. in cyber crime-related security events and subject to future variation from investment
data breaches globally, affecting multiple returns, longevity and other similar factors.
Change in the year: We have continued to
improve our technology, data and digital organisations, in multiple industry verticals. Mitigation: The UK pension scheme is
capabilities to drive sustained benefits in A high level of focus will continue in order to supported by a Company covenant and the
customer and employee experience. We are reduce the risk and the AA continues to use assets and obligations of the scheme are kept
executing against a disciplined programme of external parties to independently verify its under review. The DB scheme is now closed to
capex investment and will continue to review ability to manage and reduce this risk, adjusting new entrants and future accrual.
timelines and priorities as part of the execution our strategy to meet any change to the threat
Change in the year: We continue to execute
of our declared strategy. landscape.
the recovery plan agreed with the trustees in
Impact, likelihood and trend: Change February 2020 and continue to assume that
management and IT transformation is central to Principal Risk: Health and safety the deficit will be fully repaid by July 2025.
execution of the AA Group’s strategy. Failure to The CARE section of the AAUK scheme has
We are unable to maintain the safety of our now been closed, and from April 2020 pension
implement within budget and/or timeframes employees and customers
could have a significant impact; therefore, we accrual is now on a defined contribution
continue to invest in this area to ensure that Risk trend: Increasing basis with transitional arrangements for
delivery is met in line with plans. affected employees over a 3-year period
Description: We must continue to effectively
from 1 April 2020.
manage the risks to our employees’ and
customers’ safety and ensure that effective Impact, likelihood and trend: While potential
Principal Risk: Information security/cyber controls are deployed to achieve this. continuing volatility in the markets and global
crime/data breach economic uncertainty can still impact the
Mitigation: We have a robust and externally
We are unable to protect ourselves from a deficit, the changes noted above mean that
audited integrated health, safety and
significant data breach or cyber security incident the ongoing build-up of defined benefit risk
environmental (HS&E) management system as
is curtailed.
Risk trend: Increasing well as local arrangements where appropriate.
Description: The integrity of critical information We regularly review all our HS&E risks and
is corrupted, resulting in it not being available controls to ensure that they remain fit for
where and when it is needed, or the confidentiality purpose. We have a dedicated team of health
of commercially sensitive, private or customer and safety advisers who are all members of
information is compromised by inappropriate the Institution of Occupational Safety and
disclosure or a serious data breach. Health. We deploy best practice, both that
seen internally as well as externally. We are an
Mitigation: The AA has an ongoing programme active member of SURVIVE, the industry group
of security improvements to maintain an working towards improving safety for those
appropriate level of security against the working at the roadside, and we have an
increasingly sophisticated global cyber external expert chair of our core Health and
threats. Controls include information security Safety Committee, to ensure good governance
awareness training, preventative and detective and independent scrutiny.
security, and a specialist information security
team with a much improved 24/7 security Change in the year: The AA continues to
operations capability, with a focus on incident strive to maintain a safe environment for
response and data breach readiness. The AA employees and members. As part of our
benchmarks its security controls against the COVID-19 response the AA continues to follow
Standard for Information Security (ISO27001), government guidance in our operations, both
and an annual review of the effectiveness of internally for our staff as well as externally
these controls is performed by an independent to our members to minimise risk to all parties.
third party. As a result of our response, we have and will
continue to incur additional costs (such as PPE
and additional resources within offices) to
maintain safe systems of work in line with
government guidance.
STRATEGIC REPORT
Stakeholder engagement
s172(1) statement
Engaging with stakeholders makes our business better

Engagement is critical for any business, but particularly so for one in the process of
transforming itself. The importance of aligning everyone around a common objective and
working towards delivering it successfully cannot be overstated. That’s why we are proud
of the work that we have been doing to ensure that our people at all levels understand the
direction of our business and the role they play in ensuring our long-term success.
Our people Communities and societies Government and regulators

We engage with our people in a variety of Ensuring that we make a positive In our conversations with Government and
ways, ensuring that their voice is heard and contribution to the places where we live and regulators, we promote the interests of all
that they can help to influence the future of work helps build thriving communities and UK motorists and advocate for more rigorous
our business strengthens our business industry standards
Examples in 2020
easured employee engagement and

M witched to purchasing 100% renewable
S ur campaign on the safety of ‘smart’
O
culture through two shorter surveys electricity in our offices and other buildings motorways was successful, with the
which gave us valuable insights about how Transport Secretary agreeing to reduce
ontinued as a signatory of the Armed
C
people were feeling during the pandemic. the spacing between emergency refuge
Forces Covenant, and holder of their
Their inputs gave us clear actions to areas to ¾ mile where feasible. We also
Employer Recognition Scheme Gold Award
support them gave evidence to various House of
ncouraged our people to raise funds for
E Commons Select Committees. We have
lected new members to our Management
E
their nominated local charity throughout won two awards for this campaign
Forum, which is designed to involve
the year
management-grade employees in e have been actively involved in the FCA’s
W
shaping strategy and major decisions he AA Charitable Trust for Road Safety
T general insurance pricing practices market
and the Environment continues to work study, responding to information requests
eveloped our internal communications
D
towards the preservation and protection and attending meetings with the FCA to
to help drive two-way conversation;
of human life and health on our roads. help it understand the potential impact of
our intranet continues to develop,
This year, the Charitable Trust supported its proposed remedies
and we have introduced new methods
a range of programmes which included
of communication, including interactive e are active members of governmental
W
helping teenagers in care learn to drive and
livestreaming and regulatory forums including a member
also helped to promote various other road
of the Government’s Motorists’ Forum and
ur annual AA colleague awards event
O safety initiatives
an adviser to the Climate Assembly UK
went virtual this year. Our awards
recognised outstanding achievements
in an exceptional year, with a theme of
‘Pride of the AA’. We received more than
700 nominations, from which our judges
chose 12 individual winners and three
teams who really stood out
Industry Investors Customers

We believe that effective, system-wide While still a listed company, we were We aim to deliver industry-leading value,
change is only possible if we work with committed to ensuring continued effective service and quality for our customers, and
our wider industry peers, partners and communication and engagement with both we are regularly judged as ‘best in class’
supply chain our shareholders and bondholders. We will
continue to offer the same high levels of
engagement with our bondholders in future
Examples in 2020
articipated in the SURVIVE Group for

P ash offer for AA plc approved by our
C ‘ Which? Recommended Provider’ status
roadside safety and the Society of Motor shareholders at the extraordinary general for the third year running
Manufacturers and Traders (SMMT) meeting on 14 January 2021
K Business Awards for the Most Customer
U
connected and autonomous vehicle
eld 138 meetings throughout the year
H Centric Organisation
working group. This year we also supported
with our bondholders and shareholders
various initiatives with the Office for old award for best digital customer
G
Zero Emission Vehicles to help give a experience at the Insurance Times
better understanding of consumer Awards 2020
concerns regarding electric vehicles 1 in insurance brand consideration for
#
orked with the breakdown industry via
W motor insurance by Ipsos
an All-Party Parliamentary Group to call Feefo Platinum Trusted Service award
for enhanced motorway safety rules that
protect road users and patrols, via the
‘slow down and move over’ campaign
© 2020 Friend Studio Ltd File name: StakeholderEngagement_v58 Modification Date: 13 April 2021 9:57 pm
Our Directors make decisions with our stakeholders, and the long term, in mind
Strategic Report
Section 172 of the Companies Act 2006 (Section 172) requires company directors to act
in the way that they consider, in good faith, would be most likely to promote the success
of the Company for the benefit of its members, as a whole.
The Board’s aim is to make sure that its Responding to COVID-19 Strategic review of future
Governance
decisions follow a consistent process, by In March 2020, the Board responded quickly financing options
considering the Company’s strategic priorities and decisively to the COVID-19 pandemic and A key focus for FY21 was how the AA could
while working within a governance framework subsequent lockdown measures. It oversaw decrease its debt burden from a leverage ratio
for key decision-making that takes into account prompt changes to the Company’s operations, of 7.6x and its associated interest, which was
all relevant stakeholders and balances their both in Roadside and Insurance, and material becoming unsustainable for business growth
various interests. The Board has considered the cost reduction programmes to mitigate the and future investment. In reducing the level
need to act fairly between stakeholders and significant uncertainty ahead. The cost-cutting of debt, the Board hoped to improve the
continue to maintain high standards of business measures included a 15% reduction in pay Company’s future financial flexibility and
conduct. Nevertheless, the Board acknowledges for all Board members for three months. investment opportunities.
that stakeholder interests may conflict with A multi-layered command structure was put
each other and that not every decision can in place immediately, with weekly conference The Board formed a working group and held
result in a positive outcome for all stakeholders. calls of the Board and executive teams to ensure weekly meetings to explore and consider a
that decisions could be taken and implemented range of options, including a new equity
Key stakeholders issue, debt refinancing, a range of hybrid
swiftly throughout the business.
The Board continuously monitors the AA’s key and convertible equity options and sale.
stakeholders to ensure that due consideration is The Board considered the health and safety of its The process was conducted over several
given to all relevant stakeholders in the context employees and customers to be of paramount months, with specialist advisors in respect of
of principal decisions. During the year, the importance. It took action to safeguard these each option conducting detailed analysis and
following key stakeholders were identified: groups while ensuring that the business could presenting this to the Board. There were also
continue to operate effectively. Office-based multiple briefings from the Company’s lawyers
Our people
employees were transitioned to homeworking regarding the application of section 172 to the
Communities and societies as quickly as possible, and safe systems of work Board’s considerations.
were put in place for patrols and other employees
Government and regulators The Board carefully considered the risks and
who were unable to work from home. The number
Industry of employees who were placed on furlough potential benefits associated with the various
were kept under continuous review and, in most options. The Board considered the impact on
Investors employees and consulted with the IDU union.
cases, employees were able to return to work
Customers relatively quickly where necessary. Throughout the process, the Board strived to
have open and transparent engagement with
Read more about our engagement with key The Company also took steps to keep employees the entire workforce through regular direct
stakeholders, and our approach to each of informed and to support their wellbeing and
the groups mentioned above, on P28 communications from the CEO. It also engaged
mental health during this unprecedented proactively with the FCA and other regulators,
period. It communicated with all employees on keeping them updated as appropriate.
Board considerations a regular basis through weekly video blogs from
During the year, the Board considered how the the CEO and an FAQ section on the Hub, the The City Code on Takeovers and Mergers
AA engages with each of the key stakeholders Company’s intranet. The Company trained 108 (the Code) required the Company to publish
mentioned above, as well as its future mental health first aiders and rolled out mental certain formal updates to investors and the
engagement strategy under new ownership. health training to all managers. Two ‘Ways of wider market. The impact of COVID-19 and the
The Board will continue to ensure that due Working’ surveys were carried out during the rules of the Code and Market Abuse Regulation
consideration is given to stakeholder views and year to help understand how the workforce had meant that informal engagement with investors
interests, to the extent that they are relevant to been affected by COVID-19 and what additional was more challenging during FY21. However,
any particular decision. actions the Company could take to support investors were able to communicate with the
its employees. The second survey received Investor Relations team and were encouraged
Two matters that dominated Board time during
its highest ever response rate of 88%, which to ask questions at the Company’s general
the year were the Company’s response to
will help to inform the Company’s future meetings. Ultimately, shareholders could
COVID-19 and future financing options.
working practices. express their views directly via their right to
The case studies on the right describe how
vote on the transaction.
the Directors had regard to the matters set The Board considered how best to support
out in Section 172 when discharging their customers who were experiencing financial Having considered the interests of all
duties, and how this informed the Board’s difficulties as a result of COVID-19. The Company stakeholders and consulted where appropriate,
decision-making around these two matters. was able to offer more flexible payment options on 25 November 2020 the Board announced
to customers who had been directly affected. and formally recommended an offer of 35p
Other required disclosures per share (the Offer) from Basing Bidco Limited
In other cases, it was possible to modify or
Principal non-financial risks: P25-27 (Bidco), a newly incorporated company indirectly
temporarily suspend the product a customer
Gender diversity statistics: P1 was receiving to ensure that it continued to wholly owned by a consortium of (i) funds
meet their needs. Finally, the Company was advised by TowerBrook Capital Partners (U.K.)
proud to be able to support the wider community LLP or its affiliates; and (ii) private equity funds
by partnering with the London Ambulance managed by Warburg Pincus LLC or its affiliates
Service and offering free breakdown cover to (together, the Consortium). On 14 January 2021,
NHS employees. the Offer was overwhelmingly approved by
shareholders and the transaction completed
The Board will continue to balance various on 9 March 2021. The Board hopes that the
stakeholder needs to ensure that the business significant reduction in the Company’s debt will
can operate in a safe and effective manner, provide the foundations for future investment
while supporting employees, customers and and growth, which will in turn benefit the
the wider community through periods of crisis. Company’s wider stakeholders.
© 2020 Friend Studio Ltd File name: StakeholderEngagement_v58 Modification Date: 13 April 2021 9:57 pm
STRATEGIC REPORT
Environmental, social and governance
Going cleaner, safer, my new electric vehicle. We also continued to

work with the Environment Agency to promote
We listen to our customers. Our AA Yonder
Poll is the biggest dedicated motoring panel in
smarter in a fast-moving a joint campaign warning of the dangers of Europe, and the responses from approximately
driving through flood water. Read more about 13,000–20,000 drivers each month helps to
world our commitment to the environment on P31. mould our policy and influences Government
policy. On the commercial side, our ‘Passenger
Cleaner, safer, smarter Safer and social Seat’ panel of 17,000 customers, helps us to
As President, I head up the AA Charitable Trust With over 10m customers in the UK, develop products and services which reflect
for Road Safety and the Environment and lead we take our wider social responsibilities very the needs of drivers. Read more about our
our external campaigns on safety, innovation, seriously. Ensuring that we operate safely commitment to our people on P35, our
mobility and environmental issues. This is an and in a manner that protects our customers, commitment to a high performance culture
important role that we have fulfilled throughout colleagues and the public has always been on P12-13 and our corporate governance
our history. our number one priority. Last year, we led a on P39-49.
The last 12 months have been a challenge for campaign for significant improvement in safety
standards on smart motorways, where the Throughout this report, you will see examples
everyone due to the global pandemic. The AA of how our ‘cleaner, safer, smarter’ approach
team reacted well by introducing safe systems hard shoulder is used as a running lane and
there aren’t enough emergency refuge areas. to ESG penetrates and helps to shape our
of work, enabling most office-based employees business and is vital to our success, now and
to work from home and indeed helping the Our campaigning and the evidence we gave to
the All-Party Roadside Rescue and Recovery in the future.
national efforts by supporting NHS staff with
free breakdown cover and helping various Group and the Transport Select Committee Edmund King OBE
ambulance services to get more vehicles on helped to put pressure on the Government to AA President
the road. make changes. We instigated a BBC Panorama Chairman AA Charitable Trust
programme on the subject and held numerous
Our external ESG strategy is headlined meetings with ministers and officials.
‘cleaner, safer smarter’. This is a strategy we Our intensive campaigning paid off, with
have developed to support our extensive the Transport Secretary agreeing to all our
campaigning work on behalf of Britain’s drivers demands in an 18-point plan including doubling
through our public affairs team. Internally, we the number of emergency refuge areas and
put the health, safety, security and wellbeing of the full introduction of stopped vehicle detection
our colleagues, customers and the public first technology. We continue to keep up the
in everything we do, alongside our efforts to pressure to ensure these improvements
manage our environmental impact, prepare for are implemented.
a changing customer car parc and govern our
business ethically and responsibly. This dual Our broader social remit also means working
strategy runs through our operations, business with suppliers who share our values and
units and campaigning work. It is sponsored by supporting local charities around our UK Stakeholders
Gareth Kirkwood, Managing Director, Roadside offices. This year, we further rolled out a scheme
we developed with the University of Bristol, More information about the Company’s
Services, from an executive perspective, and wider stakeholder groups can be found
coordinated by Hannah Smith, our new Head of that helps teenage care leavers learn to drive,
which improves both their job prospects and on P28.
Group Health, Safety and the Environment, and
has the full support of myself and the Board. self-esteem. We worked with Live Unlimited in In our broader public affairs work and
Barnet and other charities to take this scheme ESG initiatives we have had very close
We are keen to show how we will prosper over forward in the communities where they work. liaison with the Transport Secretary and
the long term as the global economy moves Due to COVID-19 and cancelled tests and Roads Minister, particularly over smart
from fossil fuels to renewables. lessons, we have increased the number of motorways, traffic and travel during
lessons we have pre-funded for care leavers. COVID-19 lockdowns, and Christmas
Cleaner and environment
We recently refreshed our diversity and travel.
There are real challenges as we strive for zero
emissions. The Government’s target of stopping inclusion strategy, targeting six key We also work alongside various House
the sale of new petrol and diesel cars and vans communities to fully embrace the diversity of Commons Select Committees and
by 2030 is a welcome and radical move. As a of our employees and enable the AA to be an with officials from the Department of
market leader, our remit extends beyond the even more inclusive place to work. These Transport, Treasury, Downing St, DVLA,
actions we take to reduce our carbon footprint. communities include those with visible and DVSA and Highways England. We work
In 2020, these have included the purchasing invisible disabilities, gender balance, age, with various safety groups, including
of 100% renewable electricity for our sites, carers, those from our BAME communities PACTS, and we chair the SURVIVE road
and further development of our ‘remote fix’ and vocational backgrounds, and our LGBT safety group for recovery operators.
strategy to reduce the fuel consumption of employees. Each of these communities is led by We also interact with trade bodies such
our fleet. For the third year running, we’ve a senior executive sponsor to raise awareness as Chambers of Commerce, SMMT,
achieved a sector-leading rating in the Carbon of the diverse nature of our workforce and the Logistics UK, Road Haulage Association
Disclosure Project (CDP) environmental communities we serve. Read more about our and Campaign for Better Transport.
assessment. We seek to influence Government, commitment to safety and our commitment to In response to COVID-19, we have
decision-makers and the driving public on steps society on P36-37. worked with the NHS and the London
that can be taken to mitigate the climate crisis – Smarter and governance Ambulance Services and several
for example, last year I was an adviser to Climate regional ambulance services.
Assembly UK. In addition, we often poll our Good governance is crucial and covers
everything from how we listen to our customers On the charity front, we have worked
customers on issues such as accelerating the
and people, to the way we run our Company. with Barnardo’s, Live Unlimited, the FIA
rollout of electric vehicles (EVs) and ensure that
We have rolled out a new Code of Conduct Foundation and the Road Safety Trust.
the results are communicated to Government
and other relevant stakeholders. and fully implemented The Senior Managers Through DriveTech, we work closely with
and Certification Regime (SMCR). We have police forces and various academic and
We supported the introduction of ‘green’ improved our training in areas such as technology institutions. We also liaise
number plates to identify electric and zero anti-bribery and corruption, whistleblowing, with professional bodies and have won
emission vehicles and encourage their take-up. information security, identifying and acting awards from the Chartered Institute of
Alongside the Transport Secretary, I was one of upon customer vulnerability and our data Public Relations and the Public Relations
the first in the UK to have a green plate fitted to protection responsibilities. and Communications Association.
Our members are our key stakeholders
and we often seek their views on issues
through our AA Yonder Motoring Panel
and our Passenger Seat surveys.
© 2020 Friend Studio Ltd File name: EnvironmentalXSocialXandXGovernance_v123 Modification Date: 13 April 2021 9:58 pm
Cleaner, safer, smarter: campaigning Our buildings
Strategic Report
Our commitment to on cleaner verall property GHG emissions have
O
increased by 11%.* Until the colder months
We have continued to lead environmental
the environment ‘thought leadership’ throughout the year: materialised, a significant reduction was
expected. However, to ensure that fresh air
e continued to provide expert resource to
W
Sustainable development support national and local campaigning
could still be provided to reduce the risk of
COVID-19 spread, increased gas usage (9.5%)
is an integral part of the AA and lobbying was required to increase the temperature
mindset and we have been e continued proactive leadership on the
W of colder external air being brought into our
occupied offices
proud to continue to develop shift to EVs
e reduced marked-based emissions per
W
and invest in our strategy e led populus research consumer attitudes
W
ft2 ** by 5.3% against a 2019 baseline and a
to EVs
over the last 12 months. target of 2%
We were a founding partner for World EV Day
The global disruption caused by the e continued to purchase 100% renewable
W
e have supported drivers with their
W
Governance
COVID-19 pandemic has affected every electricity for all our offices and other
questions on electric vehicles by conducting buildings.*** This equates to 7,601 MWh
part of human life. It has, however, several surveys and working with ITV Tonight
provided a rare opportunity to reflect of electricity now being renewable
on ‘Electric Cars: Are We Ready?’ documentary
on our own personal carbon and energy s a result of reduced occupancy, we have
A
footprints and re-engage or discover our he AA President’s blog, ‘Living with an
T actively managed the estate during COVID-19
local environment. At the AA, we have electric car’ and regular appearances on the to reduce emission levels. This has resulted
also used this opportunity to reflect B2B forum ‘EV Café’ in a reduction in consumption of electricity
and ensure that we re-align with this e have promoted environmentally
W (-18.5%), water usage (-57.5%) and waste
global mindset. We acknowledge our responsible driving to pupils in our driving tonnage (-59.3%) compared to FY20
responsibility and the vital role we school training
can play in addressing our impact on e continued to roll out energy monitoring
W
climate change. More than ever, we are e have worked with our DriveTech business’
W and savings initiatives throughout our estate
committed to driving climate action corporate clients to support them in improving e reduced waste generated by our offices
W
within the fields we can directly influence fuel efficiency with their petrol or diesel and maintained our ‘zero to landfill’ policy
vehicles, but also to support them with their
but also to lead the wider market
transition. Nowhere is this better switch to electric vehicles Our fleet
illustrated than with EVs, which have e offered specialist information on
W verall operational fleet emissions have
O
the potential to transform global https://www.theaacorporate.com/ decreased by 17.6%,* mainly influenced by a
emissions reduction. We understand driving-advice/fuels/environment change in workload blend and a decrease in
the importance of societal change in overall workload
this area and the expectations of our e provided traffic news and route planning
W
to optimise journey times and lengths verall operational fleet fuel consumption for
O
investors, workforce, members, and FY21 has decreased by nearly 2.36m litres
how our treatment of this issue will affect Reducing our impact: minimising (-16%) compared with the same period last
our future success.
our carbon and energy footprint year. This is due to our effective operational
This section will provide you with some management alongside a change in workload
2020 highlights
of the highlights and achievements from blend and a decrease in overall workload
We achieved a sector-leading rating in Carbon
the past 12 months, specifically related to e reduced company car emissions by 71.5%
W
Disclosure Project (CDP) assessment (B);
reducing our own impact, our readiness compared with 2019 as a result of reduced
citing an improvement from B- in 2019
for a changing market, the external travel and investment in information
activity we have undertaken and our e achieved a decrease of 17.4% for total
W technology to support remote meetings
priorities for the year ahead. Greenhouse Gas (GHG) emissions*
e have enhanced electric and hybrid options
W
hrough innovation, we recorded a 1%*
T made available for company cars. 74% of our
reduction in our recovery emissions this company car fleet is now either electric or
year as a result of our ‘Repair management hybrid compared to 63% in 2019; average CO2
Solution’ . During FY21, we trialled this solution emissions of our fleet were 52g/km in 2020,
in one area. This has since increased to four compared with 74g/km in 2019 and 81g/km
areas and we are anticipating national roll out in 2018
by Q3 2021. The business is working towards
a target of 1m recovery miles saved and ll of our roadside and recovery fleet vehicles
A
a 5%* reduction in our recovery emissions meet the Euro 6 standard
e independently verified GHG emissions for
W e introduced the Freewheeling hub, our
W
the second year, providing us with additional latest innovative technology which will bring
assurance and certainty an expected further reduction of 2% of our
recovery emissions in FY22*
e continued on our path to Task Force on
W
Climate-related Financial Disclosures (TCFD) e continued development of our ‘remote fix’
W
compliance, providing a structured framework strategy to reduce the fuel consumption
for future compliance of our fleet, resulting in the avoidance of
48,483 patrol journeys
e removed 450,000 plastic membership
W
cards from circulation so far, with a cost saving
of over £45,000. We are continuing to roll out
extended trials of cardless packs
e introduced innovative equipment to
W
improve our capability to tow four-wheel
drives and EVs, decreasing reliance on the
deployment of a secondary resource and the
generation of GHGs related to that secondary
operational deployment * Compared to 2019 figures.
** Net lettable.
*** Renewable electricity not available to purchase in
Northern Ireland.
STRATEGIC REPORT
Environmental, social and governance continued
Summary GHG footprint

Our GHG emissions continued to decrease in FY21; 33,621 tCO2e compared to 40,500 tCO2e in FY20.
tCO2e tCO2e tCO2e % change to
Source of emissions (AR21) (AR20) (AR19) AR20
Scope 1 emissions
(direct combustion of fuels in stationary and mobile sources,
and fugitive emissions) 33,621 40,500 41,379 17.0%
Scope 2 emissions, market-based
(emissions from generation of purchased emissions in owned or controlled
equipment and operations, using a supplier-specific emission factor) 31 262 3,225 88.2%
Scope 2 emissions, location-based
(emissions from generation of purchased emissions in owned or controlled
equipment and operations, using a regional emission factor) 1,777 2,395 2,944 25.8%
Total emissions (market-based) 33,652 40,762 44,604 17.4%
Out of scope emissions
(emissions from the biofuel content in forecourt diesel and petrol) 1,382 1,296 861 6.6%
Fleet intensity measurement 1 (tCO2e/job)
(emissions from operational fleet divided by the number of operational job
tasks completed) 0.01054 0.01121 0.01089 6.0%
Property intensity measurement 2 (tCO2e/ft2)
(market-based emissions from energy use in UK Corporate portfolio
(electricity and natural gas consumption), divided by floor area) 0.00300 0.00316 0.00945 5.1%
GHG Methodology In AR21, the Company had a Streamlined Energy The reported emissions align with our financial
Emissions reported as required under and Carbon Reporting (SECR) carbon footprint year (February – January), and in line with
Companies Act 2006 (Strategic Report and of 36,103 tCO2e using a location-based SECR requirements, the emissions in scope
Directors’ Reports) Regulations 2013. approach. This is down from 43,853 tCO2e in are based on a financial control boundary.
Calculations follow the GHG Protocol Corporate AR20, a decrease of 18%. We recognise the This differs from our GHG inventory boundary,
Accounting and Reporting Standard (revised likely impact that COVID-19 caused to our in which we only report emissions for where
edition), using emissions factors from UK operations during the financial year, with we have ‘operational control’ (i.e. ability to
Government’s GHG Conversion Factors for changes to our operational carbon footprint influence, manage and track energy use and/or
Company Reporting 2020. Overseas factors impacted by the movement away from offices emissions from an operation). The SECR
have been obtained from national agencies. during this time, and the ‘stay at home’ therefore additionally includes sites for where
The GHG reporting period aligns with financial restrictions impacting our day-to-day the AA is deemed not to have operational
statements 2020/21. <1% of consumption data operational fleet use. control. The consumption of these sites has
is estimated using GHG Protocol guidelines. been estimated using the CIBSE Guide F, and
This section of our report discloses our
Boundaries are defined using the operational emissions estimated using the residual AIB
operational energy and carbon footprint in line
control approach. Emissions from AA The 2019 factors. Emissions for previous years
with the Government’s SECR initiative and
Driving School Agency Limited are considered are retrospectively adjusted as and when
includes the data from this financial year
out of scope, as it operates as a franchise more accurate data becomes available.
(February 2020–January 2021; AR21) and, for
and the Company has neither equity rights the sake of comparison, data from the previous The Company undertakes third party
nor control over franchisees. Home-based financial year (February 2019–January 2020; verification to independently verify the
teleworkers are excluded from GHG reporting. AR20). accuracy, completeness and consistency
Square footage of buildings has been aligned of its GHG emissions data (operational control
to our net lettable area in line with our SECR Methodology scope only) against ISO 14064-1 and ISO
Company targets. To comply with SECR, the Company has 14064-3. The AR20 and AR21 data have
reported on all of the emission sources required been independently assured by a third party.
Streamlined Energy and under The Companies (Directors’ Report) and
Carbon Reporting Limited Liability Partnerships (Energy and SECR Annual energy and carbon
Climate change represents one of the greatest Carbon Report) Regulations 2018. This includes In AR21, the Company consumed 149,574,623
challenges facing our planet, and at the AA, emissions from the first year in which we fell kWh of energy and had an adjusted footprint of
we are committed to supporting the transition into the scope of the scheme (AR21) and our 36,103 tCO2e (location-based), equating to an
to a low-carbon economy to meet the previous reporting year (which was not included absolute decrease of 7,750 tCO2e compared
science-based recommendations of the in our AR20 report). This is for the sake of with AR20.
Intergovernmental Panel on Climate Change comparison and is not mandatory for the first
(IPCC). Our emissions are generated across year of reporting under SECR. Our emissions
our operations, including at sites, by vehicles have been calculated in line with the GHG
and through employee travel. Protocol Corporate Accounting and Reporting
Standard (revised edition). We calculated our
The goal is to conduct current and future Scope 2 emissions using a dual reporting
business operations in a sustainable manner approach, publishing both a location-based
which helps create a better future for the footprint (using regional average grid-mix), and
environment. Our largest environmental impact a market-based footprint (determined from
from our direct operations comes from our fleet suppliers’ standard fuel mix). Emission factors
and buildings. Therefore, we established the are provided by suppliers when feasible
following emission reduction targets relevant to cover Renewable Energy Guarantees of
to FY21: Origin (REGO) or conventional supplies.
educe emissions from our buildings per ft2
R Where this is not available, UK Residual Mix by
by 2% by the end of FY21 compared to FY20 the Association of Issuing Bodies (AIB, 2019)
factors are used.
perational fleet: 2.9% reduction in litres per
O
job task in FY21 compared to FY20
Summary SECR footprint
Strategic Report
Table 1 shows our operational Scope 1 emissions, including our consumption of natural gas, fuel consumed by our operational fleet and company cars,
fugitive emissions from refrigerants and fuel consumed by our backup generators and equipment. Please note it is not yet feasible to separate out fuel
purchased for private use from fuel card data, and therefore the following table includes a minimal proportion of grey fleet data.
Table 1: Scope 1 emissions
Generators and
Natural Gas Transport – Diesel Transport – Petrol Refrigerants Equipment – Gas oil
Scope 1 kwh tCO2e kwh tCO2e kwh tCO2e kwh tCO2e kwh tCO2e
AR20 7,359,483 1,353 157,671,742 38,570 2,269,659 530 N/A 79 269 1
AR21 8,030,421 1,477 131,167,687 31,599 821,321 276 N/A 369 1,462 6
Table 2 shows our Scope 2 emissions, released from the generation of the electricity we consume. These have been calculated using both the
Governance
location-based methodology, in line with the average UK grid energy mix, as well as the market-based methodology, which reflects the contractual
emission factors of the electricity providers with specific information regarding the origin of electricity and associated GHG intensity. The Company
entered into a renewable energy contract in March 2019, backed by REGO.
Table 2: Scope 2 emissions
Scope 2 Electricity kwh tCO2e (location) tCO2e (market)
AR20 11,265,711 2,880 982
AR21 9,516,632 2,219 689
Table 3 shows our Scope 3 emissions from our energy consumed by our employees who have travelled either in a rental car or claimed mileage on their
personal car.
Table 3: Scope 3 Emissions
Transport Grey Fleet – Diesel Transport Grey Fleet – Petrol
Scope 3 kwh tCO2e kwh tCO2e
AR20 676,785 166 1,169,582 273
AR21 13,651 57 23,449 102
A summary of all the emissions reported in line with our SECR disclosure is shown in Table 4.
Table 4: Total carbon emissions
Scope 2 Scope 2 Total Total
Scopes Scope 1 (location) (market) Scope 3 (location) (market)
AR20 40,534 2,880 982 439 43,853 41,955
AR21 33,725 2,219 689 159 36,103 34,573
A summary of all the kWh energy reported in line with our SECR disclosure is shown in Table 5.
Table 5: Total kWh energy
kWh Scope 1 Scope 2 Scope 3 Total
AR20 167,301,154 11,265,711 1,846,367 180,413,232
AR21 140,020,891 9,516,632 37,100 149,574,623
Table 6 contains our intensity ratios. The Company discloses its emissions so as to reflect the share of environmental impact across the business,
in particular with regard to emissions from property, and emissions from the operational fleet. Emissions will be considered with regard to:
Occupied Floor Area – AA Corporation Limited ‘UK Corporate’ sites
Number of operational job tasks – The AA Breakdown & Recovery Operations Confirmation of floor area and number of job tasks
Table 6: Intensity ratio (tCO2e/sqft and tCO2e/no. of operational job tasks)
tCO2e /sqft tCO2e/no of
kWh (Location) (Market) operational jobs
AR20 0.0075 0.0032 0.0112
AR21 0.0066 0.0030 0.0105
STRATEGIC REPORT
Energy efficiency actions Our readiness: We have Environment: Our focus for the
We strived to increase our energy efficiency year ahead
efforts and have thus evaluated several been developing our We will continue to invest in and develop
cost-effective energy efficiency measures
across our portfolio for FY21.
people and fleet for a reducing our own footprint and supporting
our customers’ changing needs:
Due to COVID-19, we have had to adjust our changing car parc upporting the Government’s targets of
S
usual business operations (e.g. adapting We have taken steps to build key foundational stopping new petrol and diesel vehicle sales
buildings and reducing occupancy levels due EV capabilities. by 2030, wider climate change goals by
to Government restrictions and lockdowns). 2050 and regional low emission zones (LEZ)
This has resulted in energy savings across FY21, Invested in our people and and ultra low emission zones (ULEZ), while
with the significantly lower headcounts on site equipment – they are the EV experts acknowledging the challenges this presents
reducing the small power, domestic hot water,
air conditioning and ancillary services use and
you can rely on for our industry; actively working to remove
I n collaboration with our business partner, these issues for the AA and our supply chain
overall associated energy demand.
we were the first company in the world ontinuing the development and introduction
C
The below list outlines our operational changes to develop and utilise an Electric Vehicle of our equipment roadmap leading to emissions
due to the pandemic: Training Rig in GHG, reductions in fossil fuel consumption,
un times and set points were adjusted to
R ll patrols and technicians are being trained
A enhanced resource management and
reflect reduced occupation to equivalent Level 2 High Voltage Awareness decreased secondary/third-party resource
by the end of FY22 deployment to dangerous locations
ncillary equipment and service areas were
A
reviewed, and un-used equipment was nalysing our deployment and fleet data
A
Enhanced our EV repair and recovery to determine operational improvements
switched off (e.g. catering equipment in
kitchens, unnecessary fridges, etc.) capability resulting in carbon and energy reductions
e have developed the freewheeling hub,
W
OVID-19-secure workplaces have required
C nalysing our supply chain, especially the
A
to allow us to move EV vehicles safely when
the isolation of heat recovery mechanisms garage network for compliance with clean
we cannot repair at roadside. This ensures that
in HVAC air zone regulations
the customer is repositioned to a charging
These can also be translated into energy point at the soonest opportunity, allowing ontinuing to reassess our most polluting
C
efficiency initiatives, as shown below: the customer to get back on their journey vehicles (9% of roadside operational fleet
with the least interruption. We are estimating account for 38% of the total ops fleet
kWh Savings this latest innovation will save 325 tCO2e emissions) and our wider fleet to determine
Initiative for AR21 Status (approximately 2% of our annualised recovery opportunities for EV, hybrid and alternative
Isolating unneeded emissions)*. It is foreseeable that this saving fuel options when these become available
floors’ electricity 326,598 Complete will continue to increase as the EV car parc urther enhancing our in-house subject
F
Isolating unneeded continues to grow matter knowledge and expertise across
floors’ gas 68,006 Complete 1 2m UK drivers are considering purchasing an more of the EV value chain
BMS* changes: EV in the next two years, which equates to I nvesting in our expert patrols to further
electricity 408,248 Complete 49% of members. Last year, we attended just distil knowledge to enhance roadside repair
BMS* changes: gas 85,008 Complete over 13,000 full EVs (anticipated to be 30,000 capability with equivalent Level 3 High Voltage
for FY22). Only 690 ‘run out of power’ jobs training currently being planned
LCNC** Electricity 81,650 Complete were attended for battery electric vehicles
LCNC** Gas 17,002 Complete in 2020. Our patrols and technicians are, nhancing our existing diagnostic rules and
E
however, equipped with a RFID charge card approaches for EV to ensure that we remain
* BMS- Building Management System.
enabling them to recover an out of charge leaders in this space
** LCNC- Low Cost/ No Cost initiatives.
EV to the nearest BP Pulse public charger xploring options to partner better with
E
Our standards I n collaboration with our business partner, charging providers to enhance our customer
It’s important for us to meet popular, credible we developed a way of refuelling a hydrogen charging capability offering
standards for environmental and sustainability fuel cell vehicle at the side of the road. orking directly with OEMs to develop
W
performance. This year: Mobile refuelling equipment is installed in ‘out of charge EV’ safe recovery procedures
our state-of-the-art technical development to ensure vulnerable customers are moved
e continued successful certification of our
W van. To read more please visit https://www.
integrated HS&E management system to to a place of safety
theaacorporate.com/about-us/newsroom/
the ISO 14001 standard innovation-and-technology/toyota-mirai-fcv- ptimising our support of the EV marketplace
O
e completed the CDP climate change
W refuel by forging more business relationships with
assessment for the third year running in charge point operators while diversifying our
FY21 and are really pleased to confirm we Partnered with infrastructure offering to power companies, EV hardware
have achieved a climate change score of B. providers to support our customers manufacturers and software providers
This is an improvement on the previous year growing EV requirements aunching a level 2 support function where
L
(previously B-). This achievement is above We have focused on establishing partnerships our mobile workforce will support the needs of
sector, European and global averages which with growing brands that support the UK EV charge post operators beyond the call centre
sit at a score of C charging infrastructure. Last year saw us by offering a maintenance and emergency
e supplied greenhouse gas emissions data
W partner with SWARCO, GRIDSERVE, Gronn response field-based service
that has been independently verified to the Kontakt and EO Charging by providing an
Continuing our path to TCFD alignment
international standards ISO14064-1 and outsourced customer service to meet their
ISO1064-3 client needs. From March 2020, we closed
out the year handing 1,200 calls per month,
Please visit https://www.theaacorporate.com/ resolving 85% of enquiries on the call with
esg for more information on our GHG emissions an average handling time of 6 minutes.
and verification statement. We have enabled these customers to manage
the uptime of their network while we handled
their customer needs.
* Based on FY20 emissions data and average figures for

