Acromas Annual Report 2012 - Permira

annual Report and financial statements31 January 2013

Chief Executive’sReview of the BusinessContinued growth and successDespite challenging economic circumstances, Acromas has continuedto develop and grow. This is due to our focus on the needs of ourcustomers and on delivering excellent customer service. Over thelast 12 months, our Turnover grew 6.4% to over £2.2 billion, and weachieved a Trading EBITDA of £621 million, an increase of 4.9%.I am very proud that Saga and the AA have retained their positions as1st and 2nd for customer favourability and treating people fairly in theindependent IPSOS MORI Corporate Image Survey.Andrew GoodsellChief Executive‘Our strong financialperformance has enabledcontinued investmentfor the future’Our strong financial performance has enabled continued investment forthe future to support our market-leading positions, with all investmentsmade from cash generated by the business.This year our three key strategic initiatives were: first, to increase ourcruise ship capacity, which has been met through the launch of the£60 million Saga Sapphire; second, to invest in the Acromas healthcarebusinesses acquired last year; and third, to support the AA’s move intorescuing homeowners as well as motorists through the development ofthe Home Emergency Response service.Trusted brands delivering awardwinning products and serviceOur trusted brands serve the needs of some 18 million people in the UKand we create employment for around 38,000 people. Their record fordelivering exceptional service is reflected in our results.The AA continues to thrive under Acromas’ stewardship. The roadsidebusiness has some 13 million personal and business members andretains pole position as the UK’s largest provider of breakdown servicesin the UK. Our great performance was recognised by Which? Magazineagain awarding the AA “recommended provider” status. The HomeEmergency Response service continues to grow in popularity and nowprovides cover for some 1.2 million homes.Within other areas, AA DriveTech, the UK’s largest provider of fleet riskmanagement and driver education services in the UK, has had a verysuccessful year with strong growth; AA Publishing has been convertedinto engaging digital content, with personalised features to supportactivities such as “walks”, “cycling” and “days out”; and our AA Signsbusiness supported 2012’s glorious summer of sporting achievementby providing signage for the Olympics.Our in-house Acromas underwriting division produced a stellar resultthis year. In addition to Motor insurance, our underwriting skillshave increasingly been applied to a broader mix of risks and, inFebruary 2012, Acromas Insurance Company joined the Saga andAA Home insurance panels, which has proven to be very successful.Despite a very competitive insurance market, Saga finished the yearwith a record 5.1 million policies in force. Our 1,500 insurance callcentre agents personally dealt with some 6.4 million calls during theyear, and we further expanded our new contact centre in Hastingswhich now employs 350 staff.2 ACROMAS HOLDINGS LTD

Saga again won a raft of awards this year – for instance, Saga Travel& Saga Motor Insurance achieved Which? Magazine “recommendedprovider” status, and Moneywise Magazine gave Saga the “most trustedprovider” status for Home Insurance claims.The launch of Saga Legal Solutions was warmly received by the mediaand by customers. The service provides a fixed price legal service forwill writing, Power of Attorney, probate, and conveyancing for thosemoving home, and aims to save people money and the worry overmounting legal bills.Acromas Financial Services helps customers secure a better financialfuture with a range of Saga and AA branded products that aredesigned to be market-leading wherever possible but which alwaysreflect customer needs. Both the AA and Saga Credit Card wereawarded a Moneyfacts “4 star” rating. The confidence our customershave in us has helped our savings book to grow three-fold over thelast four years.Our peopleOur brands can only be as good as the people who deliver services forour customers and it is the dedication of our people – whether theyare an AA patrolman, a waiter on a cruise ship, a carer, a contact centreagent, or a driving instructor – that guarantees our future success.Delivering the very best service for our customers is at the heart of allthat they do.Looking aheadThe year ahead is bound to be one of great opportunities for theGroup and I am very much looking forward to 2013. I am confidentthat we will deliver superior performance based upon soundmanagement, dedicated staff and the zealous pursuit of excellence incustomer service.In defiance of the overall decline in the travel market, Saga’s Travelbusiness impressively posted an increase in Turnover with both theSaga and Titan brands performing well. The Saga Sapphire, whichlaunched in Spring 2012, has become a fitting new flagship for theSaga cruise fleet and is achieving outstanding quality scores.Which? Magazine named Saga as one of the top three beach andseaside holiday providers in 2012 and in the 50+ awards we werevoted the best overseas travel company.Over the year, we have worked hard to integrate and develop ourhealthcare businesses. We have adopted Allied as the principalhomecare brand for the Group and refreshed its image. Ourhomecare businesses employ some 18,000 people and deliveredaround 23 million hours of care during the year. Our nationalcoverage means that we have a care worker within half an hour’stravel of almost 90% of the UK population.Socially responsible businessWe have continued the sensitive stewardship of our environment.For example, we divert the majority of our waste from landfill andnow have electric car charging points at both AA and Saga offices,AA drivers are trained in eco-driving techniques and, in conjunctionwith the Woodland Trust, we are creating a new Jubilee Wood inFolkestone for the benefit of our staff and the publicI am proud that Saga’s charities continue to make a real difference to thelives of children and adults around the world – Kenya, Nepal, Morocco,and St Lucia to name a few – and to family carers in the UK. The AACharitable trust won a Prince Michael International Road Safety Award forits work providing driver training to disadvantaged youngsters.ACROMAS HOLDINGS LTD3

Cash flowsThroughout the year, the Group continued to successfully convertits operating activities into cash, generating £549.3 million in total, ofwhich £254.3 million was ultimately retained, and as at the balancesheet date, the Group had cash and short term bank deposits of£1,114.4 million.Together with interest received of £19.1 million, the operating cashgenerated of £549.3 million was utilised predominantly to settle theinterest due on the Group’s bank debt of £194.5 million, purchasetangible fixed assets of £52.8 million (net of £9.7 million from the saleof tangible fixed assets), make corporation and equivalent overseas taxpayments of £35.9 million, repay finance lease capital and interest of£18.8 million, and settle acquisitions of £11.0 million.Cash generated in respect of the Group’s regulated insurance andtravel subsidiaries is unavailable to the Group for general use and,during the year, this increased by £23.2 million to £705.1 million.The remaining £409.3 million is available for general corporatepurposes, including servicing the debt facility, and represents anincrease over the course of the year of £231.1 million.ACROMAS HOLDINGS LTD7

Directors’ reportDirectors:J A Goodsell (Chief Executive)J S E Arnell (Charterhouse Capital Partners)R P Hooper (CVC Capital Partners)S M Howard (Chief Financial Officer)R R Lucas (CVC Capital Partners)P S Muelder (Permira Advisers)M I Offord (Charterhouse Capital Partners)C N C Sherwood (Permira Advisers)Secretary: A P Stringer (appointed 17 August 2012)J Davies (resigned 17 August 2012)Registered Office: Enbrook Park, Folkestone, Kent CT20 3SECompany Registration No: 6252766The Directors submit their report together with the auditedfinancial statements for the year ended 31 January 2013.Principal activity and reviewof business developmentsThe Group’s principal activity is the sale of branded goods and servicesthrough its Saga and AA subsidiaries.The Group’s main products are roadside assistance, motor insurance,home insurance, private medical insurance and travel insurance,package and cruise holidays, driving services, domiciliary care,magazines and books. Accordingly, the Group segments its businessinto 5 trading segments – Financial Services, Roadside Services, Travel,Care, and Media & Other.Group turnover for the year to 31 January 2013 increased by 6.4%to £2,248.8 million (2012 - £2,113.2 million) and was contributed£1,291.0 million (2012 - £1,179.1 million) by Saga, and £957.8 million(2012 - £934.1 million) by the AA.Gross profit excluding exceptional items for the year was£1,077.7 million (2012 - £1,007.2 million), giving an overall gross marginof 47.9% (2012 - 47.7%). After administrative and marketing expenses,the Group’s operating profit excluding exceptional items was£547.9 million (2012 - £520.1 million), equating to 50.8% (2012 - 51.6%)of gross profit.The total interest charge for the year was £746.4 million (2012 - £682.0million), of which £238.2 million (2012 - £249.7 million) relates to bankborrowings and £490.1 million (2012 - £420.7 million) relatesto shareholder loans.Interest on the bank borrowings of £194.5 million (2012 - £203.1 million)was paid in cash during the year with the balance of the interest chargeadded on to the outstanding bank borrowings and shareholder loans.After financing costs, exceptional items and goodwill amortisation theGroup made a loss before taxation and minority interests of £574.9million (2012 - £505.8 million). A retained loss after tax and minorityinterests of £634.2 million (2012 - £565.6 million) has been taken toreserves. No dividends have been paid during the year (2012 - £nil).For management’s decision making and internal performancemanagement the Group’s key performance metric is Earnings beforeinterest, tax, depreciation and amortisation (EBITDA) excludingexceptional items (referred to as Trading EBITDA).Trading EBITDA for the Group increased by £28.8 million or 4.9%to £620.8 million for the year (2012 - £592.0 million). Consideringthe Group’s five segments, Turnover, Operating Profit excludingexceptional items, and Trading EBITDA for the year were as follows:8 ACROMAS HOLDINGS LTD

Principal activity and review of business developments (continued)FinancialServicesRoadServices Travel CareMedia &Other Unallocated Total£’m £’m £’m £’m £’m £’m £’m31 January 2013Turnover 771.0 681.0 353.3 334.5 109.0 0.0 2,248.8Operating profit 289.4 298.7 (6.9) 18.4 21.1 (72.8) 547.9Trading EBITDA 292.2 317.6 13.9 18.1 36.3 (57.3) 620.8Trading EBITDA % 37.9% 46.6% 3.9% 5.4% 33.3% 0.0% 27.6%31 January 2012Turnover 761.5 676.1 345.5 221.0 109.1 0.0 2,113.2Operating profit 248.0 288.2 5.1 14.5 17.8 (53.5) 520.1Trading EBITDA 248.7 303.8 26.3 16.4 34.4 (37.6) 592.0Trading EBITDA % 32.7% 44.9% 7.6% 7.4% 31.5% 0.0% 28.0%GrowthTurnover 9.5 4.9 7.8 113.5 (0.1) 0.0 135.6Operating profit 41.4 10.5 (12.0) 3.9 3.3 (19.3) 27.8Trading EBITDA 43.5 13.8 (12.4) 1.7 1.9 (19.7) 28.8Trading EBITDA % 5.2% 1.7% (3.7%) (2.0%) 1.8% 0.0% (0.4%)The significant growth in Trading EBITDA during the year has been driven by the Financial Services division which is up £43.5 million from a modestgrowth in Turnover of only £9.5 million or 1.2%. This increased performance has been driven by the Group’s insurance businesses and particularlythe Group’s insurance underwriting company which has experienced very good claims performance within its main Motor insurance product overthe course of the year.The Roadside Assistance division, which predominantly includes the breakdown service operated under the AA brand, has also had a strong yearand contributed an additional £13.8 million of Trading EBITDA, representing an increase of 4.5% over the previous year.Despite the continuing challenges within the global travel market, the Travel division grew its turnover by £7.8 million, or 2.3%. However, industrialand technical issues which delayed the launch of the new flagship to the Saga fleet, and issues on some unrelated third party engine maintenance ona sister ship, significantly impacted the bottom line performance of the division to be down £12.4 million against the previous year.The development of the domiciliary care business within Saga through the acquisition of two leading companies, Nestor Healthcare group andAllied Healthcare group, during the year ended 31 January 2012 has given the Group a strong and significant presence within the domiciliary caremarket. The full year impact of these acquisitions accounts for the majority of the increase in turnover over the year.The Unallocated category mainly comprises central functions which are not allocated to the trading divisions, predominantly on the AA side of thebusiness.ACROMAS HOLDINGS LTD9

