Interim results for the six months ended 31 July

Released : 11 Oct 2024 07:00

RNS Number : 7905H
SAGA PLC
11 October 2024
 

11 October 2024

Saga plc

Interim results for the six months ended 31 July 2024

Strong underlying profit growth, alongside significant deleveraging

Continued momentum across Cruise and Travel, while market conditions impacted Insurance

 

Saga plc (Saga or the Group), the UK's specialist in products and services for people over 50, announces its interim results for the six-month period ended 31 July 2024.

 

Six months ended

31 July 2024

31 July 2023

Change

Underlying Revenue10F

£393.3m

£355.3m

11%

Revenue

£404.8m

£358.1m

13%

Trading EBITDA1

£67.4m

£53.0m

27%

Underlying Profit Before Tax1

£27.2m

£8.0m

240%

Loss before tax

(£104.0m)

(£77.8m)

(34%)

Available Operating Cash Flow1

£54.4m

£85.9m

(37%)

Net Debt1

£614.6m

£657.4m

7%

Leverage ratio

4.6x

7.0x

2.4x

 

1 Refer to the Alternative Performance Measures Glossary for definition and explanation

Mike Hazell, Saga's Group Chief Executive Officer, said:

"Saga made significant progress in the first half of the financial year, with Ocean and River Cruise delivering exceptional growth, while we continued to position the Group for long-term success through the exploration of potential partnership opportunities.

"The Group delivered an Underlying Profit Before Tax2 that increased more than threefold when compared with the same six months in the prior year and we reduced Net Debt2 by £42.8m over the same period. In line with our debt reduction plans, we also repaid our £150.0m senior unsecured bond in May.

"Ocean and River Cruise had an excellent start to the year, with load factors and per diems, across both businesses, well ahead of the same period last year. Travel also continued to grow, delivering a small Underlying Profit Before Tax2 compared with an Underlying Loss Before Tax2 in the first half of the prior year.

"In Insurance, our Underwriting business returned to profit, however, market conditions for Broking remained challenging, particularly for home. While this continues to have a material impact on profitability, and resulted in an impairment of goodwill, we have been taking action to stabilise the business in the short-term and position it for long-term sustainable policy growth.

"As you may have seen from our separate announcement this morning, we are in exclusive negotiations with Ageas for a 20-year affinity partnership for our motor and home Insurance Broking operations and the sale of our Insurance Underwriting business. Our strong brand and 40 years' experience in providing motor and home insurance, combined with Ageas's extensive knowledge of the insurance needs of people over 50 and experience in operating successful affinity partnerships, offers the potential to create a winning partnership and, for us, a capital-light route to growth.

"We continued to make good progress with growing customer engagement, in part through enhancements to our websites, which increased the number of visits in the year to date by more than 20%. At the same time, we took steps to increase the number of customers that we have consent to contact about our range of products and services.

"The future for Saga is exciting, as we deliver our clear strategy, underpinned by the strength of our brand, our people and our data, and move towards a more capital-light model, reducing debt and delivering long-term sustainable value for our stakeholders."

2 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Operational and financial highlights

·      Underlying Revenue21F3 increased 11%, driven by continued strong momentum in our Cruise and Travel businesses and an improved Insurance Underwriting performance, but affected by ongoing challenges in Insurance Broking.

·      Trading EBITDA3 was £67.4m, an increase of 27% when compared with the same period last year.

·      Underlying Profit Before Tax3 of £27.2m increased more than threefold when compared with the £8.0m reported in the prior period.

·      The challenging conditions in Insurance Broking resulted in an impairment of the goodwill allocated to that business of £138.3m. This, together with other small, one-off exceptional items resulted in the Group reporting a loss before tax of £104.0m. This compares with a loss before tax of £77.8m in the prior period, which included a £68.1m impairment of Insurance Broking goodwill.

·      Available Operating Cash Flow3 was £54.4m, 37% behind the prior period. The year-on-year reduction was driven primarily by the one-off beneficial changes in the prior year to our customer deposit arrangements for River Cruise and Travel, where we moved from a 100% trust to a 70% ring-fenced escrow arrangement, alongside lower Insurance Broking Trading EBITDA3 and Underwriting dividends.

·      The Group remains on track to deliver a full year Underlying Profit Before Tax3 that is broadly consistent with the prior year.

3 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Divisional performance

Cruise - Customer demand continues to grow, supporting increased load factors

Ocean Cruise

·      Ocean Cruise reported an Underlying Profit Before Tax4 of £28.0m, more than double the £12.9m in the prior period.

·      Revenue was £121.5m, 17% higher than the same period the year before. We achieved a 90% load factor, which was 7ppts higher than the same period last year, and a per diem of £362, which was 9% higher.

·      As a result, Ocean Cruise Trading EBITDA (Excluding Overheads)4, was £55.8m, or £27.9m per ship, trending well in excess of our £40.0m per ship annualised target.

 

River Cruise

·      River Cruise reported an Underlying Profit Before Tax4 of £2.9m, 93% higher than the same period last year.

·      Revenue was £26.4m, 13% and £3.0m ahead of the prior period, reflecting a load factor of 86% and a per diem of £340, which were 3ppts and 15% ahead respectively.

 

Travel - Material revenue growth drives return to first half profit

·      Our Travel business, for which profitability is typically lower in the first half as a result of seasonality, had a strong start to the year, reporting an Underlying Profit Before Tax4 of £0.3m, compared with an Underlying Loss Before Tax4 of £2.6m for the prior period.

·      On a like-for-like basis, excluding the discontinued Titan third-party river cruises in the prior year, revenue grew 29% and passengers grew 13%. On a reported basis, revenue of £78.9m grew 13%, while the 24.5k passengers was 5% lower than the prior period.

 

Insurance - Profitability in line with guidance

Insurance Broking

·      Insurance Broking earned Underlying Profit Before Tax4 was £12.2m. This was lower than the £23.8m in the same period in the prior year, but in line with guidance as we invested in pricing to improve our competitive position.

·      Conditions continue to be challenging. While inflationary pressures lessened in motor, conditions in home remained further behind in the cycle, placing continued pressure on that product. These factors, when combined, dampened the effect of the pricing action we took.

·      The number of policies sold across all product lines, in the first half of the year, was 0.7m, 13% lower than the prior period. While some of this was expected, given the lower policy numbers coming into the year, it was exacerbated by the competitive environment. We had 1.4m policies in force at 31 July 2024, 13% behind the same point last year.

·      For the first half of the year, for motor and home specifically:

motor policy sales were 12% behind the prior period, with 6% growth in new business being offset by fewer renewals, following price increases introduced in the second half of last year;

home policy sales were 14% behind the prior period as a result of fewer renewals, compounded by reduced competitiveness following the introduction of price increases necessary to mitigate continued net rate inflation;

the £58 margin per policy was slightly ahead of the same period last year; and

customer retention was 76%, 8ppts lower due to increased competition in the market.

·      The Underlying Profit Before Tax4 from our other broking products was £7.0m lower than the prior period, reflecting market-wide net rate inflation in private medical insurance, alongside particularly competitive market conditions in travel insurance.

·      These factors, and their anticipated impact on future cash flows when compared with previous projections, resulted in Insurance Broking goodwill being impaired by £138.3m. At 31 July 2024, £206.4m of Insurance Broking goodwill remained on the statement of financial position.

 

Insurance Underwriting

·      Insurance Underwriting reported an Underlying Profit Before Tax4 of £1.9m. This compares with an Underlying Loss Before Tax4 of £3.6m for the same period in the prior year.

·      Pricing action taken to mitigate lower, but ongoing, motor claims inflation, currently expected to be around 10% for the full year, continued to flow through to the result, with average earned premiums 39% higher than the prior period.

·      The net current year combined operating ratio (COR) was 102%, 23ppts lower than the same period in the prior year and 15ppts lower than the year ended 31 January 2024.

4 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Wider strategic progress

·      Money reported an Underlying Profit Before Tax5 of £0.4m, broadly consistent with the prior period.

·      Following enhancements to our customer-facing websites, we saw increased traffic, with the number of visits in the year to date 21% higher than in the prior period. The number of unique visitors was 10% higher.

·      Our 9.5m strong customer database remains a key focus for us, as the scale of our first party data provides unparalleled reach and insight into our target market. In addition, the 3.8m consented customers on our database at 31 July 2024, which was 16% higher than the same point in the prior year, gives us a unique ability to engage directly with this group.

·      To broaden our customer reach, the Saga Magazine, which was previously only available via subscription, is now available to purchase in selected stores.

·      We are now distributing our new weekly digital newsletters to a combined total of 1.4m unique readers per week. 1.0m readers receive our Travel newsletter, 0.8m our Money newsletter and 0.7m the Magazine newsletter. This form of engagement continues to be popular amongst our customers, with an industry- leading open rate, across all three newsletters, of 38% when combined.

·      We continue to build our brand values into our colleague experience and, following actions taken, colleague engagement, according to our most recent survey, increased to 7.6 out of 10, from 6.6 in December 2023.

5 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Financial position

The Group continues its focus on debt reduction and made good progress in the year to date. In May 2024, we repaid the £150.0m bond through a combination of Available Cash63F resources and a drawdown of £75.0m on the loan facility provided by Roger De Haan.

At 31 July 2024, Net Debt6 was £614.6m, £42.8m lower than 31 July 2023 and £22.6m lower than 31 January 2024. The total leverage ratio improved to 4.6x, compared with 7.0x at 31 July 2023.

We recently concluded discussions with our Revolving Credit Facility (RCF) lenders to extend the facility and provide the Group with greater financial flexibility. As a result, the facility was amended to reflect a new maturity date, extended from 31 May 2025 to 31 March 2026; alongside changes to its leverage test, which used to exclude Ocean Cruise, but will now be conducted on a total Group basis. These discussions also resulted in a reduction in its covenant, from 6.25x to 6.0x, through to maturity. For context, this is comparable with our leverage ratio of 4.6x at the half year end.