MPG and times for loading.
We are focused on attracting diverse talent and (IDU)/Community, as well as our Management
Strategic Report
have piloted initiatives such as blind CV which Forum (an elected group for management-level
Social: redacts information relating to gender, age and employees), to ensure that our people’s views
Our commitment ethnicity to focus on capabilities and reduce
bias in our hiring approach.
are heard. Meetings are held with the IDU
regularly to discuss business strategy, financial
to our people Developing our people
performance and employee-related matters.
In a year like no other, it has We have continued to offer award-winning Rewarding and recognising
apprenticeships throughout COVID-19. our people
been more important than We now employ over 65 entry-level apprentices We thank and recognise our people throughout
ever that we engage and and have 130 existing employees on the year via our Extra Mile programme, while we
apprenticeships that range from Customer
listen to our colleagues, Service level two to MBA level seven. We have
celebrate their dedication and hard work at the
annual AA Awards. In 2020, our awards event
while supporting their continued to retain our award-winning status went virtual and to recognise outstanding
and were ranked in the top 20 on the
health and wellbeing. RateMyApprenticeship.co.uk, won the
achievements in an exceptional year, the theme
was ‘Pride of the AA’. We received more than
Governance
During the pandemic we’ve West Midlands regional award and placed 700 nominations, from which our judges chose
had to find new ways to in the Top 100 Apprenticeship Employers list. 12 individual winners and three teams who really
stood out.
do this. We’ve held more To develop our people safely through the
pandemic, from induction and onboarding to
regular employee surveys skills and knowledge development, we have
Promoting health and wellbeing  
In a year like no other, it was more important
enabling us to respond enhanced our capacity and capability to offer
than ever that we supported the health and
online learning.
more quickly to issues that wellbeing of our colleagues. To help this,
In 2021, we are updating and expanding our all line managers took part in a mental health
matter and introduced leadership development offering across all awareness course provided by Mental Health
new initiatives to support levels. The leadership development offering First Aid England. We also participate in Mental
is aligned with our new leadership behaviour
wellbeing, including courses framework and includes an essential and
Health Awareness Week and World Mental
Health Day.
for our line managers and elective curricula.
We also offer our people a range of wellbeing
training more than 100 Our learning management system combines programmes. In addition to our Occupational
Mental Health First Aiders. mandatory and optional learning and we have
over 200 courses available to all. We have
Health Service, we have appointed more than
100 Mental Health First Aiders from our existing
We’re extremely proud of how we’ve continued to develop essential online learning workforce across the business. They were all
helped keep Britain moving and of our for all our employees in the following areas: trained by Mental Health First Aid England to
partnership with London Ambulance Conflict of Interest support colleagues and signpost them to our
Service to keep key workers on the other wellbeing services. To address absence
roads. Across the business there Diversity & Inclusion caused by musculoskeletal issues, we have
have been great examples of how our Financial Crime & Anti-Bribery introduced a self-referral programme which
teams have supported our members, gives colleagues access to a range of
GDPR physiotherapy and related services. Our people
customers and each other. These were
showcased at our first virtual awards Health, Safety & Environment Awareness can also self-refer to our Emotional Wellbeing
event – The Pride of the AA – where Service which offers a range of psychological
Information Security therapies up to and including psychiatrist
we celebrated how our people make
us special. Whistleblowing support for the most unwell. Meanwhile, our
employee assistance programme offers free,
In 2020 we made good progress against Mental Health confidential, 24/7 support for our people, both
our priorities and, despite the difficult We’ve continued to embed ‘What drives us’ – online and over the phone. Face-to-face or
circumstances, engagement across the our AA Code of Conduct, by launching interactive virtual therapy sessions are provided as
business increased. We are now using training for all our people. This training ensures required. Qualified counsellors provide
employee feedback to help shape our our people clearly understand the expectations support on a range of topics, including personal,
future ways of working and looking and their responsibilities against five core work and family relationships. And we have
forward to a successful future under behavioural principles: recently introduced an enhanced Attendance
our new ownership. Management Policy and Procedure alongside
Put customers first the IDU, which will help us provide even greater
Louise Benford
Chief People Officer Own it and deliver support for those who are unwell with serious
health conditions.
Safeguard what matters
Throughout the course of the COVID-19
Work as a team
pandemic we have provided a range of
Attracting and Speak Up programmes and initiatives designed to
retaining talent Engagement
promote wellbeing, including for those
colleagues working from home and on furlough.
through development, In 2020 we ran two short engagement surveys. This has included free ‘virtual’ exercise classes
This enabled us to get more ‘in the moment’ and cuppas, healthy living advice and live
engagement and feedback on how people were feeling during sessions with healthcare professionals on
wellbeing the pandemic and subsequent return to work,
which we could quickly respond to and build
a range of issues.
into our plans. Workforce statistics as at

Attracting and retaining talent
This year, we attracted a record number of Highlights from the November survey include: 31 January 2021
37,521 applicants and welcomed 1,005 people Overall employee workforce
iggest increase in positive response was
B
on board, with the primary use of virtual around concerns about having the appropriate 8,105 ( including agency/contractors)
interviews and assessments. PPE for the job, up 20pts on May 6,988 (excluding agency/contractors)
We maintained our Gold Armed Forces Response rate 88%, up 21pts on May Manager grade employee population
Covenant status and continue to promote job
opportunities through the Career Transition Positive engagement 71% up 1pt on May 554
Partnership (the MoD’s official provider of We continue to work closely with our recognised Executive Board population
Armed Forces Resettlement). union, the Independent Democratic Union 6
STRATEGIC REPORT
COVID-19 specific achievements onthly unannounced independent COVID-19

M
audits to ensure that all measures were
Our commitment to 95% of office-based staff homeworking
by Easter adhered to
safe and secure nabled continuation of homeworking
E or those returning to the workplace:
F
operations throughout the period, which has led to a
comprehensive review of future ways of
COVID-19 e-learning plus induction with
physical walk-through of local measures
working across the AA
Safety leadership is the Risk assessments were undertaken for home
ll applicable recovery trucks now allow
A workers to identify appropriate controls.
foundation of our business social distancing following the installation These have been continually reviewed to
and critical to the success of Perspex screens fitted for the protection ensure that the most suitable controls are
implemented to protect our people’s health and
of our safety culture and of our people and customers
safety. Controls for those working from home
business outcomes. round 100 recovery vehicle cab screens
A
(with fitting guidance) distributed to garage
include but are not limited to:
Whether ensuring the partners to allow carriage of passengers ll staff went through a Display Screen
A
occupational safety and The challenges presented by
Equipment (DSE) assessment despite the
‘temporary’ nature of working from home
health of our people, our COVID-19 ll home workers have a range of new
A
members or the wider We have proudly remained fully operational equipment, including surge protected
throughout COVID-19 helping our members
community, we drive a and the wider community face this challenge
electrical extensions and fire extinguishers
safety-first approach. together. e put a significant focus on wellbeing
W
initiatives and increasing the number of
The AA has invested in robust controls from Mental Health First Aiders across the AA
This year in the context of the outset of the pandemic and continued to
We completed site risk assessments for our
COVID-19, more than ever, go above and beyond to protect its people,
outdoor workforce to ensure a COVID-19 secure
its members and the wider community.
it has been imperative to We continue to dynamically risk assess our and compliant workplace could be maintained.
Controls for our outdoor workforce include
ensure that we can continue activity, re-evaluate the latest research and
but are not limited to:
provide ‘thought leadership’ to ensure our
to deliver the service our safe systems of work remain effective. I nvestment in changing operational processes
members and people What have we done? where required; providing training, securing
deserve. We have completed site risk assessments for PPE and applying furlough where demand
our indoor operations to ensure that a COVID-19 allowed (ensuring this was provided to our
secure and compliant workplace could be most vulnerable people first)
maintained. Controls for our offices include erspex barriers installed into recovery
P
but are not limited to: trucks to enable safe carriage of customers
imited numbers of our people remain based
L upply chain leadership and coordination
S
in offices in line with government guidance; with NHS partners to maximise our own PPE
where workers experienced mental health capacity without undermining local NHS
or technical/logistical issues when working supply situation
from home, these have been supported
ur Safe Systems of Work have been shared
O
We put the safety and security of empathetically on a case by case basis
proactively with garage partners and
our people, customers and the eviewed airflows within buildings, offices
R competitors
public first and meeting rooms to detail air change
eadership at the industry level SURVIVE
L
frequency rates and determine which can
2020 achievements group and with DfT, Scottish Parliament and
be used safely and for how long, including
regional police forces to agree safe working
Awarded The Royal Society for the Prevention the closure of all small meeting rooms
practices across the country
of Accidents (RoSPA) Gold award for
djusted air handling units to ensure no
A
demonstrating high health and safety standards
recycling of air, bringing in fresh air only
ontinued to lead the campaign to improve
C
the safety of ‘smart’ motorways

Initial closure of our canteen facilities;
re-opening some as takeaways and offering
The AA year ended
ur people have completed over 7,500 health
O a limited service in adherence with strict 31 January 2021
and safety specific e-learning courses COVID-19 measures
chieved a reduction in our Accident
A nhanced cleaning regimes have been
E
Statement from the
Frequency Rate and Lost Time Incident put in place Independent Chair of the
Frequency rate. While inevitably impacted
ctive monitoring (e.g. by COVID-19 marshals)
A
Health Safety & Environment
positively by a reduction and change in
to ensure procedures adhered to Committee
workload and the increase in homeworking,
rovided COVID-19 kits, including hand
P I have reviewed the statements of the
we also believe it to be as a result of an
sanitiser and wipes AA for the year ended 31 January 2021
intensified focus on our safety working
which comprise the Environmental,
practices earranged available desk configuration
R Social and Governance Strategic Report.
he number of RIDDOR reports is less than
T and fitting where appropriate to enhance
social distancing In my opinion, the statements give
half of the previous year’s and lower than
a true and fair view of the state of the
any occasion in the last 10 years
Company’s affairs as at 31 January 2021.
Maintained our record of zero fatalities
Health and safety aunched Unconscious Bias training to
L ndertaking targeted risk-based safety
U
Strategic Report
all new employees and existing employees awareness campaigns to reduce harm to our
performance Designed and implemented a blind CV trial
community, members, staff, suppliers and
contracted parties
Accident Frequency Rate eveloped a gender talent programme
D
he AA Trust is to launch major research and
T
to support the development of senior
2018 35.8 a campaign to raise awareness and save the
female leaders
2019 31.9 lives of young drivers on rural roads
2020 23.7 Creating value beyond our business ne Life. One radio station. One hour: A radio
O
Our teams make a meaningful impact in the show will be created, celebrating the life of one
The data above is calculated using the formula hundreds of communities they work in every young driver who lost their life on one of UK’s
outlined in the HSE statistics guidance. day, from supporting community events and most dangerous rural roads. This will be
Previously published figures used AA local fundraising to national charity days broadcast between 2 and 3am on a Sunday,
specific formula. including Children in Need and Macmillan the exact time most crashes happen. It will
coffee mornings. We are also proud to use then be used as a central theme of a national
Total reportable incidents (RIDDOR) our technical knowledge and skills to support radio and awareness campaign targeting
Governance
Number of RIDDOR
charitable events such as the Magical Taxi young drivers
Year reports Tour and Bangers for Ben.
he Government will be held to account on
T
2010 172 Supporting our wider community their smart motorway 18-point action plan to
2011 129 This year, to support our customers and the enhance road safety for drivers and our patrols
2012 106 wider community: We will also continue to help the wider
2013 83 ur ‘Smart’ motorway campaign persuaded
O society by:
2014 78 the Government to agree to double the romoting the actions of patrols who win
P
number of emergency refuge areas and won commendations and show bravery in
2015 66
‘Best Public Affairs’ campaign supporting emergency services and local
2016 71
A Signs have provided over 1,800 free signs,
A communities
2017 62
so far completing installation at nearly 200 upporting Ambulance Services by keeping
S
2018 53 sites to enable the national vaccination effort more ambulances on the road and highlighting
2019 64 where we have helped community vaccination
ur technical services team worked with
O
2020 31 Uber in the North East to fit screens within centres with free signs
their vehicles to ensure these could continue ost of our sites will be involved in local
M
Our commitment working in the North East supporting
key workers
employee charity support and volunteer
initiatives
to society e have supported London Ambulance and
W orking with the AA Trust and other charities
W
East of England Ambulance Service with over to help teenagers in care and care leavers
Diversity and inclusion 200 patrols and technicians to ensure that as
We have a diverse workforce, so an inclusive learn to drive to enhance their mobility and
many ambulances as possible are available self-esteem
workplace is critical. In 2020, we refreshed to be on the road
our diversity and inclusion (D&I) strategy to We will create a workplace where everyone
pull together the great work that is already e have provided free breakdown cover
W feels they can belong and do their best work by:
happening across the business, and to do during the first national lockdown to all
NHS workers triving for a diverse, inclusive working
S
more of it.
environment by celebrating who we are and
The main aim of the new strategy AA Trust scheme to help teenagers in creating a workplace where everyone feels
is to celebrate who we are while enabling care learn to drive rolled out via various they can belong and do their best work. We’ll
everyone to be their best. The strategy community charities deliver this through our six community groups,
consists of three objectives:  e have led the debate promoting
W each of which has a clearly defined mission
diverse workforce that is representative of
A Government to consider red flashing lights nsuring the wellbeing of our colleagues
E
our current and future customers; one where for breakdown vehicles, promoted ‘slow across the AA by supporting their physical,
we truly value and embrace differences of all down and move over’, gave evidence to mental, and financial health through services,
kinds and realise how these contribute to a the Select Committee on e-scooters and benefits, information, and training
stronger business young drivers
ngaging colleagues, generating pride in
E
n inclusive workforce where people can
A being part of the AA through regular two-way
bring their whole self to work and therefore
Social: Our focus for the year ahead
communication, visible leadership, and
can unlock their true potential and perform We will continue to put the safety and security recognising and celebrating great work
at their best of our people and our members first by:
ontinuing to drive employee engagement
C Governance
trong relationships with the diverse
S The corporate governance requirements are
communities in which we operate, allowing in the safety space to ensure that we mitigate
the risks that affect our people presented in the Governance section of
us to understand local needs and promote this report.
us as an employer of choice roactively engaging with our recognised
P
We’ve established six clear areas of focus – Union, the IDU, to ensure that our people are
gender balance, ability, carers, pride, origins engaged in the development and delivery of
and generations – to bring together people our strategy
with shared characteristics and backgrounds to Developing our core health and safety
push forward positive change in our business. IT systems to optimise accessibility,
Each community is being championed by a performance and MI capability
member of our Executive team, demonstrating
clear commitment and ownership. Alongside nhancing the quality of our risk assessments,
E
these communities we have also nominated safe systems of work and learning and
D&I allies, who are passionate about making development programmes
a difference. Some of our successes in nhancing our pro-active hazard identification
E
2020 include: to deliver industry-leading effective safety
elebrating eight key campaigns from
C controls
International Women’s Day to National
Carers Week and Black History Month
STRATEGIC REPORT
Non-financial information statement
Reporting requirement The AA’s key policies and standards which govern our approach and controls
Environmental matters Health, Safety and Environmental Policy (E)

Further details in this report: Health, Safety and Environmental Management System (I)
Our commitment to the environment P31 Sustainability and Social Responsibility Policy (E)
Our commitment to safe operations P36 Prevention and Control of Environmental Incidents Policy (I)
Principal risk: health and safety P27 Waste Management and Minimisation Policy (I)
Company employees Business Standards Policy (I)

Further details in this report: Terms of Employment and Policy Guide (I)
Principal risk: outstanding service P26 Working Time Policy (I)
Diversity and inclusion P37 Absence policies including Absence Management, Maternity, Adoption and Family Leave (I)
Our commitment to our people P35 Learning, Development and Performance Policy, including Managing Performance, Performance
Our commitment to safe operations P36 and Development Behaviours (I)
Equality and Diversity Policy (E)
Health, Safety and Environmental Policy (E)
Health, Safety and Environmental Management System (I)
Sustainability and Social Responsibility Policy (E)
Social matters Sustainability and Social Responsibility Policy (E)

Further details in this report: Treating Customers Fairly Policy (I)
Our commitment to society P37 Vulnerable Customers Policy (I)
Our commitment to our people P35 The AA Charitable Trust (UK charity no.1125119)
Stakeholder engagement P28-29
Respect for human rights Equality and Diversity Policy (I)

Further details in this report: Human Rights Policy (E)
Diversity and inclusion P37
Our commitment to society P37
Anti corruption and anti bribery Anti-Money Laundering Policy (I)

Further details in this report: Anti-Bribery and Allowable Gifts, Hospitality and Donations Policy (I)
ur commitment to a high performance
O Conduct Risk Policy (I)
culture and the highest standards of
conduct P12-13 Conflicts of Interest Policy (I)
Financial Crime Policy (I)
Insider and share policies, including Insider and Market Abuse, Insider Information Disclosure
and Share Dealing Code Policy (I)
Whistleblowers Policy (I)
Due diligence and outcome Risk Management Framework Policy (I)

Further details in this report: Annual Internal Audit Plan (I)
Risk Management Framework P25-27 Risk Register (I)
ISO 14001, ISO 9001 and ISO45001 certification for specified business areas (E)
Business model
Further details in this report:
Our business model P4
N on-financial key performance indicators

Further details in this report:
Key performance indicators P14-15
Our commitment to safe operations P36
Our commitment to the environment P31
I Group policies, standards and guidelines that are published internally only.
E Group policies, standards and guidelines that are published on theaacorporate.com.
The Strategic Report, which has been prepared in accordance with the requirements of the Companies Act 2006, has been approved by the Board on
13 April 2021 and signed on its behalf by:
Kevin Dangerfield
Director
Directors’ Report
The Directors present their report, together with the audited consolidated Financial Statements. This Directors’ Report meets the requirements set
Strategic report
out in the Companies Act 2006, the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, and the Companies
(Miscellaneous Reporting) Regulations 2018. Some disclosures are included in other sections of this Annual Report and Accounts (ARA) and are
incorporated into this Directors’ Report by way of cross-reference.
Index to Directors’ Report and other required disclosures
Acquisitions and disposals P71 (Notes to the Financial Statements)

Auditor information P40 (Directors’ Report)
Board of Directors P40 (Directors’ Report)
Carbon emissions P32 (Strategic Report)
Directors’ indemnities and insurance P41 (Directors’ Report)
Dividends P79 (Notes to the Financial Statements)
Governance
Employee engagement P41 (Directors’ Report) and P35 (Strategic Report)
Employees with disabilities P41 (Directors’ Report)
Events after the reporting period P95 (Notes to the Financial Statements)
Financial instruments P87 (Notes to the Financial Statements)
FRC Corporate Reporting Review P41 (Directors’ Report)
Future developments P4-8 (Strategic Report)
Going concern P41 (Directors’ Report)
Internal controls over financial reporting P40 (Directors’ Report)
People P35 (Strategic Report)
Political donations and expenditure P41 (Directors’ Report)
Remuneration Report P44-49 (Remuneration Report)
Risks affecting our business P25-27 (Strategic Report)
Statement of corporate governance arrangements P39-40 (Directors’ Report)
Suppliers’ payment policy P41 (Directors’ Report)
Statement of corporate governance arrangements

Following its de-listing from the London Stock Exchange on 10 March 2021, and subsequent conversion from a public to a private limited company,
the AA Limited (the AA or the Company) is subject to the requirements for Large Private Companies under the Companies (Miscellaneous Reporting)
Regulations 2018 and must include a statement of corporate governance arrangements in its ARA. The Company was fully compliant with the UK
Corporate Governance Code 2018 (the Code) for the year ending 31 January 2021. We have set out below how we applied the overarching themes of
the Code during FY21.
© 2020 Friend Studio Ltd File name: Directors_XReport_v64 Modification Date: 13 April 2021 9:58 pm
GOVERNANCE
Directors’ Report continued
The Code Application during FY21 Auditor information

Board he Board is collectively responsible for the long-term sustainable
T The auditor of the Company is
leadership success of the Company and builds successful relationships with a PricewaterhouseCoopers LLP. So far as each
and company range of stakeholders through both formal and informal engagement person serving as a Director of the Company
purpose is aware, at the date this Directors’ report was
The Board has continued to keep Company culture under review approved by the Board there is no relevant audit
ffective workforce engagement during the year included Non-Executive
E information (that is, information needed by the
Director (NED) and Executive Director attendance at employee meetings auditor in connection with preparing its report)
and forums of which the Company’s auditor is unaware.
Each such Director confirms that he or she has
Read more about how the Board has engaged with employees in our taken all the steps that he or she ought to have
Section 172 statement on P28-29 taken as a Director in order to make himself or
herself aware of any relevant audit information
Division of here is a clear division of responsibilities between the Chair and Chief
T and to establish that the Company’s auditor
responsibilities Executive Officer (CEO) and the division of responsibilities across the is aware of that information.
Board and its Committees is regularly reviewed and documented in
Terms of Reference Audit Quality Review
here are certain matters that the Board delegates to the Executive
T The FRC’s Audit Quality Review (AQR) team
Committee and other internal operating committees; key matters reserved routinely monitors the quality of the audit work
for the Board include strategy, major policy updates, approval of major of certain UK audit firms through inspections
acquisitions and disposals, significant capital expenditure and financing of sample audits and related procedures at
matters, and approving the financial statements individual audit firms. During the year, the
AQR team selected to review the audit of the
he Board identified the following NEDs to be independent: Suzi Williams,
T Group’s financial statements for the year
Andrew Blowers, Steve Barber, John Leach, Mark Brooker and Cathryn Riley ended 31 January 2020. The Chair of the Audit
he AA exceeded the Code requirement for more than half the Board to be
T Committee held discussions with the AQR
independent NEDs, excluding the Chair, for the year ended 31 January 2021 prior to the review commencing, and the Audit
Committee received a full copy of the findings.
uring FY21, the Board implemented a new process for approving external
D No significant matters arose from the review
appointments and reviewing time commitments of Board members. which required action, and the Audit Committee
The Nomination Committee considered requests from three NEDs and was therefore satisfied as to the quality of
concluded that each NED would have sufficient time to meet their Board the audit.
responsibilities. The Board was supportive of the additional skills and
experience that these external appointments would bring to the AA Internal controls over financial
reporting
Composition, he AA’s Nomination Committee oversees the process for Board and
T
The Audit and Risk Committees worked closely
succession and senior management appointments, succession planning, and the annual
together to monitor the effectiveness of the
evaluation Board evaluation
Group’s risk management framework and
ll Directors were subject to re-election at the 2020 AGM and were
A internal financial controls. It should be noted
successfully re-elected by shareholders that the Group’s risk management systems are
orn Ferry has continued to assist with developing a diverse succession
K designed to manage rather than eliminate the
plan for the Board, Executive Committee and other business-critical roles risk of failure to achieve business objectives
and a nominated deputy system has been put in place for effective and they can only provide reasonable and
succession planning not absolute assurance against material
misstatement or loss. The Risk Committee
n evaluation of the Board, its Committees and the Chair was carried out in
A received copies of all internal audit plans and
December 2020. As the AA was not a constituent of the FTSE 350 during reports. In addition to the Head of Internal Audit
FY21, it was not required to undertake an external evaluation under the Code. attending all Committee meetings, the chair
Nevertheless, the Nomination Committee carefully considered how best to of the Committee regularly met with the Head
work within the spirit of the Code, taking into account the needs and views of Internal Audit.
of a variety of stakeholders. The Nomination Committee carried out an
internal evaluation for FY21 and discussed the results Board of Directors
The Directors who served throughout the
Audit, risk and he AA’s Audit Committee met regularly and fulfilled the requirements set
T financial year ending 31 January 2021 were
internal control out in the Code Steve Barber, Simon Breakwell, Andrew
uring the year, the Audit Committee reviewed and made recommendations
D Blowers, Mark Brooker, Kevin Dangerfield,
in relation to the preliminary final and interim financial results and disclosures John Leach, Cathryn Riley and Suzi Williams.
to ensure that all information published in the Group’s financial results was On 9 March 2021, following the acquisition of
fair, balanced and understandable the Company by Basing Bidco Limited (Bidco),
a newly incorporated company indirectly wholly
he effectiveness and independence of the Group’s external auditor,
T owned by a consortium of (i) funds advised by
including its involvement with non-audit matters, was monitored TowerBrook Capital Partners (U.K.) LLP or its
throughout the year affiliates; and (ii) private equity funds managed
he Audit Committee continued to assess the resourcing of the Internal
T by Warburg Pincus LLC or its affiliates (together,
Audit function and the adequacy of internal financial controls the Consortium), Steve Barber, Andrew Blowers,
Mark Brooker, John Leach, Cathryn Riley
new Chief Risk Officer, Briony Horvath, was appointed during the year
A and Suzi Williams resigned as Directors of
and the AA continues to develop our risk management framework. the Company.
Read more about risk management on P25-27
Remuneration I n line with the Code, the AA’s Remuneration Committee, comprising
independent NEDs, reviewed remuneration policies and practices to
ensure that these were aligned with the Company’s strategy and
promoted its long-term sustainable success
Read more about the work of the Remuneration Committee in our
Remuneration Report on P44-49
Directors’ indemnities and insurance Political donations and expenditure Suppliers’ payment policy
Strategic report
The Company maintains appropriate Directors’ No political donations were made during the It is the Company’s policy to develop and
and officers’ liability insurance cover. The year ended 31 January 2021 (2020: £nil). maintain key commercial relationships with
Company also grants indemnities to each of its The AA has a policy of not making donations its suppliers and to obtain mutually agreeable
Directors and the Company Secretary to the to political organisations or independent payment terms. For the half year period ended
extent permitted by law. Qualifying third-party election candidates or incurring political 31 January 2021, the average time taken to pay
indemnity provisions (as defined by Section expenditure anywhere in the world as defined invoices was 7 days. Further information can
234 of the Act) were in force during the year by relevant legislation. be obtained from the Government’s payment
ended 31 January 2021 and remain in force, in practice reporting portal.
relation to certain losses and liabilities which the Company re-registration
Following the Acquisition, which completed The Directors’ Report has been approved by
Directors or Company Secretary may incur to
on 9 March 2021, the Company de-listed from the Board on 13 April 2021 and signed on
third parties in the course of acting as Directors,
the London Stock Exchange on 10 March 2021 its behalf by:
Company Secretary or employees of the Group.
and became a private limited company called Kevin Dangerfield
Employee engagement AA Limited on 17 March 2021. Chief Financial Officer
We remain committed to employee engagement
Governance
throughout the business. Employees are kept
updated on the Company’s strategy and
progress through regular communications, Directors’ Responsibilities Statement
including emails and updates on the Company’s
intranet page. Further details of our workforce Statement of Directors’ responsibilities in respect
engagement and our people can be found on P35. of the financial statements
Employees with disabilities The Directors are responsible for preparing The directors are also responsible for
The AA is proud of our policy that people the Annual Report and the financial safeguarding the assets of the group and
with any disability should have full and fair statements in accordance with applicable company and hence for taking reasonable
consideration for all vacancies. During the year, law and regulation. steps for the prevention and detection of
we continued to demonstrate our commitment fraud and other irregularities.
Company law requires the directors to
to interviewing those people with disabilities
prepare financial statements for each The directors are responsible for keeping
who fulfil the minimum criteria and we endeavour
financial year. Under that law the directors adequate accounting records that are
to retain employees in the workforce if they
have prepared the group financial sufficient to show and explain the group’s
become disabled during employment.
statements in accordance with international and company’s transactions and disclose
FRC Corporate Reporting Review accounting standards in conformity with with reasonable accuracy at any time the
During the year, we were notified by the FRC’s the requirements of the Companies Act financial position of the group and company
Corporate Reporting Review team that they had 2006 and company financial statements and enable them to ensure that the financial
reviewed our FY21 Annual Report and Accounts. in accordance with United Kingdom statements and the Directors’ Remuneration
We satisfactorily responded to their enquiries Generally Accepted Accounting Practice Report comply with the Companies
and they noted no significant findings from their (United Kingdom Accounting Standards, Act 2006.
review, with any disclosure recommendations comprising FRS 101 “Reduced Disclosure
The directors are responsible for the
applied, as appropriate, in this report. Framework”, and applicable law).
maintenance and integrity of the company’s
Under company law, directors must not website. Legislation in the United Kingdom
Going concern approve the financial statements unless they governing the preparation and dissemination
The Group has £372m of Class A5 Notes due are satisfied that they give a true and fair of financial statements may differ from
within 12 months of approval of the Annual view of the state of affairs of the group and legislation in other jurisdictions.
Report and Accounts. The Directors propose a company and of the profit or loss of the
refinancing of the Class A5 Notes in advance of group for that period. In preparing the Directors’ confirmations
their maturity on 31 January 2022 and drawing financial statements, the directors are In the case of each Director in office at the
upon the remaining £100m of committed required to: date the Directors’ Report is approved:
new equity from the Consortium (see note 39
for further details). Given the significant s elect suitable accounting policies and s o far as the Director is aware, there is no
deleveraging of the debt at both A Notes and then apply them consistently; relevant audit information of which the
B Notes level following the Acquisition, the group’s and company’s auditors are
s tate whether applicable international unaware; and
current pricing of A Notes in the secondary debt accounting standards in conformity with
markets and the existing Investment Grade the requirements of the Companies Act t hey have taken all the steps that they
rating of BBB- of the A Notes to be issued, the 2006 have been followed for the group ought to have taken as a Director in order
Directors are, on this basis, confident that this financial statements and United Kingdom to make themselves aware of any relevant
refinancing will be successful. At the date of Accounting Standards, comprising FRS 101 audit information and to establish that the
approval of these financial statements, the have been followed for the company group’s and Company’s auditors are aware
Class B3 Notes that were issued on 29 January financial statements, subject to any of that information.
2021 are no longer contingent on the completion material departures disclosed and The Directors’ Responsibilities Statement
of the Acquisition (see Note 39) and considering explained in the financial statements; was approved by the Board on 13 April 2021
each of these points, along with the projected
ake judgements and accounting estimates
m and signed on its behalf by:
cash flows for a period of one year from the date
of approval of these consolidated financial that are reasonable and prudent; and Kevin Dangerfield
statements, the Directors have concluded that repare the financial statements on
p Chief Financial Officer
they have confidence that the Group will have the going concern basis unless it is
sufficient funds to continue trading for this inappropriate to presume that the group
period and will be able to secure financing so and company will continue in business.
as to be able to continue to meet its liabilities
as they fall due. Notwithstanding the above,
the refinancing of the Class A5 Notes, due on
31 January 2022 is not committed at the date
of issue of these financial statements. These
circumstances indicate that a material
uncertainty exists that may cast significant
doubt on the Group’s ability to continue
as a going concern for a period of in excess
of a year from the date of issue of these
financial statements.
GOVERNANCE
Directors’ Remuneration Report
Introduction Rationale for Committee decisions