Principal risks and uncertaintiesThe Group follows a structured, proactive risk identification andassessment process that involves all of its Directors and managementteam, is considered at Boards, Executive Committees, and otheroperational committees throughout the Group, and which is updatedon an ongoing basis.Extensive use of operational and financial information is made tomonitor the performance of the various businesses, the Group,and the external environment allowing the Directors and SubsidiaryDirectors and management teams to take action when appropriate. Inaddition, the Group has dedicated resources supporting the businessincluding internal audit, risk management, regulatory compliance,quality monitoring and health and safety.In view of the diversity of the Group’s principal activities and its brands,the principal risks and uncertainties facing the Group, together withthe actions taken to manage or mitigate them, have been groupedunder six headings as follows:1. Legislative RisksThe Group trades within regulated sectors of the economy suchas financial services, package holidays and cruising, and domiciliarycare. It is therefore required to comply with all relevant regulations.Each regulated subsidiary ensures it does this through dedicatedcompliance teams, appropriately designed processes and procedures,and the use of information relevant for monitoring purposes.2. Operational RisksThe Group faces a number of operational risks which are fundamentalto its carrying on business including suppliers not being able toprovide contracted services through force majeure, the risk associatedwith operating holidays, motoring, shipping and domiciliary carebusinesses, and business disruption due to infrastructure failures. TheGroup has put in place contingency plans to mitigate the impact ofthese risks, which are tested on an ongoing basis, and implementedprocesses and procedures to reduce the likelihood of occurrence,including operational resilience of systems.3. Market RiskThe Group continues to operate in highly competitive markets withconstant pressure on margins and market share. These risks aremanaged through promotion of the Group brands, continuing effortsto improve efficiency and reduce costs, and focus on customerservice, quality and value for money. Appropriate information isutilised to monitor the external market.4. Brand RiskThe Group recognises that Saga and the AA are quality brands andsources of competitive advantage, and has in place policies andprocedures to protect them at all times. Legal protections for brands,trade marks and other points of differentiation are put in place wherepossible.5. Credit RiskThe Group is required to comply with the provisions of its loanagreements. The Group has put in place corporate governanceprocedures and financial controls to ensure that these are compliedwith and has taken out interest rate hedges in line with its policy onmanaging interest rate risk. Monitoring of the Group’s performanceagainst the requirements of its loan agreements is performed monthly,quarterly and annually as prescribed by the loan agreements andincludes an annual certificate of compliance from the Group’s auditors.6. Liquidity RiskThe Group pays a significant proportion of the cash it generates to itslenders in line with the provisions of its loan agreements. The Groupproduces annual budgets which it reforecasts on a monthly basis.Each week, it produces a rolling three month cash flow forecast andmonitors this closely to ensure that the Group is generating sufficientfree cash flow to make payments as they fall due.Policy on use offinancial instrumentsThe Group enters into derivative transactions which are summarisedbelow and the Board reviews and agrees policies for managing therisks associated with these transactions.The Group has transactional currency exposures that arise frompurchases in currencies other than the Group’s functional currency.The Group uses forward currency contracts to eliminate the currencyexposures on all material transactions. The forward contracts topurchase foreign currency are transacted to coincide with identifiedrequirements so that at all times the Group has no material exposuresto foreign currency risk.The Group is exposed to the market price of oil relating to theconsumption of fuel by the Group’s cruise ships and recovery vehicles.The Group uses fuel swap agreements to mitigate this exposure. Theagreements hedge all the anticipated fuel requirements of the Group’sships and are transacted to coincide with committed itineraries.Interest rate hedges are used by the Group on a proportion ofthe Group’s bank borrowings to reduce the interest rate risk to anacceptable level.10 ACROMAS HOLDINGS LTD

EmployeesDuring the year the Group companies have maintained the practiceof keeping employees informed about current activities and progressby various methods including regular staff newsletters. Employeeparticipation, involvement and feedback is encouraged through, forexample, the employee survey and group wide suggestion schemes.All UK and Ireland employees employed at the time of the acquisitionof Saga and the AA were given the opportunity to share in the successof the Group by acquiring Company shares through an employeeshare scheme.It is the policy of the Group to continue to develop and promote a safeworking environment and to offer terms and conditions of service toprovide disabled persons, with the appropriate skills and qualifications,equal opportunities to seek and maintain employment with the Group.It is the Group’s policy to retain in employment, whenever practicable,employees who become disabled and give all such employees equalconsideration for training and career development to enable them tofulfil their potential.Environmental mattersThe Group is sensitive to its environmental impact and aims to ensurethat all areas of the business operate in a manner that minimises anynegative impact, such as waste sent to landfill, and invests in activitieswhich have a positive impact on the environment, such as improvedenergy efficiency.During the year, the AA diverted 76% of waste from landfill (up from62% last year), whilst Saga diverted 73% (up from 46%).AA Road Operations are certified to ISO14001 (environmentalaccreditation) and AA patrols are trained in eco driving techniques,and AA patrol vehicles are automatically monitored for use of fueland excessive idling. In London, AA patrols operate electric vans andscooters, whilst staff can recharge their electric vehicles at chargingpoints at the AA’s offices in Basingstoke and Oldbury and at Saga’shead office in Folkestone.A voltage reduction system has been successfully installed in ourheadquarters building and is planned for other sites in the comingyear. Motion sensors have been placed in lobbies and stairwells sothat office lights are only on when needed and LED technology, whichreduces lighting energy use by 80% compared to low-energy lightbulbs, is being introduced on a rolling replacement basis.The special care and planting within the parkland and grounds in whichour offices are situated supports a variety of wildlife and we promotepublic access to these spaces. This year we set aside nearly an acreof ground for the creation of a Jubilee Wood in conjunction with theWoodland Trust as part of the celebrations for Her Majesty’s DiamondJubilee.Social and community mattersThe Directors are committed to the Group being a good corporatecitizen. During the year the Group made an overall contribution(including donations in kind and staff time) to various charitable andnon-profit making organisations totalling £336,000 (2012 - £715,000).No political donations were made.Statement of Directors’responsibilitiesThe Directors are responsible for preparing the Directors’ Reportand the financial statements in accordance with applicable laws andregulations.Company law requires the Directors to prepare financial statementsfor each financial year. Under the law the Directors have elected toprepare the financial statements in accordance with United KingdomGenerally Accepted Accounting Practice (United Kingdom AccountingStandards and applicable laws). Under company law the Directors mustnot approve the financial statements unless they are satisfied thatthey give a true and fair view of the state of affairs of the Companyand Group and the profit or loss of the Company and Group for thatperiod.In preparing these financial statements, the Directors are required to:• select suitable accounting policies and then apply them consistently;• make judgements and accounting estimates that are reasonable andprudent;• state whether applicable UK Accounting Standards have beenfollowed, subject to any material departures disclosed and explainedin the financial statements;• prepare the financial statements on the going concern basis unlessit is inappropriate to presume that the Company, or the Group, willcontinue in business.The Directors are responsible for keeping adequate accounting recordsthat are sufficient to show and explain the Company’s transactions anddisclose with reasonable accuracy at any time the financial position ofthe Company, and enable them to ensure that the financial statementscomply with the Companies Act 2006. They are also responsible forsafeguarding the assets of the Company and the Group and hence fortaking reasonable steps for the prevention and detection of fraud andother irregularities.It is the Group’s policy to maintain indemnity insurance for Directorsand officers.ACROMAS HOLDINGS LTD11

Disclosure of informationto the auditorsEach current Director has made enquiries of their fellow Directors andthe Group’s auditor and taken all the steps that they are obliged totake as a Director in order to make themselves aware of any relevantaudit information and to establish that the auditor is aware of thatinformation.Relevant audit information is that information needed by the auditorin connection with preparing the report. So far as each Directorapproving this report is aware, and based on the above steps, there isno relevant audit information of which the auditor is unaware.Post year-end refinancingOn 2 July 2013, the Group entered into a series of transactions toreplace part of its existing bank debt with alternative funding and toextend the terms on the remaining facility.In order to facilitate this, new financing of £3,055.0 million hasbeen raised from a Whole Business Securitisation (‘WBS’) of the AAcomprising £1,775.0 million of bank debt, £625.0 million of Class ‘A’Bonds and £655.0 million of Class ‘B’ Bonds. The Class ‘A’ and Class‘B’ bonds are listed on the Irish Global Exchange Market with theClass ‘A’ bonds carrying a BBB- rating from Standard and Poor’s.The funds generated from the new financing, together with£579.0 million of cash held by the Group and available for this purpose,were used to repay the most expensive existing Senior and Mezzaninedebt with £1,545.0 million of Senior debt remaining and due to berepaid in September 2017.Further to these transactions, the Group’s debt liabilities have beenreduced from £5,064.7 million at 31 January 2013 to £4,600.0 million,with the first repayment due on 30 September 2017.Going concernThe Group’s business activities, together with the factors likely to affectits future development, its performance, position, risk managementobjectives, details of its financial instruments and derivative activities,and its exposure to legislative, operational, market, brand, credit andliquidity risk are described in the business review on pages 2 to 10.The Group has access to considerable cash and other financialresources together with a large renewing income stream frominsurance and membership contracts with its customers, and longtermcontracts with a number of suppliers across different industries.As a consequence, the Directors believe that the Group is well placedto manage its business risks successfully in the current economicenvironment.The Group has net liabilities at the year end. The Directors haveconsidered this together with projected cash flows for a period of oneyear from the date of signing of these financial statements and thematurity of debt detailed in note 22 and updated for the refinancingdetailed above and in note 31 and have concluded that the Grouphas sufficient funds to continue trading for this period, and theforeseeable future. Therefore, the financial statements have beenprepared using the going concern basis.auditorsIn accordance with section 487(2) of the Companies Act 2006, theAuditors Ernst & Young LLP are deemed re-appointed.By order of the BoardA P StringerSecretary4 July 201312 ACROMAS HOLDINGS LTD

Consolidated statement of total recognised gains and lossesfor the year ended 31 January 2013Note 2013 2012£’m£’mLoss for the financial year (634.1) (565.6)Actuarial losses recognised on defined benefit pension schemes 11(j) (34.4) (59.6)Movement on deferred tax relating to defined benefit pension schemes 11(j) 7.0 14.3Exchange differences arising on the translation of net assets of overseas subsidiary companies 28 (0.5) 1.6Unrealised losses on financial investments offset against revaluation reserve 28 (0.8) (1.3)Total recognised gains and losses relating to the year (662.8) (610.6)Reconciliation of movements in consolidatedshareholders’ deficit2013 2012£’m£’mTotal recognised gains and losses relating to the year (662.8) (610.6)Net movement in shareholders’ deficit (662.8) (610.6)Shareholders’ deficit brought forward (2,761.0) (2,150.4)Shareholders’ deficit carried forward (3,423.8) (2,761.0)The notes on pages 21 to 56 form an integral part of these financial statements.16 ACROMAS HOLDINGS LTD