The Group held Available Cash6 of £86.3m, in addition to the undrawn £50.0m RCF and remaining undrawn £10.0m of the loan facility provided by Roger De Haan.

6 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Strategy and outlook

The continued momentum in the year to date in Cruise and Travel, alongside a strong pipeline of future bookings, is expected to drive further growth across those businesses for the full year.

The current Ocean Cruise load factor for 2024/25 continues to be strong, at 90%7, with a per diem of £3597. These compare with a load factor of 87%7 and per diem of £3317 at the same time last year. As a result, Ocean Cruise Trading EBITDA (Excluding Overheads)8 is expected to materially exceed our £40.0m per ship annualised target.

The current River Cruise booked load factor of 88%7 and per diem of £3277 are also trending well and ahead of the same point last year by 3ppts and 15% respectively.

In Travel, growth continues, with current booked revenue for the full year of £162.2m7 and 54.4k7 passengers, which compares with £140.3m7 and 50.3k7 in the prior year.

Insurance Broking remained challenging, particularly towards the end of the first half, with inflationary pressures in home, alongside increased competition in motor. These factors resulted in fewer policy sales in the first six months of the year, a trend that is expected to continue for the second half of the year.

Pricing increases in our Insurance Underwriting business, reflecting the impact of ongoing claims inflation, are expected to continue to benefit the financial result, improving both Underlying Profit Before Tax8 and the reported net COR for the full year.

In Money, we continue to develop the business for medium-term growth and introduced a range of new products in the second half of last year, which will take time to generate a material contribution to earnings. We expect Underlying Profit Before Tax8 in the second half of the year to be broadly consistent with the first.

While Insurance continues to navigate challenging market dynamics, the strong start to the year in Cruise and Travel means that the Group remains on track to deliver a full year Underlying Profit Before Tax8 broadly in line with the prior year.

Available Cash8, at 31 January 2025 is expected to be lower than at 31 July 2024, driven by continued repayments on our two Ocean Cruise ship loan facilities, together with lower Trading EBITDA8 from Insurance Broking and the expected unwinding of some of the working capital timing differences in the first half. As a result, Net Debt8 is expected to be slightly higher at 31 January 2025 when compared with 31 July 2024.

Looking beyond the full year, while there is no certainty that the proposed transaction with Ageas will occur, Ageas has the scale, infrastructure and expertise to support a powerful partnership with Saga as we take action to return the Insurance Broking business to policy growth. This potential partnership, alongside continued growth in our Cruise, Travel and Money businesses, would leave us well positioned to continue to broaden the range of products and services we offer our customers, while enhancing long-term value for our stakeholders through continued growth and deleveraging.

7 Current year bookings reflect the position at 6 October 2024, while the prior year refers to the position at 8 October 2023

8 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

END

 

Management will hold a presentation for analysts and investors at 9.30am today. The webcast can be accessed by registering at www.investis-live.com/saga-group/66d06a7726e9bc12006c53e3/nfgmk and a copy of the presentation slides is available at www.corporate.saga.co.uk/investors/results-reports-presentations/.

A separate live presentation for retail investors will be held via the Investor Meet Company platform on 14 October 2024 at 9.30am. The presentation is open to all existing and potential investors. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00am on 11 October 2024, or at any time during the live presentation. Investors can sign up to Investor Meet Company for free and follow Saga plc via www.investormeetcompany.com/saga-plc/register-investor. Investors who already follow Saga plc on the Investor Meet Company platform will automatically be invited.

For further information, please contact:

 

Saga plc

Tel: 07732 093 007

Emily Roalfe, Director of Investor Relations and Treasury          

Email: [email protected]



Headland Consultancy


Susanna Voyle     

Tel: 07980 894 557

Will Smith

Tel: 07872 350 428


Tel: 020 3805 4822


Email: [email protected]

 

                                                                                                                 

Notes to editors

Saga is a specialist in the provision of products and services for people over 50. The Saga brand is one of the most recognised and trusted in the UK. Saga is known for its high level of customer service and its high-quality, award-winning products and services including cruises and holidays, insurance, personal finance and publishing. www.saga.co.uk

 

Chairman's Statement

Saga made significant progress during the first six months of the financial year with the performance of our Cruise and Travel businesses being a particular highlight. Net Debt15F reduced significantly when compared with the same point last year and debt reduction continues to be a key strategic priority for us. Alongside this, we more recently executed amendments to the Group's financing facilities to provide us greater flexibility in the short to medium-term.

We continue to generate exceptionally high customer demand for our ocean and river cruises and expect occupancy levels and revenue to remain strong for the full year. This strong performance and outlook is reinforced by our customer satisfaction surveys, which show that customers are enjoying our ocean and river cruises more and more. Travel growth also continued, with revenue significantly ahead of the same six-month period in the prior year.

The action we took in Insurance Broking, that I spoke about in April, involved us investing in pricing to win more business, however, the competitive market dampened its effectiveness. Alongside this, the home insurance market was challenged by increasing claims inflation and this ultimately impacted the number of policies we sold. However, our Insurance Underwriting business ended the half year period in a much stronger position, following a return to profit.

Our Money team has been hard at work, embedding the new products launched last year that broaden the range of services we offer. Publishing, meanwhile, continues to engage readers with popular weekly newsletters and our award-winning Saga Magazine which is celebrating 40 years of publication this month. Alongside this, we made strong progress with our data strategy, increasing not only our website visitors but also the number of people who have given their consent to be sent more information about our products and services. Our new Magazine website is already achieving visitor numbers in excess of those seen on our previous exceptional.com site.

Of course, none of this would be possible without Saga's excellent people and I am pleased that colleague engagement has recently increased following the actions we took to invest in career growth and to build greater awareness of the Group's strategy. These improvements place us in the best possible position to serve our customers, who remain at the heart of everything we do.

Beyond the work we are already doing, the potential partnership with Ageas represents an exciting opportunity to transform a key area of our Insurance Broking business and fits perfectly with our strategy. Ageas has the right structure and expertise, alongside a deep understanding of motor and home insurance products for people over 50. It would allow us to capitalise on the strengths of both our companies and leave us well-positioned to increase the number of our motor and home insurance customers. Alongside the potential partnership, Ageas would also acquire our Insurance Underwriting business.

Our key priorities in the second half of the year are to continue to grow our core businesses, conclude the discussions with Ageas and further reduce our debt. I look forward to the future as we continue to leverage opportunities to grow our businesses, position Saga for sustainable growth and enhance value for our stakeholders.

Sir Roger De Haan

Non-Executive Chairman

10 October 2024

1 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Group Chief Executive Officer's Strategic Review

Delivering on our ambition

I joined Saga at the end of last year, excited by the opportunity to develop a previously capital-constrained business, with a fantastic brand and loyal customer base into the largest and most-trusted brand for older people in the UK. I am pleased to report that we are making good progress towards this ambition, having continued to grow our successful Cruise and Travel businesses, navigated challenging conditions in Insurance and broadened the reach of our Money business. We achieved all this while continuing to reduce our debt and progressing our partnership ambitions, most notably through our now exclusive negotiations with Ageas for a 20-year affinity partnership and the acquisition of our Insurance Underwriting business.

Continued growth across Cruise and Travel, but challenging Insurance conditions

Customer demand for our Cruise and Travel products remained high in the first six months of the year, with both businesses delivering growth. While Insurance Underwriting performed well, Insurance Broking remained under pressure from cyclical challenges, particularly market-wide inflationary pressure in home and increased pricing competition. Our Money business traded in line with expectations, following the launch of our range of new products last year, and we continued to increase Group-wide customer engagement through our website, consent initiatives, newsletters and the Saga Magazine.

Threefold increase in Underlying Profit Before Tax1

I am very pleased to report that, for the six months ended 31 July 2024, Saga delivered a strong financial performance. Underlying Revenue16F of £393.3m reflected 11% growth when compared with the prior period and revenue, on a statutory basis, of £404.8m, was 13% higher.

The Group reported a threefold increase in Underlying Profit Before Tax1, which was £27.2m for the first half of the current year, compared with £8.0m in the first half of the prior year. This represents continued momentum in Cruise and Travel and improved performance in Insurance Underwriting, partially offset by ongoing challenges in Insurance Broking. On a statutory basis, the loss before tax was £104.0m, reflecting an Insurance Broking goodwill impairment of £138.3m, alongside other small, one-off exceptional items. This compares with a loss before tax of £77.8m for the same period last year, which included a £68.1m impairment to Insurance Broking goodwill.

Alongside underlying earnings growth, we continued to make progress with debt reduction, one of our key strategic priorities. At 31 July 2024, Net Debt1 was £614.6m, 7% or £42.8m lower than the same time last year, and 4% or £22.6m lower than at 31 January 2024. The Group also held Available Cash1 of £86.3m, in addition to the undrawn £50.0m Revolving Credit Facility (RCF) and the remaining undrawn £10.0m of the loan facility provided by Roger De Haan.

1 Refer to the Alternative Performance Measures Glossary for definition and explanation

Our strategy

Our ambition is to become the largest and most-trusted brand for older people in the UK. We aim to achieve this through the delivery of our growth plan, which is focused on the following three priorities:

1.     Maximising our core businesses

2.     Reducing debt through capital-light growth

3.     Growing our customer base and deepening our customer relationships

An update on our progress, during the first six months of the year, in each of these areas is set out below.

1. Maximising our core businesses

We plan to drive our core businesses of Cruise, Travel, Insurance and Money, through business-led growth strategies, supported by our extensive data and Publishing marketing platform.

Cruise

Ocean Cruise had an exceptionally strong start to the year and, for the six months ended 31 July 2024, reported an Underlying Profit Before Tax2 of £28.0m, more than double the £12.9m for the same period in the prior year.