Remuneration membership and This Directors’ Remuneration Report sets out to Until the point of de-listing, the Committee
attendance cover the required regulatory information in the continued to be responsible for all Executive
context of the Remuneration Policy approved remuneration matters, from the recruitment
Committee members Date appointed at the 2018 AGM, which received 76.23% votes and retention of high calibre individuals,
Mark Brooker (Chair) 6 September 2019 in favour, and how our implementation of that to the design of appropriate incentivisation
Steve Barber 27 June 2018 policy fits with the ongoing strategic priorities mechanisms and the ongoing monitoring
of the Company and desired outcomes for our of performance against these, to ensure
Andrew Blowers 15 November 2019
shareholders, and other key stakeholders, Executive outcomes are aligned with
All members ceased to be members of where appropriate. shareholder experience. Remuneration
the Committee when they resigned as practices at the AA are designed to motivate
As ever, the Committee closely follows the
Directors on 9 March 2021. the Executive and leadership team to achieve
ongoing regulatory focus on executive
strategic objectives and to lead and incentivise
remuneration, fairness and corporate culture.
Other attendees Over the past 12 months, the Committee has
all employees within the Company whilst
The CEO, Chief People Officer and delivering value for key stakeholders.
reviewed the Remuneration Policy and its
Reward Director and Deloitte LLP and implementation, taking account of the UK For the year ended 31 January 2021, Committee
Willis Towers Watson attended parts Corporate Governance Code 2018 (the Code) discussions took place against an uncertain
of Committee meetings by invitation in and associated Guidance on Board Effectiveness, political and economic backdrop as well as
order to provide the Committee with and the Companies (Miscellaneous Reporting) uncertainty around the future ownership of
additional context. As with all Board Regulations 2018. We are committed to the Company. In determining performance
Committees, the Company Secretary ensuring that the interests of the wider outcomes for the Annual Bonus Plan, the
acts as secretary and provides support workforce, shareholders, and other key Committee has taken into consideration
and sufficient resources. Where stakeholders are considered fairly, and in the the overall business performance as well
necessary, the Committee has direct context of expectations of the general public as individual performance of Executive
access to independent professional and welcome the greater degree of clarity Directors and the bonus outcomes of the
advisers to undertake their duties. and transparency that these changes bring. wider workforce. The Committee also
Willis Towers Watson was appointed considers risk and governance performance
On 25 November 2020, the Company
as adviser to the Committee from when determining outcomes.
announced that a cash offer had been received
September 2020. from Basing Bidco Limited (Bidco), a newly As set out in the FY20 Directors’ Remuneration
No individual was present when their incorporated company indirectly wholly Report, the Company confirmed that the
own remuneration was being determined. owned by a consortium of (i) funds advised by Annual Bonus Plan and its operation would be
TowerBrook Capital Partners (U.K.) LLP or its reviewed at the beginning of H2 and that the
affiliates; and (ii) private equity funds managed maximum bonus potential for Simon Breakwell
by Warburg Pincus LLC or its affiliates (together, and Kevin Dangerfield for FY21 would be
the Consortium). On 14 January 2021, 93.48% reduced accordingly.
of our shareholders voted in favour of this offer,
Our full year results, which reflect a Trading
and the Scheme of Arrangement through which
EBITDA decline of c.2% on the prior year from
the Acquisition was effected (the Scheme) took
£348m to £341m and net debt flat year on year
effect on 9 March 2021.
at £2.6bn, demonstrate our commitment to
In light of the Company’s de-listing, only delivering on the plan we set ourselves at
updates specifically relating to corporate the start of the year, amid challenging external
governance changes have been made to the trading conditions.
remuneration policy.
Over the course of the year, the Committee has
considered and taken a number of significant
decisions, in respect of Annual Bonus outcomes
and the vesting of long-term incentive plans as a
direct result of the sale and resulting de-listing
of the Company.
The Committee strongly believes that it is
important to reward performance fairly and
transparently, whilst balancing executive
outcomes with that of shareholder experience.
Taking into consideration the tremendous effort
of management to deliver an overwhelmingly
positive result in respect of the recent shareholder
vote on the sale of the Company, as well as a
strong underlying performance in light of the
COVID-19 pandemic, the Committee believes
that the decisions it has taken in respect of
remuneration outcomes have been balanced
and fair.
© 2020 Friend Studio Ltd File name: Directors_XRemunerationXReport_v58 Modification Date: 13 April 2021 9:59 pm
Key decisions taken in the year Board changes during FY21 The Committee has also received regular
Strategic Report
were in relation to: There were no Board changes in the year ended updates on progress in relation to the
31 January 2021. Company’s gender pay gap and initiatives in
FY21 Bonus outcomes place to reduce this gap over time. Whilst the
For further details, see P45. Key remuneration decisions and Committee is mindful of the widespread gender
All employee ‘Thank You’ gesture out-turns for FY21 imbalance that exists more generally within
o salary increases were awarded to
N the automotive sector, it has been particularly
In recognition of the tremendous collective
Executive Directors for 2020/21 pleased to note a number of initiatives launched
effort of everyone in the Company, the
by the Company over the past 12 months,
Committee approved a special one-off alary and fee reduction of 15% for Executive
S particularly focused on improving the Company’s
‘Thank You’ gesture of £400 per person. and Non-Executive Directors from 1 May to gender balance. The Committee is pleased to
This was made in December 2020 to all 31 July 2020 see a year-on-year increase in the number of
employees of the Company outside of the
o awards made under the Performance
N female apprentices across the Company,
Executive Committee and Executive Directors
Share Plan with females making up 43% of this year’s
(subject to qualifying employment).
apprentice cohort. In addition, the Committee
Vesting of PSP awards ince IPO, and in a time of challenging business
S notes the launch of the Company’s ‘Balance
Governance
In respect of the PSP17 award, the performance performance, no long-term incentive schemes Network’ which will be rolling out its first
period of the final measure (TSR) ended on have paid out, with the exception of the 2% mentoring scheme to 20 female leaders from
26 October 2020. The Committee noted that vesting of PSP17 awards, demonstrating that March 2021.
TSR performance significantly underperformed the interests of Executive Directors and the
wider executive are aligned with those of There were no annual pay awards for the wider
the relevant metric and, as a result, it was workforce for the year ended 2021 as a direct
determined that this measure was not met. our shareholders and poor performance is
not rewarded result of the ongoing COVID-19 crisis.
As such, the PSP17 is expected to vest to the
extent reported in last year’s Annual Report, at he closure of the CARE section of the
T Committee changes
2% of the total award, being 24,279 shares in Company’s defined benefit pension scheme Over the course of the year ended 31 January
the case of Simon Breakwell. Kevin Dangerfield to future accrual, with existing members 2021 there were no changes to the Committee,
had no awards under the PSP17. Further details moving to the defined contribution pension save for its advisers.
can be found on P45-46. scheme from April 2020
Following a competitive process conducted
In respect of the PSP18 award, the performance Wider workforce pay arrangements during the year, it is noted that Willis Towers
of both the Trading EBITDA and Net Leverage Watson were appointed as adviser to the
The Committee has continued to consider
ratio measures reached the end of their Committee from September 2020.
executive remuneration in the context of the
performance period on 31 January 2021 and it
Company’s reward framework and of fairness Kevin Dangerfield
was determined that neither of these measures
across the organisation. As well as monitoring On behalf of the Remuneration Committee
reached the minimum performance required
and reviewing the effectiveness of the approved
to trigger vesting. Whilst the TSR measure
Remuneration Policy and its impact and
would normally be measured in May 2021, the
compatibility with remuneration practices
Committee determined that all PSP18 awards
for the wider workforce, the Committee has
should lapse in their entirety on the date of the
reviewed the frameworks and budgets for key
Court Sanction.
components of employee pay arrangements,
In respect of the PSP19 award, the Remuneration together with the broader structure of Group
Committee did not make a final decision on bonus provisions in seeking to achieve
the vesting level until shortly before the appropriate alignment with executive pay
Court sanctioned the Scheme, but it made a arrangements.
preliminary assessment and awards vested
The Board has regularly received progress
in the upper half of the range. All outstanding
updates on a variety of employee engagement
options under the Performance Share Plan
initiatives, including our annual ‘Our Voice’
will lapse to the extent not exercised upon
cultural index survey, and in particular this
the expiry of one month following the Court
year, our ‘Ways of Working’ survey, which has
Sanction of the Scheme.
been conducted twice during the ongoing
No awards vested until the final Court Sanction COVID-19 pandemic. These surveys give the
date in respect of the Acquisition, at which wider workforce the opportunity to share
time all vested shares were bought by the their thoughts, feedback and suggestions.
Consortium for 35p per share, except for those
participants who elected for the Alternative
Offer under the Scheme.
GOVERNANCE
Directors’ Remuneration Report continued
FY21 remuneration at-a-glance

Trading EBITDA S&P Rating Net debt
£341m BBB- £2.6bn

2020³: £348m 2020: BBB- 2020: £2.6bn
How we implemented in FY21

Chief Executive Chief Financial
Key component Feature Comments Officer Officer
Basic salary and To attract, retain and motivate No base salary increases were made to £760k £433k
core benefits executives Executive Directors in the year. Executive
Directors took a 15% base pay reduction
for three months as a result of COVID-19
Benefits include retirement benefits,
car and private medical benefits
Annual bonus To incentivise the delivery of Maximum bonus opportunity for the CEO is £539k £253k
annual financial, strategic normally 150% base salary and 120% base
and operational objectives salary for the CFO
Maximum potential was reduced for the CEO
to 100% and to 80% for the CFO as a direct
result of the COVID-19 impact
Deferred element To facilitate alignment with In light of the pending de-listing of the N/A N/A
of bonus shareholders and aid in Company, there will be no element of deferral
satisfying the minimum for the FY21 bonus
shareholding requirement
PSP1 To award for the delivery No awards were made during FY21 £8k N/A
of performance against
PSP17 is expected to vest at 2% in line with
long-term strategic
the disclosure made in last year’s report,
objectives and provide
but no awards vested until the date of the
alignment with the interests
Court Sanction
of shareholders
Shareholding Executive Directors are 35% of salary 0% of salary

requirements2 required to build and retain a
minimum shareholding in the
Company, built up over time
1 Acquisition purchase price of 35p used for calculation.

2 Share price on 31 January 2021 of 34.8p used for calculation.
3 Trading EBITDA for the year ended 31 January 2020 has been restated due to a prior year error. See P73.
Annual report on remuneration

This section of the Directors’ Remuneration Report sets out a summary of how the Company’s Remuneration Policy was implemented in the year ended
31 January 2021.
Audited sections
The current regulations require the Company’s auditor to report to the members on the ‘auditable part’ of this report (marked*) and to state, in its
opinion, that this part of the report has been properly prepared in accordance with the Companies Act 2006.
The Committee reviews the framework for remuneration arrangements for its Executive Directors and other members of the Executive Committee
on an annual basis.
The Committee continues to believe that remuneration packages for Executive Directors should be focused on variable rewards with challenging
objectives, which are in line with the business, culture and customer needs.
Single figure of remuneration*
Strategic Report
The table below provides a single figure of remuneration for each Executive Director for the year ended 31 January 2021. The information for
Non-Executive Directors is included in the table on P48.
Taxable Retirement Annual Long term Total
Salary benefits1 benefits bonus2 incentives3 Total fixed4 variable5 Total
Director Year £000 £000 £000 £000 £000 £000 £000 £000
Simon Breakwell 2021 674 4 82 539 8 760 547 1,307
2020 700 4 82 825 – 786 825 1,611
Kevin Dangerfield6 2021 395 14 24 253 – 433 253 686
2020 30 – – – – 30 – 30
1 The components of taxable benefits include private medical insurance, permanent health insurance, life assurance and car related benefits.
2 Value of annual bonus payable in respect of the year and based on performance for the financial year.
3 The 2017 PSP award, which has elements based on performance in the period FY18 to FY20, was subject to TSR performance to 26 October 2020 and will vested at 2% on the date of the
Governance
Court Sanction, 8 March 2021.
4 Total fixed remuneration includes base pay, taxable benefits and retirement benefits.
5 Total variable remuneration includes annual bonus and long-term incentives.
6 Kevin Dangerfield was not eligible to participate in the Annual Bonus Plan for the year ending 31 January 2020.
Base salary*
Year ended 31 January 2021
There were no increases to base salary for either Executive Director in the year ended 31 January 2021. In direct response to the COVID-19 pandemic,
Executive Directors took a 15% base salary reduction for three months from 1 May to 31 July 2020. Average base salary increase for all other employees
was 0%.
Year ending 31 January 2022
There will be no increase to base salary for Executive Directors.
Retirement benefits*
Cash payments in lieu of retirement benefit, equivalent to 11.7% of salary to Simon Breakwell and 6% of salary to Kevin Dangerfield.
There are no anticipated changes to retirement benefits for Executive Directors in the year ending 31 January 2022.
Short term incentive: annual bonus*
For the year ended 31 January 2021, the Annual Bonus Plan did not operate as normal, as a direct result of the impact of the COVID-19 pandemic.
In reaching its decision in respect of Executive Director bonus outcomes for the year ended 31 January 2021, the Committee gave consideration to:
hareholder experience: dividend suspended and share price performance balanced by an offer to acquire the Company which was overwhelmingly
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supported by shareholders as the best outcome
mployee experience: minimal workforce redundancies, furlough payments topped up to 100% of contractual pay, sick pay paid in full for COVID-19
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cases, as well as an all employee ‘Thank You’ payment made in December 2020 and discretionary awards for high performers in the regular
bonus scheme
overnment support: to date, c.£6.8m has been received through the Government’s Coronavirus Job Retention Scheme. No additional government
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funding or loans were received by the Company
Action taken with regard to Executive remuneration during the year: PSP20 awards cancelled, 15% pay reduction for three months
In taking all of the above into consideration, the Committee determined that the maximum bonus potential for FY21 should be scaled back from 150%
to 100% for the CEO and from 120% to 80% for the CFO.
Annual bonus performance was assessed against a number of financial and strategic measures. The financial element was determined to have paid
out at 54% of its maximum performance, with the Trading EBITDA underpin of at least £340m being achieved. The strategic element was assessed
against a range of measures, including but not limited to the successful shareholder vote in respect of the Acquisition of the Company, strong business
resilience in light of the COVID-19 pandemic and the successful re-financing exercise undertaken. The Committee therefore determined that 100% of the
strategic element of the bonus would be paid out for both the CEO and the CFO.
Taking into account the strong underlying performance of the business, the enormous effort required to achieve the sale of the Company and continued
progress against strategic objectives, the Committee determined that both Executive Directors were awarded a pay-out of 77% of the new reduced
maximum. This resulted in payments of £539,000 for Simon Breakwell and £252,560 for Kevin Dangerfield, in both cases 51% of the original maximum
bonus potential for FY21.
Share-based incentive plans*
As disclosed in last year’s report, the TSR performance element of the PSP17 reached the end of its measurement period on 16 October 2020 and it
was determined that the Threshold level of performance had not been achieved. As a result, the PSP award made in 2017 vested at 2% as disclosed in
last year’s report. Vested shares were not released until the date of the Court Sanction on 8 March 2021 and were purchased by the Consortium for
35p per share. As a result of this purchase, Simon Breakwell will receive c.£8,498 in exchange for his 24,279 vested shares.
GOVERNANCE
PSP17 vesting outcomes

End of
Stretch Maximum performance Estimated vesting
Measure Weighting Threshold 1
(60% vest) (100% vest) period Outcome (% of element)
Relative TSR 20% TSR equal TSR outperform TSR outperform 26 October Not met 0%
to FTSE 250 FTSE Index FTSE Index 2020
Index +5% p.a. +10% p.a.
1 For threshold performance, the level of vesting for each element is as follows: (i) Trading EBITDA – 10% of element; (ii) Net Leverage Ratio – 10% of element; and (iii) Relative TSR – 25% of element.
2 Subject to an additional adjustment based on TSR performance over the period 27 October 2017 to 26 October 2020. If TSR performance over the period is below the FTSE 250 Index, vesting
outcomes will be scaled back by 10%. If TSR performance over the period is below the lower quartile of the FTSE 250, vesting outcomes will be scaled back by 50%.
As a result of the ongoing COVID-19 pandemic and the Acquisition, no PSP awards were made in the year ended 31 January 2021.
PSP vesting outcomes as a result of the Acquisition
The Remuneration Committee did not make a final decision on the vesting levels until shortly before the Court sanctioned the Scheme, but it made
a preliminary assessment and determined that the vesting levels will be within the following ranges: awards granted in 2017 will vest at 2%; awards
granted in 2018 did not vest; and awards granted in 2019 vested in the upper half of the range. All outstanding options under the Performance Share
Plan will lapse to the extent not exercised upon the expiry of one month following the Court Order being granted.
In respect of the PSP18 award, the performance of both the Trading EBITDA (30%) and Net Leverage Ratio (20%) measures reached the end of their
performance period on 31 January 2021. Whilst the TSR measure (50%) would normally be measured in May 2021, the Committee determined that
no vesting should occur in respect of these awards and that all PSP18 awards lapsed in their entirety on the date of the Court Sanction.
End of
Stretch Maximum performance Estimated vesting
Measure Weighting Threshold1 (60% vest) (100% vest) period Outcome (% of element)
Trading EBITDA 30% £370m £385m £415m 31 January 2021 240 0%
Net Leverage Ratio 20% 6.7x 6.4x 5.9x 31 January 2021 6.6x 0%
Outstanding PSP awards at 31 January 2021

Percentage
Number of vesting Performance
Grant date shares at threshold period Vesting period Holding period5
Simon Breakwell 27 October 20171 1,148,606 See note FY18 to FY20 FY18 to FY20 50% of any vested shares will be
below2 released on the 4th anniversary
of the grant date, with the
balance released on the
5th anniversary of the grant date
7 November 20183 1,157,024 25% of FY19 to FY21 FY19 to FY21 100% of any vested shares will be
maximum released on the 5th anniversary
of the grant date
30 October 20194 2,200,000 25% of FY20 to FY22 FY20 to FY22 100% of any vested shares will be
maximum released on the 5th anniversary
of the grant date
1 The face value of the award, based on a 10-day average of 161.5 pence, is £1,855,000. This was equivalent to 247% of Simon Breakwell’s annual interim salary for FY18. Relative TSR, which was
measured from a starting price of 161.5p, is based on the 10-day average share price up to and excluding the grant date of 27 October 2017.
2 Trading EBITDA – 10% of element; Net Leverage Ratio – 10% of element; and Relative TSR – 25% of element.
3 The face value of the award, based on a 10-day average of 103.2 pence, is £1,194,130. This was equivalent to 171% of Simon Breakwell’s annual salary for FY19. Relative TSR, which will be measured
from a starting price of 117p, is based on the six-month average share price up to and excluding the grant date (7 May to 6 November 2018).
4 The face value of the award, based on a 10-day average of 47 pence, is £1,050,000. This was equivalent to 150% of Simon Breakwell’s annual salary for FY20. Relative TSR, which will be measured
from a starting price of 66.83p, is based on the average share price from the beginning of the financial year on 1 February 2019 up to and including 18 October 2019).
5 Any applicable holding period ceased to apply upon the Acquisition of the Company.

No awards were made up to the date of de-listing of the Company.
All-employee share plans*
Employee Share Incentive Plan (ESIP)
The ESIP is an all-employee, HMRC-approved scheme which enables eligible participants to purchase market-priced shares by entering into a
partnership share agreement and holding such shares in trust for up to five years.
No Executive Directors participate in the ESIP.
Additional information 
Shareholding requirements*
Executive Directors are required to build and retain a minimum shareholding in the Company equivalent to 200% base pay over a reasonable timeframe,
typically within five years of appointment. All shares were purchased by the Consortium on the Acquisition completion date.
Further to the disclosure in last year’s report, 20% of Simon Breakwell’s FY20 annual bonus out-turn was invested in 295,346 of the Company’s shares
on 7 May 2020. Kevin Dangerfield was appointed as CFO and to the Board on 6 January 2020 and, as such, currently holds no shares in the Company.
Directors’ share interests
Strategic Report
The table below sets out the Directors’ (and any relevant connected persons’) share interests in the ordinary shares of the Company as at 31 January 2021.
Holding requirement ESIP – awards subject PSP – awards subject to Shareholding
as a % of base pay Shares held outright to holding period performance conditions2 (% of salary)3
Simon Breakwell2 200% 719,930 – 4,505,630 35%
Kevin Dangerfield4 200% – – – 0%
1 Includes 295,346 shares which were purchased on 7 May 2020 at a price of 29p as a result of the deferral of 20% of Simon Breakwell’s bonus for the year ending 31 January 2020, which will be
deferred for three years.
2 Includes PSP awards granted in October 2017, November 2018 and November 2019 under the 2015 PSP.
3 Based on the closing share price on 31 January 2021 of 34.8p.
4 Kevin Dangerfield was appointed to the role of CFO and to the Board on 6 January 2020.
Service contracts
The Executive Directors are employed under rolling service contracts that do not have fixed terms of appointment and are subject to a 12-month
Governance
notice period.
Payments to past Directors*
There were no payments made to past Directors in the year ended 31 January 2021.
Payments for loss of office*
In the year ended 31 January 2021, there were no payments made to Executive Directors, past or present, in compensation for loss of office.
Advice and services provided to the Committee
Over the course of the year ended 31 January 2021, the Committee was advised on matters relating to executive remuneration by Deloitte LLP
and Willis Towers Watson. Following a retender process, Willis Towers Watson was successfully appointed as adviser to the Remuneration Committee
from 11 September 2020.
Deloitte LLP and Willis Towers Watson are both founding members of the Remuneration Consultants’ Group and adhere to the Remuneration
Consultants’ Group’s Code of Conduct.
The Committee deems the advisers to be independent from the Company, and the advice it received during the year to be appropriate and objective.
The fees paid for services are set out below:
2021 2020
Company Nature of services £000 £000
Deloitte LLP1 30% 20 116
Willis Towers Watson2 20% 96 –
1 Deloitte LLP ceased advising the Remuneration Committee on the appointment of Willis Towers Watson on 11 September 2020.
2 Willis Towers Watson were appointed as advisers to the Remuneration Committee on 11 September 2020.
Percentage change in CEO remuneration

The table below illustrates the percentage change in salary, benefits and annual bonus for the year ended 31 January 2021 for the CEO as against all
other employees.
% change in % change
% change in base salary benefits in annual bonus
CEO1 -4% 0% -35%
All employees2 0% 0% 7%
1 Change in base salary is as a result of the 15% base salary reduction between 1 May and 31 July 2020 which was applied to Executive Directors.
2 Change in base salary for employees is as a result of there being no annual pay award during FY21. The change in annual bonus represents the average bonus paid to eligible employees.
CEO pay ratio

The AA’s business encompasses a very broad spectrum of services from roadside assistance to insurance, as well as driving schools and a car sales
platform. As a result, our workforce is diverse and covers a number of sectors and skillsets.
In line with requirements published in June 2018 for companies with 250 employees or more, the table below sets out the CEO’s ‘single figure’ total
remuneration of £1,307k in relation to the median, 25th and 75th percentile total remuneration of their full-time equivalent UK employees. For the
purposes of the ratios below, the CEO’s total remuneration reflects the total single figure and salary for the year ended 31 January 2021, as disclosed on
P45 of the report. The employee pay for the 25th percentile, median and 75th percentile data was calculated at 31 January 2021.
25%ile Median 75%ile
Method ratio ratio ratio
Ending 31 January 2021 A 58:1 41:1 32:1
Ending 31 January 2020 A 73:1 53:1 42:1
The Company has calculated the CEO pay ratio, using the Option A calculation method of comparing the full-time equivalent total remuneration of all
UK-based employees for the relevant financial year. Due to the complexity of pay arrangements and diversity of sectors and skillsets of our workers,
Option A is felt to provide a more accurate picture than either of the other two calculation mechanisms.
The Company considers the current median pay ratio to be well positioned in comparison with FTSE 250 companies, but is cognisant that it is open to
fluctuation depending on outcomes of both short-term and long-term incentives received by the CEO from time to time and is committed to keeping a
watching brief on year-on-year comparisons.
GOVERNANCE
Relative importance of spend on pay

The difference in actual expenditure between 2020 and 2021 on remuneration for all employees in comparison with Trading EBITDA and distributions
to shareholders by way of dividends is set out in the table below. It is noted that no dividends were paid to shareholders in FY21.
2021 2020
£m £m
Total employee remuneration 305 316 -3%
Trading EBITDA 341 3481 -2%
Distributions relating to the year 0 4 -100%
1 Trading EBITDA for the year ended 31 January 2020 has been restated due to a prior year error. See P73.
Comparing pay to performance

The table below shows the total remuneration paid to the CEO and/or Executive Chairman (as relevant) since admission.
FY15 FY16 FY17 FY181 FY19 FY20 FY212
CEO single figure of Simon Breakwell – – – £765k £1,486k £1,611k £1,307k
remuneration Bob Mackenzie £1,113k £1,557k £1,369k £469k – – –
Annual bonus pay-out Simon Breakwell – – – 69% 64% 79% 51%
(% of maximum)3 Bob Mackenzie 100% 79% 57% NIL – – –
Long-term incentives Simon Breakwell – – – n/a n/a n/a 2%
vesting (% of maximum) Bob Mackenzie n/a n/a n/a NIL – – –
1 The figures shown for each individual in FY18 reflect part-year figures. Simon Breakwell was appointed on an interim basis on 1 August 2017 and this became permanent on 25 September 2017.
Bob Mackenzie was dismissed on 1 August 2017.
2 The PSP17 vested at 2%, although awards were not released until the Court Sanction date.
3 Percentage is of normal maximum of 150%. Actual was 75% of the reduced maximum of 100% base pay.
Remuneration for Non-Executive Directors*

Remuneration for Non-Executive Directors (NEDs) is set by the Board, taking account of the commitments and responsibilities of the roles and their
participation in the various Committees of the Company. The appropriateness of fees is reviewed on an annual basis. Fees have not increased since IPO.
The fees for NEDs for the year ended 31 January 2021 are set out in the tables below. NEDs are not eligible to participate in annual bonus, LTIP and
retirement benefit arrangements.
2021 2020
Benefits Total Benefits Total
Name Fees1 £000 £000 Fees £000 £000
John Leach 265 – 265 275 – 275
Steve Barber 92 – 92 95 – 95
Andrew Blowers 133 – 133 137 – 137
Mark Brooker 91 – 91 83 – 83
Cathryn Riley 91 – 91 95 – 95
Suzi Williams 77 – 77 102 – 102
1 Non-Executive Directors took a fee reduction of 15% from 1 May to 31 July 2020 as a direct result of the COVID-19 pandemic.
Standard annual fees payable to the Non-Executive Chairman and NEDs are set out in the table below.
FY21 fee FY20 fee
Non-Executive Chairman £275,000 £275,000
Senior Independent Director (SID) £12,500 £12,500
Basic fee for other NEDs £80,000 £80,000
Additional fee for chairing of Board Committee £15,000 £15,000
Non-Executive Directors took a temporary 15% fee reduction for a period of three months from 1 May 2020. All fees reverted to 100% from 1 August 2020.
Non-Executive Director shareholdings*
While there are no shareholding requirements for NEDs, this is encouraged within the Company. The table below details ordinary shareholdings of
NEDs at 31 January 2021.
Ordinary shares of 0.1p
Name 31 January 2021 31 January 2020
John Leach 90,000 32,812
Steve Barber 200,000 200,000
Andrew Blowers 63,945 63,945
Mark Brooker 19,221 19,221
Cathryn Riley – –
Suzi Williams 15,021 15,021
On approval of the Court Sanction on 8 March 2021, all shares in issue, including those owned by Directors, were purchased by the Consortium for 35
pence per share, with the exception of those held by Andrew Blowers, who elected for the Alternative Offer.
The chart below illustrates AA Group’s TSR performance against the FTSE 250 (excluding investment trusts) since Admission. This provides
Strategic Report
a general market reference point.
Value of £100 holding since admission
200
180
56%
160
140
120
100
80
60
Governance
40
(83%)
20
0
Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020
AA FTSE 250 (ex. investment trusts)
Non-Executive Directors – agreements for service