Consolidated cash flow statementfor the year ended 31 January 2013 (continued)Note 2013 2012£’m£’mReconciliation of net cash flows to movement in net debtIncrease/(decrease) in cash 166.1 (83.2)Repayment of long-term bank loans - 24.2Repayment of capital element of finance lease agreements 13.9 19.8Maturity of fixed interest securities (28.3) (18.4)Purchase of fixed interest securities 19.8 -Increase in other deposits 97.4 114.7Change in net debt resulting from cash flows 268.9 57.1New finance lease agreements (9.9) (21.7)Loans acquired with subsidiary - (24.2)Interest accrued on bank loans (43.7) (41.6)Amortisation of issue costs of long-term loans (11.9) (5.7)Interest accrued on subordinated preference certificates (490.1) (420.7)Exchange differences (0.5) 1.6Net realised losses on fixed interest securities (0.2) (0.2)Net unrealised losses on fixed interest securities (0.8) (1.3)Movement in net debt (288.2) (456.7)Opening net debt (7,080.7) (6,624.0)Closing net debt 30 (7,368.9) (7,080.7)Note 2013£’m2012£’mAnalysis of Closing net debtNet bank and other borrowings (3,908.4) (4,110.3)Shareholder loans (3,460.5) (2,970.4)Closing net debt 30 (7,368.9) (7,080.7)The notes on pages 21 to 56 form an integral part of these financial statements.ACROMAS HOLDINGS LTD19

Company balance sheet as at 31 January 20132013 2012Note £’m £’mFixed assetsInvestment in subsidiaries 15(b) 0.9 0.90.9 0.9Current assetsDebtors 17 0.2 0.20.2 0.2Creditors - amounts falling due within one year 21 (0.1) (0.1)Net current assets 0.1 0.1Total assets less current liabilities 1.0 1.0Capital and reservesCalled up share capital 27 1.0 1.0Shareholders’ funds 1.0 1.0Signed for and on behalf of the Board byJ A GoodsellS M HowardDirectors4 July 2013The notes on pages 21 to 56 form an integral part of these financial statements.20 ACROMAS HOLDINGS LTD

Notes to the financial statements1. Accounting policiesa) Accounting conventionThe financial statements are prepared under the historical cost convention and in accordance with applicable accounting standards as definedin the Companies Act 2006 s.464.The Group has net liabilities at the year end. The Directors have considered this together with projected cash flows for a period of one year fromthe date of signing of these financial statements and the maturity of debt detailed in note 22 and updated for the refinancing detailed innote 31 and have concluded that the Group has sufficient funds, including access to borrowing facilities, to continue trading for this period,and the foreseeable future. Therefore, the financial statements have been prepared using the going concern basis.The nature of the Group’s operations mean that for management’s decision making and internal performance management the key performancemetric is Earnings before interest, tax, depreciation and amortisation (EBITDA) excluding exceptional items (referred to as Trading EBITDA).A reconciliation between Group Operating Profit and Trading EBITDA is included as an additional proforma primary statement on page 15.b) Basis of consolidationThe consolidated financial statements incorporate the financial statements of the Company and each of its subsidiaries. The results ofundertakings acquired or disposed of in the year are included in the consolidated profit and loss account from the date of acquisition or upto the date of disposal.A joint venture is an undertaking in which the Group has a long-term interest and shares control with one or more co-venturers undera contractual arrangement. In the consolidated financial statements, joint ventures are accounted for using the gross equity method.An associate is an undertaking in which the Group has a long-term equity interest and over which it exercises significant influence.In the consolidated financial statements, associates are accounted for using the equity method.Certain of the Group’s activities are conducted through joint arrangements and are included in the consolidated financial statements inproportion to the group’s interest in the income, expenses, assets and liabilities of these joint arrangements.In the parent company financial statements investments in subsidiaries are accounted for at the lower of cost and net realisable value.c) Use of estimatesAll estimates are based on management’s knowledge of current facts and circumstances, assumptions based on that knowledge and theirpredictions of future events and actions. Actual results may differ from those estimates.The list below sets out those items management considers particularly susceptible to changes in estimates and assumptions, and the relevantaccounting policy.• Deferred tax (note 1(i))• Pension benefits (note 1(k))• Goodwill (note 1(n))• Insurance technical provisions (note 1(q))• Provisions for liabilities (note 1(s))ACROMAS HOLDINGS LTD21

Notes to the financial statements (continued)1. Accounting policies (continued)d) Revenue recognitionTurnover represents amounts receivable for goods and services provided, excluding value added tax, insurance premium tax, trade discounts andintra-group transactions.Commission income from third party insurers is recognised at the commencement of the period of risk. Additional commission from theseinsurers may be earned dependent upon the underwriting results of the business insured. This income is recognised when the results of thisbusiness can be determined reasonably.Roadside membership subscriptions and premiums receivable on other insurance products are apportioned on a time basis over the period wherethe Group is liable for risk cover. The unrecognised element of subscriptions and premiums receivable, relating to future periods, is held withincreditors as deferred income and insurance technical provisions respectively.Earned insurance premiums relate to business incepted during the year less an allowance for cancellations, excluding taxes and duties levied.These premiums are recognised as income over the period of the policy on a time apportioned basis, having regard to the incidence of risk. Theunearned premium reserve is therefore calculated on a daily pro-rata basis, or with regard to the incidence of risk, and included within insurancetechnical provisions on the balance sheet. Claims incurred include reported and unreported losses occurring during the year, related handlingcosts and any adjustments to claims outstanding from previous periods. Provision is made for any deficiencies arising when unearned premiumsare insufficient to meet expected claims and expenses after taking into account future investment return.Turnover from tour operations (passenger revenue) is recognised upon departure date with the exception of cruises where the cruise ship isoperated by the Group, where passenger revenue is recognised on a daily basis.Income received in advance relating to long term commercial agreements is recognised when the Group has performed its contractualobligations.Income from credit provided to customers is recognised over the period of the loan in proportion to the outstanding loan balance.Interest and investment income is recognised as interest accrues.For all other revenue, income is recognised at point of delivery of goods or on provision of service. This includes work which has not yet beenfully invoiced, provided that it is considered to be fully recoverable.e) Tangible fixed assetsTangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Such costs include costs directlyattributable to making the asset capable of operating as intended. The cost of fixed assets less their expected residual value is depreciated byequal instalments over their useful economic lives. These lives are as follows:Buildings, properties and related fixtures:BuildingsRelated fittingsLeasehold propertiesCruise shipsComputersPlant, vehicles and other equipment50 years3 - 20 yearsover the period of the lease2 - 13 years3 years3 - 10 yearsCosts relating to cruise-ship mandatory dry-dockings are capitalised and depreciated over the period up to the next dry-dock where appropriate.The carrying value of tangible fixed assets is reviewed for impairment when events or changes in circumstances indicate the carrying value maynot be recoverable.22 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)1. Accounting policies (continued)f) Leased assets and hire purchase commitmentsAssets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to theGroup, and hire purchase contracts are capitalised in the balance sheet and are depreciated over the shorter of the lease term and the asset’suseful life. The capital elements of future obligations under leases and hire purchase contracts are included as liabilities in the balance sheet.The interest elements of the rental obligations are charged in the profit and loss account over the period of each lease and hire purchasecontract and represent a constant proportion of the balance of capital repayments outstanding.Rentals payable and receivable under operating leases are charged, or credited, to the profit and loss account on a straight line basis overthe lease term.Incentives received in connection with entering into operating leases are recognised on a straight line basis over the period of the lease.g) StocksStocks are stated at the lower of cost and net realisable value. Costs include all costs incurred in bringing each product to its present location andcondition. Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal.h) Advance receiptsAll booking fees and balance payments for holidays with starting dates after the year end and insurance premiums received which relate toinsurance policies incepting after the year end, are treated as receipts in advance at the balance sheet date and are separately disclosed withincreditors.i) Deferred taxDeferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactionsor events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more, tax. Deferred tax ismeasured on a non-discounted basis at the tax rates that are expected to apply in the years in which timing differences reverse, based ontax rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that theDirectors consider it is more likely than not that there will be suitable taxable profits from which the underlying timing differences can bededucted.j) Foreign currenciesTransactions in foreign currencies are recorded at the rate ruling at the date of the transaction or at the contracted rate if the transaction iscovered by a forward foreign currency contract. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate ofexchange ruling at the balance sheet date or if appropriate at the forward contract rate. All differences are taken to the profit and loss account.The financial statements of overseas subsidiaries have been translated using the net investment method. Under the net investment methodthe balance sheets have been translated at year end rates and the profit and loss accounts at weighted average rates for the year. Resultanttranslation differences are taken to reserves.ACROMAS HOLDINGS LTD23