Customer demand remained high, with a load factor (being the proportion of our total capacity that was filled) of 90% and per diem (being the average price charged per customer per day) of £362, reflecting a 7ppt and 9% increase on the 83% and £333 in the prior period. This, in turn, drove 17% growth in revenue, from £103.8m in the prior period, to £121.5m in the current period. In addition, Ocean Cruise Trading EBITDA (Excluding Overheads)2 increased 39%, to £55.8m, and is on track to once again exceed our annualised target of £40.0m per ship.

We continually enhance our Ocean Cruise proposition to ensure that customers receive the best possible experience and, in the year to date, we extended the reach of our VIP chauffeur service from 250 to 300 miles, making our unique boutique cruising experience a more comfortable one to more customers. Furthermore, this will increase again in 2025, with the service being made available nationwide.

At 6 October 2024, Ocean Cruise bookings for the full year were very strong, with a load factor of 90%, which compares with 87% at the same time in the prior year. At the same date, the per diem of £359 was also 8% higher.

River Cruise had a positive start to the year, reporting an Underlying Profit Before Tax2 of £2.9m for the first six months, compared with £1.5m for the same period in 2023/24. Customer demand continued to be strong, as reflected in the load factor, which increased 3ppts to 86%, with the per diem of £340, 15% higher than the £296 reported in the prior period.

Bookings for the full year, at 6 October 2024, continued to be strong, with a load factor of 88%, 3ppts ahead of the 85% at the same time last year. The per diem, at the same date, was also significantly ahead of the prior year, at £327, reflecting 15% growth when compared with the £285 at the same time in the year before.

Turning to next year, we look forward to the arrival of our new River Cruise ship, Spirit of the Moselle, in July 2025, allowing us to offer even more choice to our customers.

Travel

Travel had a very good start to the year and, supported by growing customer demand, reported an Underlying Profit Before Tax27F of £0.3m which compares with an Underlying Loss Before Tax2 of £2.6m in the prior period.

On a like-for-like basis, excluding the revenue and passengers from our discontinued Titan third-party river cruise offering in the prior year, passenger volumes grew 13% and revenue grew 29%, reflecting increased customer demand across our escorted touring and holiday stays products. The reported revenue of £78.9m grew 13%, on a passenger base of 24.5k, which compares with 25.7k in the prior period.

For the full year, booked revenue at 6 October 2024 was £162.2m, reflecting growth of 16% when compared with the £140.3m at the same time last year, from a higher volume of passengers, which increased 8%, to 54.4k, from 50.3k.

Insurance

For the first six months of the year, Insurance Broking reported an earned Underlying Profit Before Tax2 of £12.2m. In line with our previous guidance, this was lower than the £23.8m in the same six-month period in the year before.

As we set out in April, we took action in this half to re-position the business, investing in pricing to enhance our competitive position in order to slow, and in the medium-term, ultimately reverse the decline in policy volumes. The market environment, however, continues to be challenging and while the ongoing inflationary pressures lessened in motor, conditions in home remained further behind in the cycle, placing pressure on that product.

As a result of these conditions, the effectiveness of our pricing action was dampened and policy sales in the first six months of the year across all products, of 0.7m, were 13% lower than the 0.8m in the prior period. While some of this was expected, given the lower number of policies available for renewal following the decline in the prior year, this was exacerbated by the difficult market conditions. These market conditions impacted our combined motor and home customer retention, which was 76% over the period, 8ppts lower than the 84% in the prior period. At 31 July 2024, therefore, the total number of policies in force across all products was 1.4m, 13% lower than at the same point last year. The margin per policy was slightly ahead of the prior period, at £58, compared with £56.

In motor specifically, while our pricing actions showed early encouraging results, market-wide pricing also subsequently reduced, dampening our competitive position and hampering the effectiveness of our actions. As a result, the 0.3m motor policies sold in the first six months of the year were 12% lower than in the same period in the prior year. Within this, we saw an improvement in new business generation, with volumes increasing 6%, however, this was offset by fewer renewals, driven by the absolute number of policies coming into the year, and lower customer retention following the price increases applied last year.

Similarly, for the six months ending 31 July 2024, the number of home insurance policies sold was 0.3m, which was 14% lower than the prior period, arising from fewer renewals, compounded by reduced competitiveness following necessary price increases to mitigate the effect of continued market-wide net rate inflation.

The contribution from our other broking products was also lower in the first six months of the year, reflective of market-wide net rate inflation in private medical insurance and increasingly aggressive market conditions in travel insurance, where additional discounts and increased marketing activity from our competitors is constraining our ability to generate new business.

The Insurance Broking trends observed towards the end of the first half of the year, ultimately resulting in fewer policy sales, are expected to continue for the second half of the year. The anticipated impact of these on future cash flow generation resulted in an impairment to the goodwill allocated to the Insurance Broking business of £138.3m. At 31 July 2024, £206.4m of Insurance Broking goodwill remained on the statement of financial position.

We are focused on continually improving the customer experience and, to do so, have recently launched an additional contact centre in South Africa to complement our UK operations. This move will allow us to efficiently scale our contact centre capacity, as necessary, to better meet customer demand and reduce call wait times.

Significant progress was made during the first half in Insurance Underwriting, as we reported an Underlying Profit Before Tax2 of £1.9m which compares with an Underlying Loss Before Tax28F2 of £3.6m in the prior period. This reflects the benefit from the pricing action taken to mitigate the impact of claims inflation which, in turn, drove a 39% increase in average earned premiums in the year to date.

Reflecting a similar trend, the net current year combined operating ratio (COR) continued to reduce and, for the first six months of the year, was 102%, 23ppts lower when compared with 125% at the same time last year. Looking ahead to the full year, we expect the positive trajectory in both Underlying Profit Before Tax2 and the net COR to continue.

Money

For the first half of the year, Money reported an Underlying Profit Before Tax2 of £0.4m, broadly consistent with the £0.2m in the prior period. While it is still early days, following the launch of our suite of new products in the second half of last year, these are encouragingly trading in line with our expectations.

We are focused on building greater awareness of the products and advice available to support the financial health of our customers through our popular weekly newsletters, which are currently distributed to 800k readers, and free webinars covering topics from estate planning and wills to the housing market.

2 Refer to the Alternative Performance Measures Glossary for definition and explanation

2. Reducing debt through capital-light growth

We aim to deliver capital-light growth across our businesses while reducing debt and, in the first six months of the year, made good progress. At 31 July 2024, Net Debt3 was £614.6m, £42.8m lower than 31 July 2023, and £22.6m lower than at 31 January 2024. While this includes Available Cash3 of £86.3m, the Group also has access to additional liquidity through the undrawn £50.0m RCF and remaining undrawn £10.0m of the loan facility provided by Roger De Haan.

The significant growth in Trading EBITDA3 driven by Cruise and Travel, and the continued reduction in Net Debt3, resulted in the total leverage ratio, at 31 July 2024, reducing to 4.6x, compared with 7.0x in the preceding year.

Significantly, in May 2024, we repaid our £150.0m bond through a combination of Available Cash3 resources and a £75.0m drawdown on the loan facility provided by Roger De Haan. Following this repayment, the capital structure comprised the £250.0m bond maturing in July 2026; the £85.0m loan facility provided by Roger De Haan maturing in April 2026; the combined £375.9m Ocean Cruise ship facilities maturing in June 2031 and September 2032; and the undrawn £50.0m RCF.

To provide the Group with further financial flexibility, we recently concluded discussions with our RCF lenders. As part of this, we agreed an extension to the facility's maturity date, from 31 May 2025 to 31 March 2026; a revised definition for the leverage test, which used to exclude Ocean Cruise but will now be calculated at a Group level; and an associated reduction to the covenant, from 6.25x to 6.0x, until maturity.

3 Refer to the Alternative Performance Measures Glossary for definition and explanation

3. Growing our customer base and deepening our customer relationships

Helped by the analysis of our data, we continue to work towards increasing the number of customers we serve and increasing the frequency and quality of the interactions we have with them.

Often, our customers' first interaction with Saga is through our website and, following significant enhancements made to our Money, Cruise, Travel and Insurance sites, we saw an increase in this type of engagement. In the year to date, the number of visits to our website increased 21% and the number of unique visitors increased by 10%. Supporting this, our new Magazine website is doing exceptionally well and already achieving visitor numbers in excess of those seen on our previous exceptional.com site.

Our 9.5m strong customer database continues to be a key focus for us, as the scale of our first party data provides unparalleled reach and insight into people over 50 in the UK. Within this and at 31 July 2024, we had consent from 3.8m individuals who were willing to hear more about Saga's products and services. This was 16% higher than at the same point in the prior year, giving us the unique capability to engage directly with this group.

Our Publishing business continues to expand its audience, with our weekly newsletters now reaching 1.4m unique readers. They have an industry-leading combined open rate of 38% and we send 1.0m Travel newsletters, 0.8m Money newsletters and 0.7m Magazine newsletters every week. Alongside this, our popular, award-winning magazine, which is celebrating 40 years of publication, has recently been launched in selected stores across the UK.

Recognising that our colleagues are integral to our success, we undertake regular engagement surveys to improve our understanding of how they are feeling and what is important to them. At the time of our latest survey, engagement had increased to 7.6 out of 10, from 6.6 in December 2023. This resulted from an improved focus on investing in our colleagues and their career growth, alongside providing greater visibility and clarity on the Group's strategy.

A strong platform

I would like to acknowledge that the significant progress in the first six months of the year would not have been possible without the continued dedication and hard work of my colleagues, who strive to deliver exceptional experiences for our customers every day. I thank them all for their efforts and for making Saga such a wonderful place to work. I also want to thank our customers, suppliers and investors for their continued support on our journey to become the largest and most-trusted brand for older people in the UK.

The progress made in the year to date represents a significant step forward in our ambitions as we delivered a threefold increase in Underlying Profit Before Tax49F, supported by continued high demand for our Cruise and Travel offerings. This, alongside the potential partnership with Ageas, positions the business for sustainable capital-light growth, with a platform to deliver a material step-change in debt reduction and unlock significant value for shareholders.