NED appointments are subject to a letter of appointment and the Company’s Articles of Association (the Articles). They are expected to serve up to
two three-year terms but may be invited by the Board to serve for an additional period. The relevant notice periods for each NED are set out in the
table below; however, there are certain conditions under which the Company can terminate the agreement with immediate effect. NEDs receive no
compensation payments for loss of office.
The length and time commitments of appointments for NEDs are reviewed on an annual basis.
The details of the NEDs’ terms and dates of service contracts are set out below:
Date Post
Name Date of appointment Resigned Notice period
John Leach 26 June 2014 9 March 2021 6 months
Steve Barber 11 June 2018 9 March 2021 1 month
Andrew Blowers 25 September 2014 9 March 2021 1 month
Mark Brooker 10 July 2018 9 March 2021 1 month
Cathryn Riley 28 February 2018 9 March 2021 1 month
Suzi Williams 1 October 2015 9 March 2021 1 month
All NEDs resigned their posts on 9 March 2021 following the purchase of the Company by the Consortium.
This Remuneration Report has been prepared in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (the Regulations) issued under the Companies Act, and the Code.
Voting regarding the 2020 Directors’ Remuneration Report and the last approved Remuneration Policy were as follows:
Votes Votes
Votes for against withheld Total votes
Remuneration 226,497,050 11,270,720 894,834 237,767,770
Report (2020 AGM) 95.26% 4.74%
Remuneration 328,112,738 102,326,671 2,746 430,439,409
Policy (2018 AGM) 76.23% 23.77%
The Remuneration Report has been approved by the Board and signed on its behalf by:
Kevin Dangerfield
FINANCIAL STATEMENTS
Independent auditors’ report to the members of AA Limited (formerly AA plc)
Report on the audit of the financial In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
statements financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and the
Opinion Company’s ability to continue to adopt the going concern basis of
In our opinion: accounting included:
A Limited (formerly AA plc)’s Group financial statements and Company
A e obtained evidence that the takeover by TowerBrook Capital
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financial statements (the “financial statements”) give a true and fair view Partners (U.K.) LLP and Warburg Pincus International LLC (together,
of the state of the Group’s and of the Company’s affairs as at 31 January “the Consortium”) was approved by the courts on 8 March 2021 and
2021 and of the Group’s profit and the Group’s cash flows for the year examined documents in support of the equity contribution to be made
then ended; by the Consortium and the new debt facilities available to the Group.
t he Group financial statements have been properly prepared in e checked the consistency of the cashflows for the next 12 months
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accordance with international accounting standards in conformity used in the going concern assessment, including considering the impact
with the requirements of the Companies Act 2006; of COVID-19, with trading performance over the last financial year
t he Company financial statements have been properly prepared in and in the period since. We found the key cash flow assumptions to be
accordance with United Kingdom Generally Accepted Accounting consistent with recent trading experience.
Practice (United Kingdom Accounting Standards, comprising FRS 101 e vouched the cash on hand and available facilities in the Directors’
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“Reduced Disclosure Framework”, and applicable law); and going concern assessment to our year end audit work.
t he financial statements have been prepared in accordance with the e examined the potential downside sensitivities that the Directors had
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requirements of the Companies Act 2006. applied and considered their likelihood and whether other scenarios,
We have audited the financial statements, included within the Annual or more severe scenarios, could apply and the associated impact
Report and Accounts (the “Annual Report”), which comprise: the on headroom.
Consolidated and Company Statements of Financial Position as at e evaluated the results of a reverse stress test and assessed the
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31 January 2021; the Consolidated Income Statement and Consolidated likelihood of a number of scenarios that could erode the headroom.
Statement of Comprehensive Income, the Consolidated Statement of
Cash Flows, and the Consolidated and Company Statements of Changes e read the basis of preparation note in note 1.2a and the disclosures
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in Equity for the year then ended; and the notes to the financial statements, in the Directors’ Report and validated they accurately describe the
which include a description of the significant accounting policies. Directors’ considerations in this area.
Our opinion is consistent with our reporting to the Directors. Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
Separate opinion in relation to international financial
reporting standards adopted pursuant to Regulation (EC) Our audit approach
No 1606/2002 as it applies in the European Union Context
As explained in note 1.2 to the Group financial statements, the Group, in On 25 November 2020, the Board of AA plc recommended to its
addition to applying international accounting standards in conformity shareholders a cash offer of 35p per share from TowerBrook Capital
with the requirements of the Companies Act 2006, has also applied Partners (U.K.) LLP and Warburg Pincus International LLC (together
international financial reporting standards adopted pursuant to “the Consortium”). On 14 January 2020, the shareholders approved the
Regulation (EC) No 1606/2002 as it applies in the European Union. acquisition, which successfully completed post year end on 9 March
2021. Following the completion of the acquisition, AA plc delisted from
In our opinion, the Group financial statements have been properly the London Stock Exchange and was re-registered as AA Limited.
prepared in accordance with international financial reporting standards Throughout the course of the financial year to 31 January 2021, and up
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the to the point of delisting, we reported matters relevant to our audit to
European Union. the Audit Committee. Following the delisting, and prior to the formal
creation of a new Audit Committee, we reported to the Directors.
Basis for opinion
We conducted our audit in accordance with International Standards on Overview
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under Audit scope
ISAs (UK) are further described in the Auditors’ responsibilities for the
We conducted audit testing over eight components
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide our components were subject to an audit of their complete financial
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a basis for our opinion. information
Independence pecific audit procedures were performed on certain balances and
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We remained independent of the Group in accordance with the ethical transactions in respect of a further four components
requirements that are relevant to our audit of the financial statements in We obtained coverage of 92% of revenue
the UK, which includes the FRC’s Ethical Standard, as applicable to listed
public interest entities, and we have fulfilled our other ethical responsibilities Key audit matters
in accordance with these requirements. Material uncertainty related to going concern
To the best of our knowledge and belief, we declare that non-audit services Recognition of revenue in respect of the personal roadside business (Group)
prohibited by the FRC’s Ethical Standard were not provided to the Group.
Valuation of post-retirement benefit obligations (Group)
Other than those disclosed in note 33 to the financial statements, we have
provided no non-audit services to the Group in the period under audit. Valuation of insurance technical provisions (Group)
Goodwill impairment assessment (Group)
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, Investment in subsidiaries impairment assessment (Company)
we have considered the adequacy of the disclosure made in note 1.2a to COVID-19 (Group and Company)
the financial statements concerning the Group’s and the Company’s
ability to continue as a going concern. The refinancing of the Class A5 Materiality
Notes, due on 31 January 2022, is not committed at the date of issue of verall Group materiality: £8.5m (2020: £8.75m) based on 4% of
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these financial statements. These conditions, along with the other matters Operating Profit
explained in note 1.2a to the financial statements, indicate the existence of
a material uncertainty which may cast significant doubt about the Group’s verall Company materiality: £3.0m (2020: £3.0m) based on 1% of
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and the Company’s ability to continue as a going concern. The financial Total Assets, but for the purposes of the audit of the Group financial
statements do not include the adjustments that would result if the Group statements, we limited the Company materiality to £3.0m
and the Company were unable to continue as a going concern. Performance materiality: £6.3m (Group) and £2.25m (Company)
© 2020 Friend Studio Ltd File name: IndependentXAuditors_XReport_v22 Modification Date: 13 April 2021 10:00 pm
The scope of our audit esigning risk filters to search for journal entries, such as those posted
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Strategic Report
As part of designing our audit, we determined materiality and assessed with unusual account combinations or posted by members of senior
the risks of material misstatement in the financial statements. management with a financial reporting oversight role, and testing those
journals highlighted (if any).
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws I ncorporating elements of unpredictability into the audit procedures
and regulations. We design procedures in line with our responsibilities, performed.
outlined in the Auditors’ responsibilities for the audit of the financial eviewing the disclosures in the Annual Report and financial statements
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statements section, to detect material misstatements in respect of against the specific legal requirements, for example within the Directors’
irregularities, including fraud. The extent to which our procedures are Remuneration Report and the Directors’ Report.
capable of detecting irregularities, including fraud, is detailed below.
There are inherent limitations in the audit procedures described above.
Based on our understanding of the Group and industry, we identified We are less likely to become aware of instances of non-compliance with
that the principal risks of non-compliance with laws and regulations laws and regulations that are not closely related to events and transactions
related to breaches of regulatory requirements and unethical and reflected in the financial statements. Also, the risk of not detecting a
prohibited business practices, and we considered the extent to which material misstatement due to fraud is higher than the risk of not detecting
Governance
non-compliance might have a material effect on the financial statements. one resulting from error, as fraud may involve deliberate concealment by,
We also considered those laws and regulations that have a direct impact for example, forgery or intentional misrepresentations, or through collusion.
on the preparation of the financial statements such as the Companies Act
2006. We evaluated management’s incentives and opportunities for Key audit matters
fraudulent manipulation of the financial statements (including the risk of Key audit matters are those matters that, in the auditors’ professional
override of controls), and determined that the principal risks were related judgement, were of most significance in the audit of the financial
to posting inappropriate journal entries to increase revenue or profit statements of the current period and include the most significant
and the potential for management bias in accounting estimates. assessed risks of material misstatement (whether or not due to fraud)
Audit procedures performed by the engagement team included: identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and
iscussion with management, internal audit, internal compliance,
D directing the efforts of the engagement team. These matters, and any
internal legal counsel and enquiries of the Group’s legal advisors, comments we make on the results of our procedures thereon, were
including consideration of known or suspected instances of addressed in the context of our audit of the financial statements as a
non-compliance with laws and regulations, and fraud. whole, and in forming our opinion thereon, and we do not provide a
eviewing correspondence between the Group and the Financial
R separate opinion on these matters.
Conduct Authority (“FCA”) in relation to compliance with laws and In addition to going concern, described in the Material uncertainty related
regulations, and considering the matters identified in light of our to going concern section above, we determined the matters described
understanding of the sector. below to be the key audit matters to be communicated in our report.
hallenging significant accounting assumptions and judgements
C This is not a complete list of all risks identified by our audit.
individually and collectively for indications of management bias, Capitalisation of software development costs, which was a key audit
in particular in relation to the valuation of post-retirement benefit matter last year, is no longer included because of our assessment that
obligations, general insurance claims liabilities and subsidiary this is no longer a heightened audit risk. Otherwise, the key audit matters
investment and goodwill impairment assessments, as described below are consistent with last year.
further in the Key audit matters below.
Key audit matter How our audit addressed the key audit matter
Recognition of revenue in respect of the personal roadside business (Group)
Refer to Note 1.3(m) to the financial statements for the Directors’ disclosures of the related accounting policies, judgements and estimates,
and Notes 2 and 19.
The Group has recognised revenue of £470m in respect of the We evaluated the relevant IT systems and related internal controls;
personal roadside business. however, we concluded that we would not rely on the controls over
financial reporting and we performed substantive procedures in
There are known issues with the underlying policy management
this area.
systems used in the personal roadside business and the way in which
they account for revenue. A set of manual corrections are made each We reviewed management’s reconciliations of the revenue to be
month, along with a series of standing adjustments, to appropriately recognised as generated by the policy management systems to the
account for revenue. revenue actually recognised in the general ledger, and tested a sample
of the specific manual corrections and standing adjusting items
As a result of additional review procedures implemented in response
posted by management to correct the known system errors.
to these matters, the Directors identified certain misstatements that
related to the recording of revenue in the prior years, and concluded For a sample of personal roadside contracts, we performed detailed
that, as the errors were in aggregate material, a prior year adjustment testing of revenue transactions including agreeing to the underlying
was appropriate (see note 19). contracts, recalculating the revenue and deferred revenue recognised
based on transactional data and contractual terms, and agreement
We focused on whether revenue from these policies was correctly
to cash receipt. We performed detailed testing of the deferred revenue
recognised, and whether the corrections and standing adjustments
balances at period end to underlying contracts and recalculated the
made are complete. Given the known issues, including further issues
deferred revenue balance.
identified during the current year, there is an increased risk that there
are undetected errors in the policy management system calculations.
There is also an increased risk of error where manual corrections
are made.
We also focused on the completeness and adequacy of the prior year
adjustment identified.
Independent auditors’ report to the members of AA Limited (formerly AA plc) continued
Recognition of revenue in respect of the personal roadside business (Group) continued
Refer to Note 1.3(m) to the financial statements for the Directors’ disclosures of the related accounting policies, judgements and estimates,
and Notes 2 and 19.
We understood the nature of the system issues involving the incorrect

deferral of revenue in respect of subscriptions received in advance on
certain roadside assistance policies which gave rise to the prior year
adjustment errors identified. We focused our testing on the timing of
revenue recognition by evaluating the different categories of policies
sold against their contractual terms and any discounts or other offers
applied and considered these in relation to adjustments made to
deferred revenue at the year end date. We also considered other
revenue streams that could give rise to a similar error and were
satisfied there were no other material issues in the context of the
revenue adjustments recorded.
Given the magnitude of the error identified in respect of revenue
recognition in prior years, we agreed with management’s conclusion
that treating it as a prior period adjustment was appropriate. We also
evaluated the related disclosures and were satisfied they were appropriate.
We found no material misstatements from our testing.
Valuation of post-retirement benefit obligations (Group)

Refer to Note 1.3(l) to the financial statements for the Directors’ disclosures of the related accounting policies, judgements and estimates, and Note 27.
The Group operates three defined benefit pension schemes, the most We involved our specialists in our assessment of the reasonableness
significant of which is the AA UK Pension Scheme (AAUK), which of actuarial assumptions and the overall pension liability calculations
combined have a total net defined benefit pension deficit of £188m, by comparing the key assumptions, including the discount rate and
comprising gross assets of £2,631m and gross liabilities of £2,819m. inflation rate, mortality and pension increases, to benchmark ranges,
performing sensitivity analysis, checking whether methods have been
Valuation of the liabilities requires significant levels of judgement and
consistently applied and assessing the impact of the assumptions in
technical expertise in determining the appropriate assumptions to
combination with one another. We agreed that the judgements taken
measure it. Changes in key assumptions (including discount rate,
by the Directors were reasonable.
mortality, inflation and pension increases) can have a material impact
on the calculation of the liabilities either individually or in combination. We obtained external confirmations to test the existence of pension
The Directors used independent actuaries to prepare the year end assets as at 31 January 2021. In order to test the valuation of the
valuation under International Accounting Standard 19, ‘Employee complex assets, we obtained a range of supporting evidence as
benefits’ (“IAS 19”). available, including recent transaction prices, audited fund financial
statements and fund controls reports, to assess whether the net asset
Valuation of the scheme assets requires judgement, due to the nature
value provided was reliable and appropriate. In respect of the bulk
of certain complex and illiquid assets held, for which there are no
annuity policies held, we utilised our actuarial specialists to test the
quoted prices available. Of the total asset value held, 78% do not have
valuation of the assets and performed testing of the insured members
a quoted price available. Prices are obtained directly from the relevant
to data provided by both the scheme actuary and the administrator.
investment managers who apply judgement in valuing those assets.
In addition, the bulk annuity policies held are valued using actuarial We reviewed the disclosure of post-retirement scheme obligations
assumptions. against the requirements of IAS 19 and were satisfied with the nature
and extent of the disclosures provided.
We focused on the reasonableness of the assumptions used in the
calculation of the AAUK defined benefit liability, the valuation of assets We found no material misstatements from our testing.
held by the AAUK scheme and the disclosure of post-retirement
benefit scheme obligations.
Valuation of insurance technical provisions (Group)

Refer to Note 1.3(n) to the financial statements for the Directors’ disclosures of the related accounting policies, judgements and estimates
and Note 24 to the financial statements.
The Group financial statements include liabilities for the estimated Our work to address the valuation of the insurance technical
cost of settling general insurance claims. The insurance technical provisions was supported by our internal non-life actuarial specialists.
provisions contain both the outstanding claims provisions of £35m
We targeted the largest outstanding claims and evaluated the
and the provisions for incurred but not reported claims of £12m.
methodology and assumptions used by the Directors to estimate
The Directors focused on this area due to the significance of these the most judgemental components of each claim. We obtained
liabilities to the Group’s statement of financial position and because supporting documentation, deemed suitable in each instance,
of the inherent uncertainties present when estimating future claims to support the most significant elements of the claims. We agreed
development. that the judgements taken by the Directors were reasonable.
We performed independent actuarial projections of the reserve
requirements as at 31 December 2020, rolling forward our work to the
year-end. These projections were carried out at varying degrees of
granularity, including claim type and policy type projections, which
were subsequently aggregated in order to produce our independent
view. To allow for the impact of COVID-19 and the resultant change in
experience, we adjusted our view of the expected loss ratios
for the changes in road traffic volumes compared to a normal year,
i.e. before COVID-19.
We tested on a sample basis the underlying source data on which
actuarial projections are based to supporting documentation.
Strategic Report
Valuation of insurance technical provisions (Group) continued
Refer to Note 1.3(n) to the financial statements for the Directors’ disclosures of the related accounting policies, judgements and estimates and
Note 24 to the financial statements.
We focused, in particular, on: Within the booked reserve recognised in the financial statements
there is a management loading on top of the actuarial best estimate
he methodologies and assumptions used in estimating the
T
which represents a margin for uncertainty. We challenged the
outstanding claims provisions for general insurance products, in
Directors on the level of margin held as it falls towards the higher end
particular for those claims such as personal injury, which can take
of our reasonable range. We corroborated the explanations received
a long time to settle and where the amounts concerned can be
to supporting data analyses and internal documentation shared with
large; and
the underwriting company’s Board, as well as considering the margin
hether the Directors’ provision for incurred but not reported
W in the context of the maturity of the business, relevant peers and
claims, which has been determined with the assistance of an market conditions.
external actuarial expert, has been prepared appropriately,
Governance
We concluded that the year end insurance technical provisions are
including whether any trends in the underlying claims experience
reasonable based on the independent projections performed and
were appropriately reflected.
our assessment of the potential uncertainty present, and that they
are consistent with financial reporting requirements and industry
accepted practice.
Goodwill impairment assessment (Group)

Refer to Note 1.3(i) to the financial statements for the Directors’ disclosures of the related accounting policies, judgements and estimates,
and Notes 11 and 28.
The goodwill balance of £1,170m is subject to an annual impairment We compared the implied enterprise value of the Group of £3.2bn,
review. determined using the Consortium’s cash offer of £218m (which the
Directors considered evidence of the fair value of the Group) and the
The Directors analyse discounted cash flows at the cash generating
carrying value of debt at year end of £3.0bn, to the book value of
unit (CGU) level to calculate the value in use for each CGU. Cash flow
goodwill and noted material headroom in relation to the principal
forecasts are an area of particular focus given the judgements relating
CGUs of Roadside and Insurance.
to future Trading EBITDA growth and discount rate assumptions.
For all CGUs, we checked the cash flow forecasts used by the
No impairment charge has been recorded by the Directors against the
Directors in the assessment of goodwill impairment were consistent
goodwill balance in the current financial year. The risk that we focused
with the approved five year plans, and considered the reasonableness
on in the audit is that the goodwill balance may have been impaired in
of the key assumptions in relation to recent trading, including roadside
value and this has not been recognised.
membership rates and the number of motor and home insurance
policies sold.
We focused additional work upon the AA Cars and DriveTech CGU’s
(with reasonable but more limited headroom). For certain key
assumptions which underpinned their forecast performance,
including the speed of recovery of the used vehicles sales market and
the resumption of police speed awareness courses, we assessed
these for reasonableness against market data, if available, and other
internal management data where appropriate.
We also evaluated the historical accuracy of the cash flow forecasts
for these businesses and understood the impacts of COVID-19 on each
CGU in the year. We found that the forecasts have been completed on a
basis consistent with prior years and were an appropriate basis upon
which the Directors could base their conclusions.
We tested the Directors’ assumptions in the forecasts for long term
growth rates (by comparing them to economic forecasts); and the
discount rate (by engaging our valuation experts to assess the cost of
capital for the Company and comparable organisations). We found the
assumptions to be consistent and in line with our expectations based
on industry benchmarks.
We obtained and tested the Directors’ sensitivity calculations over
all their CGUs and agreed with their conclusion that there was no
reasonable possible change that would give rise to an impairment
or to enhanced disclosure.
Investment in subsidiaries impairment assessment (Company)

Refer to Notes 1.3(b) and 2 to the Company financial statements.
The Company holds investments in subsidiaries of £140m after We checked the Consortium’s cash offer of 35p per share to publicly
recording an impairment charge of £394m, representing AA available documents approved by shareholders and recomputed the
Insurance Holdings Limited group (the underwriting business) overall purchase price of £218m without exception.
and AA Mid Co Limited (which owns the rest of the Group).
We tested the Directors’ allocation of this value between the
The Directors focused on the carrying value of these investments in investments in subsidiaries held by AA Limited (formerly AA plc)
light of the takeover offer for the Company, accepted by shareholders, Company, confirming the allocations reflected appropriate and
of £218m. consistent assumptions for each business (i.e. for the underwriting
business and for the rest of the Group which includes all of the Group’s
external debt). This leveraged the Directors’ calculations for the Group
goodwill impairment assessment referred to above.
Independent auditors’ report to the members of AA Limited (formerly AA plc) continued
Investment in subsidiaries impairment assessment (Company) continued
Refer to Notes 1.3(b) and 2 to the Company financial statements.
In light of the material difference to the purchase price, the Directors With regard to the interest cash flows, we evaluated the
determined a method, after deducting the Group’s non-ring fenced appropriateness of the assumptions used with reference to market
available cash of £26m, of allocating the implied value to the Group’s conditions immediately prior to the takeover offer being received.
underwriting business proportionate to discounted cash flow We found the assumptions applied to be reasonable and supported by
projections with respect to the whole Group. No impairment of external advice and consistent with the Group’s forecasts prior to the
this investment was identified. Consortium offer.
The remainder of the implied value was allocated to the investment in We checked the calculation of the impairment and were satisfied the
the AA Mid Co Limited group and compared to the carrying value of impairment recorded in the year is appropriate.
this investment, resulting in an impairment of £394m.
We also evaluated the related disclosures, including in relation to potential
interest rate sensitivities, and were satisfied they were appropriate.
COVID-19 (Group and Company)

Refer to Notes 1.2(a), 11, 24 and 28 to the Group financial statements, and Note 2 to the Company financial statements.
The key impacts of COVID-19 on the Group and Company financial We used experience of the Group’s trading and cash performance
statements are: during the year ended 31 January 2021 to inform our assessment of
where risks due to the impact of COVID-19 may arise. We found that
he forecasts supporting the goodwill impairment assessment
T
the areas of the business with greater impacts of COVID-19 were
were updated to reflect the Directors’ best estimate of the ongoing
Driving Schools and DriveTech.
impacts of the pandemic, including the outlook for routes out
of lockdown. The assumptions applied have been determined Our procedures in respect of goodwill and investment in subsidiaries
internally, but incorporate external market views where relevant. impairment assessments are set out in the respective key audit
Consideration of the impact on the carrying value of goodwill is matters above.
described in the related key audit matter above;
With respect to the Directors’ going concern assessment, our
imilarly, the Directors’ assessment of the carrying value of the
S procedures performed are described in the Material uncertainty
Company’s investments in subsidiaries required consideration of related to going concern section above.
the impact of COVID-19 on the underlying businesses;
Our procedures in respect of the valuation of insurance technical
hese models and related assumptions also underpin the Directors’
T provisions are set out in the key audit matter above.
going concern assessment. Consideration of the impact on going
We evaluated other potential areas of impact on the financial
concern is described in the Material uncertainty related to going
statements with management and ensured the disclosures in the
concern section above;
Annual Report in relation to COVID-19 adequately disclose the risk,
he valuation of insurance technical provisions was updated to allow
T key assumptions, sensitivities and the impact on the Group.
for the impact of COVID-19 and the resultant change in experience.
Consideration of the impact on insurance technical provisions is
described in the related key audit matter above.
How we tailored the audit scope the Group level, including auditing the consolidation and financial
We tailored the scope of our audit to ensure that we performed enough statement disclosures, taxation, pension scheme balances and asset
work to be able to give an opinion on the financial statements as a whole, impairment assessments, gave us the evidence we needed for our
taking into account the structure of the Group and the Company, the opinion on the financial statements as a whole. All audit procedures were
accounting processes and controls, and the industry in which they operate. performed by the Group engagement team, with no component auditors
involved. Due to restrictions imposed by the COVID-19 pandemic,
AA Limited (formerly AA plc) has two operating segments. Within these the audit was predominantly performed remotely, and we met with
segments there are around 50 reporting units, of which the following are management via regular telephone and video calls.
considered financially significant and were subject to an audit of their
complete financial information due to their size: AA Limited (formerly The Company is principally a holding company and there are no branches
AA plc) Company, Automobile Association Developments Limited, or other locations to be considered when scoping the audit.
Automobile Association Insurance Services Limited and AA Bond Co Materiality
Limited. In addition, four legal entities were in scope for specific audit
The scope of our audit was influenced by our application of materiality.
procedures, being AA Corporation Limited, AA Underwriting Insurance
We set certain quantitative thresholds for materiality. These, together with
Company Limited, AA Senior Co Limited and AA Financial Services
qualitative considerations, helped us to determine the scope of our audit
Limited. These four components were selected based on the contribution
and the nature, timing and extent of our audit procedures on the individual
of each to specific financial statement line items, including intangible
financial statement line items and disclosures and in evaluating the effect
assets, accrued expenses, insurance technical reserves, borrowings
of misstatements, both individually and in aggregate on the financial
and prepayments. These, together with the procedures performed at
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group Financial statements – Company
Overall £8.5m (2020: £8.75m). £3.0m (2020: £3.0m)

materiality
How we 4% of Operating Profit 1% of Total Assets, but for the purposes of the audit of the Group
determined it financial statements, we limited the Company materiality to £3.0m.
Rationale for Operating Profit is the primary statutory We believe that total assets is the appropriate measure as the
benchmark performance metric presented in the Annual Company is a non-profit oriented entity. In the current year,
applied Report. This is because the Group is highly geared overall materiality has been reduced to £3.0m to ensure the
and has a significant interest charge. Company did not have a higher materiality than the overall
Group materiality allocation.
For each component in the scope of our Group audit, we allocated a In preparing the financial statements, the Directors are responsible for
Strategic Report
materiality that is less than our overall Group materiality. The range of assessing the Group’s and the Company’s ability to continue as a going
materiality allocated across components was £3.0m to £8.1m. Certain concern, disclosing, as applicable, matters related to going concern and
components were audited to a local statutory audit materiality that was using the going concern basis of accounting unless the Directors either
also less than our overall Group materiality. intend to liquidate the Group or the Company or to cease operations, or
have no realistic alternative but to do so.
We use performance materiality to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected Auditors’ responsibilities for the audit of the financial statements
misstatements exceeds overall materiality. Specifically, we use Our objectives are to obtain reasonable assurance about whether the
performance materiality in determining the scope of our audit and financial statements as a whole are free from material misstatement,
the nature and extent of our testing of account balances, classes of whether due to fraud or error, and to issue an auditors’ report that includes
transactions and disclosures, for example in determining sample sizes. our opinion. Reasonable assurance is a high level of assurance, but is not
Our performance materiality was approximately 75% of overall materiality, a guarantee that an audit conducted in accordance with ISAs (UK) will
amounting to £6.3m for the Group financial statements and £2.25m for always detect a material misstatement when it exists. Misstatements can
the Company financial statements. arise from fraud or error and are considered material if, individually or in
In determining the performance materiality, we considered a number of the aggregate, they could reasonably be expected to influence the economic
Governance
factors – the history of misstatements, risk assessment and aggregation decisions of users taken on the basis of these financial statements.
risk and the effectiveness of controls – and concluded that an amount at Our audit testing might include testing complete populations of certain
the upper end of our normal range was appropriate. transactions and balances, possibly using data auditing techniques.
We agreed with the Audit Committee that we would report to them However, it typically involves selecting a limited number of items for
misstatements identified during our audit above £0.5m (Group and testing, rather than testing complete populations. We will often seek to
Company audits) (2020: £0.4m) as well as misstatements below those target particular items for testing based on their size or risk characteristics.
amounts that, in our view, warranted reporting for qualitative reasons. In other cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample is selected.
Reporting on other information A further description of our responsibilities for the audit of the financial
The other information comprises all of the information in the Annual statements is located on the FRC’s website at: www.frc.org.uk/
Report other than the financial statements and our auditors’ report auditorsresponsibilities. This description forms part of our auditors’
thereon. The Directors are responsible for the other information. Our report.
opinion on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except to the Use of this report
extent otherwise explicitly stated in this report, any form of assurance This report, including the opinions, has been prepared for and only for the
thereon. Company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving
In connection with our audit of the financial statements, our responsibility
these opinions, accept or assume responsibility for any other purpose or
is to read the other information and, in doing so, consider whether the
to any other person to whom this report is shown or into whose hands it
other information is materially inconsistent with the financial statements
may come save where expressly agreed by our prior consent in writing.
or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial
Other required reporting
statements or a material misstatement of the other information. If, based Companies Act 2006 exception reporting
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that Under the Companies Act 2006 we are required to report to you if,
fact. We have nothing to report based on these responsibilities. in our opinion:
e have not obtained all the information and explanations we require
w
With respect to the Strategic Report and Directors’ Report, we also
for our audit; or
considered whether the disclosures required by the UK Companies Act
2006 have been included. dequate accounting records have not been kept by the Company, or
a
Based on our work undertaken in the course of the audit, the Companies returns adequate for our audit have not been received from branches
Act 2006 requires us also to report certain opinions and matters as not visited by us; or
described below. ertain disclosures of Directors’ remuneration specified by law are not
c
made; or
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, t he Company financial statements and the part of the Directors’
the information given in the Strategic Report and Directors’ Report for the Remuneration Report to be audited are not in agreement with the
year ended 31 January 2021 is consistent with the financial statements accounting records and returns.
and has been prepared in accordance with applicable legal requirements. We have no exceptions to report arising from this responsibility.
In light of the knowledge and understanding of the Group and Company
and their environment obtained in the course of the audit, we did not identify Appointment
any material misstatements in the Strategic Report and Directors’ Report. Following the recommendation of the Audit Committee, we were appointed
by the members on 7 June 2018 to audit the financial statements for the
Directors’ Remuneration year ended 31 January 2019 and subsequent financial periods. The period
In our opinion, the part of the Directors’ Remuneration Report to be of total uninterrupted engagement is 3 years, covering the years ended
audited has been properly prepared in accordance with the Companies 31 January 2019 to 31 January 2021.
Act 2006.
Stuart Newman
Responsibilities for the financial statements and the audit (Senior Statutory Auditor)
Responsibilities of the Directors for the financial statements for and on behalf of PricewaterhouseCoopers LLP
As explained more fully in the Directors’ Responsibilities Statement, the Chartered Accountants and Statutory Auditors
Directors are responsible for the preparation of the financial statements London
in accordance with the applicable framework and for being satisfied that 13 April 2021
they give a true and fair view. The Directors are also responsible for such
internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether
due to fraud or error.
Consolidated Income Statement

For the year ended 31 January
2021 2020*
Note £m £m
Revenue 2 967 993
Cost of sales (362) (393)
Gross profit 605 600
Administrative and marketing expenses (387) (346)
Other income 18 – 1
Operating profit 4 218 255
Finance costs 6 (169) (155)
Finance income 7 3 5
Profit before tax 52 105
Tax expense 9 (12) (20)
Profit for the year 40 85
2021 2020*
Earnings per share from the profit for the year: Note pence pence
Basic from total operations 10 6.5 13.8
Diluted from total operations 10 6.4 13.4
* Revenue, gross profit, operating profit, profit before tax, profit for the year and earnings per share for the year ended 31 January 2020 have been restated to correct a prior year error, see note 19.
The accompanying notes are an integral part of this consolidated income statement.
Consolidated Statement of Comprehensive Income

2021 2020*
Note £m £m
Profit for the year 40 85
Other comprehensive income/(expense) on items that may be reclassified to the income
statement in subsequent years
Effective portion of changes in fair value of cash flow hedges 1 (2)
1 (2)
Other comprehensive (expense)/income on items that will not be reclassified to the income
statement in subsequent years
Remeasurement gains on defined benefit schemes 27 (50) 39
Tax effect 9 10 (7)
(40) 32
Total other comprehensive (loss)/income (39) 30
Total comprehensive income for the year 1 115
* Profit for the year ended 31 January 2020 has been restated to correct a prior year error, see note 19.
The accompanying notes are an integral part of this consolidated statement of comprehensive income.
© 2020 Friend Studio Ltd File name: ConsolidatedXStatementXTables_v31 Modification Date: 13 April 2021 10:00 pm
Consolidated Statement of Financial Position
As at 31 January
2021 2020*
Strategic Report
Note £m £m
Non-current assets
Goodwill and other intangible assets 11 1,353 1,354
Property, plant and equipment 13 53 52
Right-of-use assets 14 55 69
Investments in joint ventures and associates 15 5 5
Financial assets at amortised cost 29 4 4
Deferred tax assets 9 17 9
1,487 1,493
Current assets
Inventories 16 4 4
Trade and other receivables 17 304 257
Governance
Proceeds of Class B3 Notes issuance held in escrow 20 280 –
Cash and cash equivalents 18 185 149
773 410
Assets classified as held for sale 38 – 12
Total assets 2,260 1,915
Current liabilities
Trade and other payables 19 (556) (507)
Current tax payable (2) (7)
Borrowings and loans 20 (637) (200)
Derivative financial instruments 22 (1) –
Lease liabilities 31 (18) (23)
Provisions 23 (5) (5)
(1,219) (742)
Non-current liabilities
Borrowings and loans 20 (2,354) (2,506)
Derivative financial instruments 22 (1) (2)
Lease liabilities 31 (34) (43)
Defined benefit pension scheme liabilities 27 (188) (162)
Provisions 23 (7) (6)
Insurance technical provisions 24 (47) (43)
(2,631) (2,762)
Liabilities classified as held for sale 38 – (3)
Total liabilities (3,850) (3,507)
Net liabilities (1,590) (1,592)
Equity
Share capital 25 1 1
Share premium 26 412 410
Own shares 26 (23) (33)
Cash flow hedge reserve 26 (1) (2)
Retained earnings 26 (1,979) (1,968)
Total equity (1,590) (1,592)
* Trade and other payables, current tax payable and retained earnings as at 31 January 2020 have been restated to correct a prior year error, see note 19.
The financial statements were approved by the Board of Directors on 13 April 2021 and signed on its behalf by
Simon Breakwell Kevin Dangerfield

Chief Executive Officer Chief Financial Officer
The accompanying notes are an integral part of this consolidated statement of financial position.
Consolidated Statement of Changes in Equity