Notes to the financial statements (continued)1. Accounting policies (continued)k) Pension benefitsFor defined benefit schemes, the amounts charged to operating profit are the current costs and gains and losses on settlements andcurtailments. They are included as part of staff costs. Past service costs are recognised immediately in the profit and loss account if the benefitshave vested. If the benefits have not vested immediately, the costs are recognised on a straight line basis over the period until vesting occurs.The expected return on the scheme’s assets and the increase during the period in the present value of the scheme’s liabilities arising from thepassage of time are included in interest payable. Actuarial gains and losses are recognised immediately in the statement of total recognised gainsand losses.Defined benefit schemes (with the exception of the APMP scheme) are funded, with assets of the schemes held separately from those of theGroup, in separate trustee administered funds. Defined benefit pension scheme assets are measured using market values. Defined benefitpension scheme liabilities are measured using the projected unit actuarial method and are discounted at the current rate of return on a highquality corporate bond of equivalent term and currency to the liability. The actuarial valuations are obtained at least triennially and are updated ateach balance sheet date. The resulting defined benefit asset or liability, net of related deferred tax, is presented separately after other netassets/liabilities on the face of the balance sheet. The value of a net pension benefit asset is restricted to the amount that may be recoveredeither through reduced contributions or agreed refunds from the scheme.For defined contribution schemes, the amounts charged to the profit and loss account are the contributions payable in the year.l) Government grantsGovernment grants are credited to a deferred income account and are released to the profit and loss account when earned or, in respect ofcapital expenditure, over the expected useful lives of the relevant assets by equal annual instalments.m) Liquid resourcesIncluded within the cash flow statement as liquid resources are cash deposits, other than those held overnight or in call accounts.n) GoodwillGoodwill is the difference between the fair value of the consideration paid for an acquired entity and the aggregate of the fair values of thatentity’s separately identifiable assets and liabilities. Positive goodwill is capitalised, classified as an asset on the balance sheet and amortised on astraight line basis over its useful economic life, through the profit and loss account. The useful economic life of goodwill has been estimated tobe 20 years. The Directors review the appropriateness of this useful life at the end of each year and revise it if necessary.Additionally, the Directors review goodwill for impairment at the end of the first full financial year following the acquisition and at other timesshould events indicate that the carrying values may not be recoverable.o) Derivative instrumentsThe Group uses forward foreign currency contracts to manage its exposure to adverse movements in foreign exchange rates. The Group usesinterest rate hedges to reduce its interest rate exposure. The Group considers its derivative instruments qualify for hedge accounting whencertain criteria are met.The criteria for forward foreign currency contracts are:• The instrument must relate to a future foreign currency commitment;• It must be denominated in the same currency as the hedged item; and• It must reduce the risk of losses arising from adverse foreign currency exchange movements on the Group’s operations.The rates under such contracts are used to record the hedged item. As a result, gains and losses are offset against the foreign exchange gainsand losses on the related financial assets and liabilities, or where the instrument is used to hedge a future transaction are recognised when thetransaction occurs.The criteria for interest hedges is that the instrument must be related to an asset or a liability; and it must change the character of the interestrate by converting a variable rate to a fixed rate or vice versa. Interest differentials are recognised by accruing with net interest payable.The Group is exposed to the market price of fuel relating to the consumption of fuel by the Group’s cruise ships and recovery vehicles. The Groupuses fuel swap agreements, and occasionally caps, to mitigate this exposure, and these agreements are transacted to coincide with committeditineraries. The cost of fuel purchases is recorded at the hedged rate with any profit or loss from mismatches recognised as incurred.24 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)1. Accounting policies (continued)p) Acquisition costsAcquisition costs comprise those expenses relating to the conclusion of insurance contracts. Those acquisition costs relating to the unexpiredperiod of risk of contracts in force at the balance sheet date are carried forward from one accounting period to the next. The bulk of these costsrelate to product-specific advertising expenditure and overheads relating to the underwriting and call centre departments.q) Insurance technical provisionsThe provision for outstanding claims is set on an individual claim basis and is based on the ultimate cost of all claims notified but not settledless amounts already paid by the balance sheet date, together with a provision for related claims handling costs. The provision also includes theestimated cost of claims incurred but not reported at the balance sheet date, which is set using statistical methods. Claims estimates represent apoint within a range of possible outcomes. Further details of estimation techniques are given in note 25.The amount of any anticipated reinsurance, salvage or subrogation recoveries are separately identified and reported within debtors and insurancetechnical provisions respectively.Differences between the provisions at the balance sheet date and settlements and provisions in the following year (known as ‘run off deviations’)are recognised in the profit and loss account for that year.A provision for unexpired risks is maintained, when required, to cover the estimated excess of net liabilities over the associated unearnedpremium reserve after taking future investment return into account. An assessment is made for each grouping of business that is managedtogether such that the offsetting of any surpluses and deficits can only occur within each group.r) Debt instrumentsDebt is initially stated in the balance sheet at the amount of the cash proceeds raised less finance costs incurred directly in connection with theissue of the instrument. After initial recognition debt is increased by the finance cost in respect of the reporting period and reduced by paymentsmade in respect of the debts of the period. Finance and issue costs of debt are allocated over the term of the debt at a constant rate on thecarrying amount.s) Provisions for liabilitiesA provision is recognised when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow ofeconomic benefits will be required to settle the obligation. Provision is made on a discounted basis where the time value of money is expected tobe material.t) InvestmentsOther fixed asset investments are included in the balance sheet at cost, less any provisions for permanent impairment.Fixed interest securities and deposits with credit institutions are accounted for as current asset investments and are stated at their current valueas at the accounting date. Unrealised gains on financial investments are taken to the revaluation reserve. Unrealised losses are offset against thisreserve. Deficits in excess of the revaluation reserve are taken to the profit and loss account.In the Company balance sheet, investments in Group undertakings are stated at the lower of cost and net realisable value.u) Cash settled equity share schemesThe Group operates a long-term incentive plan which allows employees to purchase shares in the Company. The employee’s ability to realise thefair value of their shareholdings is subject to certain vesting conditions being met. Where appropriate, the Company recognises a provision forthe change in fair value of employee shareholdings over the relevant vesting periods, in accordance with the accounting requirements forcash-settled share based payment arrangements.v) Exceptional itemsItems which derive from events or transactions that fall outside of the ordinary activities of the Group and which are material, or if of a similartype are material in aggregate, are treated as exceptional. Exceptional items are charged or credited to the profit and loss account as appropriateand are separately reported on the face of the profit and loss account.ACROMAS HOLDINGS LTD25

Notes to the financial statements (continued)2. TurnoverTurnover comprises sales to third parties, commissions receivable from insurers and earned insurance premiums, all net of value added tax andinsurance premium tax.3. Segmental analysisAll turnover originates in the UK and Republic of Ireland. Turnover by destination is not materially different from turnover by origin.2013 2012Turnover by class of business £’m £’mFinancial Services 771.0 761.5Roadside Services 681.0 676.1Travel 353.3 345.5Care 334.5 221.0Media and other 109.0 109.12,248.8 2,113.2The Group’s key performance metric for decision making and internal performance management of Trading EBITDA analysed by segmentis as follows:2013 2012Trading EBITDA by class of business £’m £’mFinancial Services 292.2 248.7Roadside Services 317.6 303.8Travel 13.9 26.3Care 18.1 16.4Media and other 36.3 34.4Unallocated (57.3) (37.6)620.8 592.02013 2012Operating profit by class of business £’m £’mFinancial Services 289.4 248.0Roadside Services 298.7 288.2Travel (6.9) 5.1Care 18.4 14.5Media and other 21.1 17.8Unallocated (72.8) (53.5)547.9 520.12013 2012Net assets by class of business £’m £’mFinancial Services 825.4 746.7Roadside Services 1,672.1 1,359.5Travel 44.3 56.8Care 97.4 113.6Media and other 96.6 41.1Unallocated (6,159.7) (5,078.6)(3,423.9) (2,760.9)26 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)4. Gross profitThe following analysis shows the elements of the Group’s turnover and cost of sales that relate to insurance underwriting activities.2013 2012Group Turnover £’m £’mInsurance underwriting activities – net earned premiums 305.3 325.0Other activities 1,943.5 1,788.2Group turnover excluding exceptional items 2,248.8 2,113.2Cost of salesInsurance underwriting activities – net claims incurred & handling costs (255.1) (295.4)Other activities (924.6) (824.0)(1,179.7) (1,119.4)Gross profit 1,069.1 993.8The amount disclosed for claims incurred is net of £49.2 million (2012 - £15.4 million) in respect of favourable claims experience on prior year claims.5. Other operating income2013 2012£’m£’mInterest on deposits 18.1 17.218.1 17.2ACROMAS HOLDINGS LTD27

Notes to the financial statements (continued)6. Operating profit2013 2012Operating profit is stated after charging/(crediting): £’m £’mDepreciation of owned tangible fixed assets 61.4 53.5Depreciation of leased tangible fixed assets 17.3 19.6Deferred government grant release (0.1) (0.1)Auditors’ remuneration (note 7) 1.4 1.4Operating lease rentals receivable – cruise ships - (4.4)Operating lease rentals payable – land and buildings 10.7 9.5Operating lease rentals payable – plant and machinery 12.1 12.9Exceptional item – direct costs - 7.2Exceptional item – cruise cancellation 8.6 -Exceptional item – stock write-off - 6.2Total exceptional items (Cost of sales) 8.6 13.4Exceptional item – restructuring costs 34.8 13.0Exceptional item – outsourced IT contract break costs - 0.4Exceptional item – legal settlement 1.3 -Exceptional item – VAT 1.3 -Exceptional item – aborted acquisition 0.5 -Exceptional item – IT system replacement project 0.3 0.1Exceptional item – property provision costs 1.0 -Total exceptional items (Administrative & marketing expenses) 39.2 13.5The cost of sales exceptional items relate to: (a) onerous lease contract costs within the Group’s Media and Other operations; (b) reimbursements,compensation payments and costs (net of insurance claims) relating to the curtailment and cancellation of cruises as a result of refit delays andship engine maintenence issues; and (c) stock write-off within the Group’s Media operations.The administrative & marketing expenses exceptional items relate to: (a) restructuring expenditure costs primarily relating to redundancy costs,professional fees and the re-organising of Group operations; (b) exit penalty costs as a result of serving notice on a long term IT outsourcingcontract; (c) legal settlement and costs in relation to a claim made against the Group’s Care operations; (d) historic German VAT costs withinthe Group’s Travel business; (e) legal and professional costs relating to an aborted acquisition within the Group’s Travel business; (f) IT systemreplacement project costs; and (g) onerous property provision future lease costs in respect of vacant properties, net of expected sub-lettingincome.28 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)7. Auditors remunerationThe remuneration of the auditors is further analysed as follows:2013 2012£’000 £’000Audit of the consolidated financial statements 117 117Audit of the Group’s subsidiaries financial statements 1,307 1,062Audit related assurance services 23 11Tax compliance services 3 10Tax advisory services 23 105Other assurance services 116 53Corporate finance services 1,760 -Total Auditor remuneration 3,349 1,358In addition to the above amounts payable to the principal auditors, fees for audit services of £49,000 (2012 - £31,000) were payable to other firms.8. Interest payable and similar charges2013 2012£’m£’mCash interestBank loans and overdrafts – cash interest 194.5 203.1Finance charges payable under finance lease agreements 4.9 4.6199.4 207.7Non-cash interestBank loans and overdrafts – interest accrued but not due 43.7 46.6Interest on subordinated preference certificates 490.1 420.7Amortisation of issue costs of bank loans 11.9 5.7Unwinding of discount rate on provisions (note 26) 0.9 1.1Other interest payable and finance charges 0.4 0.2547.0 474.3Total interest payable and similar charges 746.4 682.0ACROMAS HOLDINGS LTD29

Notes to the financial statements (continued)9. Directors’ remuneration2013 2012£’000 £’000Aggregate remuneration in respect of qualifying services 2,430 2,3612013 2012Members of defined benefit pension scheme 2 2The amounts paid in respect of the highest paid Director were as follows:2013 2012£’000 £’000Aggregate remuneration in respect of qualifying services 1,557 1,5122013 2012Defined benefit pension scheme: £’000 £’000Accrued pension at end of year 89 8310. Staff costs2013 2012£’m£’mWages and salaries 581.4 488.1Social security costs 46.0 39.6Other pension costs 36.6 37.4664.0 565.1The average monthly number of persons employed under contracts of service during the year was:2013 2012No.No.Financial Services 4,054 3,921Roadside Services 5,941 5,860Travel 2,466 2,624Care 17,201 10,938Media & Other 558 551Central Administration 1,082 1,03631,302 24,930In respect of the acquisitions made during the prior year, employees have been included in the average monthly number from the dateof acquisition only.30 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)11. Pension costs and other post retirement benefitsThe Saga group operates one funded scheme (“Saga scheme”), the Saga Pension Scheme, a defined benefits scheme. The assets of the schemeare held separately from those of the Group in independently administered funds. All members of the Saga scheme accrue benefits on a careeraverage salary basis.The AA group operates two funded schemes (“AA schemes”): the AA Pension Scheme and the AA Ireland Pension Scheme, both of which aredefined benefit schemes. The assets of the schemes are held separately from those of the Group in independently administered funds.New entrants to the AA schemes accrue benefits on a career average salary basis. The AA schemes have final salary sections that are closed tonew entrants but open to future accrual for existing members.Certain AA employees are also members of a closed unfunded Post-retirement Private Medical Plan scheme (“APMP scheme”) which is adefined benefit scheme.The Nestor group operates two funded schemes (“Nestor schemes”): the Nestor Healthcare Group Retirement Benefits Scheme and the HealthcallGroup Limited Pension Scheme, both of which are defined benefit schemes providing benefits based on final salary and are closed to newmembers. The assets of the schemes are held separately from those of the Group in independently administered funds.The Nestor and Allied Healthcare groups also operate several defined contribution schemes with varying rates of employer contribution.In the year, contributions of £0.7 million (2012 - £0.7 million) were paid to defined contribution schemes.Regular employer contributions to the Saga scheme, Nestor schemes and AA schemes in the year to 31 January 2014 are estimated to be£6.6 million, £3.3 million and £26.1 million respectively. Further additional employer contributions will be required if there are any redundanciesor augmentations during the year.The valuations used for FRS17 (Retirement benefits) disclosures have been based on a full assessment of the liabilities of the schemes.The present values of the defined benefit obligation, the related current service cost and any past service costs were measured using theprojected unit credit method.Actuarial gains and losses have been recognised in the year in which they occur through the Statement of Total Recognised Gains and Losses(STRGL).The principal assumptions used by the independent qualified actuaries to calculate the liabilities under FRS17 (Retirement benefits) areset out below:At 31 January 2013 At 31 January 2012SagaschemeNestorschemesAAschemesSagaschemeNestorschemesAAschemesReal rate of increase in salaries 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Real rate of increase of pensions in payment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Real rate of increase of pensions in deferment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Discount rate 4.7% 4.7% 4.7% 4.6% 4.7% 4.6%Inflation assumption 3.4% 3.4% 3.4% 3.0% 3.0% 3.0%Medical premium inflation N/a N/a 7.4% N/a N/a 7.0%Mortality assumptions are set using standard tables based on scheme specific experience where available. Each scheme’s mortality assumptionsare based on standard mortality tables which allow for future mortality improvements. The Saga scheme assumptions are that a member currentlyaged 65 will live on average for a further 24 years if they are male. The AA scheme assumptions are that an active male retiring in normal healthcurrently aged 60 will live on average for a further 27 years. The Nestor scheme assumptions are that an active male retiring in normal healthcurrently aged 65 will live on average for a further 23 years.ACROMAS HOLDINGS LTD31