Mike Hazell

Group Chief Executive Officer

10 October 2024

4 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Group Chief Financial Officer's Review

The Group reported an Underlying Profit Before Tax110F of £27.2m, compared to £8.0m in the prior period. This reflected a strong performance from our Cruise and Travel businesses, with the challenges in the Insurance market continuing to impact our Insurance Broking business.

Cruise and Travel have seen strong demand in the period, with both passenger numbers and average prices increasing. Ocean Cruise had a particularly strong half, reporting an Underlying Profit Before Tax1 of £28.0m (H1 2023: £12.9m). River Cruise also saw strong demand and reported Underlying Profit Before Tax1 of £2.9m (H1 2023: £1.5m), despite the challenges from the adverse weather seen across Europe. Travel performed well in the first half with Underlying profit before Tax1 of £0.3m (H1 2023: loss of £2.6m), driven by a focus on higher value touring products.

The Group's Insurance Broking business continues to be challenged by high net rate inflation, particularly in home, and a highly competitive marketplace. The Insurance Broking business reported an earned Underlying Profit Before Tax1 of £12.2m (H1 2023: £23.8m), reflecting the impact of the actions taken to increase competitiveness and stabilise policy volumes. Due to the challenging market back drop, these actions had less of an impact and the number of policies in force was down 13.2% to 1,386k.

Despite the challenges in Insurance Broking, our Underwriting business traded well and reported Underlying Profit Before Tax1 of £1.9m (H1 2023: loss £3.6m), reflecting the ongoing earn through of the pricing action taken in prior years and positive development on prior year claims.

The Group reported a loss before tax of £104.0m (H1 2023: loss of £77.8m), that reflects an impairment of Insurance Broking goodwill of £138.3m and net positive exceptional items of £7.1m. The impairment of goodwill was driven by a lower view of cash flows from Insurance Broking, compared with our previous growth projections, reflecting the high claims cost inflation impacts to profitability and policy volumes in the future. The exceptional items primarily relate to onerous contract provisions on three-year fixed-price policies under International Financial Reporting Standard (IFRS) 17.

Reducing debt continues to be a priority for the Group and Net Debt1, at 31 July 2024, was £614.6m, £22.6m lower than the year end, reflecting Ocean Cruise ship debt repayments. During the period, the £150.0m 2024 bond was repaid from a combination of Available Cash1 and drawing £75.0m on the loan facility provided by Roger De Haan, resulting in Available Cash1 reducing to £86.3m by the half year end (31 January 2024: £180.7m).

Available Operating Cash Flow1 reduced to £54.4m (H1 2023: £85.9m), driven by lower cash generation from the unrestricted businesses, and River and Travel businesses, offset by an increase from Ocean Cruise. The reduction in the River and Travel businesses was driven by a one-off benefit in the prior period, after moving from 100% to 70% coverage under the Civil Aviation Authority (CAA) escrow arrangement.

We recently concluded discussions with our Revolving Credit Facility (RCF) lenders to provide the Group with greater financial flexibility. As a result, the following amendments were agreed, in addition to other smaller changes:

·      Extension to the maturity date, from 31 May 2025 to 31 March 2026.

·      Leverage test to now be conducted on a Group basis, so including the Net Debt1 and Trading EBITDA1 in relation to Ocean Cruise.

·      Reduction in the leverage ratio covenant, from 6.25x to 6.0x, until maturity.

The second half of the year is expected to be another strong period for customer demand in Cruise and Travel, supported by the strong forward booked positions in these businesses. The impact of home net rate inflation seen towards the end of the first half is expected to continue to have a significant impact on the Insurance Broking business, with margins and policy volumes under pressure.

As you may have seen, we announced that we are in exclusive negotiations with Ageas for a 20-year affinity partnership for motor and home insurance. If these negotiations are successful, the ambition would be for the partnership to go live by the end of 2025 and, therefore, have no impact on the current year. As a result, we continue to expect Underlying Profit Before Tax1 for 2024/25 to be broadly consistent with that of 2023/24.

1 Refer to the Alternative Performance Measures Glossary for definition and explanation

Operating performance

Group income statement

 

 

£m

Unaudited6m to

July 2024

                 Change

Unaudited6m to

July 2023

 

 

 

 

Underlying Revenue211F

393.3

10.7%

355.3

 

 

 

 

Underlying Profit/(Loss) Before Tax2


 




 


Cruise and Travel

31.2

164.4%

11.8

Insurance Broking (earned)

12.2

(48.7%)

23.8

Insurance Underwriting

1.9

152.8%

(3.6)

Total Insurance

14.1

(30.2%)

20.2

Other Businesses and Central Costs

(5.2)

58.4%

(12.5)

Net finance costs312F3

(12.9)

(12.2%)

(11.5)

Underlying Profit Before Tax2

27.2

240.0%

8.0

Impairment of Insurance Broking goodwill

(138.3)

 

(68.1)

Other exceptional items

7.1


(17.7)

Loss before tax

(104.0)

(33.7%)

(77.8)

Tax (expense)/credit

(2.1)

(130.9%)

6.8

Loss after tax

(106.1)

(49.4%)

(71.0)

 

 

 

 

Earnings/(loss) per share


 


Underlying Earnings Per Share2

17.9p

>500.0%

1.7p

Loss per share

(75.9p)

(49.1%)

(50.9p)

 

The Group's business model is based on providing high-quality and differentiated products to its target demographic, predominantly focused on cruise, travel and insurance. The Cruise and Travel businesses comprise Ocean Cruise, River Cruise and Travel. The Insurance business operates mainly as a broker, sourcing underwriting capacity from selected third-party insurance companies, and, for motor and home, also from the Group's in-house underwriter. Other Businesses include Saga Money, Saga Publishing and CustomerKNECT, a mailing and printing business.

Underlying Revenue2

Underlying Revenue2 increased by 10.7% to £393.3m (H1 2023: £355.3m) mainly due to increased load factors and per diems across our Cruise businesses, alongside a 18.7% increase in average revenue per passenger in our Travel business.

Underlying Profit/(Loss) Before Tax2

The Group generated an Underlying Profit Before Tax2 of £27.2m in the first half of the current year, compared with £8.0m in the first half of the prior year. This is primarily due to a:

·      £19.4m increase in Cruise and Travel, moving to an Underlying Profit Before Tax2 of £31.2m (H1 2023: £11.8m), with £15.1m driven by Ocean Cruise;

·      a return to an Underlying Profit Before Tax2 in Insurance Underwriting of £1.9m (H1 2023: Underlying Loss Before Tax2 of £3.6m); and

·      £7.3m improvement in Other Businesses and Central Costs following the cost reduction programme actioned in the second half of the prior year.

These were partially offset by an £11.6m reduction in Insurance Broking profitability due to difficult trading conditions, particularly within home.

Net finance costs3 in the period were £12.9m (H1 2023: £11.5m), which exclude finance costs that are included within the Cruise and Travel businesses of £8.2m (H1 2023: £9.7m) and Insurance Underwriting business of £1.9m (H1 2023: £6.5m).

 

Loss before tax

The loss before tax for the period, of £104.0m, includes a £138.3m impairment to Insurance Broking goodwill and a net positive of other exceptional items of £7.1m, consisting of:

·      onerous contract provisions net positive of £9.7m on three-year fixed-price policies and on insurance contracts under IFRS 17;

·      fair value gains on debt securities of £2.7m;

·      a £0.3m positive change in discount rate on non-periodical payment order (PPO) insurance liabilities;

·      foreign exchange gains on River Cruise ship leases of £0.5m;

·      restructuring costs of £4.2m;

·      costs associated with the unsecured loan facility provided by Roger De Haan of £1.2m;

·      fair value losses of £0.6m on derivatives; and

·      a negative IFRS 16 adjustment of £0.1m on River Cruise ships.

The loss before tax in the prior period, of £77.8m, includes a £68.1m impairment to Insurance goodwill and a net negative of other exceptional items of £17.7m, comprising:

·      restructuring costs of £5.9m;

·      onerous contract provision net cost of £9.2m on three-year fixed-price policies and on insurance contracts under IFRS 17;

·      fair value losses on debt securities of £4.8m;

·      a £3.1m positive change in discount rate on non-PPO insurance liabilities;

·      arrangement fee on the unsecured loan facility provided by Roger De Haan of £1.0m;

·      a £0.1m acquisition cost on the purchase of The Big Window Consulting Limited;

·      fair value losses of £0.9m on derivatives;

·      foreign exchange gains on River Cruise ship leases of £0.6m; and

·      a positive IFRS 16 adjustment of £0.5m on River Cruise ships.

Tax

The Group's tax expense for the period was £2.1m (H1 2023: £6.8m credit), representing a tax effective rate of 6.1% (H1 2023: 70.1%), excluding the Insurance Broking goodwill impairment charge. In both the current and prior periods, the difference between the Group's tax effective rate and the standard rate of corporation tax was mainly due to the Group's Ocean Cruise business being in the tonnage tax regime.

There was also an adjustment in the current period for the over-provision of prior year tax of £0.3m credit (H1 2023: £1.2m credit). Excluding the impact of the Ocean Cruise business being in the tonnage tax regime, the Insurance goodwill impairment and adjustments to prior year tax, the tax effective rate for the current period is 35.8% (H1 2023: 25.6%).

Earnings/(loss) per share

The Group's Underlying Basic Earnings Per Share213F was 17.9p (H1 2023: 1.7p). The Group's reported basic loss per share was 75.9p (H1 2023: loss of 50.9p).