Cash flow
Share Share Own hedge Retained
capital premium shares reserve earnings Total
£m £m £m £m £m £m
At 1 February 2019 as previously reported 1 408 (31) – (2,068) (1,690)
Restatement* (see note 19) – – – – (9) (9)
At 1 February 2019 (restated*) 1 408 (31) – (2,077) (1,699)
Profit for the year (restated*) – – – – 85 85
Other comprehensive income/(expense) – – – (2) 32 30
Total comprehensive income/(expense) – – – (2) 117 115
Dividends – – – – (12) (12)
Issue of share capital – 2 – – – 2
Purchase of own shares – – (2) – – (2)
Equity-settled share-based payments (see note 36) – – – – 4 4
At 31 January 2020 (restated*) 1 410 (33) (2) (1,968) (1,592)
Profit for the year – – – – 40 40
Other comprehensive (expense)/income – – – 1 (40) (39)
Total comprehensive income – – – 1 – 1
Issue of share capital – 2 – – – 2
Purchase of own shares – – (4) – – (4)
Settlement of share schemes – – 14 – (14) –
Equity-settled share-based payments (see note 36) – – – – 3 3
At 31 January 2021 1 412 (23) (1) (1,979) (1,590)
* Retained earnings as at 1 February 2019 and 31 January 2020 and the profit for the year ended 31 January 2020 have been restated to correct a prior year error, see note 19.
The accompanying notes are an integral part of this consolidated statement of changes in equity.
Consolidated Statement of Cash Flows
2021 2020*
Strategic Report
Note £m £m
Operating activities
Amortisation, depreciation and impairment 11,13,14 93 89
Net finance costs 6,7 166 150
Difference between pension charge and cash contributions (19) (22)
Other adjustments to profit before tax 5 (11)
Working capital and provisions:
Increase in trade and other receivables (52) (34)
Increase in trade and other payables 41 32
Increase in provisions 5 19
Total working capital and provisions adjustments (6) 17
Governance
Net cash flows from operating activities before tax 291 328
Tax paid (15) (11)
Net cash flows from operating activities 276 317
Investing activities
Capital expenditure (64) (69)
Proceeds from sale of fixed assets 1 6
Payment for acquisition of subsidiary, net of cash acquired (1) (8)
Investment in joint venture (1) –
Proceeds from sale of subsidiaries, net of cash sold (2) –
Interest received – 1
Net cash flows used in investing activities (67) (70)
Financing activities
Proceeds from borrowings 21 525 15
Issue costs on borrowings 21 (8) –
Debt repayment premium and penalties 21 (6) –
Repayment of borrowings 21 (525) (43)
Refinancing transactions (14) (28)
Interest paid on borrowings (137) (129)
Acquisition of own shares (2) –
Payment of lease capital (27) (31)
Payment of lease interest (3) (4)
Dividends paid – (12)
Net cash flows used in financing activities (183) (204)
Net increase in cash and cash equivalents 26 43
Cash and cash equivalents at 1 February 159 116
Cash and cash equivalents at 31 January 18 185 159
* Profit before tax and increase in trade and other payables for the year ended 31 January 2020 have been restated to correct a prior year error, see note 19.
The cash flows from operating activities are stated net of cash outflows relating to adjusting operating items of £16m (2020: £9m). These items
comprised £5m related to the closure costs of the CARE section of the AAUK pension scheme and the transitional agreement made with employees in
that scheme (2020: £nil), transaction fees related to the Acquisition (see note 39) of £12m (2020: £nil), costs of strategic initiatives of £2m (2020: £6m),
conduct and regulatory costs of £nil (2020: £2m), net cash outflows from property lease provisions of £nil (2020: £1m) and £4m related to emergency
IT expenditure incurred setting up home working due to the COVID-19 pandemic (2020: £nil), offset by £7m related to government furlough support in
respect of COVID-19 (2020: £nil).
Other adjustments to profit before tax inflow of £5m (2020: outflow of £11m) include equity-settled share-based payment charge of £3m (2020: £4m),
loss on sale of fixed assets of £2m (2020 profit: £5m), other income of £nil (2020: £1m) and credit on remeasurement of contingent consideration of £nil
(2020 credit: £9m).
The accompanying notes are an integral part of this consolidated statement of cash flows.
Notes to the Consolidated Financial Statements
1 Basis of preparation and accounting policies However, as noted above, the refinancing of the Class A5 Notes, due on
31 January 2022, is not committed at the date of issue of these financial
1.1 General information
statements. These circumstances indicate that a material uncertainty
The consolidated financial statements for the year ended 31 January 2021 exists that may cast significant doubt on the Group’s ability to continue as
comprise the financial statements of AA Limited (‘the Company’) and its a going concern for a period of in excess of a year from the date of issue of
subsidiaries (together referred to as ‘the Group’). AA Limited is a private these financial statements.
company, limited by shares, and is incorporated and domiciled in England
and Wales, UK. Prior to de-listing on 10 March 2021, the Company’s The financial statements do not include the adjustments that would
ordinary share capital was listed on the London Stock Exchange. result if the Group was unable to continue as a going concern.
These statements and the prior year comparatives have been presented b) Basis of consolidation
to the nearest £million. The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
1.2 Basis of preparation
(its subsidiaries). Control is achieved where the Company has rights to
The Group has prepared these statements in accordance with variable returns from its involvement with the entity and has the ability
international accounting standards in conformity with the requirements to influence those returns through its power over the entity.
of the Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the The results of subsidiaries acquired or disposed of during the year are
European Union. included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate.
These consolidated financial statements have been prepared under the Where necessary, adjustments are made to the financial statements of
historic cost convention as modified by the measurement of derivatives subsidiaries to bring the accounting policies into line with those used by
and liabilities for contingent consideration in business combinations the Group. All intra-group transactions, balances, income and expenses
at fair value. are eliminated on consolidation.
a) Going concern 1.3 Accounting policies
The Group’s operations are cash generative with a large proportion of its The accounting policies set out below have, unless otherwise stated,
revenues coming from recurring transactions. The significant customer been applied consistently to all years presented in these consolidated
loyalty demonstrated by high renewal rates and lengthy customer tenure financial statements.
underpins this and, in addition to the cash balances at the reporting date,
the Group has agreed undrawn credit facilities. a) Interests in joint ventures and associates
On 25 November 2020, it was announced that the Company had reached An associate is an entity over which the Group is in a position to exercise
agreement with a newly formed joint venture company indirectly owned significant influence, but not control or joint control, through participating
in equal shares by (i) funds advised by TowerBrook Capital Partners (U.K.) in the financial and operating policy decisions of the entity. Joint ventures
LLP or its affiliates; and (ii) private equity funds managed by Warburg are joint arrangements whereby the parties that have joint control of the
Pincus International LLC or its affiliates (together, ‘the Consortium’) arrangement have rights to the net assets of the arrangement.
on the terms of a recommended cash offer for the entire issued and The results, assets and liabilities of joint ventures and associates are
to be issued ordinary share capital of the Company. The acquisition incorporated in these financial statements using the equity method of
of the Company (‘the Acquisition’) was implemented by way of a accounting. Investments in joint ventures and associates are carried in the
court-sanctioned scheme of arrangement (‘the Scheme’). The Scheme Group statement of financial position at cost, including direct acquisition
was approved by shareholders on 14 January 2021 at a court meeting costs, as adjusted by post-acquisition changes in the Group’s share of the
and then at a General Meeting. Regulatory approval was subsequently net assets less any impairment losses.
received and the Scheme was sanctioned by court hearing on 8 March
2021. The effective date of the Scheme was 9 March 2021. The transaction b) Foreign currencies
included a commitment from the Consortium for an injection of new These financial statements are presented in pounds sterling, which
equity into the Group of £261m following completion to be used is the currency of the primary economic environment in which the
in the refinancing of the Class B2 Notes and a subsequent injection Group operates.
of £100m to be used in the refinancing of the Class A5 Notes, being
the Notes with the nearest maturity dates. The equity injection was Transactions in currencies other than the functional currency of each
formalised in an Equity Commitment Letter providing the Directors with consolidated undertaking are recorded at rates of exchange prevailing on
the assurance that, after completion of the transaction, the leverage of the dates of the transactions. Monetary assets and liabilities denominated
the Group would be significantly reduced. in foreign currencies are translated into the respective functional currency
at rates of exchange ruling at the statement of financial position date.
The Group issued £280m of Class B3 Notes in January 2021 which, Gains and losses arising on the translation of assets and liabilities are
alongside the £261m of new equity noted above and the surrender for taken to the income statement.
cancellation of £29m of Class B2 Notes held by the Company, enabled
in March 2021 the repayment in full of the £570m of Class B2 Notes c) Business combinations and goodwill
outstanding at 31 January 2021. The Consortium also secured a new All business combinations are accounted for by applying the acquisition
£150m Senior Term Facility and £56m Working Capital Facility to replace method.
the Group’s existing facilities.
Costs related to the acquisition, other than those associated with the
The Directors propose a refinancing of the Class A5 Notes in advance of issue of debt or equity securities, are expensed as incurred.
their maturity on 31 January 2022 and drawing upon the remaining £100m
of committed new equity referred to above. The Directors understand Goodwill arising on consolidation represents the excess of the consideration
that the outstanding £1,997m Class A Notes are trading at a price near par paid over the Group’s interest in the fair value of the identified assets and
with yields below 4% which indicate that the debt market considers the liabilities of a subsidiary at the date of acquisition. Goodwill is recognised
refinancing risk of the Class A5 Notes to be low. Given the significant as an asset at cost less accumulated impairment losses.
deleveraging of the debt at both A Notes and B Notes level, the current Any contingent consideration payable is recognised at fair value at
pricing of A Notes in the secondary debt markets and the existing the acquisition date, and subsequent changes to the fair value of the
Investment Grade rating of BBB- of the A Notes to be issued, the Directors contingent consideration are taken to the income statement.
are, on this basis, confident that this refinancing will be successful. At the
date of approval of these financial statements, the Class B3 Notes are no d) Intangible assets
longer contingent on the completion of the Acquisition and there is no Intangible assets other than goodwill which are acquired separately
other debt with a maturity date within 12 months from the issue of these are stated at cost. The cost of intangible assets acquired in a business
financial statements (see note 20). combination is their fair value as at the date of acquisition.
The Directors have considered these points along with the projected Following initial recognition, intangible assets are carried at cost less
cash flows, for a period of one year from the date of approval of these any accumulated amortisation and impairment losses. Intangible assets
consolidated financial statements and have concluded that they have with finite lives are amortised on a straight-line basis over their estimated
confidence that the Group will have sufficient funds to continue trading useful economic lives. The only intangible assets with finite lives held by
for this period and will be able to secure financing so as to be able to the Group are customer relationships, software and development costs.
continue to meet its liabilities as they fall due.
© 2020 Friend Studio Ltd File name: FinancialXStatements_v49 Modification Date: 13 April 2021 10:10 pm
1 Basis of preparation and accounting policies continued Debt instruments
Strategic Report
1.3 Accounting policies continued Debt is initially recognised in the statement of financial position at fair
value less transaction costs incurred directly in connection with the issue
e) Software and development costs
of the instrument. Debt issue fees in respect of the instrument, including
Software development expenditures on an individual project are premiums and discounts on issue, are capitalised at inception and
recognised as an intangible asset when the Group can demonstrate: charged to the income statement over the term of the instrument using
he technical feasibility of completing the intangible asset so that it
T the effective interest method. Remaining issue costs on debt are written
will be available for use or sale off to the income statement when the debt is extinguished.
Its intention to complete and its ability to use or sell the asset An exchange with an existing lender of debt instruments with substantially
different terms, or a substantial modification of the terms of an existing
How the asset will generate future economic benefits financial liability or a part of it, is accounted for as an extinguishment of
The availability of resources to complete the asset the original financial liability and the recognition of a new financial liability.
If an exchange of debt instruments or modification of terms is accounted
The ability to measure reliably the expenditure during development
for as an extinguishment, any costs or fees incurred are recognised as part
Following initial recognition of the development expenditure as an of the gain or loss on the extinguishment. If the exchange or modification
Governance
asset, the cost model is applied. The asset is carried at cost less any is not accounted for as an extinguishment, any costs or fees incurred
accumulated amortisation and impairment losses. Amortisation of the adjust the carrying amount of the liability and are amortised over the
asset begins when development is complete and the asset is available remaining term of the modified liability.
for use. It is amortised on a straight-line basis over its useful life of three
to five years. Equity instruments (share capital issued by the Group)
An equity instrument is any contract that evidences a residual interest in
f) Property, plant and equipment the assets of the Group after deducting all its liabilities. Equity instruments
Land and buildings held for use in the production of goods and the are recognised at the fair value of proceeds received less direct issue costs.
provision of services or for administrative purposes are stated in the
statement of financial position at cost or fair value for assets acquired in Derivative financial instruments
a business combination less any subsequent accumulated depreciation The Group’s capital structure exposes it to the financial risk of changes in
and impairment losses. If relevant conditions are met, borrowing costs interest rates and fuel prices. The Group uses interest rate and fuel swap
are capitalised. contracts to hedge these exposures.
Property, plant and equipment is stated at cost less accumulated Derivative financial instruments are recorded in the statement of financial
depreciation and impairment losses. Such costs include costs directly position at fair value. The fair value of derivative financial instruments is
attributable to making the asset capable of operating as intended. determined by reference to market values for similar financial instruments.
The cost of property, plant and equipment less their expected residual The gain or loss on remeasurement to fair value is recognised immediately
value is depreciated in equal instalments over their useful economic in the income statement unless they qualify for hedge accounting as
lives. These lives are as follows: described below.
Buildings 50 years Cash flow hedges

Related fittings 3 – 20 years Where a derivative financial instrument is designated as a hedge of
the variability in cash flows of a recognised asset or liability, or a highly
Leasehold properties over the period of the lease
probable forecast transaction, the effective part of any gain or loss on
Plant, vehicles and other equipment 3 – 10 years the derivative financial instrument is recognised directly in the cash
flow hedge reserve. Any ineffective portion of the hedge is recognised
g) Inventories immediately in the income statement.
Inventories are stated at the lower of cost and net realisable value. Costs
In the same period or periods during which the hedged expected future
include all costs incurred in bringing each product to its present location
cash flows affects profit or loss, the associated cumulative gain or loss on
and condition. Net realisable value is based on estimated selling price less
the hedged forecast transaction is removed from equity and recognised in
any further costs expected to be incurred to completion and disposal.
the income statement.
h) Financial instruments When the hedging instrument is sold, expires, is terminated or exercised,
Financial assets and financial liabilities are recognised in the Group’s or the entity revokes designation of the hedge relationship but the hedged
statement of financial position when the Group becomes a party to the forecast transaction is still expected to occur, the cumulative gain or loss
contractual provisions of the instrument. They are classified according to at that point remains in equity and is recognised in accordance with the
the substance of the contractual arrangements entered into. The Group above policy when the transaction occurs. If the hedged transaction is
recognises loss allowances for expected credit losses (ECLs) on relevant no longer expected to take place, the cumulative unrealised gain or loss
financial assets. recognised in equity is recognised in the income statement immediately.
Trade receivables i) Impairment of assets

Trade receivables are amounts due from customers for goods or services The carrying amounts of the Group’s non-financial assets, other than
performed in the ordinary course of business. They are generally due inventories, are reviewed at each reporting date to determine whether
for settlement within 30 days and are therefore all classified as current. there is any indication of impairment. If any such indication exists, then
Trade receivables are recognised at fair value and are subsequently held the asset’s recoverable amount is estimated. In addition, goodwill and
at amortised cost. The Group applies the IFRS 9 simplified approach to intangible assets not yet available for use are tested for impairment
measuring ECLs which uses a lifetime expected loss allowance for all annually.
trade receivables.
For the purpose of impairment testing, assets that cannot be tested
Trade payables individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent
Trade payables are not interest bearing and are recognised at fair value
of the cash inflows of other assets or groups of assets (the cash-generating
and are subsequently held at amortised cost.
units or ‘CGUs’). The goodwill acquired in a business combination is
Cash and cash equivalents allocated to CGUs so that the level at which impairment is tested reflects
Cash and cash equivalents comprise cash balances and call deposits the lowest level at which goodwill is monitored for internal reporting
with an original maturity less than three months. Restricted cash is cash purposes.
which is subject to contractual or regulatory restrictions. The recoverable amount of an asset or CGU is the greater of its value
in use and its fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset.
Notes to the Consolidated Financial Statements continued
1 Basis of preparation and accounting policies continued For defined contribution schemes, the amounts recognised in the income
statement are the contributions payable in the year.
1.3 Accounting policies continued
i) Impairment of assets continued m) Revenue recognition
An impairment loss is recognised if the carrying amount of an asset or its Revenue is measured at the fair value of the consideration receivable
CGU exceeds its estimated recoverable amount. Impairment losses are less any discounts and excluding value added tax and other sales
recognised in the income statement. Impairment losses recognised in related taxes.
respect of CGUs are allocated first to reduce the carrying amount of any
allocated goodwill and then to reduce the carrying amounts of the other Roadside membership subscriptions and premiums receivable on
assets on a pro rata basis. underwritten insurance products are apportioned on a time basis over
the period where the Group is liable for risk cover as the relevant
An impairment loss in respect of goodwill is not reversed. In respect of performance obligations are settled over time, with the Group acting
other assets, an impairment loss is reversed if there has been a change in as principal. The unrecognised element of subscriptions and premiums
the estimates used to determine the recoverable amount. An impairment receivable, relating to future periods, is held within liabilities as deferred
loss is reversed only to the extent that the asset’s carrying amount does income and provision for unearned premium.
not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised. Commission income from insurers external to the Group is recognised at
the commencement of the period of risk on a point in time basis, with the
j) Leases Group acting as agent in this relationship. Commission income for policies
Lease liabilities underwritten by the Group is deferred and recognised over the period of
risk, with the Group acting as principal in this relationship.
Lease liabilities are measured at the present value of the remaining lease
payments, discounted using the lessee’s incremental borrowing rate. Where customers choose to pay by instalments, the Group charges
interest based on the principal outstanding and disclosed interest rate
Measurement of right-of-use assets
and recognises this income over the course of the loan.
The associated right-of-use assets for leases are initially measured at the
amount equal to the initial lease liability, adjusted by the amount of any Fees receivable on franchise agreements with driving instructors are
prepaid or accrued lease payments relating to that lease recognised in recognised as revenue over time across the term of the franchise
the statement of financial position. agreements. This includes fees receivable under the franchise agreement
in respect of provision of tuition vehicles, which is not considered to be a
Subsequently the right-of-use assets are depreciated over their lease terms. sub-lease arrangement. The Group acts as principal in this relationship.
For property leases, where a decision has been made prior to the year end Commission income receivable from the sale and related marketing and
to permanently vacate the property, the right-of-use asset is impaired administrative services of financial products, such as that earned through
to the extent that the value cannot be recovered through rental or other the partnership with the Bank of Ireland, is recognised on a point in time
income expected to be received up to the estimated date of final disposal. basis at the point of the provision of the service, with the Group acting as
k) Provisions and contingent liabilities agent in this relationship. Fixed income and fixed rebates relating to the
provision of these services are recognised in revenue over time in line
A provision is required when the Group has a present legal or constructive with the profile of expected commissions over the contract term.
obligation as a result of a past event and it is probable that settlement will
be required of an amount that can be reliably estimated. For all other revenue, this income is recognised on a point in time basis at
the point of delivery of goods or on the provision of service, or over time
Provisions are discounted where the impact is material. Material where the service is provided over more than one day. This includes work
contingent liabilities are disclosed unless the likelihood of transfer of which has not yet been fully invoiced, provided that it is considered to be
economic benefits is remote. Contingent assets are only disclosed if fully recoverable.
an inflow of economic benefits is probable.
Provisions for restructuring costs are recognised when the Group has a n) Insurance contracts
detailed formal plan for the restructuring that has been communicated An insurance contract is a contract under which insurance risk is
to affected parties. transferred to the issuer of the contract by another party. In the roadside
segment, the Group accepts insurance risk from its customers under
l) Retirement benefit obligation roadside recovery service contracts by agreeing to provide services
The Group’s position in respect of defined benefit pension plans is whose frequency and cost is uncertain. Claims and expenses arising
calculated by estimating the amount of future benefit that employees from these contracts are recognised in profit or loss as incurred, broker
have earned in return for their service in the current and prior years; that acquisition costs are deferred. The Group also has insurance risk within
benefit is discounted to determine its present value, and the fair value the insurance underwriting segment on insurance products underwritten
of any plan assets (at bid price) is deducted. The Group determines the by the Group.
net interest on the net defined benefit liability for the year by applying At the statement of financial position date, a liability adequacy test is
the discount rate used to measure the defined benefit obligation at the performed to ensure the adequacy of the insurance contract liabilities.
beginning of the year to the net defined benefit liability. In performing these tests, current estimates of future cash outflows
The discount rate is the yield at the reporting date on bonds that have a arising under insurance contracts are considered and compared with
credit rating of at least AA, with maturity dates approximating the terms the carrying amount of deferred income, provision for unearned
of the Group’s obligations, and that are denominated in the currency in premiums and other insurance contract liabilities. Any deficiency is
which the benefits are expected to be paid. immediately recognised in the income statement and an additional
liability is established.
Remeasurements arising from defined benefit plans comprise actuarial
gains and losses and the return on plan assets (excluding interest). The estimation of the ultimate liability from claims made under insurance
The Group recognises them immediately in other comprehensive income contracts for breakdown recovery is not considered to be one of the
and all other expenses related to defined benefit plans in administrative Group’s most critical accounting estimates. This is because there is a very
and marketing expenses in the income statement. short period of time between the receipt of a claim, e.g. a breakdown, and
the settling of that claim. Consequently, there are no significant provisions
When the benefits of a plan are changed, or when a plan is curtailed,
for unsettled claims costs in respect of the roadside assistance services.
the portion of the changed benefit related to past service by employees,
or the gain or loss on curtailment, is recognised immediately in the The provision for outstanding claims relating to products with insurance
income statement when the plan amendment or curtailment occurs. risk within the insurance underwriting segment is set on an individual
claim basis and is based on the ultimate cost of all claims notified but not
The calculation of the defined benefit obligations is performed by a qualified
settled, less amounts already paid by the reporting date, together with a
actuary using the projected unit credit method. When the calculation
provision for related claims handling costs. The provision also includes
results in a benefit to the Group, the recognised asset is limited to the
the estimated cost of claims incurred but not reported (‘IBNR’) at the
present value of benefits available in the form of any future refunds from
statement of financial position date, which is set using statistical methods.
the plan or reductions in future contributions and takes into account the
Both outstanding claims and IBNR are not discounted for the time value
adverse effect of any minimum funding requirements.
of money.
1 Basis of preparation and accounting policies continued A deferred tax asset is recognised only to the extent that it is probable
Strategic Report
that future taxable profits will be available against which the temporary
1.3 Accounting policies continued
difference can be utilised. The carrying amount of deferred tax assets is
n) Insurance contracts continued reviewed at each statement of financial position date and reduced to the
The amount of any anticipated reinsurance, salvage or subrogation extent that it is no longer probable that sufficient taxable profits will be
recoveries is separately identified and reported within trade and other available to allow all or part of the asset to be recovered.
receivables and insurance contract liabilities respectively. Differences
between the provisions at the reporting date and settlements and s) Segmental analysis
provisions in the following year are recognised in the income statement The Group reports its operations using the segments that are reported
as they arise. for management purposes. Segments are based on business operations
because this is where Group risk and return is focused.
Reinsurance
The Group undertakes a programme of reinsurance in respect of the t) Share-based payments
policies which it underwrites. Outward reinsurance premiums are The Group operates a number of equity-settled and cash-settled
accounted for in the same accounting period as the related inward share-based payment compensation plans for employees.
insurance premiums and are included as a deduction from earned
Governance
premium, and therefore as a reduction in revenue. The amount of Share-based payment arrangements in which the Group receives
any anticipated reinsurance recoveries is treated as a reduction in goods or services as consideration for its own equity instruments are
claims costs. accounted for as equity-settled share-based payment transactions,
regardless of how the equity instruments are obtained by the Group.
The Group has also entered into coinsurance arrangements in respect
of certain policies that it underwrites. Premiums and claims in respect The grant date fair value of equity-settled share-based payment
of coinsured policies are shown net of the coinsurer’s share. awards granted to employees is recognised as an employee cost, with
a corresponding increase in equity, over the period that the employees
o) Insurance aggregator fees become unconditionally entitled to the awards. The fair value of the
Insurance aggregator fees are the costs related to the acquisition of options granted is measured using an option valuation model, taking into
customers from insurance comparison websites. These costs are account the terms and conditions upon which the options were granted.
expensed to the income statement in full at the commencement of the The amount recognised as an expense is adjusted to reflect the actual
insurance policy except where the risk is underwritten by the Group in number of awards for which the related service and non-market vesting
which case aggregator fees are initially deferred then expensed over conditions are expected to be met, such that the amount ultimately
the duration of the policy. These costs are presented in the income recognised as an expense is based on the number of awards that do meet
statement within administrative and marketing expenses. the related service and non-market performance conditions at the vesting
date. For share-based payment awards with non-vesting conditions, the
p) Adjusting operating items and adjusted earnings per share grant date fair value of the share-based payment is measured to reflect
Adjusting operating items are events or transactions that fall within such conditions and there is no true up for differences between expected
the operating activities of the Group and which, by virtue of their size and actual outcomes.
or incidence, have been disclosed in order to improve a reader’s
understanding of the financial statements. Share-based payment transactions in which the Group receives goods
or services by incurring a liability to transfer cash or other assets that is
In addition, occasionally there are events or transactions that fall below based on the price of the Group’s equity instruments are accounted
operating profit that are one-off in nature and items within operating profit for as cash-settled share-based payments. The fair value of the amount
that relate to transactions that do not form part of the ongoing segment payable to employees is recognised as an expense, with a corresponding
performance and which, by virtue of their size or incidence, have been increase in liabilities, over the period in which the employees become
separately disclosed in the financial statements. unconditionally entitled to payment. The liability is remeasured at each
Adjusted earnings per share is a non-IFRS performance measure which statement of financial position date and at settlement date. Any changes
adjusts profit after tax for items that are either discontinued operations, in the fair value of the liability are recognised as an employee cost in the
one-off in nature or relate to transactions that do not form part of the income statement.
ongoing performance of the Group.
u) Discontinued operations and disposals
q) Finance income and costs A discontinued operation is a component of the Group’s business,
Finance costs comprise interest payable, finance charges on lease the operations and cash flows of which can be clearly distinguished
liabilities recognised in profit or loss using the effective interest method, from the rest of the Group, and which:
amortisation of debt issue fees, unwinding of the discount on provisions epresents a separate major line of business or geographical area
R
(including the net defined benefit obligations) and unwinding of the of operations;
discount on contingent consideration payable.
I s part of a single coordinated plan to dispose of a separate major
Finance income comprises interest receivable on funds invested. line of business or geographical area of operations; or
r) Taxation Is a subsidiary acquired exclusively with a view to re-sale.
Tax on the profit or loss for the year comprises current and deferred tax. Classification as a discontinued operation occurs on disposal or when
Current tax is the expected tax payable or receivable on the taxable the operation meets the criteria to be classified as held for sale, if earlier.
income or loss for the year, using tax rates enacted or substantively When an operation is classified as a discontinued operation, the
enacted at the statement of financial position date, and any adjustment comparative statement of comprehensive income is represented
to tax payable in respect of prior years. as if the operation had been discontinued from the start of the
Deferred tax is provided on temporary differences between the carrying comparative year.
amounts of assets and liabilities for financial reporting purposes and
v) Critical accounting estimates and judgements
the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of goodwill; Estimates are evaluated continually and are based on historical
the initial recognition of assets or liabilities that affect neither accounting experience and other factors, including expectations of future events that
nor taxable profit other than in a business combination; and differences are believed to be reasonable under the circumstances. The Group makes
relating to investments in subsidiaries to the extent that they will probably estimates and assumptions about the future. The resulting accounting
not reverse in the foreseeable future. The amount of deferred tax provided estimates will, by definition, seldom equal the related actual results.
is based on the expected manner of realisation or settlement of the Management has exercised judgement in applying the Group’s
carrying amount of assets and liabilities, using tax rates enacted or accounting policies and in making critical estimates. The underlying
substantively enacted at the statement of financial position date. assumptions on which these judgements are based are reviewed on an
ongoing basis and include the selection of assumptions in relation to
the retirement benefit obligation and assumptions for future growth
of cash flows to support the value in use calculations for the goodwill
impairment review.
1 Basis of preparation and accounting policies continued Insurance technical provisions

1.3 Accounting policies continued The Group’s insurance technical provisions are an estimate of the
expected ultimate cost of claims as at the statement of financial position
v) Critical accounting estimates and judgements continued
date and the cost of claims incurred but not yet reported to the Group.
The principal estimates and assumptions that have a significant risk of The estimation of these claims is based on historical experience projected
causing a material adjustment to the carrying amounts of assets and forward using actuarial projection methodologies which incorporate
liabilities within the next financial year are discussed below: various assumptions. It can take a significant period of time before the
Retirement benefit obligation ultimate cost of claims can be established with certainty, and the final
outcome may be better or worse than that provided.
The Group’s retirement benefit obligation, which is actuarially assessed
each period, is based on key assumptions including return on plan assets, Share-based payments
discount rates, mortality rates, inflation, future salary and pension costs. The Group has issued a number of share-based payment awards to
These assumptions may be different to the actual outcome. employees which are measured at fair value. Calculating the share-based
The following are other principal estimates and assumptions made by payment charge for the year involves estimating the number of awards
the Group, but which management believes do not have a significant risk expected to vest, which in turn involves estimating the number of expected
of causing a material adjustment to the carrying amounts of assets and leavers over the vesting period and the extent to which non-market-based
liabilities within the next financial year: performance conditions will be met. Determining the fair value of an
award with a market-based performance condition also involves factoring
Goodwill in the impact of the expected volatility of the share price.
The Group tests goodwill for impairment annually. The recoverable
amounts of CGUs have been determined based on value in use Leases
calculations which require the use of estimates (see note 28). The Group recognises lease liabilities in relation to leases, measured at the
Management has prepared discounted cash flows based on the present value of the minimum lease payments, discounted using the discount
latest strategic plan. rate implicit in the lease, or, where this is not available, the corresponding
incremental borrowing rate as at the date of inception of the lease.
Intangibles Management’s approach to determining the incremental borrowing rate
The Group has significant software development programmes and there for a right-of-use asset involves using data provided by the Group’s external
is judgement in relation to which programmes and costs to capitalise advisers on the rate of interest that the Group would have to pay to borrow
under IAS 38. Additionally, there is an estimate in respect of the future over a similar term, and with a similar security, the funds necessary to
usage period of software on which the Group bases the useful economic obtain an asset of a similar value to the relevant right-of use asset.
life of related assets.
2 Segmental information and revenue disaggregation

The Group has two key segments – Roadside and Insurance. Head Office costs have been allocated to these two key segments as these costs
principally directly support the operations of these segments. Head Office costs are predominately allocated on a percentage of revenue basis.
The two reportable operating segments are as follows:
Roadside: This segment is the largest part of the AA business. The AA provides a nationwide service, sending patrols out to members stranded at
the side of the road, repairing their vehicles where possible and getting them back on their way quickly and safely. In addition, this segment includes
the AA and BSM driving schools and DriveTech which provides driver training and educative programmes.
I nsurance: This segment includes the insurance brokerage activities of the AA, primarily in arranging motor and home insurance for customers and
its intermediary financial services business. This segment also includes the insurance underwriting and reinsurance activities of the AA.
During the year and reflecting the way that the Group is now managed, the Group has determined that its AA Cars business should be included within
the Insurance segment, having previously been included in the Roadside segment. This has been reflected in the below analysis of segmental
performance and corresponding comparatives.
2021 2020*
£m £m
Revenue
Roadside1 799 827
Insurance1 168 166
Revenue 967 993
Trading EBITDA
Roadside1 280 285
Insurance1 61 63
Share-based payments (see note 36) (4) (5)
Pension service charge adjustment (see note 3) (5) (4)
Amortisation and depreciation (see notes 11, 13, 14) (93) (89)
Operating profit before adjusting operating items 239 259
Adjusting operating items (see note 5) (21) (4)
Net finance costs (see notes 6 and 7) (166) (150)
* The comparatives for the year ended 31 January 2020 have been restated to correct a prior year error, see note 19.
2 Segmental information and revenue disaggregation continued
Strategic Report
All segments operate principally in the UK. Revenue by destination is not materially different from revenue by origin.
Segment performance is primarily evaluated using the Group’s key performance measures of Revenue and Trading EBITDA as well as operating profit
before adjusting operating items.
Adjusting operating items, net finance costs and tax expense are not allocated to individual segments as they are managed on a group basis.
Segmental information is not presented for items in the statement of financial position as management does not view this information on a segmental basis.
Roadside1 Insurance1
2021 2020* 2021 2020*
Operating profit before adjusting operating items £m £m £m £m
Trading EBITDA 280 285 61 63
Share-based payments (3) (2) (1) (3)
Pension service charge adjustment (4) (4) (1) –
Governance
Contingent consideration remeasurement gain – – – 9
Amortisation and depreciation (81) (79) (12) (10)
Operating profit before adjusting operating items 192 200 47 59
Disaggregation of revenue:
2021 2020*
£m £m
Roadside:
Consumer (B2C)
Insured contracts 470 484
Pay for use contracts2 48 47
Business services (B2B)
Insured contracts 32 33
Pay for use contracts2 176 171
Roadside other1 73 92
Total Roadside 799 827
Insurance:
Brokering activities1 113 120
Insurance underwriting 40 28
Insurance other1 15 18
Total Insurance 168 166
Revenue 967 993
1 Insurance other now comprises the Group’s AA Cars and Financial Services businesses, which were previously included in Roadside other and Insurance brokering activities respectively. Roadside
other comprises the Group’s Driving Schools, DriveTech and Prestige businesses as well as a number of other smaller operations. This better reflects the nature of their products and the way that
the Group is now managed. The segmental analysis and revenue disaggregation figures for the year ended January 2020 have been restated to reflect this change.
2 Pay for use contracts relate to contracts that take into account the number of breakdowns.
Roadside B2C and B2B mostly consists of revenue from roadside membership subscriptions. The majority of brokering activities revenue relates to
commission income from insurers external to the Group, whereas insurance underwriting largely consists of premiums receivable on underwritten
insurance products.
For further detail on the Group’s revenue streams see the ‘Our performance’ section of the Annual Report on P16-19, and the ‘AA Risk Management
Framework’ section of the Annual Report on P25-27 for the different risks associated with each.
3 Adjusted performance measures

These financial statements report results and performance both on a statutory and non-GAAP (non-statutory) basis. The Group’s adjusted performance
measures are non-GAAP (non-statutory) financial measures and are included in these financial statements as they are key financial measures used by
management to evaluate performance of business segments. The measures enable stakeholders to more easily and consistently track the underlying
operational performance of the Group and its business segments. Some of the measures are also required under our debt documents for debt covenant
calculations.
Trading EBITDA is profit after tax on a continuing basis as reported, adjusted for depreciation, amortisation, adjusting operating items, share-based
payments, pension service charge adjustments, net finance costs, contingent consideration remeasurement movements and tax expense.
The pension service charge adjustment relates to the difference between the cash contributions to the pension scheme for ongoing contributions and
the calculated annual service costs.
Reconciliation of Trading EBITDA to operating profit

Trading EBITDA is calculated as operating profit before adjustments as shown in the table below:
2021 2020*
Note £m £m
Trading EBITDA 2 341 348
Share-based payments 36 (4) (5)
Pension service charge adjustment (5) (4)
Amortisation and depreciation 11,13,14 (93) (89)
Adjusting operating items 5 (21) (4)
Operating profit 4 218 255
Trading EBITDA excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the
quality of earnings, such as restructuring costs, legal costs and impairments when the impairment is the result of an isolated, non-recurring event.
It also excludes the effects of share-based payments, contingent consideration remeasurement gains or losses, defined benefit pension service
charge adjustments, amortisation, depreciation and unrealised gains or losses on financial instruments.
These specific adjustments are made between the GAAP measure of operating profit and the non-GAAP measure of Trading EBITDA because Trading
EBITDA is a performance measure required and clearly defined under the terms of our debt documents and is used for calculating our debt covenants.
Given the significance of the Group debt, Trading EBITDA is a key measure for our bondholders and therefore management. In addition, the Group
shows Trading EBITDA to enable stakeholders and management to more easily and consistently track the underlying operational performance of the
Group and its business segments.
Adjusted earnings per share

Adjusted earnings per share adjusts profit after tax for items that are either discontinued operations, one-off in nature or relate to transactions that do
not form part of the ongoing performance of the Group.
Adjusted profit before tax is included as a non-GAAP measure as it is used by management to evaluate performance and by investors to more easily
and consistently track the underlying performance of the Group. Adjusted earnings per share is calculated as adjusted profit after tax divided by the
weighted average number of shares in issue during the year.
2021 2020*
Profit after tax as reported (£m) 40 85
Adjusted for:
Adjusting operating items (see note 5) (£m) 21 4
Share-based payments (see note 36) (£m) 4 5
Contingent consideration remeasurement gain (£m) – (9)
Pension service charge adjustment (£m) 5 4
Adjusting finance costs (see note 6) (£m) 20 –
Adjusting finance income (see note 7) (£m) – (4)
Tax expense (see note 9) (£m) 12 20
Adjusted profit before tax (£m) 102 105
Tax at rate of 19% (2020: 19%) (£m) (19) (20)
Adjusted profit after tax (£m) 83 85
Weighted average number of shares outstanding (millions) 611 615
Adjusted basic earnings per share (pence) 13.6 13.8
Weighted average number of diluted ordinary shares (see note 10) (millions) 621 634
Adjusted diluted earnings per share (pence) 13.4 13.4
4 Operating profit
Strategic Report
Operating profit is stated after charging:
2021 2020
£m £m
Amortisation of owned intangible assets (see note 11) 55 46
Depreciation of owned tangible fixed assets (see note 13) 12 14
Depreciation of right-of-use assets (see note 14) 26 29
5 Adjusting operating items