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(a) The amounts recognised in the balance sheet are as follows:2013£’m2012£’mSaga scheme (note 11(b)) - 0.7Defined benefit pension assets - 0.7Nestor schemes (note 11(b)) (9.7) (6.8)AA schemes (note 11(b)) (93.3) (71.7)APMP scheme (note 11(b)) (42.8) (40.9)Defined benefit pension liabilities (145.8) (119.4)Net defined benefit pension liabilities (note 11(b)) (145.8) (118.7)(b) The amounts recognised in the balance sheet are as follows:As at 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mFair value of scheme assets (note 11(e)) 160.8 44.2 1,535.4 - 1,740.4Present value of defined benefit obligation (note 11(d)) (160.8) (56.8) (1,653.6) (47.5) (1,918.7)Defined benefit scheme liability (note 11(c)) - (12.6) (118.2) (47.5) (178.3)Related deferred tax asset (note 12(e)) - 2.9 24.9 4.7 32.5Liability recognised in balance sheet (note 11(a)) - (9.7) (93.3) (42.8) (145.8)As at 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mFair value of scheme assets (note 11(e)) 146.0 40.6 1,423.4 - 1,610.0Present value of defined benefit obligation (note 11(d)) (145.1) (49.6) (1,516.8) (44.8) (1,756.3)Defined benefit scheme asset/(liability) (note 11(c)) 0.9 (9.0) (93.4) (44.8) (146.3)Related deferred tax (liability)/asset (note 12(e)) (0.2) 2.2 21.7 3.9 27.6Asset/(liability) recognised in balance sheet (note 11(a)) 0.7 (6.8) (71.7) (40.9) (118.7)32 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(c) The amounts recognised in the balance sheet are reconciled as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mOpening defined benefit asset/(liability) 0.9 (9.0) (93.4) (44.8) (146.3)Fair value adjustment to defined benefit liability acquired - (4.1) - - (4.1)Profit and loss expense (note 11(h)) (4.3) 0.3 (23.1) (2.3) (29.4)Contributions by employer (note 11(e)) 6.6 3.3 25.0 1.0 35.9Loss recognised via the STRGL (note 11(j)) (3.2) (3.1) (26.7) (1.4) (34.4)Closing defined benefit liability (note 11(b)) - (12.6) (118.2) (47.5) (178.3)Related deferred tax asset (note 12(e)) - 2.9 24.9 4.7 32.5Liability recognised in balance sheet (note 11(b)) - (9.7) (93.3) (42.8) (145.8)Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mOpening defined benefit asset/(liability) 7.2 - (73.5) (41.1) (107.4)Defined benefit liability acquired - (5.8) - - (5.8)Profit and loss expense (note 11(h)) 6.3 0.3 (14.3) (2.5) (10.2)Contributions by employer (note 11(e)) 7.0 3.3 25.2 1.2 36.7Loss recognised via the STRGL (note 11(j)) (19.6) (6.8) (30.8) (2.4) (59.6)Closing defined benefit asset/(liability) (note 11(b)) 0.9 (9.0) (93.4) (44.8) (146.3)Related deferred tax (liability)/asset (note 12(e)) (0.2) 2.2 21.7 3.9 27.6Asset/(liability) recognised in balance sheet (note 11(b)) 0.7 (6.8) (71.7) (40.9) (118.7)ACROMAS HOLDINGS LTD33

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(d) The changes in the present value of the defined benefit obligation are as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mOpening defined benefit obligation 145.1 49.6 1,516.8 44.8 1,756.3Fair value adjustment to defined benefit obligation acquired - 4.1 - - 4.1Current service cost (note 11(h)) 4.7 0.1 24.6 0.2 29.6Interest cost (note 11(i)) 6.7 2.3 69.3 2.1 80.4Contributions by scheme participants (note 11(e)) 0.1 - 1.5 - 1.6Changes in assumptions underlying the present valueof scheme liabilities (note 11(j))6.5 3.6 78.3 1.4 89.8Net benefits paid out (note 11(e)) (2.3) (2.9) (39.2) (1.0) (45.4)Currency gain - - 2.3 - 2.3Closing defined benefit obligation (note 11(b)) 160.8 56.8 1,653.6 47.5 1,918.7Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mOpening defined benefit obligation 119.2 - 1,342.5 41.1 1,502.8Defined benefit obligation acquired (note 15) - 44.7 - - 44.7Current service cost (note 11(h)) 4.5 0.1 18.7 0.2 23.5Past service cost (note 11(h)) (9.6) - - - (9.6)Interest cost (note 11(i)) 6.9 2.4 75.8 2.3 87.4Contributions by scheme participants (note 11(e)) 0.1 - 1.6 - 1.7Changes in assumptions underlying the presentvalue of scheme liabilities (note 11(j))26.5 4.3 117.2 2.4 150.4Net benefits paid out (note 11(e)) (2.5) (1.9) (37.5) (1.2) (43.1)Currency gain - - (1.5) - (1.5)Closing defined benefit obligation (note 11(b)) 145.1 49.6 1,516.8 44.8 1,756.334 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(e) The changes in the fair value of scheme assets during the year are as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mOpening fair value of scheme assets 146.0 40.6 1,423.4 - 1,610.0Expected return on scheme assets (note 11(g)) 7.1 2.7 70.8 - 80.6Actuarial gains/(losses) on scheme assets (note 11(g)) 3.3 0.5 52.8 - 56.6Contributions by employer (note 11(c)) 6.6 3.3 25.0 1.0 35.9Contributions by scheme participants (note 11(d)) 0.1 - 1.5 - 1.6Net benefits paid out (note 11(d)) (2.3) (2.9) (39.2) (1.0) (45.4)Currency gain - - 1.1 - 1.1Closing fair value of scheme assets (note 11(b)) 160.8 44.2 1,535.4 - 1,740.4Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mOpening fair value of scheme assets 126.4 - 1,269.0 - 1,395.4Fair value of scheme assets acquired (note 15) - 38.9 - - 38.9Expected return on scheme assets (note 11(g)) 8.1 2.8 80.2 - 91.1Actuarial gains/(losses) on scheme assets (note 11(g)) 6.9 (2.5) 85.8 - 90.2Contributions by employer (note 11(c)) 7.0 3.3 25.2 1.2 36.7Contributions by scheme participants (note 11(d)) 0.1 - 1.6 - 1.7Net benefits paid out (note 11(d)) (2.5) (1.9) (37.5) (1.2) (43.1)Currency loss - - (0.9) - (0.9)Closing fair value of scheme assets (note 11(b)) 146.0 40.6 1,423.4 - 1,610.0ACROMAS HOLDINGS LTD35

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(f) The fair value of scheme assets by percentage are as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeEquities 37% 50% 30% -Bonds 52% 43% 43% -Property 10% - 7% -Hedge Funds - - 19% -Other 1% 7% 1% -Total 100% 100% 100% -Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeEquities 35% 53% 34% -Bonds 55% 39% 40% -Property 9% - 8% -Hedge Funds - - 15% -Other 1% 8% 3% -Total 100% 100% 100% -(g) The analysis of the actual return on scheme assets is as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mExpected return on scheme assets (note 11(e)) 7.1 2.7 70.8 - 80.6Actuarial gains on scheme assets (note 11(e)) 3.3 0.5 52.8 - 56.6Actual return on scheme assets 10.4 3.2 123.6 - 137.2Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mExpected return on scheme assets (note 11(e)) 8.1 2.8 80.2 - 91.1Actuarial gains/(losses) on scheme assets (note 11(e)) 6.9 (2.5) 85.8 - 90.2Actual return on scheme assets 15.0 0.3 166.0 - 181.3An expected return is set for each asset class, reflecting a combination of historical performance analysis, the forward looking views of thefinancial markets (as suggested by the yields available) and the views of investment organisations. A single asset return for the schemes’ assetsis then derived as an average of the expected return on each asset class, weighted by the schemes’ actual allocation of that class.36 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(h) The analysis of amounts recognised in the profit and loss account are as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mCurrent service cost (note 11(d)) 4.7 0.1 24.6 0.2 29.6Interest cost (note 11(i)) 6.7 2.3 69.3 2.1 80.4Expected return on scheme assets (note 11(i)) (7.1) (2.7) (70.8) - (80.6)Expense taken in the profit and loss account (note 11(c)) 4.3 (0.3) 23.1 2.3 29.4Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mCurrent service cost (note 11(d)) 4.5 0.1 18.7 0.2 23.5Past service cost (note 11(d)) (9.6) - - - (9.6)(5.1) 0.1 18.7 0.2 13.9Interest cost (note 11(i)) 6.9 2.4 75.8 2.3 87.4Expected return on scheme assets (note 11(i)) (8.1) (2.8) (80.2) - (91.1)Expense taken in the profit and loss account (note 11(c)) (6.3) (0.3) 14.3 2.5 10.2(i) The analysis of net finance return on pension schemes recognised in the profit and loss account are as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mInterest cost (note 11(d) and note 11(h)) 6.7 2.3 69.3 2.1 80.4Expected return on scheme assets (note 11(h)) (7.1) (2.7) (70.8) - (80.6)Net finance (return)/cost recognised (0.4) (0.4) (1.5) 2.1 (0.2)Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mInterest cost (note 11(d) and note 11(h)) 6.9 2.4 75.8 2.3 87.4Expected return on scheme assets (note 11(h)) (8.1) (2.8) (80.2) - (91.1)Net finance (return)/cost recognised (1.2) (0.4) (4.4) 2.3 (3.7)ACROMAS HOLDINGS LTD37