 

2 Refer to the Alternative Performance Measures Glossary for definition and explanation

3 Net finance costs exclude Cruise, Travel and Insurance Underwriting finance costs and net fair value losses on derivatives

 

Cruise and Travel

 

Unaudited 6m to July 2024

 

Unaudited 6m to July 2023

£m

Ocean

Cruise

River

Cruise

Travel

Total Cruise and Travel

Change

Ocean Cruise

River

Cruise

Travel

Total Cruise

and Travel


 

 

 

 

 

 

 

 

 

Revenue

121.5

26.4

78.9

226.8

15.2%

103.8

23.4

69.7

196.9

 

Gross profit

52.1

7.8

16.5

76.4

35.9%

36.1

6.5

13.6

56.2

Marketing expenses

(6.8)

(2.4)

(5.9)

(15.1)

(2.7%)

(6.5)

(2.8)

(5.4)

(14.7)

Other operating expenses

(9.1)

(2.7)

(10.9)

(22.7)

(12.9%)

(7.0)

(2.2)

(10.9)

(20.1)

Investment return

-

0.2

0.6

0.8

>500.0%

-

-

0.1

0.1

Finance costs

(8.2)

-

-

(8.2)

15.5%

(9.7)

-

-

(9.7)

Underlying Profit/(Loss) Before Tax414F

28.0

2.9

0.3

31.2

164.4%

12.9

1.5

(2.6)

11.8



 








Average revenue per passenger (£)

5,170

3,034

3,220

4,000

19.0%

4,272

2,721

2,712

3,360

Ocean Cruise load factor

90%



90%

7ppt

83%



83%

Ocean Cruise per diem (£)

362



362

8.7%

333



333

River Cruise load factor


86%


86%

3ppt


83%


83%

River Cruise per diem (£)


340


340

14.9%


296


296

Passengers ('000)

23.5

8.7

24.5

56.7

(3.2%)

24.3

8.6

25.7

58.6


Ocean Cruise

The Ocean Cruise business owns two ocean cruise ships, Spirit of Discovery and Spirit of Adventure.

In the first half of the current year, the business achieved a load factor of 90% (H1 2023: 83%) and a per diem of £362 (H1 2023: £333). These two factors, when combined, equated to revenue growth of 17.1% and resulted in a 117.1% increase in profitability, from an Underlying Profit Before Tax4 of £12.9m in the first half of the prior year, to an Underlying Profit Before Tax4 of £28.0m in the first half of the current year.

River Cruise

The River Cruise business has 10-year charters in place for two boutique purpose-built river cruise ships, Spirit of the Rhine and Spirit of the Danube, alongside two other shorter-term charters.

In the first half of the current year, the business achieved a load factor of 86% (H1 2023: 83%) and a per diem of £340 (H1 2023: £296). This resulted in revenue growth of 12.8% and a 93.3% increase in profitability to an Underlying Profit Before Tax4 of £2.9m (H1 2023: £1.5m).

Travel

The Travel business, which includes both the Saga Holidays and Titan brands, generated higher revenue per passenger in the first half of the current year, increasing by 18.7% from £2,712 to £3,220, but saw slightly reduced volumes when compared with the first half of the prior year, with passenger numbers decreasing from 25.7k to 24.5k.

This led to revenue growth of 13.2% and a return to profitability, from an Underlying Loss Before Tax4 of £2.6m in the first half of the prior year, to an Underlying Profit Before Tax4 of £0.3m in the first half of the current year.

On a comparable basis and, therefore, excluding the discontinued Titan third-party river cruise product, which is included in the prior year numbers, revenue grew 28.5% on a passenger base that grew 13.3%.

Forward Cruise and Travel sales

The Ocean Cruise load factor for 2024/25 is ahead of the same point last year for 2023/24 by 3ppts, driven by an improved load factor in the first quarter when compared with the prior year. The per diem for 2024/25 is 8.5% higher than the same point last year, reflecting strong customer demand.

The Ocean Cruise load factor for 2025/26 is in line with the same point in the prior year, despite the season going on sale one week later, with the per diem 7.5% ahead.

The River Cruise load factor and per diem for 2024/25 are also ahead of the same point last year, by 3ppts and 14.7% respectively, reflecting increased customer demand.

Looking ahead to 2025/26, the River Cruise booked load factor is in line with the prior year position, with the per diem 7.4% ahead.

Travel bookings for 2024/25 are ahead of the same point last year by 15.6% and 8.2% for revenue and passengers respectively. The increased revenue is due, in part, to higher passenger numbers, but also higher average selling prices, as a result of enhanced revenue management processes. The increase in passenger numbers is largely due to increased uptake of short-haul travel within our Titan brand and the introduction of new products, alongside Titan tours now being sold to customers in Australia.

Travel bookings for 2025/26 reflect a revenue position that is 5.9% ahead of the same point in the prior year, with passengers 3.8% ahead, following the launch of Titan tours in Australia.

 

 

Current year departures

 

Next year departures

 

6 October

 2024

Change

8 October 2023

 

6  October 2024

Change

8 October

2023

 

 

 

 

 

 

 

 

Ocean Cruise revenue (£m)

228.8

10.0%

208.0


138.4

5.3%

131.4

Ocean Cruise load factor

90%

3ppts

87%


51%

-

51%

Ocean Cruise per diem (£)

359

8.5%

331


388

7.5%

361


 

 

 

 

 

 

 

River Cruise revenue (£m)

49.0

12.9%

43.4


17.6

(6.9%)

18.9

River Cruise load factor

88%

3ppts

85%


29%

-

29%

River Cruise per diem (£)

327

14.7%

285


347

7.4%

323



 






Travel revenue (£m)

162.2

15.6%

140.3


77.1

5.9%

72.8

Travel passengers ('000)

54.4

8.2%

50.3


21.9

3.8%

21.1

 

4 Refer to the Alternative Performance Measures Glossary for definition and explanation


Insurance

Insurance Broking

The Insurance Broking business provides tailored insurance products and services, principally motor, home, private medical and travel insurance. Its role is to price the policies and source the lowest risk price, whether through the panel of motor and home underwriters or through solus arrangements for private medical and travel insurance. The Group's in-house insurer, Acromas Insurance Company Limited (AICL), sits on the motor and home panels and competes for that business with other panel members on equal terms. AICL offers its underwriting capacity on the home panel through a coinsurance deal with a third party, so the Group takes no underwriting risk for that product. Even if underwritten by a third party, the product is presented as a Saga product and the Group manages the customer relationship.


Unaudited 6m to July 2024

 

Unaudited 6m to July 2023


Motor

Home

Other

 

 

Motor

Home

Other


£m

broking

broking

broking

Total

Change

broking

broking

broking

Total

Gross Written Premiums5 (GWP)

 

 

 

 

 

 

 

 

 

Brokered

65.1

81.1

64.8

211.0

0.4%

61.9

78.3

70.0

210.2

Underwritten

88.0

-

1.2

89.2

0.7%

86.9

-

1.7

88.6

GWP

153.1

81.1

66.0

300.2

0.5%

148.8

78.3

71.7

298.8

Broker revenue

4.7

6.7

20.5

31.9

(20.4%)

4.7

12.1

23.3

40.1

Instalment revenue

1.6

1.7

-

3.3

-

1.7

1.6

-

3.3

Add-on revenue

3.8

4.0

-

7.8

(14.3%)

4.2

4.9

-

9.1

Other revenue

14.3

8.6

(2.6)

20.3

-

13.4

8.1

(1.2)

20.3

Written Underlying Revenue5

24.4

21.0

17.9

63.3

(13.0%)

24.0

26.7

22.1

72.8

Written gross profit

21.8

21.0

21.8

64.6

(11.7%)

20.7

26.7

25.8

73.2

Marketing expenses

(4.4)

(2.9)

(3.6)

(10.9)

-

(5.1)

(2.6)

(3.2)

(10.9)

Written Gross Profit After Marketing Expenses5

17.4

18.1

18.2

53.7

(13.8%)

15.6

24.1

22.6

62.3

Other operating expenses

(16.7)

(12.5)

(12.9)

(42.1)

4.5%

(18.3)

(15.5)

(10.3)

(44.1)

Written Underlying Profit/(Loss) Before Tax515F

0.7

5.6

5.3

11.6

(36.3%)

(2.7)

8.6

12.3

18.2

Written to earned adjustment

0.6

-

-

0.6

(89.3%)

5.6

-

-

5.6

Earned Underlying Profit Before Tax5

1.3

5.6

5.3

12.2

(48.7%)

2.9

8.6

12.3

23.8

 





 





Policies in force

649k

564k

173k

1,386k

(13.2%)

754k

634k

208k

1,596k

Policies sold

337k

279k

95k

711k

(13.2%)

385k

323k

111k

819k

Third-party panel share616F

37.6%




(1.3ppt)

38.9%









 





 

Insurance Broking written Underlying Profit Before Tax5, which excludes the impact of the written to earned adjustment deferring the revenue on policies underwritten over the term of the policy, decreased to £11.6m, from £18.2m in the prior period.

A key metric for the Insurance Broking business is Written Gross Profit After Marketing Expenses5, before deducting overheads. This reduced from £62.3m in the first half of the prior year to £53.7m in the first half of the current year, mainly due to lower renewal volumes and margins on home, lower renewal margins on private medical insurance (PMI) and lower new business volumes and margins on travel. This was partially offset by an improvement in motor margins as net rate inflation has slowed. Written Gross Profits After Marketing Expenses5 fell by £6.0m in home and £4.4m in other broking, partially offset by an increase in motor of £1.8m.

For motor and home insurance, in terms of the total Written Gross Profit After Marketing Expenses5, the new business proportion reduced by £0.4m and the renewal proportion by £3.8m.

The reduction in profitability of the home business is attributable to significant inflationary pressure in the net rates charged by panel underwriters, which have increased at a faster pace than the price that can be charged to consumers in a competitive marketplace. This has been accentuated by the fact that a significant number of home policies are on three-year fixed-price deals, which fix the customer price for two renewals. Lower new business volumes in the prior year have also led to a 14% reduction in the level of renewal volumes in the first half of the current year.

The three-year fixed-price product remains significant, with 180k policies sold in the period, compared with 319k policies in the prior year. This represented 29% of total motor and home policies (H1 2023: 45%), with 28% of direct new business customers taking the product (H1 2023: 30%). These policies remain highly attractive to our customer base and, while current profitability has been impacted by high industry inflation, this is a short-term challenge, as all policies will have been repriced by the middle of 2025.