2021 2020
£m £m
Transaction fees related to the Acquisition (see note 39) 16 –
Governance
Strategic review projects 2 6
Closure costs of the CARE section of the AAUK pension scheme and the transitional agreement made
with employees in that scheme 5 –
Emergency IT expenditure incurred setting up home working due to the COVID-19 pandemic 4 –
Government furlough support in respect of COVID-19 (7) –
Other adjusting operating items 1 (2)
Total adjusting operating items 21 4
In the current year, other adjusting operating items comprised a £2m loss on disposal of subsidiaries (see note 12), £1m of additional property
dilapidations costs and a £1m impairment of investments in joint ventures offset by a £2m release of a provision for conduct and regulatory costs and
a £1m profit on disposal of non-current assets.
In the prior year, other adjusting operating items comprised £2m related to conduct and regulatory costs and £1m related to legal disputes offset by a
£2m gain on the disposal of 51% of AA Media Limited and a £3m profit on disposal of non-current assets.
As noted above, we have separately identified the incremental costs directly attributable to COVID-19 and the credit received from government furlough
support, within adjusting operating items. The trading effects from COVID-19 are reflected within Trading EBITDA.
Costs from the current year refinancings in February 2020 and January 2021 were directly attributable to the issue and repayment of loan notes and
have therefore been included either in finance costs or in borrowings as debt issue fees (see notes 6 and 21).
6 Finance costs
2021 2020
£m £m
Interest on external borrowings 136 129
Finance charges payable on lease liabilities 3 5
Total ongoing cash finance costs 139 134
Ongoing amortisation of debt issue fees 9 14
Fair value movement on interest rate swaps 1 1
Contingent consideration movements – 1
Net finance expense on defined benefit pension schemes – 5
Total ongoing non-cash finance costs 10 21
Debt repayment premium (see note 21) 6 –
Debt issue fees immediately written off following repayment of borrowings (see note 21) 5 –
Total adjusting cash finance costs 11 –
Unamortised debt issue fees written off following repayment of borrowings (see note 21) 9 –
Total adjusting non-cash finance costs 9 –
Total finance costs 169 155
During the current year, the Group issued £325m of Class A8 Notes in exchange for £325m of Class A5 Notes (see note 21). As a result, the Group
incurred adjusting finance costs associated with this refinancing of £20m, consisting of £6m of exchange premium, £5m of transaction fees and a
£9m write-off of unamortised issue fees associated with the Class A5 Notes.
During the current year, the Group also issued £280m of Class B3 Notes. This was not a modification of any existing debt and so associated issue
fees were capitalised (see note 21).
7 Finance income
2021 2020
£m £m
Interest receivable from financial assets held for cash management purposes – 1
Total ongoing cash finance income – 1
Net finance income on defined benefit pension schemes 3 –
Total ongoing non-cash finance income 3 –
Net gain on settlement of debt – 4
Adjusting finance income – 4
Total finance income 3 5
8 Employee costs
2021 2020
£m £m
Wages and salaries 244 254
Social security costs 25 26
Other pension costs 32 31
Share-based payments expense (see note 36) 4 5
305 316
The above employee costs are presented gross of government furlough support in respect of COVID-19.
The average monthly number of persons employed under contracts of service during the year was:
2021 2020
Operational 5,931 6,313
Management and administration 1,290 1,223
7,221 7,536
9 Tax
The major components of the income tax expense are:
2021 2020*
£m £m
Consolidated income statement
Current income tax
Current income tax charge 15 16
Adjustments in respect of prior years (1) –
14 16
Deferred tax
Origination and reversal of temporary differences (1) 4
Effect of rate change on opening balances (1) –
(2) 4
Tax expense in the income statement 12 20
2021 2020
£m £m
Consolidated statement of comprehensive income
Current tax on remeasurements of defined benefit pension liability (4) –
Deferred tax on remeasurements of defined benefit pension liability (6) 7
Income tax charged directly to other comprehensive income (10) 7
9 Tax continued
Strategic Report
Reconciliation of tax expense to profit before tax multiplied by UK’s corporation tax rate
2021 2020*
£m m
Tax at rate of 19% (2020: 19%) 10 19

Adjustments relating to prior years (1) –
Rate change adjustment on temporary differences (1) –
Expenses not deductible/(chargeable) for tax purposes:
Costs relating to share transactions 3 –
Amounts relating to acquisitions and disposals 1 (1)
Other non-deductible expenses/non-taxed income – 2
Governance
Income tax expense reported in the consolidated income statement at effective rate of 23.1% (2020: 19.0%) 12 20
Deferred tax by type of temporary difference

Consolidated statement of Consolidated
financial position income statement
2021 2020 2021 2020
£m £m £m £m
Accelerated depreciation for tax purposes 9 7 (2) –
Revaluations of land and buildings to fair value (1) (1) – –
Rollover relief (2) (2) – –
Pension – (6) – 2
Short-term temporary differences 7 5 (2) (1)
Losses available for offsetting against future taxable income 4 6 2 3
Deferred tax expense (2) 4
Net deferred tax assets 17 9 – –
Reconciliation of net deferred tax assets

2021 2020
£m £m
At 1 February 9 22
Tax expense recognised in the income statement 2 (4)
Tax expense recognised in other comprehensive income 6 (7)
Deferred tax liability on acquisition of subsidiary (see note 12) – (2)
At 31 January 17 9
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
The March 2020 budget announced that the expected reduction in tax rate to 17% would be cancelled and the 19% rate retained after 1 April 2020.
The effect of cancelling the tax rate reduction was an increase in the value of the deferred tax asset as at 31 January 2020 by £1m. This £1m rate change
has been reflected in the current year deferred tax charge. The March 2021 budget announced that the main corporation tax rate will increase to 25% in
April 2023. The increased rate will not impact on the Group’s current tax for the year ending 31 January 2022. As this new rate is expected to be enacted
later in 2021, an assessment will be made on the carrying value of the Group’s deferred tax balance, depending on the expected timing of reversals, for
the year ending 31 January 2022.
Deferred tax has been recognised at an overall rate of 19% at 31 January 2021 (2020: 17%). The rate has been adjusted to reflect the expected reversal
profile of the Group’s temporary differences.
The Group has carried forward tax losses which arose in the UK of £22m (deferred tax equivalent £4m) (2020: £36m tax losses, deferred tax equivalent
£6m) that are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. A deferred tax asset has been
recognised in respect of these losses. A further £1m (2020: £1m) deferred tax asset relating to other tax losses has not been recognised due to the
uncertainty of the availability of suitable future profits to enable recovery.
The effective tax rate is higher than the standard rate of corporation tax as a result of one-off disallowable costs incurred in respect of the Acquisition of
the Group’s shares. Further costs of the Acquisition, to be incurred in the year ending 31 January 2022, are also expected to result in an effective rate
above that of the standard rate for that financial year.
10 Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
2021 2020*
Basic earnings per share:
Profit after tax from total operations (£m) 40 85
Weighted average number of shares outstanding (millions) 611 615
Basic earnings per share from total operations (pence) 6.5 13.8
For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume conversion of all potential dilutive ordinary shares.
Under the Group’s Employee Share Incentive Plan, shares are purchased monthly at market value and therefore any dilution is immediately accounted
for in the earnings per share. In addition, matching shares are issued monthly and placed into trust, therefore any dilution is immediately accounted for
in the earnings per share and the issue of matching shares has no further dilutive effect. As at 31 January 2021, there are no outstanding shares to be
issued under these schemes that are potentially dilutive.
As at 31 January 2021, the Performance Share Plan (‘PSP’) share scheme (see note 36) is considered to be potentially dilutive and is included in the
diluted earnings per share below. There are no further classes of share that we believe will have a material dilutive impact as at 31 January 2021.
2021 2020*
Weighted average number of ordinary shares in issue (millions) 611 615
Potentially dilutive shares (millions) 10 19
Weighted average number of diluted ordinary shares (millions) 621 634
Diluted earnings per share from total operations (pence) 6.4 13.4
* Earnings per share comparatives for the year ended 31 January 2020 have been restated to correct a prior year error, see note 19.
Adjusted earnings per share adjusts profit after tax for items that are either one-off in nature or relate to transactions that do not form part of the ongoing
performance of the Group (see note 3).
11 Goodwill and other intangible assets

Customer
Goodwill relationships Software Total
£m £m £m £m
Cost
At 1 February 2019 1,197 – 257 1,454
Additions – 11 58 69
Disposals – – (14) (14)
At 31 January 2020 1,197 11 301 1,509
Additions – – 57 57
Reclassification – – (2) (2)
Disposals – – (46) (46)
At 31 January 2021 1,197 11 310 1,518
Accumulated amortisation and impairment

At 1 February 2019 27 – 96 123
Amortisation – 1 45 46
Disposals – – (14) (14)
At 31 January 2020 27 1 127 155
Amortisation – 1 54 55
Disposals – – (45) (45)
At 31 January 2021 27 2 136 165
Net book value

At 31 January 2021 1,170 9 174 1,353
At 31 January 2020 1,170 10 174 1,354
Within software, £17m (2020: £29m) relates to assets under construction which are not amortised.
Software additions comprise £12m (2020: £12m) in relation to internally developed assets and £45m (2020: £46m) in relation to separately acquired assets.
Amortisation costs are included within administrative and marketing expenses in the income statement.
An annual impairment review has been performed over the goodwill balance, see note 28 for details.
12 Business combinations
Strategic Report
Acquisitions during the year ended 31 January 2021
There were no acquisitions during the year ended 31 January 2021.
Acquisitions during the year ended 31 January 2020

On 1 February 2019, the Group completed the purchase of the entire share capital of Prestige Motor Care Holdings Limited and its three wholly owned
subsidiaries Prestige Fleet Servicing Limited, Prestige Car Servicing Limited and Prestige Motor Care Limited for cash consideration of £11m.
On acquisition, assets and liabilities acquired included £3m cash and £2m trade and other payables. Goodwill of £10m was initially recognised but was
subsequently reallocated within the permitted measurement period, comprising additions of £11m to customer relationships, £1m to software and £2m
to deferred tax liabilities. At the point of acquisition, the combined fair value of net assets acquired was therefore £11m, which resulted in £nil goodwill
being recognised. The net outflow of cash to acquire these subsidiaries was £8m.
Disposals during the year ended 31 January 2021

On 21 May 2020, the Group completed the sale of the entire share capital of AA Reinsurance Company Limited, AA Underwriting Limited and
Automobile Association Underwriting Services Limited for cash consideration of £6m. The combined net book value of net assets disposed of was
Governance
£8m, which resulted in a £2m loss on disposal being recognised. The net outflow of cash to dispose of these subsidiaries was £2m.
The assets and liabilities disposed of had been presented as held for sale at 31 January 2020.
Disposals during the year ended 31 January 2020

On 29 March 2019, the Group completed the sale of 51% of the share capital of AA Media Limited.
13 Property, plant and equipment

Freehold Buildings on long Plant &
land & buildings leasehold land Vehicles equipment Total
£m £m £m £m £m
Cost
At 1 February 2019 24 12 2 78 116
Additions – – 2 7 9
Reclassification – (5) – 5 –
Disposals – – – (10) (10)
At 31 January 2020 24 7 4 80 115
Additions – – – 11 11
Reclassification – – – 2 2
Disposals – – (4) (18) (22)
At 31 January 2021 24 7 – 75 106
Accumulated depreciation and impairment

At 1 February 2019 8 4 2 45 59
Charge for the year 1 – 2 11 14
Disposals – – – (10) (10)
At 31 January 2020 9 4 4 46 63
Charge for the year 1 – – 11 12
Disposals – – (4) (18) (22)
At 31 January 2021 10 4 – 39 53
Net book value

At 31 January 2021 14 3 – 36 53
At 31 January 2020 15 3 – 34 52
Within plant and equipment, £1m (2020: £3m) relates to assets under construction which are not depreciated.
14 Right-of-use assets
This note provides information for leases where the Group is a lessee. Under IFRS 16, right-of-use assets are recognised in the statement of financial
position in respect of leased assets.
Vehicles &
Property equipment Total
£m £m £m
Cost
At 1 February 2019 23 119 142
Additions 4 33 37
Disposals – (71) (71)
At 31 January 2020 27 81 108
Additions – 13 13
Disposals (2) (19) (21)
At 31 January 2021 25 75 100
Accumulated depreciation and impairment

At 1 February 2019 – 53 53
Charge for the year 3 26 29
Disposals – (43) (43)
At 31 January 2020 3 36 39
Disposals (2) (18) (20)
At 31 January 2021 4 41 45
Net book value

At 31 January 2021 21 34 55
At 31 January 2020 24 45 69
15 Investments in joint ventures and associates

2021 2020
Joint Joint
ventures Associates Total ventures Associates Total
£m £m £m £m £m £m
At 1 February 1 4 5 1 4 5
Additions 1 – 1 – – –
Impairment (1) – (1) – – –
At 31 January 1 4 5 1 4 5
The joint ventures of the Group which are indirectly held are detailed below. Except where otherwise stated, the share capital of each joint venture
consists of only ordinary shares.
Company Country of registration Nature of business
AA Law Limited (49% interest held)1 England and Wales, UK Insurance services
Drvn Solutions Limited (50% interest held)2 England and Wales, UK Roadside services
AA Media Limited (49% interest held)3 England and Wales, UK Publishing
1 The Group exercises joint control over AA Law Limited through its equal representation on the Board. AA Law Limited has A and B ordinary shares.
2 Intelematics Europe Limited changed its name to Drvn Solutions Limited on 10 June 2020. The Group exercises joint control over Drvn Solutions Limited through its joint influence over key
decision-making. Drvn Solutions Limited has A and B ordinary shares. The Group increased its shareholding in Drvn Solutions Limited from 32% to 50% on 29 April 2020.
3 The Group exercises joint control over AA Media Limited through its equal representation on the Board. AA Media Limited has A ordinary shares.
The associates of the Group are listed below. Except where otherwise stated, the share capital of each associate consists of only ordinary shares.
Company Country of registration Nature of business
ARC Europe SA (20% interest held) Belgium Roadside services
16 Inventories
2021 2020
£m £m
Finished goods 4 4
4 4
17 Trade and other receivables
Strategic Report
2021 2020
£m £m
Current
Trade receivables 162 143
Prepayments 30 24
Contract assets 15 16
Reinsurers’ share of insurance liabilities (see note 24) 86 67
Other receivables 11 7
304 257
Trade receivables include £106m (2020: £90m) relating to amounts due from insurance broking customers.
Reinsurers’ share of insurance liability comprises £52m (2020: £35m) in relation to the provision for unearned premiums and £34m (2020: £32m) in
Governance
relation to claims outstanding.
18 Cash and cash equivalents

2021 2020
£m £m
Ring-fenced cash at bank and in hand – available 119 62
Ring-fenced cash at bank and in hand – restricted – 40
Non ring-fenced cash at bank and in hand – available 26 27
Non ring-fenced cash at bank and in hand – restricted 40 30
Cash and cash equivalents as presented in consolidated statement of cash flows 185 159
Less: presented as assets held for sale (see note 38) – (10)
Cash and cash equivalents as presented in consolidated statement of financial position 185 149
Ring-fenced cash and cash equivalents relate to cash held within the Whole Business Securitisation (WBS) by AA Intermediate Co Limited and its
subsidiaries. Dividends can only be paid to AA Limited when certain debt to Trading EBITDA and cash flow criteria are met.
Restricted cash is cash which is subject to contractual or regulatory restrictions. Restricted cash consists of £40m (2020: £38m) held by and on behalf
of the Group’s insurance businesses which are subject to contractual or regulatory restrictions, which generated £nil (2020: £1m) of other income.
At 31 January 2020, restricted cash also included £32m held in a separate bank account due to a requirement under the terms of the Group’s debt
documents. The requirement is to deposit a calculated amount of ‘excess cash’ at the year end when within an ‘accumulation period’ (the 12 months
before which any borrowings become due). This applied to the Class A3 Notes which were due on 31 July 2020. On 31 July 2020, the Group completed
the refinancing of the £200m outstanding Class A3 Notes using the £200m proceeds from drawing down the Senior Term Facility (see note 21).
Therefore, as it was no longer required, the excess cash was returned to available cash on 31 July 2020.
19 Trade and other payables

2021 2020*
£m £m
Current
Trade payables 128 112
Other taxes and social security costs 25 29
Accruals 81 59
Deferred income 225 231
Deferred consideration – 1
Provision for unearned premiums in insurance underwriting (see note 24) 62 46
Other payables 35 29
556 507
* Deferred income for the year ended 31 January 2020 has been restated to correct an error relating to prior years. Deferred income in respect of certain roadside assistance policies had been
understated in the opening and closing statement of financial position for the year ended 31 January 2020.
Trade payables include £77m (2020: £72m) relating to amounts due to underwriters in respect of insurance broking activities.
Deferred income primarily relates to roadside subscriptions deferred on a time apportionment basis. Of the revenue recognised in the year, £219m
(2020: £217m) was included within deferred income at the beginning of the year.
Included in deferred income is £11m (2020: £12m) which will be released over a period more than 12 months from the statement of financial position date.
In the prior year, the deferred consideration payable of £1m related to the acquisition of Used Car Sites Limited (AA Cars), which was paid during the
current year.
The effect of the restatement referenced above is shown below:
Financial statements for the year ended 31 January 2019 31 January 2020
Previously Effect of Previously Effect of
reported restatement Restated reported restatement Restated
£m £m £m £m £m £m
Consolidated income statement
Revenue 979 (1) 978 995 (2) 993
Consolidated statement of financial position
Retained earnings (2,068) (9) (2,077) (1,957) (11) (1,968)
Deferred income (233) (10) (243) (219) (12) (231)
Current tax payable (3) 1 (2) (8) 1 (7)
20 Borrowings and loans

2021 2020
£m £m
Current liabilities
Borrowings (see note 21) 637 200
Non-current liabilities
Borrowings (see note 21) 2,354 2,506
2,991 2,706
At 31 January 2021, the current borrowing of £637m comprises:
£367m carrying value of £372m Class A5 Notes for which the expected maturity date is 31 January 2022
£270m carrying value of £280m Class B3 Notes (see below)
At 31 January 2020, the current borrowing of £200m related to the Class A3 Notes which were repaid on their expected maturity date of 31 July 2020
(see note 21).
At 31 January 2021, the £280m Class B3 Notes were contingent on the completion of the Acquisition (see note 21) and as such have been presented
as a current liability at the year end. This matches the presentation as a current asset of the £280m proceeds of Class B3 Notes issuance held in escrow
(see below). At the date of approval of these financial statements, the Acquisition has completed (see note 39) and the Class B3 Notes are therefore no
longer contingent on that event.
2021 2020
£m £m
Current assets
Proceeds of Class B3 Notes issuance held in escrow 280 –
Proceeds of Class B3 Notes issuance held in escrow of £280m (2020: £nil) relate to the cash proceeds from the issuance of Class B3 Notes on
29 January 2021 (see note 21). At 31 January 2021, these proceeds were held in a secured escrow account on behalf of the Group, its Class B Note
Trustee and the Class B3 Noteholders as secured creditors. These funds could only be used for the purposes of redeeming the Group’s Class B2
Notes or repaying the Class B3 Noteholders should the Class B2 Notes not have been redeemed. At the date of approval of these financial statements,
the proceeds of Class B3 Notes issuance held in escrow have been used to redeem the Class B2 Notes (see note 39).
21 Borrowings
Total at Total at
Amortised 31 January 31 January
Principal Issue costs issue costs 2021 2020
Expected maturity date Interest rate £m £m £m £m £m
Senior Term Facility 31 July 2023 2.72% 200 – – 200 –
Class A2 Notes 31 July 2025 6.27% 500 (1) 1 500 500
Class A3 Notes 31 July 2020 4.25% – – – – 200
Class A5 Notes 31 January 2022 2.88% 372 (25) 20 367 677
Class A8 Notes 31 July 2027 5.50% 325 (3) – 322 –
Class B2 Notes 31 July 2022 5.50% 570 (16) 14 568 566
Class B3 Notes 31 January 2026 6.50% 280 (10) – 270 –
4.88% 3,047 (67) 40 3,020 2,735
Class B2 Notes Repurchased (5.50%) (29) 1 (1) (29) (29)
4.87% 3,018 (66) 39 2,991 2,706
At 31 January 2021, the Senior Term Facility was subject to a variable interest rate of LIBOR plus a margin of 1.75% per annum. However, the Group has
an interest rate swap in place which exchanges LIBOR for a fixed interest rate of 0.97% thereby fixing the Senior Term Facility’s interest rate at 2.72%
through to 31 July 2021. Thereafter, the Group had an interest rate cap in place which caps the variable interest rate at 1.00% through to 31 July 2023.
At 31 January 2021, all other borrowings have fixed interest rates. The weighted average interest rate for all borrowings of 4.87% has been calculated
using the interest rate and principal values on 31 January 2021.
On 5 February 2020, the Group issued £325m of Class A8 Notes at an interest rate of 5.50% in exchange for £325m of Class A5 Notes. £3m of
new issue premium associated with the issue of the Class A8 Notes was capitalised. In line with accounting for a substantial modification of a debt
instrument under IFRS 9, costs of £20m associated with the issue of the Class A8 Notes and the cancellation of the Class A5 Notes were written off,
consisting of £6m of exchange premium, £5m of transaction fees and £9m of unamortised issue costs associated with the Class A5 Notes.
On 23 April 2020, the Group announced that it had drawn down in full its £200m Senior Term Facility. The proceeds were held in escrow and
subsequently released to refinance the remaining £200m Class A3 Notes on 31 July 2020.
21 Borrowings continued
Strategic Report
On 29 January 2021, the Group issued £280m of Class B3 Notes at an interest rate of 6.50%. £10m of issuance fees associated with the issue of the
Class B3 Notes were capitalised and will be amortised over the expected maturity of the debt. At 31 January 2021, the cash proceeds were held in
a secured escrow account on behalf of the Group, its Class B Note Trustee and the Class B3 Noteholders as secured creditors. These funds could
only be used for the purposes of redeeming the Group’s Class B2 Notes or repaying the Class B3 Noteholders should the Class B2 Notes not have
been redeemed.
At 31 January 2021, the Company held £29m at principal value of repurchased Class B2 Notes in AA Bond Co Limited (2020: £29m). This is recognised
by the Group as a reduction in borrowings and presented in a separate line in the above table. The asset was held by the Group outside of the WBS but
was linked to the Class B2 Notes shown above which were issued by the Group within the WBS. The current restrictions of the WBS prevented the
Class B2 Notes from being purchased by an entity within the WBS and cancelled through settlement.
On 10 March 2021, the Company released AA Bond Co Limited from the £29m Class B2 Notes described above and refinanced the remaining £541m
outstanding Class B2 Notes using £261m cash injected as new equity from the Consortium and the £280m proceeds from the issuance of the Class B3
Notes which were released from escrow. There was no premium paid on repayment of the Class B2 Notes. See note 39 for further detail.
On 10 March 2021, the Group also refinanced its Senior Term Facility, Working Capital Facility and Liquidity Facility. See note 39 for further detail.
Governance
In order to show the Group net borrowings, the notes and the issue costs have been offset. Issue costs are shown net of any premium on the issue of
borrowings. Interest rate swaps are recognised in the statement of financial position at fair value at the year end.
All of the Class A Notes are secured by first ranking security in respect of the undertakings and assets of AA Intermediate Co Limited and its subsidiaries.
The Class A facility security over the AA Intermediate Co Limited group’s assets ranks ahead of the Class B2 Notes and Class B3 Notes. The Class B2
Notes and Class B3 Notes have first ranking security over the assets of the immediate parent undertaking of the AA Intermediate Co Limited group,
AA Mid Co Limited. AA Mid Co Limited can only pay a dividend when certain Net Debt to Trading EBITDA and cash flow criteria are met.
Any voluntary early repayments of the Class A Notes would incur a make-whole payment of all interest due to expected maturity date, except the
Class A5, Class A6, Class A7 and Class A8 Notes which can be settled without penalty within three months, two months, three months and six months
respectively of the expected maturity date. The Class B3 Notes would attract a make-whole payment if they were to be redeemed before 31 January
2023, thereafter any voluntary repayment would be made at a fixed premium until 31 January 2025 after which there would be no premium to pay
on redemption.
All of the Group loan notes are listed on the Irish Stock Exchange.
In order to comply with the requirements of the Class A Notes, the Group is required to maintain the Class A free cash flow to debt service ratio in excess
of 1.35x. The actual Class A free cash flow to debt service ratio as at 31 January 2021 was 2.5x (2020: 3.4x). Following redemption of the Group’s Class
B2 Notes on 10 March 2021 (see note 39), the Group no longer has to comply with any Class B free cash flow to debt service ratio requirements.
The Class A Notes only permit the release of cash providing the Senior Leverage ratio after payment is less than 5.5x and providing there is sufficient
excess cash flow to cover the payment. The actual Senior Leverage ratio as at 31 January 2021 was 6.5x (2020: 6.2x). The Class B Notes restrictions
only permit the release of cash providing the Fixed Charge Coverage ratio after payment is more than 2:1 and providing that the aggregate payments
do not exceed 50% of the accumulated consolidated net income. The actual Fixed Charge Coverage ratio as at 31 January 2021 was 2.4x (2020: 2.6x).
The Class A and Class B Notes therefore place restrictions on the Group’s ability to upstream cash from the key trading companies to pay external
dividends and finance activities unconstrained by the restrictions embedded in the debts.
On 5 February 2020, S&P Global Ratings reaffirmed the credit rating of the Group’s Class A Notes at BBB- and the Class B2 Notes at B+. On 23 April
2020, as part of the Senior Term Facility drawdown process, the Group announced that S&P confirmed the credit rating on the Class A Notes at BBB-.
On 29 January 2021, S&P Global Ratings assigned the credit rating of the Class B3 Notes at B+ and reaffirmed the credit rating of the Group’s Class A
Notes at BBB- and the Class B2 Notes at B+.
In addition to the Senior Term Facility, the Group had a Working Capital Facility available of £60m, of which £56m remained undrawn at 31 January 2021.
22 Derivative financial instruments

2021 2020
£m £m
Current
Interest rate swap (1) –
Non-current
Forward fuel contracts (1) (2)
(2) (2)
The forward fuel contracts liability is shown on a net basis as the liability is settled on a net basis. On a gross basis, the asset is £nil (2020: £nil) and the
liability is £1m (2020: £2m).
23 Provisions
Property
leases Other Total
£m £m £m
At 1 February 2019 5 2 7
Reclassification – 6 6
Utilised during the year (1) – (1)
Released during the year (1) – (1)
At 31 January 2020 3 8 11
Utilised during the year – (5) (5)
Released during the year – (2) (2)
At 31 January 2021 4 8 12
Current 1 4 5
Non-current 3 4 7
At 31 January 2021 4 8 12
Current – 5 5
Non-current 3 3 6
At 31 January 2020 3 8 11
The property leases provision primarily relates to dilapidations. These sums are mainly expected to be paid out over the next 10 years; however, it will
take 35 years to fully pay out all amounts provided for. The provision has been calculated on a pre-tax discounted basis.
Other provisions include £1m (2020: £nil) relating to anticipated redress costs. During the current financial year, the Group identified that there had been
limited instances whereby consumer renewal pricing needs to realign with regulatory requirements. Consequently, the Group has provided for the
costs of redress to affected customers, which is expected to be paid out during the next year.
At 31 January 2020, other provisions included £2m relating to anticipated compensation costs for poorly handled complaints. During the current year,
an in-depth review was completed and it was determined that this provision was not required, therefore £2m was released from other provisions.
The remaining balance in other provisions of £7m (2020: £6m) relates to self-funded insurance liabilities, where the Group provides for the cost of
certain claims made against it, for example motor vehicle accident damage and employer liability claims.
Litigation – update on Mr Mackenzie’s claim

As reported previously, the former Executive Chairman, Bob Mackenzie, who was dismissed for gross misconduct on 1 August 2017, had on 6 March 2018
issued a claim for substantial damages against AA Limited, its subsidiary (Automobile Association Developments Limited) (together, ‘the Companies’)
and personally against a number of their directors (existing and former) and the former Company Secretary.
In November 2018, Mr Mackenzie’s claim against all the directors and the former Company Secretary was dismissed in full and he was ordered to pay
their costs to be assessed by the Court if not agreed. The majority of Mr Mackenzie’s claim arises from his exclusion from a share option scheme which,
in any event, lapsed for all participants without any payment in June 2019. However, Mr Mackenzie subsequently issued an amended claim which
included a new claim for personal injury allegedly suffered as a result of stress arising from his role as CEO and Chairman.
The Companies have filed a full defence in relation to Mr Mackenzie’s amended claim and, after further discussion with external counsel, the Companies
decided to apply for a strike-out application in relation to the entirety of Mr Mackenzie’s claims against them. This application was filed in May 2020
and the Companies attended an application hearing in March 2021 in respect of this. The Court reserved its judgement after the strike out application
hearing and as of the date of this document the judgement is still awaited. Therefore, the Board assumes for the purpose of these financial statements
that Mr Mackenzie will proceed with the claim against the Companies but maintains that it is not necessary for the Group to make a financial provision
as it expects the defence will prevail.
From time to time the Group is subject to other claims and potential litigation. At the time of these financial statements, the Directors do not consider
any such claims and litigation to have anything other than a remote risk of resulting in any material liability to the Group.
24 Insurance Underwriting
Reconciliation to segmental result
2021 2020
£m £m
Gross earned premium 115 70
Earned premium ceded to reinsurers (88) (48)
Net earned premium 27 22
Deferral of broker commission – (3)
Other income 13 9
Insurance Underwriting revenue (see note 2) 40 28
2021 2020
£m £m
Gross claims incurred (69) (63)
Less reinsurance recoveries 44 36
Net claims incurred (25) (27)
Ceding commission 14 10
Administrative costs (10) (6)
Deferral of broker acquisition costs 3 4
Insurance Underwriting costs (18) (19)
24 Insurance Underwriting continued
Strategic Report
Reconciliation of movements in the provision for unearned premiums
2021 2020
£m £m
Gross unearned premiums at 1 February 46 26
Less: reinsurers’ share of unearned premiums (35) (17)
Net unearned premiums at 1 February 11 9
Gross premiums written 131 90

Less: outward reinsurance premium ceded (105) (66)
Net premiums written 26 24
Gross premiums earned (115) (70)
Governance
Less: earned premium ceded to reinsurers 88 48
Net premiums earned (27) (22)
Gross unearned premiums at 31 January (see note 19) 62 46

Less: reinsurers’ share of unearned premiums (see note 17) (52) (35)
Net unearned premiums at 31 January 10 11
Reconciliation of movements in claims outstanding

2021 2020
£m £m
Gross claims outstanding at 1 February 43 30
Less: reinsurers’ share of claims outstanding (32) (22)
Net claims outstanding at 1 February 11 8
Gross claims incurred 69 63

Less: reinsurance recoveries (44) (36)
Net claims incurred 25 27
Gross claims paid (65) (48)

Less: received from reinsurers 42 25
Net claims paid (23) (23)
Gross claims outstanding transferred to liabilities held for sale (see note 38) – (2)
Reinsurers’ share of claims outstanding transferred to assets held for sale (see note 38) – 1
Net claims presented as held for sale – (1)
Gross claims outstanding at 31 January (see below) 47 43

Less: reinsurers’ share of claims outstanding (see note 17) (34) (32)
Net claims outstanding at 31 January 13 11
Insurance technical provisions

2021 2020
£m £m
Outstanding claims provisions 35 36
Other technical provisions – provisions for incurred but not reported (IBNR) claims 12 7
47 43
Provision is made for the estimated cost of claims incurred but not settled at the statement of financial position date, including the cost of claims
incurred but not yet reported. The estimated cost of claims includes expenses to be incurred in settling claims.
The purpose of the outstanding claims provision is to ensure that adequate reserves are in place for claims where the incident has already occurred. It is
calculated by aggregating the case reserves for all the claims that have already been reported to us, which are estimated by using the most up-to-date
information available concerning each case.
The purpose of the IBNR reserve is to reflect the additional claims cost from claims incurred but not reported before the statement of financial position
date. Standard actuarial claims projection techniques are used to estimate outstanding claims. Such methods extrapolate the development of paid
and incurred claims, recoveries from third parties, average cost per claim and ultimate claim numbers for each accident year, based upon the observed
development of earlier years and expected loss ratios.
The Group’s results are not materially susceptible to changes within the assumptions used within the insurance technical provisions due to the
reinsurance arrangements in place.
24 Insurance Underwriting continued

Claims development table as at 31 January
2017 2018 2019 2020 2021 Total
Incurred to date – gross claims £m £m £m £m £m £m
At end of underwriting year 16 16 23 45 49
One year later 31 24 38 68 –
Two years later 29 23 38 – –
Three years later 30 23 – – –
Four years later 29 – – – –
Cumulative claims incurred 29 23 38 68 49 207
Claims paid (28) (21) (32) (51) (28) (160)
Gross claims outstanding 1 2 6 17 21 47
2017 2018 2019 2020 2021 Total

Incurred to date – net claims £m £m £m £m £m £m
At end of underwriting year 2 7 7 18 18
One year later 5 12 20 25 –
Two years later 5 11 20 – –
Three years later 5 11 – – –
Four years later 5 – – – –
Cumulative claims incurred 5 11 20 25 18 79
Claims paid (5) (10) (18) (20) (13) (66)
Gross claims outstanding – 1 2 5 5 13
25 Share capital
2021 2020
£m £m
Allotted, called up and fully paid
624,054,757 (2020: 616,734,346) ordinary shares of £0.001 each 1 1
1 1
The voting rights of the holders of all ordinary shares are the same and all ordinary shares rank pari passu on a winding up.
All movement in the number of shares relates to the issue of matching shares in relation to the Employee Share Incentive Plans (see note 36).
Other share types issued were as follows:
2021 2020
£000 £000
Allotted, called up and fully paid
60,000,000 (2020: 60,000,000) deferred shares of £0.001 each 60 60
60 60
The deferred shares have no voting rights and are held in trust (see note 36).
26 Reserves
Strategic Report
Cash flow
Share Own hedge Retained
premium shares reserve earnings Total
£m £m £m £m £m
At 1 February 2019 as previously reported 408 (31) – (2,068) (1,691)
Restatement* (note 19) – – – (9) (9)
At 1 February 2019 (restated*) 408 (31) – (2,077) (1,700)
Retained profit for the year (restated*) – – – 85 85
Dividends paid – – – (12) (12)
Purchase of own shares – (2) – – (2)
Issue of shares 2 – – – 2
Equity-settled share-based payments (note 36) – – – 4 4
Governance
Other comprehensive income:
Remeasurement gains on defined benefit schemes (note 27) – – – 39 39
Tax effect of remeasurement gains on defined benefit schemes (note 9) – – – (7) (7)
Effective portion of changes in fair value of cash flow hedges – – (2) – (2)
At 31 January 2020 (restated*) 410 (33) (2) (1,968) (1,593)
Retained profit for the year – – – 40 40
Purchase of own shares – (4) – – (4)
Issue of shares 2 – – – 2
Settlement of share schemes – 14 – (14) –
Equity-settled share-based payments (note 36) – – – 3 3
Other comprehensive income:
Remeasurement losses on defined benefit schemes (note 27) – – – (50) (50)
Tax effect of remeasurement gains on defined benefit schemes (note 9) – – – 10 10
Effective portion of changes in fair value of cash flow hedges – – 1 – 1
At 31 January 2021 412 (23) (1) (1,979) (1,591)
* Retained earnings as at 1 February 2019 and 31 January 2020 and the profit for the year ended 31 January 2020 have been restated to correct a prior year error, see note 19.
Cash flow hedge reserve