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(j) The analysis of amounts recognised in the STRGL are as follows:Year to 31 January 2013SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mActuarial gains on scheme assets (note 11(g)) 3.3 0.5 52.8 - 56.6Net currency loss - - (1.2) - (1.2)Changes in assumptions underlying the present valueof scheme liabilities (note 11(d))(6.5) (3.6) (78.3) (1.4) (89.8)Scheme loss recognised via the STRGL (note 11 (c)) (3.2) (3.1) (26.7) (1.4) (34.4)Movement in deferred tax (note 12(e)) 0.7 0.7 5.3 0.3 7.0Total loss recognised in the STRGL (2.5) (2.4) (21.4) (1.1) (27.4)Year to 31 January 2012SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mActuarial gains/(losses) on scheme assets (note 11(g)) 6.9 (2.5) 85.8 - 90.2Net currency gain - - 0.6 - 0.6Changes in assumptions underlying the present valueof scheme liabilities (note 11(d))(26.5) (4.3) (117.2) (2.4) (150.4)Scheme loss recognised via the STRGL (note 11 (c)) (19.6) (6.8) (30.8) (2.4) (59.6)Movement in deferred tax (note 12(e)) 4.9 1.7 7.1 0.6 14.3Total loss recognised in the STRGL (14.7) (5.1) (23.7) (1.8) (45.3)SagaschemeNestorschemesAAschemesAPMPschemeTotal£’m£’m£’m£’m£’mCumulative scheme losses recognised in the STRGL (44.8) (9.9) (483.5) (2.7) (540.9)38 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(k) Experience gains and losses five year historySaga scheme2013£’m2012£’m2011£’m2010£’m2009£’mFair value of scheme assets (note 11(e)) 160.8 146.0 126.4 110.4 88.8Present value of defined benefit obligation (note 11(d)) (160.8) (145.1) (119.2) (117.4) (77.3)Defined benefit scheme asset/(liability) - 0.9 7.2 (7.0) 11.5Experience adjustments arising on plan liabilities - (7.1) - (1.7) -Experience adjustments arising on plan assets 3.3 6.9 7.7 11.1 (17.0)Nestor schemes2013£’m2012£’m2011£’m2010£’m2009£’mFair value of scheme assets (note 11(e)) 44.2 40.6 - - -Present value of defined benefit obligation (note 11(d)) (56.8) (49.6) - - -Defined benefit scheme liability (12.6) (9.0) - - -Experience adjustments arising on plan liabilities - 0.2 - - -Experience adjustments arising on plan assets 0.5 (2.5) - - -AA schemes2013£’m2012£’m2011£’m2010£’m2009£’mFair value of scheme assets (note 11(e)) 1,535.4 1,423.4 1,269.0 1,194.5 1,031.2Present value of defined benefit obligation (note 11(d)) (1,653.6) (1,516.8) (1,342.5) (1,395.9) (1,021.9)Defined benefit scheme (liability)/asset (118.2) (93.4) (73.5) (201.4) 9.3Experience adjustments arising on plan liabilities 2.8 (2.9) 17.8 11.4 (0.9)Experience adjustments arising on plan assets 52.8 85.8 12.2 106.9 (281.5)20132012201120102009APMP scheme£’m£’m£’m£’m£’mPresent value of defined benefit obligation (note 11(d)) (47.5) (44.8) (41.1) (44.2) (37.2)Experience adjustments arising on plan liabilities - - - - -ACROMAS HOLDINGS LTD39

Notes to the financial statements (continued)11. Pension costs and other post retirement benefits (continued)(l) The effect of changes in assumed medical cost trend are as follows:Medical costtrend ratesadopted£’mMedical costtrend rates of1% pa lower£’mMedical costtrend rates of1% pa higher£’mActuarial value of APMP liabilities at 31 January 2013 47.5 (5.8) 7.0Total of interest cost and service cost for the year to 31 January 2013 2.3 (0.4) 0.412. Taxation(a) Tax on loss on ordinary activitiesThe tax charge is made up as follows: 2013£’m2012£’mCurrent tax:UK corporation tax at 24.33% (2012 – 26.32%) 50.9 38.5Adjustments relating to prior years 0.7 1.1Foreign tax 0.9 1.4Group current tax 52.5 41.0Deferred tax:Effect of tax rate change on opening balance 4.8 4.9Origination and reversal of timing differences – current year 2.2 13.6Origination and reversal of timing differences – prior years (0.4) 0.2Group deferred tax 6.6 18.7Tax charge on loss on ordinary activities 59.1 59.7(b) Tax included in the Group statement of total recognised gains and lossesThe tax credit is made up as follows:Deferred tax:Effect of actuarial losses recognised on defined benefit schemes (7.0) (14.3)40 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)12. Taxation (continued)(c) Factors affecting the current tax chargeThe tax assessed on the loss on ordinary activities for the year is lower than the standard rate of corporation tax in the year of 24.33%(2012 – 26.32%). The differences are reconciled below:2013£’m2012£’mPre-tax losses at 24.33% (2012 – 26.32%) (139.9) (133.1)Accelerated capital allowances (0.6) (11.3)Permanent differences 122.5 116.9Other timing differences (2.0) (6.4)Lower rate of foreign tax (0.9) (0.9)Utilisation of losses (3.6) (3.8)Non-deductible amortisation of goodwill 76.3 78.2Adjustments relating to prior years 0.7 1.452.5 41.0The tax credit relating to exceptional items amounts to £12.8 million (2012 - £7.1 million credit).The Group’s foreign tax rates are lower than those in the UK primarily because profits earned in AA Ireland Limited are taxed at a rate of 12.5%(2012 – 12.5%).(d) Factors that may affect future tax chargesNo provision has been made for deferred tax on gains recognised on the fair value adjustment on acquired property at 18 September 2007.Such tax would become payable only if the property were sold without it being possible to claim rollover relief. The total unprovided amount is£1.2 million (2012 - £1.2 million). At present, it is not envisaged that any tax will become payable in the foreseeable future.The Finance Act 2012 reduced the main rate of corporation tax from 26% to 24% with effect from 1 April 2012, and further reduced it from24% to 23% with effect from 1 April 2013. As this reduction was substantively enacted on 3 July 2012, the deferred tax balance at 31 January 2013has been stated at 23%.The Chancellor has announced that he intends to further reduce the main rate of Corporation Tax to 21% with effect from 1 April 2014 andto 20% with effect from 1 April 2015. The Directors estimate that the effect of this proposed rate change will reduce the Group’s deferred taxbalance by £6.2 million.Other than this, there are no circumstances foreseen that are expected to materially impact future tax charges.ACROMAS HOLDINGS LTD41

Notes to the financial statements (continued)12. Taxation (continued)(e) Deferred taxGroupThe deferred tax included in the balance sheet is as follows:2013£’m2012£’mIncluded in debtors (note 17) 30.7 34.2Included in net defined benefit pension liability (note 11(b)) 32.5 27.663.2 61.82013£’m2012£’mAt 1 February 61.8 59.8Deferred tax charge in Group profit and loss account (note 12(a)) (6.6) (18.7)Fair value adjustment to deferred tax asset on defined benefit pension liability acquired 1.0 -Deferred tax acquired with subsidiary undertakings - 6.4Amount recognised in the statement of total recognised gains and losses (note 11(j)) 7.0 14.3At 31 January 63.2 61.8The Group has an unrecognised deferred tax asset of £32.2 million (2012: £35.8 million) relating to unutilised tax losses. This asset will berecoverable in the event of suitable profits becoming available.13. Intangible fixed assetsGoodwill2013£’m2012£’mCostAt 1 February 6,443.4 6,199.8Additions (note 15(c)) 5.3 243.6At 31 January 6,448.7 6,443.4AmortisationAt 1 February 1,353.8 1,034.3Charge for the year 322.9 319.5At 31 January 1,676.7 1,353.8Net book amountAt 31 January 4,772.0 5,089.642 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)14. Tangible fixed assetsGroupFreeholdLand &BuildingsShortLeaseholdLand &BuildingsCruiseShipsVehiclesOtherAssetsTotal£’m£’m£’m£’m£’m£’mCostAt 1 February 2012 88.2 22.4 134.4 55.2 214.4 514.6Additions 0.2 0.3 18.3 12.3 37.8 68.9Disposals - - (30.1) (16.9) (10.4) (57.4)Exchange adjustment - - - 0.1 0.4 0.5Reclassification adjustments - (1.0) - 0.1 0.9 -At 31 January 2013 88.4 21.7 122.6 50.8 243.1 526.6DepreciationAt 1 February 2012 8.9 3.7 24.3 15.1 92.1 144.1Provided during the year 3.5 0.6 14.3 15.8 44.5 78.7Disposals - - (15.6) (16.4) (9.9) (41.9)Exchange adjustment - - - - 0.3 0.3Reclassification adjustments - (0.8) - - 0.8 -At 31 January 2013 12.4 3.5 23.0 14.5 127.8 181.2Net book amountsAt 31 January 2013 76.0 18.2 99.6 36.3 115.3 345.4At 31 January 2012 79.3 18.7 110.1 40.1 122.3 370.5Included in Freehold Land and Buildings are amounts in respect of land, with an original cost on acquisition of £6.9 million (2012 - £6.9 million),which have not been depreciated.The net book amount of Vehicles includes £32.2 million (2012 - £37.1 million) held under finance lease agreements. The accumulateddepreciation on these assets is £13.2 million (2012 - £14.3 million).The net book amount of Other Assets includes £3.9 million (2012 - £6.7 million) in respect of plant & machinery held under finance leaseagreements. The accumulated depreciation on these assets is £6.5 million (2012 - £3.7 million).During the year the Group disposed of assets with a net book value of £15.5 million (2012 - £1.6 million). The losses arising on disposal were£5.8 million (2012 - £1.2 million).15. Investmentsa) Group2013£’m2012£’mAssociates 4.3 4.3Other fixed asset investments 1.0 1.0At 31 January 5.3 5.3ACROMAS HOLDINGS LTD43