The challenging home environment has been broadly offset by an improvement to the motor environment which has led to the average gross margin per policy for motor and home combined, calculated as Written Gross Profit After Marketing Expenses517F divided by the number of policies sold, increasing to £57.6 in the first half of the current period, compared with £56.1 in the prior period.

In addition, customer retention reduced from 84% to 76%, overall motor and home policies in force decreased 13% when compared with 31 July 2023 and direct new business sales reduced by 3ppts to 43% as the Group rebalanced volumes towards price-comparison website distribution channels.

Written profit and gross margin per policy for motor and home are stated after allowing for deferral of part of the revenues from three-year fixed-price policies, which is then recognised in profit or loss when the option to renew those policies at a predetermined fixed price is exercised or lapses, recognising the inflation risk inherent in these products. At 31 July 2024, £11.6m (H1 2023: £11.1m) of income had been deferred in relation to three-year fixed-price policies, £5.2m (H1 2023: £4.5m) of which related to income written in the period to 31 July 2024.

Motor broking

Gross Written Premiums5 increased 2.9% due to a 17.5% increase in average premiums, partially offset by a 12.5% reduction in core policies sold. Gross Written Premiums5, from business underwritten by AICL, increased 1.3% to £88.0m (H1 2023: £86.9m), due to a 13.7% increase in average premiums, offset by a 11.0% decrease in core policies sold.

Written Gross Profit After Marketing Expenses5 was £17.4m (H1 2023: £15.6m), contributing £51.6 per policy (H1 2023: £40.5 per policy). The increase in renewal margins and a 6.4% increase in new business policies sold was partially offset by lower new business margins and a 16.6% reduction in renewal policies sold.

Home broking

Gross Written Premiums5 increased 3.6% due to a 19.9% increase in average premiums, partially offset by a 13.6% reduction in core policies sold.

Written Gross Profit After Marketing Expenses5 was £18.1m (H1 2023: £24.1m), equating to £64.9 per policy (H1 2023: £74.6 per policy). The reduction in written gross profits, and margin per policy, was mainly due to the adverse impact of net rate inflation on home renewal profitability.

Other broking

Other broking primarily comprises PMI and travel insurance.

Gross Written Premiums5 reduced 7.9% as a result of both lower average premiums and a reduction to policy sales to 74k (H1 2023: 86k) in travel insurance. For PMI, policy sales were broadly stable at 16k (H1 2023: 17k).

As a result, Written Gross Profit After Marketing Expenses5 relating to travel insurance products decreased by £1.4m.

While sales of PMI were broadly stable, there were net rate inflation pressures in the first half of the year, reducing renewal margins and leading to Written Gross Profit After Marketing Expenses5 decreasing by £2.6m.

5 Refer to the Alternative Performance Measures Glossary for definition and explanation

6 Third-party underwriter's share of the motor panel for policies

 

 Insurance Underwriting

 

 

Unaudited 6m to July 2024

 

Unaudited 6m to July 2023

£m

 

 

Gross

Re-

insurance

 

Net

Gross change

 

Gross

Re-

insurance

 

Net


 

 

 

 

 

 

 

 

Insurance Underlying Revenue718F

A

102.0

(9.0)

93.0

29.9%

78.5

(8.0)

70.5

Incurred claims (current year)

B

(78.4)

(0.6)

(79.0)

14.3%

(91.5)

19.2

(72.3)

Claims handling costs in relation to incurred claims

C

(8.3)

-

(8.3)

(5.1%)

(7.9)

-

(7.9)

Changes to liabilities for incurred claims (prior year)

D

(1.4)

2.2

0.8

(116.3%)

8.6

7.4

16.0

Other incurred insurance service expenses

E

(7.3)

-

(7.3)

5.2%

(7.7)

-

(7.7)

Insurance service result

 

6.6

(7.4)

(0.8)

133.0%

(20.0)

18.6

(1.4)

Net finance (expense)/income from (re)insurance (excludes impact of change in discount rate on non-PPO liabilities)

 

(5.4)

3.5

(1.9)

58.1%

(12.9)

6.4

(6.5)

Investment return (excludes fair value gains/losses on debt securities)

 

4.6

-

4.6

7.0%

4.3

-

4.3

Underlying Profit/(Loss) Before Tax7

 

5.8

(3.9)

1.9

120.3%

(28.6)

25.0

(3.6)

 

 




 




Reported loss ratio

(B+D)/A

78.2%


84.1%

27.4ppt

105.6%


79.9%

Expense ratio

(C+E)/A

15.3%


16.8%

4.6ppt

19.9%


22.1%

Reported combined operating ratio (COR)

(B+C+D+E)/A

93.5%


100.9%

32.0ppt

125.5%


102.0%

Current year COR

(B+C+E)/A

92.2%


101.7%

44.2ppt

136.4%


124.7%

Number of earned policies

 

260k



(6.4%)

278k



Policies in force - Saga motor

 

435k



(5.8%)

462k



 

The Group's in-house underwriter, AICL, underwrites over 60% of the motor business sold by Insurance Broking, alongside a smaller proportion of business on other panels. Alongside this, AICL underwrites a portion of Saga's home panel, although all home underwriting risk is passed to third-party insurance and reinsurance providers. AICL also has excess of loss and funds-withheld quota share reinsurance arrangements in place, relating to its motor underwriting line of business, which transfer a significant proportion of motor insurance risk to third-party reinsurers.

In line with the wider market, AICL experienced a prolonged period of elevated claims inflation across 2022 and 2023, with the significant price rises applied over that period having now materially earned through to insurance revenue.

Gross insurance Underlying Revenue7, in the first half of the year, increased 29.9% to £102.0m (H1 2023: £78.5m), reflecting a 38.8% increase in average earned premiums. This was partially offset by a 6.4% reduction in the number of earned policies underwritten by AICL, particularly those underwritten for Saga as opposed to other panels.

The pricing and other management action taken during 2022 and 2023 resulted in significant improvement in the gross insurance service result year on year, with a 44.2ppt reduction in the current year gross COR to 92.2% (H1 2023: 136.4%). After allowing for reinsurance arrangements, this increased slightly to 101.7% (H1 2023: 124.7%). This result was in line with expectations, recognising the fact that the gross current period motor surplus generated during the first half of the current year is shared with reinsurance partners.

Motor claims severity inflation during the first half of the current year reduced to 11%, in line with pricing expectations, with the full year expected to reduce further.

Positive changes to liabilities for incurred prior year claims reduced from £16.0m in the first half of the prior year to £0.8m in the first half of the current year. Both years benefited from favourable large claims movements (net of excess of loss reinsurance), albeit more so in the prior year. The net impact of our quota share reinsurance arrangements switched from a net benefit in the prior year to a net cost in the current year, with 80% of the favourable development in the most recent accident years ceded to quota share reinsurance partners.

The net finance expense of £1.9m reduced from £6.5m in the prior period. The expense was higher in the prior period as there was an increase in the yield curve which increased indexation of reinsurance deductibles and, therefore, net incurred claims.

7 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Other Businesses and Central Costs

 

Unaudited 6m to July 2024

 

Unaudited 6m to July 2023

£m

Other

Businesses

Central Costs

Total

Change

Other

Businesses

Central Costs

Total

Underlying Revenue819F

 

 

 

 

 

 

 

Money

2.8

-

2.8

(24.3%)

3.7

-

3.7

Publishing and CustomerKNECT

6.8

-

6.8

17.2%

5.8

-

5.8

Insight

-

-

-

(100.0%)

0.5

-

0.5

Total Underlying Revenue

9.6

-

9.6

(4.0%)

10.0

-

10.0

Gross profit

3.5

3.0

6.5

(3.0%)

4.2

2.5

6.7

Operating expenses

(2.9)

(11.1)

(14.0)

34.9%

(6.4)

(15.1)

(21.5)

Investment income

-

2.3

2.3

-

-

2.3

2.3

Net finance costs

-

(12.9)

(12.9)

(12.2%)

-

(11.5)

(11.5)

Underlying Profit/(Loss) Before Tax8

0.6

(18.7)

(18.1)

24.6%

(2.2)

(21.8)

(24.0)

 

The Group's Other Businesses include Saga Money, Saga Publishing and CustomerKNECT.

Underlying Profit Before Tax8 for Other Businesses, when combined, increased by £2.8m, from a £2.2m Underlying Loss Before Tax8 in the first half of the prior year to an Underlying Profit Before Tax8 of £0.6m in the first half of the current year. This was largely due to the decision made, in the second half of last year, to exit our smaller, loss-making activities of Saga Exceptional and Saga Insight. Underlying Revenue8 in Saga Money reduced £0.9m due to market-wide equity release challenges arising from the inflationary environment.

Central operating expenses reduced to £11.1m (H1 2023: £15.1m). Gross administration costs, before Group recharges, decreased by £2.6m in the period, as a result of a cost-reduction programme enacted in the second half of the prior year. Net costs decreased by a further £1.4m due to higher Group recharges to the business units.

Net finance costs in the period were £12.9m (H1 2023: £11.5m), which exclude finance costs that are included within the Cruise and Travel businesses of £8.2m (H1 2023: £9.7m) and Insurance Underwriting business of £1.9m (H1 2023: £6.5m). The increase was predominantly driven by the drawdown on the loan facility provided by Roger De Haan to support repayment of the £150.0m bond in May 2024 and the higher interest rate attached to that facility.