The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to
hedged transactions that have not yet occurred.
Dividends
In March 2020, the Directors resolved to suspend the final dividend, thereby leaving total dividend payments of £4m in respect of the 2020 financial
year, reflecting total dividends of 0.6p per qualifying ordinary share. The Company did not pay a dividend in the year ended 31 January 2021.
27 Pensions
The Group operates two funded defined benefit pension schemes: the AA UK Pension Scheme (AAUK) and the AA Ireland Pension Scheme (AAI).
The assets of the schemes are held separately from those of the Group in independently administered funds. The AAUK scheme has a closed final
salary section and a Career Average Revalued Earnings (CARE) section which itself was closed from 1 April 2020 following consultation with affected
employees. All future pensions build-up from 1 April 2020 in the UK is now on a defined contribution basis. The CARE section provided for benefits to
accrue on an average salary basis. During the 2017 financial year and following the sale of the Irish business by the Group, AA Corporation Limited, a UK
subsidiary of the Group, became the sponsor of the AAI scheme. The Group also operates an unfunded post-retirement Private Medical Plan (AAPMP),
which is treated as a defined benefit scheme and is not open to new entrants.
The AAUK scheme is governed by a corporate trustee whose board is currently composed of member-nominated and Company-nominated directors.
The AAI scheme is governed by a corporate trustee whose board is currently composed of Company-nominated directors of which some are also
members of the scheme. For both pension schemes the Company-nominated directors include an independent director whom the trustee board
directors have nominated as Chairman. The trustee of each scheme is responsible for paying members’ benefits and for investing scheme assets,
which are legally separate from the Group.
The AAUK and AAI schemes are subject to full actuarial valuations every three years using assumptions agreed between the trustee of each scheme and
the Group. The purpose of this valuation is to design a funding plan to ensure that the pension scheme has sufficient assets available to meet the future
payment of benefits to scheme members.
The valuation of liabilities for funding purposes differs from the valuation for accounting purposes, mainly due to the different assumptions used and
changes in market conditions between different valuation dates. For funding valuation purposes, the assumptions used to value the liabilities are agreed
between the trustee and the Group with the discount rate, for example, being based on a bond yield plus a margin based on the assumed rate of return
on scheme assets. For accounting valuation purposes, the assumptions used to value the liabilities are determined in accordance with IAS 19, with the
discount rate, for example, being based on high-quality (AA rated) corporate bonds.
The valuations have been based on a full assessment of the liabilities of the schemes which have been updated where appropriate to 31 January 2021
by independent qualified actuaries.
27 Pensions continued
The amounts recognised in the statement of financial position are as follows:
As at 31 January 2021
AAUK AAI AAPMP Total
£m £m £m £m
Present value of the defined benefit obligation in respect of pension plans (2,713) (60) (46) (2,819)
Fair value of plan assets 2,580 51 – 2,631
Deficit (133) (9) (46) (188)
As at 31 January 2020
AAUK AAI AAPMP Total
£m £m £m £m
Present value of the defined benefit obligation in respect of pension plans (2,576) (61) (44) (2,681)
Fair value of plan assets 2,472 47 – 2,519
Deficit (104) (14) (44) (162)
The increase in the deficit is primarily due to the financial markets experiencing a reduction in corporate bond yields which drive the discount rate,
in combination with increasing future inflation expectations. This was partially offset by the performance of plan assets being above expectations.
In November 2013, the Group implemented an asset-backed funding scheme which remains in place. The asset-backed funding scheme provides
a long-term deficit reduction plan where the Group makes an annual deficit reduction contribution of £14m increasing annually with inflation, until
October 2038 or until the AAUK scheme funding deficit is removed if earlier, secured on the Group’s brands.
In February 2020, the actuarial triennial review for the AAUK pension scheme was completed as at 31 March 2019. This resulted in a significant
reduction to the technical provisions deficit of 64% from £366m as at 31 March 2016 to £131m. Under the previous 2016 valuation, the recovery plan
extended through to 2038 in respect of the Asset-Backed Funding element and to 2026 in respect of the Additional Funding element. A new recovery
plan has now been put in place and agreed with the trustee which assumes that the scheme’s technical deficit will be fully repaid by July 2025, which
is one year earlier than previously planned in terms of the Additional Funding element and 13 years earlier in terms of the Asset-Backed Funding element.
To do this, the Group has committed to paying an additional (above the Asset-Backed Funding scheme payments) £10m per annum from April 2020 to
March 2021, £11m per annum from April 2021 to March 2022 and £12m per annum from April 2022 to July 2025. From 1 February 2020, the trustee has
also met its own costs of running the scheme. As a result, annual cash costs for the Group are expected to reduce by around £6m.
Consultation on the closure of the CARE section of the AAUK pension scheme commenced on 18 January 2020 through employee representatives
and concluded on 18 March 2020. The Group had proposed that, from 1 April 2020, all future pension accrual would be on a defined contribution
basis. Following a review of the feedback received during consultation, the Group confirmed on 27 March 2020 that the proposals were going to
be implemented on a modified basis and future pension accrual would be on a defined contribution basis for all UK employees with transitional
arrangements which will cost c. £11m over three years starting from 1 April 2020.
The agreed transitional arrangements provide a valuable enhanced Group pension contribution over a three-year period commencing 1 April 2020
available to all members who make a contribution of at least 4% of pensionable salary per year. Further enhancements to the Group pension
contribution are also available during the transitional period to members willing to make higher contributions.
On an ongoing basis, the regular (non-transitional) pension accrual costs for the affected members are expected to be c. £4m per year lower than the
previous costs in the AAUK scheme as a result of the closure.
In addition, without scheme closure the Group would have incurred increased pension accrual cash costs in relation to the CARE section of a further
c. £5m per annum from 1 April 2020 (under the triennial valuation agreement). Closure also curtails the ongoing build-up of defined benefit risk for
the Group.
Following agreement of the 31 March 2019 triennial valuation in February 2020, as well as conclusion of the consultation on closure of the AAUK
scheme to future accrual, the Group has a much clearer visibility over pension costs for at least the next three years (where finalisation of the 31 March
2022 triennial valuation would reasonably be expected). The ongoing volatility from accrual costs has been removed but future volatility of deficit
costs does remain. The impact of COVID-19 on the global financial markets has meant higher fluctuation of the funding level in the AAUK scheme, albeit
partially mitigated by the de-risked investment strategy and high levels of hedging. Should these conditions persist at the time of the 2022 triennial
valuation, then there is a risk that the contributions required from the Group could increase.
Using an inflation assumption of 3.0% and a discount rate assumption of 1.5%, the present value of the future deficit reduction contributions has been
calculated. Based on these assumptions, the Group expects the present value of deficit reduction contributions to exceed the IAS 19 deficit. The Group
notes that, in the event that a surplus emerges, it would have an unconditional right to a refund of the surplus assuming the gradual settlement of AAUK
scheme liabilities over time until all members have left the scheme.
The actuarial triennial review as at 31 December 2019 for the AAI pension scheme was completed during September 2020. This resulted in a reduction
to the funding deficit of 50% from c. £8m as at 31 December 2016 to c. £4m as at 31 December 2019. The Group made deficit reduction contributions of
£1m in the year ended 31 January 2021 and will continue to make annual deficit reduction contributions, increasing with inflation, until December 2024
(an extension of one year over the previous agreement) or until an alternative agreement is signed with the AAI scheme trustee.
In total, the Group paid £4m in ongoing employer contributions until the closure of the AAUK scheme CARE section and paid £25m in deficit reduction
employer contributions to its defined benefit plans (AAUK and AAI) in the year ending 31 January 2021.
During the year, the Group recognised a one-off past service cost of £1m as a result of the supplementary ruling in the Lloyds Bank Guaranteed Minimum
Pensions (GMP) equalisation case with respect to members that transferred out of their scheme prior to the ruling.
Strategic Report
The Group has been informed by the trustee of the AAUK scheme of a possible need to review the scheme’s approach to ‘equalising’ certain pension
benefits earned before 1 April 1992, so that the benefits earned by male and female members are equal. This requirement, stemming from EU law, is
common to most UK defined benefit pension schemes. In simple terms, this requires some pre-1992 pensions to be treated as if payable from a more
generous age of 60, rather than the AAUK scheme’s normal retirement age of 65. Action was taken in 1992 to put in place a mechanism for equalisation
of these benefits, but the trustee has raised questions about the effectiveness of the mechanism used.
This is a highly technical matter that relates only to the benefits of members who joined certain sections of the AAUK scheme before 1 November 1987
and remained in service after 17 May 1990. At this early stage of our analysis, we consider the scope of potentially impacted benefits to be limited to
those accrued in the period 17 May 1990 to 31 March 1992. A detailed legal analysis will be needed to determine whether any additional liabilities need
to be recognised by the Group or whether the existing methods used by the AAUK scheme trustee to equalise benefits are in fact valid. Without this
detailed analysis, as well as obtaining scheme information dating back to the 1990s, making a reliable estimate of the potential impact is extremely
difficult due to the range of possible conclusions (including a scenario where no additional liability is recognised). Given the need for this extensive
legal analysis and information collation, a reliable estimate is unavailable at this stage.
The Group recognised a charge in the income statement of £24m in respect of defined contribution pension scheme costs in the year (2020: £8m).
Governance
This increase in the current year is due to pension accrual being fully on a defined contribution basis from 1 April 2020.
The Group’s pension schemes have not borne any costs related to the Acquisition of the Group (see note 39).
Total Group schemes

Other
Income comprehensive
Assets Liabilities statement income
£m £m £m £m
Balance at 1 February 2019 2,286 (2,504) – –
Current service cost – (23) (23) –
Interest on defined benefit scheme assets/(liabilities) 59 (64) (5) –
Amounts recognised in the income statement 59 (87) (28) –
Effect of changes in financial assumptions – (452) – (452)
Effect of changes in demographic assumptions – 227 – 227
Effect of experience adjustment – 52 – 52
Return on plan assets excluding interest income 212 – – 212
Amounts recognised in the statement of comprehensive income 212 (173) – 39
Foreign exchange (loss)/gain (2) 2 – –
Contribution from scheme participants 1 (1) – –
Benefits paid from scheme assets (82) 82 – –
Ongoing employer contributions 19 – – –
Deficit reduction employer contributions 26 – – –
Movements through cash (36) 81 – –
Balance at 31 January 2020 2,519 (2,681) – –
Past service cost – (1) (1) –
Administrative expenses (4) – (4) –
Interest on defined benefit scheme assets/(liabilities) 52 (49) 3 –
Effect of changes in demographic assumptions – (8) – (8)
Amounts recognised in the statement of comprehensive income 111 (161) – (50)
Foreign exchange gain/(loss) 3 (3) – –
AAUK scheme
Other
£m £m £m £m
Balance at 1 February 2019 2,242 (2,409) – –
Interest on defined benefit scheme assets/(liabilities) 58 (62) (4) –
Amounts recognised in the statement of comprehensive income 207 (160) – 47
Contribution from scheme participants 1 (1) – –
Past service cost – (1) (1) –
Administrative expenses (4) – (4) –
Interest on defined benefit scheme assets/(liabilities) 51 (48) 3 –
Effect of changes in demographic assumptions – (8) – (8)
Strategic Report
AAI scheme
Other
£m £m £m £m
Balance at 1 February 2019 44 (50) – –
Current service cost – – – –
Interest on defined benefit scheme assets/(liabilities) 1 (1) – –
Amounts recognised in the income statement 1 (1) – –
Effect of changes in demographic assumptions – – – –
Effect of experience adjustment – – – –
Governance
Foreign exchange (loss)/gain (2) 2 – –
Contribution from scheme participants – – – –
Ongoing employer contributions – – – –
Balance at 31 January 2020 47 (61) – –
Interest on defined benefit scheme assets/(liabilities) 1 – 1 –
Amounts recognised in the income statement 1 – 1 –
Amounts recognised in the statement of comprehensive income 1 2 – 3
Foreign exchange gain/(loss) 3 (3) – –
Ongoing employer contributions – – – –
Balance at 31 January 2021 51 (60) – –
AA PMP scheme
Other
£m £m £m £m
Balance at 1 February 2019 – (45) – –
Interest on defined benefit scheme assets/(liabilities) – (1) (1) –
Amounts recognised in the income statement – (1) (1) –
Return on plan assets excluding interest income – – – –
Amounts recognised in the statement of comprehensive income – 1 – 1
Contribution from scheme participants – – – –
Deficit reduction employer contributions – – – –
Movements through cash – 1 – –
Balance at 31 January 2020 – (44) – –
Interest on defined benefit scheme assets/(liabilities) – (1) (1) –
Amounts recognised in the income statement – (1) (1) –
Return on plan assets excluding interest income – – – –
Amounts recognised in the statement of comprehensive income – (2) – (2)
Deficit reduction employer contributions – – – –
Movements through cash – 1 – –
Balance at 31 January 2021 – (46) – –
Fair value of plan assets

The tables below show the AAUK and AAI scheme assets split between those that have a quoted market price and those that are unquoted.
The fair value of the AAUK scheme assets and the return on those assets were as follows:
2021 2020
Assets with Assets without Assets with Assets without
a quoted a quoted a quoted a quoted
market price market price market price market price
£m £m £m £m
Equities – 360 – 244
Bonds/gilts 439 562 474 571
Property 31 239 32 255
Hedge funds 29 287 1 300
Private equity – 69 – 44
Cash/net current assets 26 12 15 9
Annuity policies – 526 – 527
Total AAUK scheme assets 525 2,055 522 1,950
Actual return on AAUK plan assets 161 265
The above table displays the quoted and unquoted splits of the underlying investments.
The AAUK scheme assets are largely invested in pooled funds, with the market values provided by the scheme’s custodian, Bank of New York Mellon
Corporation (BNYM). Some of the pooled funds themselves are not listed on any publicly traded exchange and are therefore described as unquoted
except where we are aware of a specific look-through to allow part of the assets within the fund to be described as quoted.
Of the £2,055m assets without a quoted market price at 31 January 2021, £526m is in relation to the buy-in policies held by the scheme. Under IAS 19,
the fair value of the insurance policies is deemed to be the present value of the related defined benefit obligations. Hence a key area of judgement is the
assumptions used to derive the value of the corresponding obligations.
Approximately £36m of unquoted assets allocated to private equity and £9m of unquoted assets allocated to property have been measured at
amortised cost rather than fair value.
Strategic Report
The fair value of the AAI scheme assets and the return on those assets were as follows:
2021 2020
Assets with Assets without Assets with Assets without
a quoted a quoted a quoted a quoted
market price market price market price market price
£m £m £m £m
Equities 12 – 11 –
Bonds/gilts 25 – 22 –
Property – 6 – 5
Hedge funds 8 – 9 –
Total AA Ireland scheme assets 45 6 42 5
Actual return on AA Ireland plan assets 2 6
Governance
Investment strategy
The AAUK scheme trustee determines its investment strategy after taking advice from a professional investment adviser. The AAUK scheme’s
investment strategy has been set following an asset/liability review which considered a wide range of investment opportunities available to the scheme
and how they might perform in combination. Other factors were also taken into account such as the strength of the employer covenant, the long-term
nature of the liabilities and the funding plan agreed with the employer.
The AAUK scheme trustee aims to achieve the scheme’s investment objectives through investing in a diversified portfolio of growth assets which,
over the long term, are expected to grow in value by more than low-risk assets like cash and gilts. This is done within a broad liability driven investing
framework that also uses such cash and gilts in a capital efficient way. In combination, this efficiently captures the trustee risk tolerances and return
objectives relative to the scheme’s liabilities. A number of investment managers are appointed to promote diversification by assets, organisation and
investment style.
To diversify sources of return and risk, the AAUK scheme invests in many asset classes and strategies, including equities, bonds and property funds
which primarily rely on the upward direction of the underlying markets for returns, and also hedge funds which also invest in asset classes like equities,
bonds and currencies, but in such a way that relies more on the skill of the investment manager to add returns while hedging against downward market
moves.
The AAUK scheme trustee’s investment advisers carry out detailed ongoing due diligence on funds in all asset classes from both operational and
investment capability standpoints, and any funds which are not expected to achieve their investment performance targets are replaced where possible.
Pension plan assumptions

The principal actuarial assumptions were as follows:
AAUK AAI AAPMP
2021 2020 2021 2020 2021 2020
% % % % % %
Pensioner discount rate 1.5 1.6 0.4 0.3 1.5 1.6
Non-pensioner discount rate 1.6 1.8 0.7 0.8 1.5 1.6
Pensioner RPI 3.0 2.9 – – 3.0 2.9
Non-pensioner RPI 2.8 2.8 – – 3.0 2.9
Pensioner CPI 2.2 2.0 1.3 1.2 2.2 2.0
Non-pensioner CPI 2.3 2.0 1.3 1.2 2.2 2.0
Rate of increase of pensions in payment
(final salary sections) – pensioner 2.9 2.8 – – – –
(final salary sections) – non-pensioner 2.8 2.8 – – – –
(CARE section) – pensioner 1.8 1.7 – – – –
(CARE section) – non-pensioner 1.9 1.7 – – – –
Pension increase for deferred benefits 2.3 2.0 1.3 1.2 – –
Medical premium inflation rate – – – – 7.0 6.9
Mortality assumptions are set using standard tables based on scheme-specific experience where available and an allowance for future improvements.
For 2021, the assumptions used were in line with the SAPS (S3) series mortality tables with scheme-specific adjustments (2020 – SAPS (S3)
series with scheme-specific adjustments) with future improvements in line with the CMI_2019 model with a 1.25% long-term rate of improvement
(2020 – CMI_2018 model with a 1.25% long-term rate of improvement). The AAI scheme mortality assumptions are set using standard tables with
scheme-specific adjustments.
The AA schemes’ overall assumptions are that an active male retiring in normal health currently aged 60 will live on average for a further 25 years
(2020: 25 years) and an active female retiring in normal health currently aged 60 will live on average for a further 28 years (2020: 28 years).
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have
affected the defined benefit liability by the amounts shown below:
For the year ended 31 January 2021
AAUK AAI AAPMP
£m £m £m
Increase of 0.25% in discount rate 135 3 2
Increase of 0.25% in RPI and CPI (110) (1) –
Increase of 0.25% in CPI only (47) (1) –
Increase of 1% in medical claims inflation – – (8)
Increase of one year of life expectancy (111) (2) –
An equivalent decrease in the assumptions at 31 January 2021 would have had a broadly equal but opposite effect on the amounts shown above,
on the basis that all other variables remain constant. The amounts shown above are the effects of changing the assumptions on the gross defined
benefit liability, rather than on the net deficit. The de-risked investment strategy, the two insured annuity policies and high levels of hedging reduce
the sensitivities of changing these assumptions on the net deficit considerably.
The weighted average duration of the defined benefit obligation at 31 January 2021 is around 20 years.
Pension scheme risks

The AAUK and AAI schemes have exposure to a number of risks because of the investments they make in following their investment strategy.
Investment objectives and risk limits are implemented through the investment management agreements in place with the schemes’ investment
managers and monitored by the trustees of each scheme through regular reviews of the investment portfolios. In addition, under guidance from
their investment advisers, the trustees of each scheme monitor estimates of key risks on an ongoing basis such as those shown below. A number
of measures are taken to mitigate these risks where possible.
Credit risk – This is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
This risk mainly relates to the schemes’ bonds and is mitigated by carrying out due diligence and investing only in bond funds which are well diversified
in terms of credit instrument, region, credit rating and issuer of the underlying bond assets. To reduce risk further, the underlying bond assets within a
fund are ring-fenced, and the scheme diversifies across a number of bond funds.
Currency risk – The scheme is subject to currency risk because some of the scheme’s investments are in overseas markets. The trustee hedges some
of this currency risk by investing in investment funds which hold currency derivatives to protect against adverse fluctuations in the relative value of
its portfolio positions as a result of changes in currency exchange rates.
Market price risk – This is the risk that the fair value or future cash flows of a financial asset such as equities will fluctuate because of changes in
market prices (other than those arising from interest rate, inflation or currency risk), whether those changes are caused by factors specific to the
individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The scheme manages this
exposure to overall price movements by constructing a diverse portfolio of investments across various markets and investment managers.
Financial derivatives risk – The scheme does not directly hold any financial derivatives but instead invests in investment funds which hold the
derivatives required to hedge the scheme’s interest rate, inflation and currency risks. The scheme also permits some of the investment managers
to use derivative instruments if these are being used to contribute to a reduction of risks or facilitate efficient portfolio management of their funds.
The main risks associated with financial derivatives include: losses may exceed the initial margin; counterparty risk where the other party defaults
on the contract; and liquidity risk where it may be difficult to close out a contract prior to expiry. These risks are managed by monitoring of investment
managers to ensure that they use reasonable levels of market exposure relative to initial margin and positions are fully collateralised on a daily basis
with secure cash or gilts collateral.
The AAUK scheme aims to hedge the majority of both the interest rate risk and inflation risk (of the non-insured liabilities on the scheme-specific
self-sufficiency measure) as part of a policy to reduce financial risks. As at 31 January 2021, the scheme had hedged around 70-75% of interest rate and
inflation risk (of the non-insured liabilities on the scheme-specific self-sufficiency measure). Hedging levels fluctuate regularly as market conditions
evolve and the scheme trustees, along with their advisers, closely monitor these fluctuations. Where changes are needed to the level of hedging,
the scheme trustees effect this, in consultation with the Group, with consideration to prevailing pricing and risk appetite.
Bulk annuity policies

The AAUK scheme holds two bulk annuity policies with a total fair value of £526m as at 31 January 2021. The bulk annuity policy purchased in
August 2018 insured all the benefits payable under the scheme in respect of 2,510 pensioner and dependant members, while the bulk annuity policy
purchased in September 2019 insured all the benefits payable under the scheme in respect of a further 1,790 pensioner and dependant members.
The trustee has invested in such policies as the scheme will see all financial and demographic risks exactly matched for the covered members.
The annuity policies were purchased in the name of the trustee and therefore remain assets of the AAUK scheme. Under IAS 19, these policies are
considered to be qualifying insurance policies which exactly match the amount and timing of certain benefits payable under the scheme. The fair
value of the insurance policies are therefore deemed to be the present value of the related defined benefit obligations.
The bulk annuity policies mean that the AAUK scheme has hedged the associated longevity risks on c.20% of the scheme’s IAS 19 liabilities.
While risks remain, the hedging strategy noted above, including the bulk annuity purchases, is important in controlling the Group’s exposure to
future increases in the deficit.
28 Impairment of intangible assets
Strategic Report
Goodwill acquired through business combinations has been allocated to cash-generating units (CGUs) on initial recognition and for subsequent
impairment testing. CGUs represent the smallest group of assets that independently generate cash flow and whose cash flow is largely independent
of the cash flows generated by other assets.
The carrying value of goodwill by CGU is as follows:
2021 2020
£m £m
Roadside Assistance 874 874
Insurance Services 240 240
AA Cars 25 25
DriveTech 31 31
1,170 1,170
Governance
The Group has performed impairment testing at 31 January 2021 and 31 January 2020. The impairment test compares the recoverable amount of the
CGU with its carrying value.
The recoverable amount of each CGU has been determined based on a value in use calculation using cash flow projections from the Group’s five-year
plan up to 31 January 2025, updated to reflect the estimated financial impact of COVID-19, and a 2% growth expectation in the subsequent year. For the
purposes of the impairment test, terminal values have been calculated using a 2% growth assumption (2020: 2%). Cash flows have been discounted at a
pre-tax rate reflecting the time value of money and the risk specific to these cash flows. This has been determined as a pre-tax rate of 7.7% (2020: 8.9%).
The equivalent post-tax rate was 7.0% (2020: 8.0%).
The cash flow projections are forecast using historical trends overlaid with business-led assumptions such as contract wins, sales volumes and prices,
together with operational KPIs such as number of personal members, number of business customers, insurance policies in force, renewal rates and
average repair times. These allow the business to forecast profits, working capital and capital expenditure requirements.
The value in use calculation used is most sensitive to the assumptions used for growth and the discount rate. Accordingly, stress testing has been
performed on these key assumptions as part of the impairment test to further inform the consideration of whether any impairment is evident. From the
results of this stress testing it was concluded that no reasonably foreseeable change in the key assumptions would result in the recoverable amount
being less than the carrying amount for any of the CGUs.
Goodwill was not impaired for any of the above CGUs in either the current or prior financial year.
29 Financial assets and financial liabilities

The carrying amounts of all financial assets and financial liabilities by class are as follows:
Financial assets
2021 2020
£m £m
Financial assets at amortised cost
Loans to related parties 4 4
Cash and cash equivalents (see note 18) 185 149
Trade receivables (see note 17) 162 143
Proceeds of Class B3 Notes issuance held in escrow (see note 20) 280 –
Reinsurers’ share of insurance liabilities (see note 17) 86 67
Contract assets and other receivables (see note 17) 26 23
Total financial assets 743 386
Loans to related parties comprise £4m of 5% fixed rate loan notes issued from AA Media Limited to the Group, redeemable at par on 29 March 2024.
The Group has recognised this receivable from a related party as a financial asset at amortised cost.
Financial liabilities
2021 2020
£m £m
Financial liabilities at fair value through other comprehensive income
Derivative financial instruments (see note 22) 1 2
Financial liabilities at fair value through profit or loss

Derivative financial instruments (see note 22) 1 –
Financial liabilities at amortised cost

Trade payables (see note 19) 128 112
Other payables and accruals (see note 19) 116 88
Borrowings (see note 20) 2,991 2,706
Deferred consideration (see note 19) – 1
Lease liabilities (see note 31) 52 66
Insurance technical provisions (see note 24) 47 43
Total financial liabilities 3,336 3,018
29 Financial assets and financial liabilities continued

Fair values
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
Valuation techniques include net present value and discounted cash flow models, and comparison to similar instruments for which market observable
prices exist. Assumptions and market observable inputs used in valuation techniques include interest rates.
The objective of using valuation techniques is to arrive at a fair value that reflects the price of the financial instrument at each year end at which the asset
or liability would have been exchanged by market participants acting at arm’s length.
Observable inputs are those that have been seen either from counterparties or from market pricing sources and are publicly available. The use of these
depends upon the liquidity of the relevant market. When measuring the fair value of an asset or a liability, the Group uses observable inputs as much as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation as follows:
Level 1 – Quoted market prices in an actively traded market for identical assets or liabilities. These are the most reliable.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities. These include valuation models used to
calculate the present value of expected future cash flows and may be employed either when no active market exists or when there are quoted prices
available for similar instruments in active markets. The models incorporate various inputs including interest rate curves and forward rate curves of the
underlying instrument.
Level 3 – Inputs for assets or liabilities that are not based on observable market data.
If the inputs used to measure the fair values of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level as the lowest input that is significant to the entire measurements.
The fair values are periodically reviewed by the Group Treasury function. The following tables provide the quantitative fair value hierarchy of the Group’s
fuel and interest rate swaps and loan notes.
The carrying values of all other financial assets and liabilities (including the Senior Term Facility) are approximate to their fair values:
At 31 January 2021: Fair value measurement using

Quoted prices Significant Significant
in active observable unobservable
Carrying markets inputs inputs
value (Level 1) (Level 2) (Level 3)
£m £m £m £m
Financial liabilities measured at fair value
Forward fuel contracts (note 22) 1 1 – –
Interest rate swap derivatives (note 22) 1 1 – –
Liabilities for which fair values are disclosed
Loan notes (note 21) 2,791 2,978 – –
At 31 January 2020: Fair value measurement using

Quoted prices Significant Significant
in active observable unobservable
Carrying markets inputs inputs
value (Level 1) (Level 2) (Level 3)
£m £m £m £m
Financial liabilities measured at fair value
Forward fuel contracts (note 22) 2 2 – –
Liabilities for which fair values are disclosed
Loan notes (note 21) 2,706 2,746 – –
There have been no transfers between the levels and no non-recurring fair value measurements of assets and liabilities during the two years to
31 January 2021.
30 Financial risk management objectives and policies

The Group’s principal financial liabilities comprise borrowings as well as trade and other payables. The main purpose of these financial liabilities
is to finance the Group’s operations. The Group’s principal financial assets include deposits with financial institutions, money market funds and
trade receivables.
The Group is exposed to market risk, credit risk, liquidity risk and insurance risk. The Group’s senior management oversees the management of these
risks, supported by the Group Treasury function. The Group Treasury function ensures that the Group’s financial risks are governed by appropriate
policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives.
All derivative activities are for risk management purposes and are carried out by the Group Treasury function. It is the Group’s policy not to trade in
derivatives for speculative purposes.
30 Financial risk management objectives and policies continued
Strategic Report
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in prices set by the market.
The key market risk that the Group is exposed to is interest rate risk. The Group has policies and limits approved by the Board for managing the interest
rate risk exposure. The Group’s policy is to fully hedge all of its exposure to variable interest rates. The Group therefore takes out interest rate swaps to
the value of its variable rate instruments.
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
2021 2020
£m £m
Fixed rate instruments
Financial assets 284 4
Governance
Financial liabilities (2,844) (2,772)
Net exposure to fixed rate instruments (2,560) (2,768)
Variable rate instruments

Financial liabilities (200) –
Net exposure to variable rate instruments (200) –
Sensitivity of fixed-rate instruments

The Group does not account for any fixed-rate financial assets and financial liabilities at fair value through profit or loss and does not use derivative
instruments in fair value hedges. Consequently, having regard to fixed rate instruments, a change in market interest rates at the reporting date would
not affect profit or loss.
Sensitivity of variable rate instruments
An increase of 50 basis points in interest rates at 31 January 2021 would have increased equity by £nil (2020: £nil) and would have had no impact on
profit or cash because the variable rate on the Senior Term Facility, which was drawn during the current year, is hedged by an interest rate swap.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
The Group is exposed to credit risk in relation to its financial assets, outstanding derivatives and trade and other receivables. The Group assesses its
counterparty exposure in relation to the investment of surplus cash and undrawn credit facilities. The Group primarily uses published credit ratings
to assess counterparty strength and therefore to define the credit limit for each counterparty, in accordance with approved treasury policies.
The credit risk for the Group is limited as payment from customers is generally required before services are provided.
Credit risk in relation to deposits and derivative counterparties is managed by the Group Treasury function in accordance with the Group’s policy.
Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set
to mitigate financial loss through any potential counterparty failure.
The Group’s maximum exposure to credit risk for the components of the statement of financial position at each reporting date is the carrying amount
except for derivative financial instruments. The Group’s maximum exposure for financial derivative instruments is noted under liquidity risk.
The ageing analysis of trade receivables is as follows:
Total Current < 30 days 30–60 days 60+ days

£m £m £m £m £m
2021 162 144 6 5 7
2020 143 129 9 2 3
The movements in the provision for the collective impairment of receivables are as follows:
2021 2020
£m £m
At 1 February 2 2
Charge for the year 3 1
Utilised (1) (1)
At 31 January 4 2

Liquidity risk
Liquidity risk is the risk that the Group either does not have available sufficient financial resources to enable it to meet its obligations as they fall due, or
can secure them only at excessive cost. The Group’s approach to managing liquidity risk is to evaluate current and expected liquidity requirements to
ensure that it maintains sufficient reserves of cash and headroom on its working capital facilities.
The table below analyses the maturity of the Group’s financial liabilities on a contractual undiscounted cash flow basis and includes any associated debt
service costs. The analysis of non-derivative financial liabilities is based on the remaining period at the reporting date to the contractual maturity date.
At 31 January 2021:
Less than Over
1 year 1–2 years 2–5 years 5 years Total
£m £m £m £m £m
Loans and borrowings 519 661 2,012 352 3,544
Derivative financial instruments 1 1 – – 2
Lease liabilities 21 14 10 21 66
Other payables and accruals 116 – – – 116
Insurance liabilities 35 7 5 – 47
Trade payables 128 – – – 128
820 683 2,027 373 3,903
At 31 January 2020:
Less than Over
1 year 1–2 years 2–5 years 5 years Total
£m £m £m £m £m
Loans and borrowings 322 813 1,529 516 3,180
Derivative financial instruments – 2 – – 2
Obligation under finance leases 25 15 16 26 82
Other payables and accruals 88 – – – 88
Insurance liabilities 30 7 5 1 43
Deferred consideration 1 – – – 1
Trade payables 112 – – – 112
578 837 1,550 543 3,508
Insurance risk
The Group is exposed to insurance risk through its underwriting activities. The Company manages these risks through its underwriting strategy,
reinsurance arrangements and proactive claims handling. For further detail regarding insurance risk, refer to P26 of the Annual Report.
Capital management
As noted in the Financial Review on P20-24, the Group considered its capital to be a combination of Net Debt and equity until the de-listing on
10 March 2021 (see note 39).
2021 2020
£m £m
Total Net Debt 2,605 2,645
Equity (valued at close on 31 January) 217 295
Total capital 2,822 2,940
The Group’s objectives when managing capital have been:
t o safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other
stakeholders
to put service, innovation and data at the heart of the AA
to deliver targeted and strategic investment in our people, our products, our systems and operations
to reduce Group borrowings and associated interest costs
to provide an adequate return to shareholders
The relative priorities of these objectives are discussed on P10-13 and P22-23.
Strategic Report
The Group monitors capital using Net Debt to Trading EBITDA ratios. The key ratios are Senior Secured Debt to Trading EBITDA, and Net Debt to Trading
EBITDA as calculated below:
2021 2020
£m £m
Class A Notes 1,997 2,197
Senior Term Facility 200 –
Less: AA Intermediate Co Limited group cash and cash equivalents (119) (102)
Net Senior Secured Debt1 2,078 2,095
Class B Notes 850 570
Less: proceeds of Class B3 Notes issuance held in escrow (280) –
Lease obligations for covenant reporting2 27 39
Net Whole Business Securitisation (WBS) Debt3 2,675 2,704
Governance
IFRS 16 lease adjustment for WBS lease obligations4 22 24
AA Limited group lease obligations5 3 3
Class B2 Notes repurchased by AA Limited (29) (29)
Less: AA Limited group cash and cash equivalents6 (66) (57)
Total Net Debt 2,605 2,645
AA Limited Trading EBITDA 341 348

