Foundations for growth

Welcome to our Annual Report and Accounts 2016

Scroll down to read the highlights of the year, or jump down to downloads to access the full report and key sections.

The AA at a glance

We operate three divisions: Roadside Assistance, Insurance Services and Driving Services.
We also operate in Ireland providing Roadside Assistance and Insurance Services.

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Executive Chairman's statement

Executive Chairman Bob Mackenzie

“In this past year, the first year
of our transformation
, we have strengthened the foundations of the AA and put in place the platform which is allowing us to revolutionise customer experience. We have also substantially reduced the cost of borrowings. At the same time, we have delivered results in line with expectations and strong operational cash flow.

“With stronger foundations and the significant potential we see across the business, we are confident that our continued investment during the 2017 financial year will build momentum.

We expect to begin to realise the benefits of this transformation in the 2018 financial year. “The Board’s confidence in the business, combined with the substantial reduction in the annual cash interest costs achieved by the refinancing, has led to the recommendation of a total dividend of 9p in respect of the 2016 financial year.”

Executive Chairman Bob Mackenzie's signature
Bob Mackenzie
Executive Chairman

The financial implications of
the transformation

Capital expenditure

When we set out the plan for the transformation, we announced that the capital investment required for the IT element of the transformation was £128m over three years and this is unchanged. However, the phasing of that investment has altered and we invested £54m capital expenditure in the 2016 financial year, below the level expected due to timing of payments around the year end. We expect to invest approximately £65m during the 2017 financial year and £9m in the 2018 financial year.

Once the transformation is complete, we expect to continue to invest approximately £40m per year on maintenance capital expenditure split between vehicles (approximately £20m net of proceeds), IT systems (approximately £10m) and property and equipment (approximately £10m).

Brand advertising investment

Based on the success of the brand advertising during the past year, we continue to expect to invest approximately £10m per year in brand marketing. As previously stated, we also expect to make additional investment into product development such as connected car and Automyze services, which will significantly enhance the Membership proposition.

Operating costs

We expect incremental IT operational maintenance costs, mainly comprising fees and licences, to amount to £8m per year.

We remain confident in our ability to reduce costs and continue to expect savings to our 2015 cost base of at least £40m per year from the 2019 financial year. We made savings in the 2016 financial year of £8m which are largely related to higher productivity throughout the organisation, efficiencies in our call centres and back office and in rationalising property. The cost to achieve these total savings is expected to be £45m over three years.

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Financial highlights

Revenue (excluding business disposed of)
£963m 2015: £967m
Trading EBITDA (excluding business disposed of)
£415m 2015: £429m
Cash conversion
101% 2015: 96.7%
Net debt
£2.8bn 2015: £3.0bn
Adjusted basic EPS
23.2p 2015: 23.3p
Basic EPS
1.0p 2015: 13.3p
Interest cover
2.2x 2015: 2.0x


The following definitions apply throughout the report.

2016 financial year is the year to 31 January 2016:

Trading EBITDA (earnings before interest, tax, depreciation and amortisation) excludes exceptional items and items not allocated to a segment. In the current period items not allocated to a segment principally relate to the difference between the cash contributions to the pension schemes for on-going service and the calculated annual service cost and share-based payments (see note 32).

Adjusted basic EPS (earnings per share) adjusts for a number of one-offs of which the largest are exceptional items and the amortisation of debt issue fees, items not allocated to a segment, the amortisation of debt issue fees, penalties on early repayment of debt and double running interest costs on Class B/B2 notes. This is covered more fully in note 8 to the accounts.

Cash conversion is net cash inflow from operating activities before tax and exceptional items divided by Trading EBITDA.

Interest cover is Trading EBITDA divided by cash finance costs, excluding any early repayment fees.

Net debt includes the principal amounts of the Group’s borrowings less cash and cash equivalents.

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Downloads centre

Annual Report and Accounts 2016

Annual General Meeting

Our AGM is on 9 June 2016. For details and documents visit our corporate website

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