8 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Cash flow and liquidity

Available Operating Cash Flow920F

£m


Unaudited6m to

July 2024

 

 Change

Unaudited

6m to

July 2023





 


Insurance Broking Trading EBITDA9


15.9

(42.2%)

27.5

Other Businesses and Central Costs Trading EBITDA9


(2.7)

73.0%

(10.0)

Trading EBITDA9,1021F from unrestricted businesses

 

13.2

(24.6%)

17.5

Dividends paid by Insurance Underwriting business


-

(100.0%)

7.0

Working capital and non-cash items


(6.1)

(>500.0%)

(0.7)

Capital expenditure funded with Available Cash9


(8.3)

23.9%

(10.9)

Available Operating Cash Flow9 before cash repayment from Cruise and Travel operations


(1.2)

(109.3%)

12.9

Cash repayment from River Cruise and Travel businesses


1.5

(94.2%)

26.0

Ocean Cruise Available Operating Cash Flow9


54.1

15.1%

47.0

Available Operating Cash Flow9

 

54.4

(36.7%)

85.9

Restructuring costs


(6.8)

(41.7%)

(4.8)

Interest and financing costs


(20.4)

4.2%

(21.3)

Tax receipts


1.2

300.0%

0.3

Other payments


(5.8)

-

(5.8)

Change in cash flow from operations


22.6

(58.4%)

54.3

Change in bond debt


(150.0)

(100.0%)

-

Change in bank and other debt


75.0

100.0%

-

Change in Ocean Cruise ship debt


(31.1)

-

(31.1)

Cash at 1 February


169.8

7.8%

157.5

Available Cash9 at 31 July

 

86.3

(52.2%)

180.7


Available Operating Cash Flow9 is made up of the cash flows from unrestricted businesses and the dividends paid by restricted companies, less any cash injections to those businesses. Unrestricted businesses include Insurance Broking (excluding specific ring-fenced funds to satisfy Financial Conduct Authority (FCA) regulatory requirements), Other Businesses and Central Costs, and the Group's Ocean Cruise business. Restricted businesses include AICL, River Cruise and Travel.

As a result of a reduction in cash generation from unrestricted businesses, particularly in Insurance Broking and cash repayments from the River Cruise and Travel businesses, partially offset by improved cash generation from the Ocean Cruise business, Available Operating Cash Flow9 reduced from £85.9m in the first half of the prior year to £54.4m in the first half of the current year.

Excluding cash repayments from the Cruise and Travel businesses, Available Operating Cash Flow9 was an outflow of £1.2m compared with an inflow of £12.9m in the prior period. Trading EBITDA9,10 from unrestricted businesses reduced by £4.3m, mainly as a result of lower margins and policies in the Insurance Broking segment, particularly in home and other, partially offset by the impact of cost savings enacted in Central Costs during the second half of the prior year. Changes in working capital were a £6.1m outflow in the current period, compared with a £0.7m outflow in the prior period, mainly due to a reduction in net premiums payable to our panel of underwriters on motor following price reductions in the period as claims inflation slowed. No dividends were received from AICL, as expected, a reduction of £7.0m when compared with the prior year.

For River Cruise and Travel, the Group was repaid £1.5m in the first half of the year. This is a reduction of £24.5m when compared with the £26.0m repayment in the first half of the prior year. The reduction is due to the businesses, in the first half of the prior year, in agreement with the CAA, moving from a fully ring-fenced trust arrangement, where the businesses could not access 100% of customer cash until they returned from their river cruise or holiday, to a ring-fenced escrow arrangement where only 70% of customer cash is restricted until they return. This resulted in a one-off cash benefit in the first half of the prior year. At 31 July 2024, the ring-fenced businesses held cash of £72.3m, of which £56.6m was held in escrow. The Group must hold a minimum of £8.1m of cash outside of escrow within the ring-fenced businesses, as agreed with the CAA.

The Ocean Cruise business reported an Available Operating Cash Flow9 of £54.1m (H1 2023: £47.0m), with an increase in advance customer receipts of £7.2m (H1 2023: £18.7m) and net trading income of £47.7m (H1 2023: £31.4m), partially offset by capital expenditure of £0.8m (H1 2023: £3.1m). Net of interest costs of £7.0m (H1 2023: £8.1m), the Ocean Cruise business reported a net cash inflow, before capital repayments on the ship debt, of £47.1m for the first half of 2024/25 compared with £38.9m in the first half of prior year.

 

Other cash flow movements

Interest and financing costs reduced in the current period due to lower interest costs on the ship debt loans as a result of the gross ship debt reducing as capital repayments are made.

The Group continued to make the agreed payments to the defined benefit pension fund as part of the deficit recovery plan of £5.8m (H1 2023: £5.8m). These are included within other payments.

In the current period, the Group repaid in full its £150.0m corporate bond at maturity, drew down £75.0m of the available £85.0m loan facility provided by Roger De Haan and continued to make capital repayments against its ship debt facilities, with one payment of £15.3m (H1 2023: £15.3m) on Spirit of Discovery's debt facility and one payment of £15.8m (H1 2023: £15.8m) on Spirit of Adventure's debt facility.

9 Refer to the Alternative Performance Measures Glossary for definition and explanation

10 Trading EBITDA includes the line-item impact of IFRS 16 with the corresponding impact to net finance costs included in net cash flows used in financing activities

 

Reconciliation between operating and reported metrics

Available Operating Cash Flow1122F1 reconciles to net cash flows from operating activities as follows:

£m


Unaudited

6m to

July 2024

 

Change

Unaudited

6m to

July 2023






 


Net cash flows from operating activities (reported)


42.8

17.5%

51.9

Exclude cash impact of:



 



Trading of restricted divisions


(13.3)

(125.4%)

(5.9)


Non-trading costs


12.6

>500.0%

0.2


Interest paid


19.9

(3.9%)

20.7





19.2

28.0%

15.0

Cash released from restricted divisions


1.5

(95.5%)

33.0

Include capital expenditure funded from Available Cash11


(8.3)

23.9%

(15.8)

Include Ocean Cruise capital expenditure


(0.8)

74.2%

(3.1)

Available Operating Cash Flow11

 

54.4

(36.7%)

85.9

 

Underlying Revenue11 reconciles to the statutory measure of revenue as follows:



m to

uly 2024

 

 

 

m to

uly 2023

 

£m


Unaudited

6m to

July 2024

Change

Unaudited

6m to

July 2023






Underlying Revenue11


393.3

10.7%

355.3

Ceded reinsurance premiums earned on business underwritten by the Group


9.0

12.5%

8.0

Onerous contract provision


2.1

140.4%

(5.2)

Exit from smaller, loss-making activities


0.4

100.0%

-

Revenue


404.8

13.0%

358.1

 

Trading EBITDA11 reconciles to Underlying Profit Before Tax11 as follows:

£m


Unaudited

6m to

July 2024

Change

Unaudited

6m to

July 2023



 

 

 

Insurance Broking Trading EBITDA11


15.9

(42.2%)

27.5

Insurance Underwriting Trading EBITDA11


3.8

31.0%

2.9

Ocean Cruise Trading EBITDA11,1223F


46.7

41.1%

33.1

River Cruise and Travel Trading EBITDA11


3.7

>500.0%

(0.5)

Other Businesses and Central Costs Trading EBITDA11


(2.7)

73.0%

(10.0)

Trading EBITDA11

 

67.4

27.2%

53.0

Depreciation and amortisation


(17.2)

0.6%

(17.3)

Net finance costs (including Cruise, Travel and Insurance Underwriting)


(23.0)

17.0%

(27.7)

Underlying Profit Before Tax11

 

27.2

240.0%

8.0


Adjusted Trading EBITDA1124F1 is used in the Group's leverage calculation for the RCF covenant and is calculated as follows:

£m


Unaudited

6m to

July 2024

Change

Unaudited

6m to

July 2023






Trading EBITDA11 for 12m to 31 January 2024


116.5

25.8%

92.6

Less Trading EBITDA11 for 6m to 31 July 2023


(53.0)

0.4%

(53.2)

Add Trading EBITDA11 for 6m to 31 July 2024


67.4

27.2%

53.0

Trading EBITDA11 (12 months rolling)

 

130.9

41.7%

92.4

Impact of accounting standard changes since 31 January 2017


2.6

30.0%

2.0

Spirit of Discovery and Spirit of Adventure Trading EBITDA11,1225F


(88.4)

(48.8%)

(59.4)

Adjusted Trading EBITDA11


45.1

28.9%

35.0

 

Ocean Cruise Trading EBITDA11,12 reconciles to Ocean Cruise Trading EBITDA (Excluding Overheads)11 as follows:

£m


Unaudited

6m to

July 2024

Change

Unaudited

6m to

July 2023



 

 

 

Ocean Cruise Trading EBITDA11,12


46.7

41.1%

33.1

Ocean Cruise overheads


9.1

(30.0%)

7.0

 

Ocean Cruise Trading EBITDA (Excluding Overheads)11

 

55.8

39.2%

40.1

 

 

11 Refer to the Alternative Performance Measures Glossary for definition and explanation

12 Ocean Cruise Trading EBITDA includes Ocean Cruise overheads

 

Statement of financial position

Goodwill

On 1 January 2022, new pricing rules arising from the implementation of recommendations included in the FCA's General Insurance Pricing Practices market study came into effect. As a result, and against the background of a highly competitive motor insurance market, the Group saw a fall in policy volumes in the period to 31 July 2023 and year to 31 January 2024. At 31 July 2024, high claims cost inflation in a competitive market continued to have an adverse impact on the expected future profitability of the Insurance business. Management, therefore, considered it necessary to perform impairment assessments of goodwill attaching to the Insurance Broking business at each of these dates. Forecast cash flows were modelled and, as a result, management took the decision to impair Insurance goodwill by £138.3m at 31 July 2024, following total impairments recognised in the year to 31 January 2024 of £104.9m. Consistent with the approach taken in previous years, this impairment is not included within Underlying Profit Before Tax1326F.

13 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Carrying value of Ocean Cruise ships

At 31 July 2024, the carrying value of the Group's Ocean Cruise ships was £576.9m (31 January 2024: £586.7m). Trading performance in the current year has been very positive, and, with strong bookings for 2025/26, the Directors concluded that there were no indicators of impairment at 31 July 2024.

Investment portfolio

The majority of the Group's financial assets are held by its Insurance Underwriting entity and represent premium income received and invested to settle claims and meet regulatory capital requirements.