Notes to the financial statements (continued)15. Investments (continued)b) CompanyInvestment in subsidiary undertakingCost2013£’m2012£’mAt 1 February and 31 January 0.9 0.9The principal operating subsidiary undertakings of Acromas Holdings Limited, all of which are wholly owned except where stated, are listed below.All of the principal subsidiary undertakings of Acromas Holdings Limited are indirectly held by the company, with the exception ofAcromas SPC Co Limited which is directly held.CompanySubsidiary undertakingsCountry ofregistrationNature ofbusinessAcromas SPC Co Limited England Holding companyAcromas Mid Co Limited England Holding companyAcromas Bid Co Limited England Holding companySaga Group Limited England Holding companyAcromas Holidays Limited England Tour OperatingAcromas Shipping Limited England CruisingSaga Services Limited England Financial servicesAcromas Insurance Company Limited Gibraltar Insurance underwritingCHMC Limited (formerly Claimfast Limited) England Motor accident managementSaga Publishing Limited England PublishingAcromas Financial Services Limited England Regulated investment productsNestor Healthcare Group Limited England Holding companyNestor Primecare Services Limited England Primary and social careAllied Healthcare Group Holdings Limited England Holding companyAllied Healthcare Holdings Limited England Holding companyAllied Healthcare Group Limited England Primary and social careAA Mid Co Limited (formerly AA SPC Co Limited) England Holding companyAA Intermediate Co Limited (formerly AA Junior Mezzanine Co Limited) England Holding companyAA Acquisition Co Limited England Holding companyAA Senior Co Limited England Holding companyAA Corporation Limited England Holding companyThe Automobile Association Limited Jersey Roadside servicesAutomobile Association Developments Limited England Roadside & other servicesAutomobile Association Underwriting Services Limited England Roadside & insurance servicesAA Ireland Limited Ireland Roadside & insurance servicesAutomobile Association Insurance Services Limited England Roadside & insurance servicesDriveTech (UK) Limited England Driving ServicesAcromas Reinsurance Company Limited Guernsey Insurance servicesDirect Choice Insurance Services Limited England Insurance services44 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)15. Investments (continued)CompanyCountry ofregistrationNature ofbusinessAssociates (20% interest held)(i)ARC Europe S.A. Belgium Roadside servicesAssociates (22% interest held)(i)A.C.T.A. Assistance S.A. France Roadside servicesA.C.T.A. Assurance S.A. France Roadside & insurance servicesA.C.T.A. S.A. France Roadside services(i) The Group holds these associate undertakings directly with the exception of A.C.T.A. S.A. and A.C.T.A. Assurance S.A., which are both subsidiariesof A.C.T.A. Assistance S.A. There is no difference between percentage holding and percentage voting rights in ordinary shares.c) AcquisitionsOn 25 September 2012 the Group acquired the entire share capital of Peak Performance Limited, a provider of driving services. The considerationfor the transaction (including costs) was £1.7 million, of which £1.3 million was settled in cash at the time and £0.4 million is deferred and willbe settled in the future. Goodwill arising on acquisition was £1.3 million. This acquisition has generated turnover of £0.4 million and createdoperating profits of £0.1 million in the 4 month period ended 31 January 2013.In addition to the above, sundry adjustments relating to acquisitions made in prior periods resulted in an increase in goodwill of £4.0 million,of which a £3.0 million increase related to Nestor Healthcare Group Limited, a £1.1 million increase related to Intelligent Data Systems (UK) Limitedand a £0.1 million decrease related to Allied Healthcare Group Holdings Limited.All of the acquisitions described above have been included in the Group balance sheet at their fair value at the date of acquisition. The fairvalues of all of the above acquisitions were not materially different to book value. The business combinations have all been accounted for usingAcquisition accounting. There were no recognised gains and losses in the post-acquisition period other than those described above.The acquisitions described above result in movements in goodwill of (note 13):2013£’m2012£’mNestor Healthcare Group Limited 3.0 155.0Intelligent Data Systems (UK) Limited 1.1 5.0Allied Healthcare Group Holdings Limited (0.1) 84.4Peak Performance Limited 1.3 -Adjustments relating to previous acquisitions - (0.8)5.3 243.6ACROMAS HOLDINGS LTD45

Notes to the financial statements (continued)16. Stocks2013Group£’m2012Group£’mRaw materials and consumables 2.2 2.3Work in progress 0.1 1.2Finished goods 9.5 7.111.8 10.617. Debtors2013Group£’m2012Group£’m2013Company£’m2012Company£’mTrade debtors 300.3 332.6 - -Amounts owed by Group undertakings - - 0.2 0.2Other debtors 78.5 60.5 - -Deferred acquisition costs 19.8 25.4 - -Prepayments and accrued income 32.1 39.0 - -Other taxes and social security costs 5.3 5.4 - -Deferred tax (note 12(e)) 30.7 34.2 - -466.7 497.1 0.2 0.2Deferred tax comprises an excess of depreciation over capital allowances of £7.8 million (2012 - £10.0 million), short-term differencesof £19.5 million (2012 - £24.2 million) and unrelieved tax losses carried forward of £3.4 million (2012 - £nil).All amounts above are due in less than one year, except for deferred tax.46 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)18. Financial investmentsFixed interest securities2013Group£’m2012Group£’mAt 1 February 78.7 98.6Additions 19.8 -Disposals (28.3) (18.4)Net realised losses (0.2) (0.2)Net unrealised revaluation losses (note 28) (0.8) (1.3)At 31 January 69.2 78.7The majority of the fixed interest securities held have maturity dates in excess of one year. Although these investments could be realised at shortnotice it is anticipated that they will be held until maturity. Financial investments are held by the Group’s insurance subsidiary undertakings andare not readily available to be used for other purposes within the Group.19. Cash on deposit2013Group£’m2012Group£’mDeposits with financial institutions 1,069.4 819.11,069.4 819.1Included in cash on deposit above are monies held which are subject to contractual or regulatory restrictions. These amounts include cash heldwithin the Group’s Holiday and Insurance businesses, which are subject to regulatory restrictions, and monies held by the Group’s insuranceintermediary business but owing to underwriters and subject to contractual restrictions. In total these monies amount to £684.1 million(2012 - £663.6 million).Included in cash on deposit above are deposits of £315.8 million (2012 - £324.6 million) having maturity dates in excess of one year.20. Cash at bank and in hand2013Group£’m2012Group£’mCash at bank and in hand 45.0 31.545.0 31.5Cash at bank and in hand includes £21.0 million (2012 - £8.8 million) held by and on behalf of the Group’s Holiday and Insurance businesses whichare subject to contractual or regulatory restrictions. These amounts held are not readily available to be used for other purposes within the Group.ACROMAS HOLDINGS LTD47

Notes to the financial statements (continued)21. Creditors falling due within one year2013Group£’m2012Group£’m2013Company£’m2012Company£’mBank overdraft 7.7 6.9 - -Obligations under finance lease agreements (note 23) 19.2 12.6 - -Advance receipts 298.3 288.0 - -Trade creditors 207.7 250.8 - -Amounts owed to Group undertakings - - 0.1 0.1Corporation tax 19.8 3.1 - -Other taxes and social security costs 34.3 37.5 - -Deferred government grants 0.1 0.1 - -Other creditors 43.1 60.3 - -Accruals and deferred income 140.2 142.0 - -770.4 801.3 0.1 0.122. Creditors falling due after more than one year2013Group£’m2012Group£’mBank loans – senior 4,138.4 4,128.7Bank loans – mezzanine 912.6 866.7Subordinated preference certificates 3,460.5 2,970.4Obligations under finance lease agreements (note 23) 14.1 24.7Deferred government grants 1.9 1.9Other creditors 5.6 6.6Deferred income 0.6 0.98,533.7 7,999.9The senior and mezzanine bank loans fall due for repayment:2013Group£’m2012Group£’mIn two to five years 5,064.7 3,500.0In more than five years - 1,521.05,064.7 5,021.0Less: Deferred issue costs (13.7) (25.6)5,051.0 4,995.4The senior and mezzanine bank loan facilities are secured by a floating charge over the Group’s assets.48 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)22. Creditors falling due after more than one year (continued)The bank loans falling due after more than five years are repayable as follows:2013Group£’m2012Group£’m30 September 2015 1,750.0 1,750.030 September 2016 1,750.0 1,750.031 March 2017 650.0 650.030 September 2017 914.7 871.05,064.7 5,021.0Interest rates on the senior and mezzanine bank loans are on a variable basis linked to LIBOR.On 2 July 2013, the Group repaid a significant part of this bank debt to leave only £1,545.0 million outstanding and raised new alternative financeof £3,055.0 million. Full details of this transaction and the new repayment profile of the financing are detailed in note 31.The subordinated preference certificates fall due for repayment:2013Group£’m2012Group£’mIn more than five years 3,460.5 2,970.4The subordinated preference certificates were issued to equity investors and employees of the Group on 18 September 2007 at a subscriptionprice of £1,524.0 million and are redeemable at par on 18 September 2037. Interest is capitalised and is charged to the profit and loss accountover the term of the instrument at an effective rate of 16.5% per annum. The certificates are unsecured.On 30 January 2013, payment in kind subordinated preference certificates were issued with a nominal value of £285.5 million in settlementof £93.7 million of interest accrued on Tranche A subordinated preference certificates and £191.8 million of interest accrued on Tranche Bsubordinated preference certificates.23. Obligations under finance lease agreementsAmounts payable under finance lease agreements are:2013Group£’m2012Group£’mWithin one year (note 21) 19.2 12.6Within two to five years (note 22) 14.1 24.733.3 37.3ACROMAS HOLDINGS LTD49

Notes to the financial statements (continued)24. Lease commitmentsThe annual commitment under non-cancellable operating leases is as follows:Land and BuildingsPlant and MachineryLeases expiring:2013Group£’m2012Group£’m2013Group£’m2012Group£’mWithin one year 1.4 1.8 3.4 0.8Between two and five years 2.6 3.2 1.8 2.0After five years 4.7 3.1 - -8.7 8.1 5.2 2.825. Insurance technical provisions2013Group£’m2012Group£’mUnearned premium reserve 203.4 226.3Reinsurers’ share of unearned premium reserve (2.5) (2.3)200.9 224.0Outstanding claims provisions 515.0 481.3Reinsurers’ share of outstanding claims provisions (17.5) (13.4)698.4 691.9The ultimate cost of outstanding claims is estimated by using standard actuarial claims projection techniques including the chain ladder andBornhuetter-Ferguson methods. Such methods extrapolate the development of paid and incurred claims, average costs per claim and ultimateclaim numbers for each accident year, based on the observed development of earlier years and expected loss ratios. The main assumptionunderlying these techniques is that past claims development experience can be used to project ultimate claims costs.Judgement is used to assess the extent to which past trends may not apply to the future, for example to reflect public attitudes to claimingor levels of claim inflation. The approach adopted takes into account, inter alia, the nature and materiality of the business and the type of dataavailable. Case estimates are generally set by skilled claims technicians applying their experience and knowledge to the circumstances of individualclaims. Additional qualitative input, such as allowance for one off occurrences or changes in legislation, policy conditions or portfolio mix, is usedin arriving at the estimated ultimate cost of claims, in order that it represents the most likely outcome, from a range of possible outcomes, takingaccount of all the uncertainties involved.Provisions are calculated allowing for reinsurance recoveries and a separate asset is recorded for the reinsurers’ share havingregard to collectability.Lump sum payments in settlement of bodily injury claims decided by the UK courts are calculated in accordance with the Ogden Tables. TheOgden Tables contain a discount rate that is set by the Lord Chancellor and that is applied when calculating the present value of loss of earningsand ongoing care costs for claims settlement purposes. The Ogden discount rate is currently under review. The outcome of this review may beannounced in due course but it is still not clear whether or by how much the rate will change. A reduction in the Ogden discount rate will increaselump sum payments to UK bodily injury claimants.50 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)26. Provisions for liabilitiesGroupPropertyleases£’mInsurancereturnedpremium£’mRe-structuring£’mOther£’mTotal£’mAt 1 February 2012 37.6 5.8 2.7 5.4 51.5Utilised during the year (5.8) (0.3) (1.9) (1.6) (9.6)Released unutilised during the year (0.7) (4.3) (0.6) (1.6) (7.2)Unwinding of discount rate (note 8) 0.9 - - - 0.9Charge for the year 6.9 0.4 13.5 4.0 24.8Balance at 31 January 2013 38.9 1.6 13.7 6.2 60.4The property lease provision relates to future onerous lease costs of vacant properties for the remaining period of the lease, net of expectedsub-letting income. A significant element of this provision relates to Service Centre sites not transferred to a third party, with the balancerelating to sites acquired with the Care acquisitions in the prior year. These sums are expected to be paid out annually over the next 15 years.The amount expected to be payable in more than one year is £28.1 million. The provision has been calculated on a pre-tax discounted basis.The insurance returned premium provision relates to potential returned premiums, life insurance commission clawbacks and insurance policiesthat cancel post-year end. These items are reviewed and updated annually and reflect commission repayments that the Group’s Financial Servicesbusinesses may have to make as a result of the mid-term cancellation or adjustment of policies. The provision is expected to be payable in lessthan one year.The restructuring provision relates to redundancy and other related costs following the restructuring of continuing and acquired businessesin the current and prior periods. The provision is expected to be payable in less than one year.Other provisions primarily comprise property dilapidations, claims in respect of clinical incidents and fleet insurance at the estimated cost ofsettling all outstanding incidents at the balance sheet date. These items are reviewed and updated annually. The amount expected to be payablein more than one year is £3.3 million.In 2007, the Group established a long-term incentive plan which allows employees to purchase shares in the Company. The employee’s abilityto realise the fair value of their shareholdings is subject to certain vesting conditions being met. The scheme has been in existence for5 years 4 months at the year end and the consideration paid by participating employees equates with the prevailing fair value. In accordancewith FRS 20 “Share based payment” the fair value of these awards has been determined via a multiple of the Group’s earnings.The Company’s policy is to recognise a provision representing the change in fair value of employee shares amortised over the relevant vestingperiods, being the period until the normal retirement age is reached. However, since there has been no change in fair value since the schemewas established no provision has been recognised. Similarly, the charge recognised in the profit and loss account is £nil (2012: £nil).During the year, no additional shares (2012 - 104,168) were issued.ACROMAS HOLDINGS LTD51