AA Intermediate Co Limited Trading EBITDA7 319 338
Covenant
Net Debt ratio8 7.6x 7.6x
Class B leverage ratio9 8.4x 8.0x
Senior Leverage ratio10 6.5x 6.2x
Interest cover11 2.5x 2.6x
Class A Free Cash Flow: Debt Service12 >1.35x 2.5x 3.4x
1 Principal amounts of the Senior Term Facility and Class A Notes less AA Intermediate Co Limited group cash and cash equivalents.
2 The lease obligations for covenant reporting value is presented based on frozen GAAP pre-IFRS 16, as required by the debt documents. The figure above is therefore different to the lease liabilities
value shown in the statement of financial position.
3 Net WBS Debt represents the borrowings and cash balances within the WBS structure headed by AA Intermediate Co Limited. This includes the principal amounts of the Senior Term Facility,
Class A Notes, Class B2 Notes, Class B3 Notes and lease obligations for covenant reporting less AA Intermediate Co Limited group cash and cash equivalents and proceeds of Class B3 Notes
issuance held in escrow.
4 Difference between lease obligations for covenant reporting based on frozen GAAP and the lease liabilities value shown in the statement of financial position having adopted IFRS 16 from 1
February 2019.
5 Total lease obligations for the Group excluding the value reported as the AA Intermediate Co Limited group lease obligations.
6 Total cash and cash equivalents for the Group excluding the value reported as the AA Intermediate Co Limited group cash and cash equivalents.
7 AA Intermediate Co Limited group Trading EBITDA including discontinued operations as required by the debt documents based on frozen GAAP.
8 Ratio of Total Net Debt to AA Limited Trading EBITDA.
9 Ratio of Net WBS Debt³ to AA Intermediate Co Limited group Trading EBITDA.
10 Ratio of Net Senior Secured Debt¹ to AA Intermediate Co Limited group Trading EBITDA.
11 AA Limited Trading EBITDA divided by total ongoing cash finance costs (see note 6).
12 Ratio of free cash flow to proforma debt service relating to the Senior Term Facility and Class A Notes.
The Senior Term Facility and Class A Notes have interest cover covenants attached to them. The Group was in compliance with all covenants
throughout the year and as at 31 January 2021.
The Group includes regulated companies which are required to hold sufficient capital to meet acceptable solvency levels based on the relevant
regulators’ requirements. In addition, the Group is required to hold on deposit a calculated amount of ‘excess cash’ under the terms of its debt
documents when within an accumulation period (see note 18).
Further details on our policies and processes for managing capital as well as the thresholds set for the covenants above are set out in the Financial
Review on P20-24.
31 Commitments and contingencies

Lease commitments
The Group has lease contracts for property, plant, equipment and vehicles. Future minimum lease payments under lease contracts together with the
present value of the net minimum lease payments are as follows:
2021 2020
Present value Minimum Present value Minimum
of payments payments of payments payments
£m £m £m £m
Within one year 18 21 23 25
Between one and five years 21 24 27 31
After five years 13 21 16 26
Total minimum lease payments 52 66 66 82
Less amounts representing finance charge – (14) – (16)
Present value of minimum lease payments 52 52 66 66
Where the future minimum lease payments are in excess of any expected rental income due, the corresponding right-of-use asset is impaired by
this excess.
Capital commitments
Amounts contracted for but not provided in the financial statements amounted to £4m (2020: £10m).
32 Subsidiary undertakings
The subsidiary undertakings of the Company, all of which are wholly owned except where stated, are listed in note 8 of the Company financial statements.
33 Auditors’ remuneration
2021 2020
£m £m
Amounts receivable by the Company’s auditors and their associates in respect of:
Audit of financial statements of subsidiaries of the Company 1 1
The fee for the audit of these financial statements was £0.8m (2020: £0.6m).
In addition, fees for non-audit services provided by the Company’s auditors were £0.6m (2020: £0.1m), relating to audit-related assurance services and
in the prior year included other advisory services.
34 Related party transactions

The following tables provide the total value of transactions that have been entered into with associates and joint ventures during each financial year:
Transactions with associates:

2021 2020
Associate Nature of transaction £m £m
ARC Europe SA Registration and call handling fees 2 5
At 31 January 2021, the Group had an outstanding balance payable to ARC Europe SA of £nil (2020: £1m) comprising trade payables in respect of the
above transactions.
Transactions with joint ventures:

2021 2020
Joint venture Nature of transaction £m £m
AA Media Limited Services supplied to AA Media Limited – 1
Drvn Solutions Limited Goods supplied by Drvn Solutions Limited 3 1
At 31 January 2021, the Group had an outstanding balance receivable from AA Media Limited of £4m comprising fixed rate loan notes.
Intelematics Europe Limited changed its name to Drvn Solutions Limited on 10 June 2020. At 31 January 2021, the Group had an outstanding balance
payable to Drvn Solutions Limited of £nil (2020: £nil) in respect of the above transactions.
35 Compensation of key management personnel of the Group
Strategic Report
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of
the Group.
Key management personnel consist of the Chief Executive Officer, Chief Financial Officer, the Executive Committee and the Non-Executive Directors.
With effect from 1 February 2020 Non-Executive Directors are included in the definition of key management personnel.
The amounts recognised as an expense during the financial year in respect of key management personnel were as follows:
2021 2020*
£m £m
Short-term employee benefits 5 5
Share-based payments (see note 36) 1 1
Total compensation paid to key management personnel 6 6
* This number has been restated to include the Non-Executive Directors as per the new definition.
Governance
36 Share-based payments
2021 2020
£m £m
Equity-settled share-based payments:
Share-based payments – Employee Share Incentive Plan 2 2
Share-based payments – Performance Share Plan 1 1
Share-based payments – Insurance LTBP – 1
Total equity-settled share-based payments 3 4
Cash-settled share-based payments:
Share-based payments – Insurance LTBP 1 –
Share-based payments – Longacre LTBP – 1
Total cash-settled share-based payments 1 1
Total share-based payments expense 4 5
Following the Acquisition of the Company (see note 39), both the ESIP and PSP schemes ceased to operate. The settlement of these schemes will be
accounted for in the year ending 31 January 2022.
Shares held in trust

As at 31 January 2021, the following shares were held in trust:
Ordinary Deferred
shares shares
Ocorian – Employee Benefit Trust (EBT) 12,524,269 60,000,000
Equiniti – ESIP 11,567,837 –
Total shares held in trust 24,092,106 60,000,000
Employee Share Incentive Plans

The Group has an all-Employee Share Incentive Plan (ESIP). Under the ESIP, employees were able to buy Partnership shares by making weekly or
monthly payments into the ESIP. In addition, for every Partnership share an employee purchases the Company will match this on a 1:1 basis
(Matching shares).
The ESIP share-based payments are equity-settled. ESIP Matching shares are issued on the 11th day of each month with a vesting period of 36 months
from the date they were issued, unless otherwise determined by the Board.
The following table illustrates the weighted fair value at award date and vesting period for each of the ESIPs awarded:
Weighted
No. of shares fair value
outstanding per share
Share type Award date Vesting date 20211 £
FY19 ESIP Matching shares See above See above 2,112,491 0.86
Total 11,567,837
1 The number of shares shown above is the estimated number.
Performance Share Plan (PSP)

During the 2018, 2019 and 2020 financial years, awards were granted under the PSP scheme to the CEO and other members of Senior Management,
with vesting conditions linked to the performance of the Group and its share price.
A proportion of the PSP Awards are subject to a comparative total shareholder return (TSR) performance condition. This includes 100% of the PSP 2017
Award (due to the presence of a TSR underpin), 50% of the PSP 2018 Award and 50% of the PSP 2019 Award. The fair values of awards were calculated
using a Monte Carlo simulation model to take into account the expectation at the grant date that the performance conditions will be met. The expected
volatility has been calculated using historical daily data commensurate with the expected term of each award as at each grant date.
36 Share-based payments continued

Performance Share Plan (PSP) continued
The following table illustrates the fair value and vesting period of the PSP schemes:
2021 2020
Weighted fair Weighted fair
2021 2020 value value
No. of shares No. of shares per share per share
Award date Vesting date outstanding outstanding £ £
2017 CEO Award 27 October 2017 27 October 2020 1,148,606 1,148,606 0.97 0.97
2017 Award 11 December 2017 27 October 2020 1,920,058 2,286,597 0.75 0.75
2018 CEO/CFO 7 November 2018 22 November 2021 1,355,371 1,950,412 0.86 0.86
2018 Award 7 November 2018 22 May 2021 3,542,026 4,387,044 0.86 0.86
2019 CEO 30 October 2019 29 October 2022 2,200,000 2,200,000 0.27 0.27
2019 Award 30 October 2019 29 October 2022 8,731,136 9,958,794 0.31 0.31
Total 18,897,197 21,931,453
Insurance Long Term Bonus Plan (Insurance LTBP)

During the 2019 financial year, awards were granted under the Insurance LTBP to certain key members of senior management of the Group’s Insurance
businesses. These awards vest to specified threshold pound sterling values. The vesting conditions for each threshold are linked to the performance
of the Group’s Insurance businesses. The award date for this scheme was 23 January 2019.
The first settlement under this scheme was paid out in shares in respect of awards vesting over the period from 23 January 2019 to 31 July 2020.
These were accounted for as equity-settled share-based payments.
Awards under this scheme with vesting periods from 23 January 2019 to 31 July 2021, 2022 and 2023 are expected to be settled in cash. As the terms
of this award permit settlement in cash or shares, these awards are accounted for as cash-settled share-based payments.
The total expected value of shares to be awarded under this scheme is £2m as at 31 January 2021. The vesting charge for the current year is £1m and
is presented in the cash-settled share-based payments expense (2020: £1m in equity-settled share-based payments expense).
37 Accounting standards, amendments and interpretations

New accounting standards, amendments and interpretations adopted in the year
The Group did not identify any new accounting standards coming into effect in the current year with a material impact on the financial statements.
New accounting standards, amendments and interpretations not yet adopted

A number of new standards, amendments and interpretations have been issued and will be effective for financial years beginning after 1 February 2021
but have not been applied by the Group in these financial statements. These are set out below (effective dates are UK effective dates).
Amendments to IFRS 17 and IFRS 4, ‘Insurance contracts’, deferral of IFRS 9 (effective 1 January 2023)
Amendments to IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (effective date to be confirmed)
Amendments to IAS 1, ‘Presentation of financial statements’ on classification of liabilities (effective date to be confirmed)
number of narrow-scope amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective date
A
to be confirmed)
IFRS 17, ‘Insurance Contracts’ (effective 1 January 2023)
The Group did not identify any new accounting standards coming into effect in the financial year ending 31 January 2022 with an expected material
impact on the financial statements.
38 Assets and liabilities classified as held for sale

At the prior year end, AA Underwriting Limited, Automobile Association Underwriting Services Limited and AA Reinsurance Company Limited were
held for sale. Each of these subsidiary undertakings were subsequently disposed of during the current year (see note 12) and related to insurance
businesses already in run-off.
The assets classified as held for sale were:
2021 2020
£m £m
Reinsurers’ share of insurance liabilities – 1
Other receivables – 1
Cash and cash equivalents – 10
– 12
The liabilities classified as held for sale were:
2021 2020
£m £m
Accruals – 1
Insurance technical provisions – gross claims outstanding – 2
– 3
39 Events after the reporting period
Strategic Report
The Acquisition
On 25 November 2020, the board of directors of Basing Bidco Limited (‘Bidco’), a newly formed joint venture company indirectly owned in equal shares
by (i) funds advised by TowerBrook Capital Partners (U.K.) LLP or its affiliates and (ii) private equity funds managed by Warburg Pincus International LLC
or its affiliates (together, ‘the Consortium’), agreed with the Board of Directors of the Group the terms of a recommended cash acquisition pursuant to
which Bidco would acquire the entire issued and to be issued ordinary share capital of the Group (‘the Acquisition’). The Acquisition was completed on
9 March 2021 and the Company’s ordinary shares were de-listed from the London Stock Exchange on 10 March 2021. The Company was re-registered
as a private company on 17 March 2021. As part of the Acquisition, the Consortium made an alternative offer to shareholders enabling them to transfer
their ownership to the new structure resulting in an interest of 16% in Bidco and the Group transferring to these shareholders.
Refinancing of the Class B2 Notes

On 29 January 2021, AA Bond Co Limited issued £280m of Class B3 Notes (see note 21). The gross proceeds of the issuance of the Class B3 Notes
were held in escrow for the benefit of the Class B3 Noteholders until the completion of the Acquisition. On 10 March 2021, these funds were released
from escrow and combined with an equity contribution of £261m from Bidco in order to prepay and redeem the Class B2 Notes. In addition, £29m
aggregate principal amount of Class B2 Notes which were held by the Company (see note 21) were surrendered for cancellation. As a result, all £570m
Governance
of outstanding Class B2 Notes were redeemed as part of this refinancing.
Refinancing of Senior Term Facility, Working Capital Facility and Liquidity Facility
On 10 March 2021, the Group also refinanced its Senior Term Facility, Working Capital Facility and Liquidity Facility:
he Group entered into a new £150m Senior Term Facility which it drew down immediately and used, in combination with £50m of cash, to refinance
T
its existing £200m Senior Term Facility. The new £150m Senior Term Facility is subject to a variable interest rate of LIBOR plus a margin of 2.75%
per annum, and the terms of the loan include provisions for the parties to enter into negotiations to replace the LIBOR benchmark with a suitable
replacement benchmark expected to be SONIA. The Group has an interest rate swap in place which fixes the variable interest rate at 0.97% until
31 July 2021 and has entered into a new interest rate swap which fixes the variable SONIA interest rate at 0.46% from 1 August 2021 to 10 March 2026.
he Group agreed a new £56m Working Capital Facility, of which £46m is available for cash drawings and remains undrawn, and cancelled its existing
T
Working Capital Facility of £60m.
The Group agreed a new £160m Liquidity Facility which remains undrawn, and cancelled its existing Liquidity Facility of £165m.
Summary of borrowings as at 10 March 2021:
Total at
Issue Amortised issue 10 March
Expected Interest Principal costs costs 2021
maturity date rate £m £m £m £m
Senior Term Facility 10 March 2026 3.72% 150 (1) – 149
Class A2 Notes 31 July 2025 6.27% 500 (1) 1 500
Class A5 Notes 31 January 2022 2.88% 372 (25) 20 367
Class A8 Notes 31 July 2027 5.50% 325 (3) – 322
Class B3 Notes 31 January 2026 6.50% 280 (10) – 270
4.84% 2,427 (52) 26 2,401
Refinancing of the Class A5 Notes

In accordance with the terms of the Acquisition, Bidco intends to provide an additional £100m of funds to be used, together with an issue by AA Bond
Co Limited of at least £272m in new Class A Notes, to redeem in full the £372m of Class A5 Notes. This is planned to take place before the expected
maturity date of the Class A5 Notes in January 2022.
Transaction fees and expenses

As part of the Acquisition, both the Group and Bidco have incurred transaction fees and expenses in an aggregate amount of c.£77m. Approximately
£27m of these costs are incurred by the Group of which £16m had been expensed as adjusting operating items as at 31 January 2021 (see note 5), and
£4m were refinancing costs and were capitalised as issue costs for the refinancing of the Class B3 Notes (see note 21). Bidco is expected to incur costs
of c.£50m, of which £6m were refinancing costs and were capitalised as issue costs for the Class B3 Notes (see note 21). The remaining costs will be
incurred in the year ended 31 January 2022 and will be expensed as adjusting operating items. Bidco has made a further equity injection of £17m
towards these costs, with the remainder expected to be met using cash from the Group.
Share schemes
In accordance with the terms of the Scheme of Arrangement by which the Acquisition was effected, the Group’s ESIP and PSP share schemes
(see note 36) vested to differing extents on 8 March 2021 and the relevant underlying share awards were subsequently purchased by Bidco.
See the Directors’ Remuneration Report on P43-46 for more information.
Contract with Nationwide Building Society

In March 2021, the Group announced the award of a new five-year contract with Nationwide through which it will offer Nationwide’s Flexplus customers
the Group’s award-winning roadside assistance services, which they will be able to access fully through the Group’s digital channels including the
AA app. The service will go live from the first quarter of 2022.
Company Statement of Financial Position

As at 31 January
2021 2020
Notes £m £m
Non-current assets
Investments in subsidiaries 2 140 531
Financial assets at amortised cost 3 – 26
140 557
Current assets
Trade and other receivables 4 1 14
Cash and cash equivalents 5 25 26
26 40
Assets classified as held for sale 2 – 1
Total assets 166 598
Current liabilities
Trade and other payables 6 (3) –
Total liabilities (3) –
Net assets 163 598
Equity
Called up share capital 7 1 1
Share premium 412 410
Own shares (23) (33)
Retained earnings (227) 220
Total equity 163 598
The loss for the financial year of the Company is £436m (2020: loss of £294m).
The financial statements were approved by the Board of Directors on 13 April 2021 and signed on its behalf by
Simon Breakwell Kevin Dangerfield

Chief Executive Officer Chief Financial Officer
The accompanying notes are an integral part of this Company statement of financial position.
Company Statement of Changes in Equity

Share Share Own Retained

capital premium shares earnings Total
£m £m £m £m £m
At 1 February 2019 1 408 (31) 522 900
Loss for the year – – – (294) (294)
Dividends – – – (12) (12)
Issue of share capital – 2 – – 2
Purchase of own shares – – (2) – (2)
Share-based payments – – – 4 4
At 31 January 2020 1 410 (33) 220 598
Loss for the year – – – (436) (436)
Issue of share capital – 2 – – 2
Purchase of own shares – – (4) – (4)
Settlement of share schemes – – 14 (14) –
Share-based payments – – – 3 3
At 31 January 2021 1 412 (23) (227) 163
The accompanying notes are an integral part of this Company statement of changes in equity.
© 2020 Friend Studio Ltd File name: CompanyXStatements_v32 Modification Date: 13 April 2021 10:01 pm
Notes to the Company Financial Statements
1 Presentation of financial statements and Company The recoverable amount of fixed assets is the greater of their fair value
Strategic Report
accounting policies less costs to sell and value in use. In assessing value in use, the expected
future cash flows are discounted to their present value using a discount
1.1 Presentation of financial statements rate that reflects current market assessments of the rate of return
AA Limited (‘the Company’) is a private company, limited by shares, expected on an investment of equal risk. For an asset that does not
incorporated and domiciled in England and Wales, UK. Prior to de-listing generate largely independent income streams, the recoverable amount
on 10 March 2021, the Company’s ordinary shares were traded on the is determined for the income-generating unit to which the asset belongs.
London Stock Exchange. The address of the Company’s registered office
is Fanum House, Basing View, Basingstoke, Hampshire, RG21 4EA. c) Financial instruments
These financial statements were prepared in accordance with Financial Financial assets and financial liabilities are recognised in the Company’s
Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and the statement of financial position when the Company becomes a party
Companies Act 2006. The financial statements are prepared under the to the contractual provisions of the instrument. They are classified
historical cost convention and on a going concern basis. See also note according to the substance of the contractual arrangements entered
1.2(a) of the consolidated financial statements. into. The Company recognises loss allowances for expected credit
losses (ECLs) on relevant financial assets.
No income statement is presented by the Company as permitted by
Governance
Section 408 of the Companies Act 2006. d) Critical accounting estimates and judgements
The accounting policies which follow set out those policies which apply Estimates are evaluated continually and are based on historical experience
in preparing the financial statements for the year ended 31 January 2021. and other factors, including expectations of future events that are believed
The financial statements are prepared in sterling and are rounded to the to be reasonable under the circumstances. The Group makes estimates
nearest million pounds (£m). and assumptions about the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The following
1.2 Basis of preparation are principal estimates and assumptions made by the Company.
The Company has taken advantage of the following disclosure Management has exercised judgement in applying the Group’s accounting
exemptions under FRS 101: policies and in making critical estimates. The underlying assumptions on
IAS 1 paragraph 10(d) (statement of cash flows) which these judgements are based are reviewed on an ongoing basis and
include the assumptions for future growth of cash flows to support the
IAS 1 paragraph 16 (statement of compliance with all IFRS) value in use calculations for the investment impairment review.
I AS 1 paragraph 38A (requirement for minimum of two primary
Investments
statements, including cash flow statements)
The Group tests the investment balances for impairment annually.
IAS 1 paragraph 111 (cash flow statement information) The recoverable amounts of the investments have been determined
IAS 1 paragraphs 134–136 (capital management disclosures) based on value in use calculations which require the use of estimates.
Management has prepared discounted cash flow forecasts based on
Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ the latest strategic plan (see note 2 for details).
IAS 7, ‘Statement of cash flows’
IAS 8 paragraphs 30 and 31 2 Investments in subsidiaries
he requirements in IAS 24, ‘Related party disclosures’ to disclose
T 2021 2020
related party transactions entered into between two or more members £m £m
of a group At 1 February 532 822
IFRS 7, ‘Financial Instruments: Disclosures’ Charge for the share incentive schemes 3 4
Disposal of subsidiary AA Reinsurance
The Company did not identify any new accounting standards coming
Company Limited (1) –
into effect in the financial year ending 31 January 2022 with an expected
material impact on the financial statements. Impairment (394) (294)
At 31 January 140 532
1.3 Accounting policies
Less: presented as assets held for sale – (1)
The accounting policies set out below have, unless otherwise stated,
been applied consistently to all years presented in these financial Investments in subsidiaries as presented in the
statements. Company statement of financial position 140 531
a) Foreign currencies In the year ended 31 January 2021, there was a decrease in investments in
subsidiaries of £392m (2020: decrease of £290m). This was the result
Transactions in foreign currencies are recorded at the rate ruling at the
of an impairment of £394m in the year, which is described in more detail
date of the transaction or at the contracted rate if the transaction is
below (2020: £294m). This was partially offset by a £3m increase
covered by a forward foreign currency contract. Monetary assets and
(2020: £4m) relating to the fair value of equity-settled share-based
liabilities denominated in foreign currencies are retranslated at the
payments granted (see note 36 of the Group financial statements).
rate of exchange ruling at the statement of financial position date or if
appropriate at the forward contract rate. All differences are taken to The Company has performed impairment testing at 31 January 2021 to
the income statement. compare the recoverable amount of the investments in subsidiaries to
their carrying value. The Company has two directly held subsidiaries,
b) Investments in subsidiaries AA Insurance Holdings Limited which owns the Group’s underwriting
Investments in subsidiaries are held at cost less impairment. business and AA Mid Co Limited which owns the rest of the Group.
The cost of share-based payments settled by the Company in respect of At 31 January 2021, the shareholders of the Company had accepted an
employees of its subsidiaries are accounted for as a capital contribution offer on its share capital valuing the Company’s market capitalisation
and are therefore reflected as an addition to the cost of the investments at £218m.
in subsidiaries. After deducting the Group’s non ring-fenced available cash of £26m
The carrying amounts of the Company’s assets are reviewed for from the £218m offer price, an allocation of the remaining implied value
impairment when events or changes in circumstances indicate that was assigned to the Group’s underwriting business proportionate to
the carrying amount of the fixed asset may not be recoverable. If any its discounted cash flow projections with respect to those of the whole
such indication exists, the asset’s recoverable amount is estimated. Group. This valuation allocation for the Group’s underwriting business
An impairment loss is recognised whenever the carrying amount of an was then compared to the carrying value of its investment balance.
asset or its income-generating unit exceeds its recoverable amount. No impairment of this balance was deemed necessary.
Impairment losses are recognised in the income statement unless
they arise on a previously revalued fixed asset.
Notes to the Company Financial Statements continued
2 Investments in subsidiaries continued Disposal of investment in subsidiary

The remainder of the market valuation was then allocated to the During the current year, the Company disposed of its investment in
Company’s investment in the AA Mid Co Limited group and compared to AA Reinsurance Company Limited, a direct subsidiary undertaking of the
the carrying value of this investment. This indicated an impairment of Company. This subsidiary undertaking related to an insurance business in
£394m. This impairment has been reflected in the carrying value of the run-off, and was presented as assets held for sale at the prior year end.
Company’s investments in subsidiaries as at 31 January 2021.
The recoverable amounts of the investments were determined based on
3 Financial assets at amortised cost
a value in use calculation using cash flow projections from the Group’s 2021 2020
five-year plan. For the year ended 31 January 2021, the Company used the £m £m
five-year plan covering the four years up to 31 January 2025 and a 2.0% Non-current
expectation of growth in the subsequent year. For the purposes of the
Listed corporate debt – 26
impairment test, terminal values have been calculated using a 2.0%
(2020: 2.0%) inflationary growth assumption in perpetuity based on – 26
the IMF’s UK long-term growth rate.
Listed corporate debt comprises Class B2 Notes in AA Bond Co Limited.
Due to the short-term risks specific to the Group and industry in place The Class B2 Notes have an expected maturity date of 31 July 2022 and
at 31 January 2021, the Company considered it appropriate to continue pay interest at a fixed rate of 5.5%.
applying a value in use model using forecast dividend cash flows from its
investments (a ‘dividend distribution’ model), consistent with the final On 10 March 2021, the Company released AA Bond Co Limited from the
valuation model used in the year ended 31 January 2020. This model Class B2 Notes. At 31 January 2021, these have therefore been impaired
assesses the cash flows available to the parent company from its from their carrying value of £27m to their recoverable amount of £nil.
investment in the subsidiaries. In this dividend distribution model,
the cash flow projections of the underlying investments include cash 4 Trade and other receivables
outflows relating to financing costs (i.e. interest) and taxation, a departure
2021 2020
from the traditional value in use model described in IAS 36 which was
£m £m
used in the years prior to the year ended 31 January 2020. The model
also reflects an assessment of future refinancing and interest costs that Amounts owed by subsidiary undertakings – 13
the Group expects to arise as its existing debt is refinanced over the Other receivables 1 1
next five years. 1 14
IAS 36 considers that the appropriate discount rate for a value in use
calculation should reflect the current market assessments of the time Amounts owed by subsidiary undertakings are unsecured, have no
value of money. Having reviewed this model and its results, and given repayment terms and bear no interest.
that the current market valuation of the Group as at 31 January 2021 was
known, the Company determined that the use of this model and the 5 Cash and cash equivalents
implicit discount rate could reasonably be expected to reflect an investor’s
2021 2020
assessment of the return required given the specific Group, industry £m £m
and macroeconomic conditions and risks in existence at the year end.
Cash at bank and in hand 25 26
There is significant judgement over which assumptions are most
25 26
appropriate to apply in these circumstances and as to whether a dividend
distribution model or a traditional enterprise value less debt value in use
model is the most appropriate. The use of the dividend distribution model 6 Trade and other payables
and its inputs were specific to conditions in existence at the Company’s
year end and may no longer be appropriate in subsequent years should 2021 2020
these conditions no longer exist. Specifically, the Company considers £m £m
the primary driver for the accepted offer price and value of the implicit Amounts owed to subsidiary undertakings 3 –
discount rate to be due to the risks in existence at 31 January 2021 of 3 –
the Class B2 Notes securitised against AA Mid Co Limited and their
refinancing. After year end, the conditions associated with this Amounts owed to subsidiary undertakings are unsecured, have no
suppressed valuation have been removed by the redemption of the repayment terms and bear no interest.
Class B2 Notes on 10 March 2021.
IAS 36 permits the reversal of impairment losses when there have been 7 Called up share capital
favourable events or changes in circumstances since the loss was
2021 2020
recognised. On this basis, given the deleveraging and refinancing of the £m £m
B2 Notes, the new Senior Term Facility, Working Capital Facility and
Liquidity Facility and further deleveraging expected with the support Allotted, called up and fully paid
of the Consortium, we would expect future cash flow generation to be 624,054,757 (2020: 616,734,346)
increased significantly. These changes in circumstances will be taken ordinary shares of £0.001 each 1 1
into account in our impairment review in future years. 1 1
The valuation allocation to the Company’s investment in AA Mid Co Limited
The voting rights of the holders of all ordinary shares are the same and all
is sensitive to changes in forecast cash flows dependent on interest rate
ordinary shares rank pari passu on a winding up. The Company has no
assumptions on future refinancings of the Group’s debt. Sensitivity testing
authorised ordinary share capital.
was performed to analyse the changes in valuation allocation in different
interest rate scenarios. The movement in the number of shares in the current year is in relation to
the matching shares for the Employee Share Incentive Plans (see Group
Implied impairment financial statements – note 36 for further information on these shares).
of investment in AA Change in
Mid Co Limited impairment The Company has 60 million deferred shares in issue (2020: 60 million)
Scenario £m £m which are held in trust and have no voting rights.
Interest rates on new borrowings -1% 389 (5)
Interest rates as per 5-year plan 394 –
Interest rates on new borrowings +1% 400 6
8 Subsidiary undertakings
Strategic Report
All subsidiaries are wholly owned (except where stated) and incorporated and registered where stated below.
All subsidiaries are consolidated in the Group financial statements.
The principal subsidiary undertakings of the Company at 31 January 2021 are:
Country of incorporation/
Name registered office key Class of shares held
AA Acquisition Co Limited England and Wales, UK/A Ordinary
AA Bond Co Limited1 Jersey/B Ordinary
AA Corporation Limited England and Wales, UK/A Ordinary
AA Financial Services Limited England and Wales, UK/A Ordinary
AA Intermediate Co Limited England and Wales, UK/A Ordinary
AA Mid Co Limited2 England and Wales, UK/A Ordinary
Governance
AA Senior Co Limited England and Wales, UK/A Ordinary
AA Technical Solutions Limited England and Wales, UK/A Ordinary
A A The Driving School Agency Limited England and Wales, UK/A Ordinary
AA Underwriting Insurance Company Limited Gibraltar/D Ordinary
Automobile Association Developments Limited England and Wales, UK/A Ordinary
Automobile Association Insurance Services Limited England and Wales, UK/A Ordinary
DriveTech (UK) Limited England and Wales, UK/A Ordinary
Prestige Fleet Servicing Limited England and Wales, UK/A Ordinary
Used Car Sites Limited England and Wales, UK/A Ordinary
Longacre Claims Limited England and Wales, UK/A Ordinary and B shares
The other subsidiary undertakings of the Company at 31 January 2021 are:
Country of incorporation/
Name registered office key Class of shares held
A.A. Pensions Trustees Limited England and Wales, UK/A Ordinary
AA Brand Management Limited England and Wales, UK/A Ordinary
AA Garage Services Limited England and Wales, UK/A Ordinary
AA Insurance Holdings Limited2 England and Wales, UK/A Ordinary
AA Ireland Pension Trustees DAC Ireland/E Ordinary
AA Newco Limited4 England and Wales, UK/A Ordinary
AA Pension Funding GP Limited Scotland, UK/C Ordinary
AA Pension Funding LP3 Scotland, UK/C Membership interest
Automobile Association Holdings Limited England and Wales, UK/A Ordinary and deferred
redeemable non-voting
special dividend
Automobile Association Insurance Services Holdings Limited England and Wales, UK/A Ordinary
Automobile Association Services Limited England and Wales, UK/A Limited by guarantee
Accident Assistance Services Limited England and Wales, UK/A Ordinary
Intelligent Data Systems (UK) Limited England and Wales, UK/A Ordinary
Personal Insurance Mortgages and Savings Limited England and Wales, UK/A Ordinary
Prestige Motor Care Holdings Limited4 England and Wales, UK/A Ordinary
The Automobile Association Limited¹ Jersey/B Ordinary
1 This company also has a UK branch establishment.
2 Directly owned by AA Limited; all other subsidiaries are indirectly held.
3 This partnership is fully consolidated into the Group financial statements and the Group has taken advantage of the exemption (as confirmed by regulation 7 of the Partnerships (Accounts)
Regulations 2008) not to prepare or file separate financial statements for this entity.
4 The Group has filed an active proposal to strike off this company.
Registered office key

A – Fanum House, Basing View, Basingstoke, Hampshire, RG21 4EA, England
B – 22 Greenville Street, St Helier, Jersey, JE4 8PX
C – 20 Castle Terrace, Edinburgh, EH1 2EN, Scotland
D – First Floor, Grand Ocean Plaza, Ocean Village, Gibraltar
E – 6th Floor, South Bank House, Barrow Street, Dublin 4, Ireland
9 Auditor’s remuneration
The fee for the audit of these financial statements was £0.8m (2020: £0.6m). See also note 33 of the consolidated financial statements.
10 Employee costs
The Company had no employees or employee costs in the current or prior year. However, the Company has incurred costs in respect of the NEDs of £1m
(2020: £1m).

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AA Limited

Company number: 05149111

Presentation of financial information UK regulations/APM

FINANCIAL AND OPERATIONAL HIGHLIGHTS

£967m £52m 32%

20202: £993m 20202: £105m 11.9m Female

20202: £348m 20202:13.8p 1,941,000 Male

20202: £255m 2020: £83m

RECOMMENDED CASH OFFER APPROVED

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS

1 Non-Generally Accepted Accounting Principles (GAAP) measures explained on P15.

We are the leading provider of roadside assistance services in the UK with a

Trading EBITDA margin Trading EBITDA margin

Trading EBITDA Trading EBITDA

Paid personal members Insurance policies

Business customers Underwritten policies

Financial Services products

1 See P65 and 73.

2 AA Limited Annual Report and Accounts 2021

Our investment case

B2B partner of choice

AA Limited Annual Report and Accounts 2021 3

4 AA Limited Annual Report and Accounts 2021

What we do and how we compete

How we measure the value we create

£163 (2020: 9.0m) 520

AA Limited Annual Report and Accounts 2021 5

Group performance continued

Insurance and Financial Services

What we do and how we compete

How we measure the value we create

£78 406,000 101,000

6 AA Limited Annual Report and Accounts 2021

AA Limited Annual Report and Accounts 2021 7

Group performance continued

Claims Frequency vs Driving Journeys Distance

8 AA Limited Annual Report and Accounts 2021

Making Britain’s drivers’ lives simpler and smarter

AA Limited Annual Report and Accounts 2021 9

FY21 review continued

Innovate and grow Roadside

10 AA Limited Annual Report and Accounts 2021

Accelerate growth in Insurance

AA Limited Annual Report and Accounts 2021 11

FY21 review continued

Accelerate growth in Insurance continued

Deliver operational and service excellence

12 AA Limited Annual Report and Accounts 2021

Creating shared prosperity Project (CDP) environmental assessment,

AA Limited Annual Report and Accounts 2021 13

Key performance indicators

Robust strategic performance in changing markets

Business customers Number of business We are market leaders in the business-to-business

Reduce borrowings and associated interest costs

AA Limited Annual Report and Accounts 2021 15

Our core Roadside business continues to deliver a solid

35% the year to 3.168m (2020: 3.215m) with the

3.168m award-winning membership proposition.

8.7m was flat at £164 (2020: £164). The reduction

1 Non-Generally Accepted Accounting Principles (GAAP) measures explained on P15.

easured employee engagement and

articipated in the SURVIVE Group for

* Based on FY20 emissions data and average figures for

COVID-19 specific achievements onthly unannounced independent COVID-19