Notes to the financial statements (continued)27. Called up share capital2013£2012£Allotted, called up and fully paid42,495,244 “A” ordinary shares of £0.01 each 424,952 424,95242,500,000 “B” ordinary shares of £0.01 each 425,000 425,00014,477,251 “C” ordinary shares of £0.01 each 144,773 144,773994,725 994,725The “A” and “B” ordinary shares are voting shares and identical in terms of rights and entitlements. The “C” ordinary shares carry no right to votein any respect with regard to general meetings of the Company.In the period to 31 January 2008, an employee share trust was established to operate the employee share ownership plan, under which the trustholds shares on behalf of participating employees.28. ReservesRevaluationReserveCurrencyEqualisationAccountProfitand LossAccountTotalGroup£’m£’m£’m£’mAt 1 February 2012 0.5 2.7 (2,765.2) (2,762.0)Retained loss for the year - - (634.1) (634.1)Unrealised losses on financial investments (note 18) (0.8) - - (0.8)Realisation of revaluation losses on financial investments 0.3 - (0.3) -Exchange differences on retranslation of net assets of subsidiary undertakings - (0.5) - (0.5)Actuarial gains and losses recognised on defined benefit pension schemes (note 11(j)) - - (34.4) (34.4)Movement in deferred tax relating to pension assets and liabilities (note 11(j)) - - 7.0 7.0At 31 January 2013 - 2.2 (3,427.0) (3,424.8)52 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)29. Reconciliation of operating profit to net cash flow from operating activities2013£’m2012£’mOperating profit before share of profits from joint arrangement 177.2 171.8Amortisation of goodwill 322.9 319.5Other operating income (18.1) (17.2)Depreciation of tangible fixed assets 78.7 73.1Loss on disposal of fixed assets (5.8) (1.2)Stock (increase)/decrease (1.2) 2.1Debtor decrease 25.5 9.9Provisions increase/(decrease) 8.0 (4.4)Creditors decrease (48.3) (35.1)Advance receipts increase/(decrease) 10.3 (3.9)Deferred government grants released (0.1) (0.1)Insurance technical provisions increase 6.5 95.8Difference between pension charge and cash contributions (6.3) (22.8)Net cash inflow from operating activities 549.3 587.5The cash inflow from operating activities is stated net of cash outflows relating to exceptional items of: (a) restructuring expenditure costsprimarily relating to redundancy costs, professional fees and the re-organising of Group operations of £17.9 million (2012 - £16.9 million);(b) exit penalty costs as a result of serving notice on a long term IT outsourcing contract of £nil (2012 - £0.4 million); (c) legal settlement and costsin relation to a claim made against the Group’s Care operations of £1.3 million (2012 - £nil); (d) reimbursements, compensation and costs (netof insurance claims) relating to the curtailment and cancellation of cruises as a result of refit delays and ship engine maintenence issues of£4.7 million (2012 - £nil); (e) historic German VAT costs within the Group’s Travel business of £0.5 million (2012 - £nil); (f) legal and professional costsrelating to an aborted acquisition within the Group’s Travel business of £0.5 million (2012 - £nil); (g) IT system replacement project costs of£0.1 million (2012 - £0.1 million); (h) onerous property provision future lease costs in respect of vacant properties, net of expected sub-lettingincome of £5.0 million (2012 - £4.6 million); and (i) onerous lease contract costs of £nil (2012 - £6.4 million).ACROMAS HOLDINGS LTD53

Notes to the financial statements (continued)30. Analysis of net debtAt 1 February2012£’mCashFlows£’mExchangeDifferences£’mOtherNon-CashMovements£’mAt 31 January2013£’mCash at bank and in hand 423.3 166.9 (0.5) - 589.7Bank overdrafts (6.9) (0.8) - - (7.7)Cash 416.4 166.1 (0.5) - 582.0Other deposits 427.3 97.4 - - 524.7Current asset investments 78.7 (8.5) - (1.0) 69.2Bank loans (4,995.4) - - (55.6) (5,051.0)Subordinated preference certificates (2,970.4) - - (490.1) (3,460.5)Finance leases (37.3) 13.9 - (9.9) (33.3)(7,080.7) 268.9 (0.5) (556.6) (7,368.9)The other non-cash movements relating to the subordinated preference certificates comprises unpaid interest that has been added to theprincipal amount borrowed. On 30 January 2013, payment in kind subordinated preference certificates were issued with a nominal value of£285.5 million in settlement of £93.7 million of interest accrued on Tranche A subordinated preference certificates and £191.8 million of interestaccrued on Tranche B subordinated preference certificates.The other non-cash movements relating to bank loans comprise unpaid interest that has been added to the principal amount borrowed of£43.7 million, plus amortisation of issue costs of long-term loans of £11.9 million.Analysis of Cash on deposit2013Group£’m2012Group£’mClassified as cash at bank and in hand (see below) 544.7 391.8Classified as other deposits (see above) 524.7 427.31,069.4 819.1Analysis of Cash at bank and in hand2013Group£’m2012Group£’mAs shown on Consolidated balance sheet 45.0 31.5Included within Cash on deposit (see above) 544.7 391.8589.7 423.354 ACROMAS HOLDINGS LTD

Notes to the financial statements (continued)31. Post balance sheet eventOn 2 July 2013, the Group entered into a series of transactions to replace part of its existing bank debt with alternative funding and to extend theterms on the remaining facility.In order to facilitate this, new financing of £3,055.0 million has been raised from a Whole Business Securitisation (‘WBS’) of the AA comprising£1,775.0 million of bank debt, £625.0 million of Class ‘A’ Bonds and £655.0 million of Class ‘B’ Bonds. The Class ‘A’ and Class ‘B’ bonds are listedon the Irish Global Exchange Market with the Class ‘A’ bonds carrying a BBB- rating from Standard and Poor’s.The funds generated from the new financing, together with £579.0 million of cash held by the Group and available for this purpose, were usedto repay the most expensive existing Senior and Mezzanine debt with £1,545.0 million of Senior debt remaining and due to be repaid inSeptember 2017.Further to these transactions, the Group’s debt liabilities have been reduced as follows:31 January2013£’m2 July2013£’m30 September 2015 1,750.0 -30 September 2016 1,750.0 -31 March 2017 650.0 -30 September 2017 914.7 1,545.031 January 2018 - 1,775.0Class ‘A’ Bonds 5 Year - 31 January 2018 - 300.0Class ‘B’ Bonds 6 Year - 31 January 2019 - 655.0Class ‘A’ Bonds 12 Year - 31 January 2025 - 325.05,064.7 4,600.032. Contingent liabilitiesAt 31 January 2013 the Group had secured £67.4 million (2012 - £77.2 million) of financial bonds and other guarantees on its £270.0 million (2012- £270.0 million) revolving credit facility. If these bonds were called, the facility would be treated as drawn and recognised as a liability on theGroup’s balance sheet. The revolving credit facility is secured by a floating charge over the Group’s assets.The Association of British Travel Agents regulates the Group’s UK tour operating business and requires the Group to put in place bonds providedby the Group’s bankers in order to provide customer protection. These bonds are included within the financial bonds described above.33. Capital commitmentsAmounts contracted for but not provided in the financial statements amounted to £1.4 million (2012 - £9.0 million).34. DerivativesThe fair value of the Group’s foreign currency forwards as at 31 January 2013 is an asset of £1,921,000 (2012 - £1,467,000 liability). These forwardcontracts are held to hedge the Group’s exposure to foreign currencies.The fair value of the Group’s fuel swaps as at 31 January 2013 is an asset of £473,000 (2012 - £1,153,000 asset). These swaps are held to hedge theprice risk on fuel.ACROMAS HOLDINGS LTD55

Notes to the financial statements (continued)35. Result for the financial yearThe Directors have taken advantage of the exemption given by the Companies Act 2006 s.408 in not publishing separately a companyprofit and loss account. The Company’s profit for the year was £nil (2012: £nil) and its profit and loss account reserves as at 31 January 2013were £nil (2012: £nil).36. Related party transactionsThe Group is exempt from the requirement to disclose related party transactions with other Group undertakings under FRS8 (Related partydisclosures) which cancel on consolidation. Other transactions with related parties during the year comprised:Amountsoutstanding as atJoint Ventures and AssociatesType of transactionsTransactions2013£’m31 January2013£’mA.C.T.A. S.A. Call handling fees paid 1.9 0.1ARC Europe S.A. Registration fees paid 0.5 0.2Amountsoutstanding as atJoint Ventures and AssociatesType of transactionsTransactions2012£’m31 January2012£’mA.C.T.A. S.A. Call handling fees paid 2.2 -ARC Europe S.A. Registration fees paid 0.5 0.3The value of the subordinated preference certificates, which accrue interest at a rate of 16.5% per annum, held by related partiesas at 31 January 2013 were:CounterpartySubscription AmountPayable at31 January 2013Payable at31 January 2012Funds advised by Charterhouse Capital Partners £642.8 million £1,459. million £1,252.8 millionFunds advised by CVC Capital Partners £357.4 million £811.5 million £696.6 millionFunds advised by Permira Advisers £357.4 million £811.5 million £696.6 millionEmployees and Employee Trust £84.5 million £191.8 million £164.7 million37. Ultimate controlling partyThe Directors consider the ultimate controlling party to be funds advised by Charterhouse Capital Partners, CVC Capital Partners andPermira Advisers acting in concert.56 ACROMAS HOLDINGS LTD