The amount held in invested funds increased by £5.7m to £257.6m (31 January 2024: £251.9m). At 31 July 2024, 100% of the financial assets held by the Group were invested with counterparties with a risk rating of BBB or above, consistent with the prior year end, reflecting the relatively stable credit risk rating of the Group's investment holdings.



Credit risk rating

 

AAA

AA

A

BBB

Unrated

Total

At 31 July 2024

£m

£m

£m

£m

£m

£m









Investment portfolio

 

 

 

 

 

 


Debt securities

24.3

63.8

63.4

63.5

0.1

215.1


Money market funds

42.5

-

-

-

-

42.5

Total invested funds

66.8

63.8

63.4

63.5

0.1

257.6

Derivative assets

-

-

0.2

-

-

0.2

Total financial assets

66.8

63.8

63.6

63.5

0.1

257.8



















Credit risk rating


AAA

AA

A

BBB

Unrated

Total

At 31 January 2024

£m

£m

£m

£m

£m

£m



 

 

 

 

 

 

Investment portfolio

 

 

 

 

 

 


Debt securities

23.9

59.2

70.4

65.6

-

219.1


Money market funds

32.8

-

-

-

-

32.8

Total invested funds

56.7

59.2

70.4

65.6

-

251.9

Derivative assets

-

-

0.3

-

-

0.3

Total financial assets

56.7

59.2

70.7

65.6

-

252.2

 

Insurance reserves

Analysis of insurance contract liabilities at 31 July 2024 and 31 January 2024 is as follows:

 

At 31 July 2024

At 31 January 2024

£m

Gross

Reinsurance assets

Net

Gross

Reinsurance assets

Net








Incurred claims - estimate of the present value of future cash flows

289.0

(138.8)

150.2

286.4

(141.3)

145.1

Incurred claims - risk adjustment

46.4

(39.7)

6.7

40.2

(33.7)

6.5

Remaining coverage - excluding loss component

53.3

5.2

58.5

56.6

3.1

59.7

Remaining coverage - loss component

7.6

(0.4)

7.2

16.1

(1.3)

14.8

Total

396.3

(173.7)

222.6

399.3

(173.2)

226.1

 

The Group's total insurance contract liabilities, net of reinsurance assets, decreased by £3.5m in the period to 31 July 2024 from the previous year end, primarily due to a £8.8m reduction in net remaining coverage claims reserves. This was partially offset by a £5.3m increase in net incurred claims reserves. The reduction in net remaining coverage claims reserves reflect favourable experience on large bodily injury claims relating to prior accident years.

Financing

At 31 July 2024, the Group's Net Debt1427F was £614.6m, £22.6m lower than at the beginning of the financial year. The Group's total leverage ratio was 4.6x as at 31 July 2024 (31 January 2024: 5.4x).

 

£m

 

Maturity date1528F

31 July

 2024

 

31 January 2024






3.375% Corporate bond

May 2024

-


150.0

5.5% Corporate bond

July 2026

250.0


250.0

RCF

March 2026

-


-

Loan facility with Roger De Haan

April 2026

75.0


-

Spirit of Discovery ship loan

June 2031

158.3


173.6

Spirit of Adventure ship loan

September 2032

217.6


233.4

Less Available Cash14,1629F


(86.3)


(169.8)

Net Debt14


614.6


637.2

Net Debt14 is analysed as follows:

 

Adjusted Net Debt14 is used in the Group's leverage calculation and reconciles to Net Debt14 as follows:

 

£m

 

31 July

 2024

 

31 January 2024

 

 

 

 

 

Net Debt14


614.6


637.2

Exclude ship loans


(375.9)


(407.0)

Exclude Ocean Cruise Available Cash14


2.7


2.7

Adjusted Net Debt14


241.4


232.9

 

Excluding the impact of debt and earnings relating to the Ocean Cruise ships, the Group's leverage ratio applicable to the RCF, at 31 July 2024, was 5.4x (31 January 2024: 5.4x), within the 6.25x covenant. At 31 July 2024, the RCF remained undrawn.

During the first half of the year, the Group repaid in full its £150.0m corporate bond at maturity and drew down £75.0m of the available £85.0m loan facility provided by Roger De Haan. The Group also made repayments on its Ocean Cruise ship debt facilities in March 2024 for Spirit of Adventure and in June 2024 for Spirit of Discovery, of £15.8m and £15.3m respectively.

To support the transition to our new Insurance operating model, we recently concluded discussions with our RCF lenders to provide the Group with greater financial flexibility. As a result, the following amendments were agreed, in addition to other smaller changes:

·      Extension to the maturity date from 31 May 2025 to 31 March 2026.

·      Leverage test to now be conducted on a Group basis, so including the Net Debt14 and Trading EBITDA14 in relation to Ocean Cruise.

·      Reduction in the leverage ratio covenant from 6.25x to 6.0x until maturity.

In addition, a series of amendments were made to the loan facility provided by Roger De Haan. These included an extension to the facility maturity, from 31 December 2025 to 30 April 2026, a reduction to the notice period required for drawdown of the loan, to 10 business days, and an increase in the maximum number of permitted utilisations, to 10.

14 Refer to the Alternative Performance Measures Glossary for definition and explanation

15 Maturity date represents the date that the principal must be repaid, other than the Ocean Cruise ship loans, which are repaid in instalments over the next eight years

16 Refer to Note 13 of the financial statements for information as to how this reconciles to a statutory measure of cash

 

Pensions

The Group's defined benefit pension scheme liability, as measured on an International Accounting Standard 19R basis, decreased by £1.4m to a £46.5m liability as at 31 July 2024 (31 January 2024: £47.9m).

 

£m

31 July

2024

 

31 January 2024





Fair value of scheme assets

210.4


204.5

Present value of defined benefit obligation

(256.9)


(252.4)

Defined benefit pension scheme liability

(46.5)

 

(47.9)


The movements observed in the scheme's assets and obligations were impacted by macroeconomic factors during the period where, at a global level, there have been rising inflation and cost of living pressures, as well as shifts in long-term market yields. The present value of defined benefit obligations increased by £4.5m to £256.9m, primarily due to higher-than-expected inflation experience and an increase in future expectations for inflation. The fair value of scheme assets increased by £5.9m to £210.4m. The increase in asset values was largely driven by the recovery plan payment, alongside marginally lower returns on assets from the fall in interest rates in the period.

Net assets

Since 31 January 2024, total assets decreased by £177.3m and total liabilities decreased by £70.2m, resulting in an overall decrease in net assets of £107.1m.

The reduction in total assets is primarily due to:

·      a decrease in goodwill of £138.3m, following an impairment to Insurance Broking goodwill in the period;

·      a decrease in cash and short-term deposits of £79.4m, mainly as a result of the repayment of the £150.0m corporate bond at maturity, partially offset by the £75.0m drawdown of the available £85.0m loan facility provided by Roger De Haan;

·      an increase in trade and other receivables of £16.7m; and

·      an increase in trust accounts of £18.7m due to seasonality in the River Cruise and Travel businesses.

The decrease in total liabilities largely reflects:

·      a decrease of £100.5m in financial liabilities, which is mainly due to a reduction of £104.9m in bond and bank loans, as a result of the repayment of the £150.0m corporate bonds and £31.1m of capital repayments on Spirit of Discovery and Spirit of Adventure facilities, partially offset by the £75.0m drawdown of the available £85.0m loan facility provided by Roger De Haan; and

·      an increase of £30.9m in contract liabilities due to seasonality in the Cruise and Travel businesses.

 

Going concern

The Directors have performed an assessment of going concern to determine the adequacy of the Group's financial resources over a period of 16 months from the date of signing these financial statements; a period selected to include consideration of the final covenant test date, at 31 January 2026, of the Group's £50.0m RCF.

This assessment is centred on a base case overlaid with risk-adjusted financial projections which incorporate scenario analysis and stress tests on expected business performance.

The Group's base case modelling assumes continued strong performance in the Cruise division on the back of high load factors and per diems. Travel is also expected to achieve continued growth in profits. The Insurance business, however, continues to experience challenge from high inflation in the net rates charged by partners on our underwriting panel, which puts pressure on Broking margins in a competitive consumer marketplace.

The Group's severe but plausible stressed scenario incorporates lower load factors for Ocean Cruise, lower levels of demand in River Cruise, and slower growth in the Travel business. Downside risks modelled for the Insurance business reflect the possibility that planned actions to limit inflation of underwriting net rates do not deliver the expected benefits.

As a result of actions undertaken by management to reduce the administrative overhead and central cost base last year, both scenarios include an assumption that the ensuant levels of savings are maintained throughout the assessment period.

Following the repayment of the £150.0m senior bonds in May of this year, the Group now operates with a lower level of Available Cash1730F. This has reduced the Group's ability to withstand possible events that are beyond those contemplated in the severe but plausible stressed scenario modelled. Notwithstanding this, the Group expects to meet scheduled Ocean Cruise debt principal repayments as they fall due over the next 16 months, and to also meet the financial covenants relating to its secured Cruise debt.

In addition, in both the base case and the stressed scenario, the £50.0m RCF is forecast to remain available for the Group to access throughout the assessment period, ensuring the Group has sufficient resources to continue in operation for at least the next 16 months.

Noting that it is not possible to accurately predict all possible future risks to the Group's trading, based on this analysis and the scenarios modelled, the Directors concluded that the Group will have sufficient funds to continue to meet its liabilities as they fall due for a period of at least 16 months from the date of approval of the condensed consolidated interim financial statements. They have, therefore, deemed it appropriate to prepare the financial statements for 31 July 2024 on a going concern basis.

17 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Dividends and financial priorities for 2024/25

Dividends

Given the Group's priority of reducing Net Debt1831F, the Board of Directors does not recommend payment of an interim dividend for the 2024/25 financial year, nor would this currently be permissible under financing arrangements and while the ship debt facility deferred amounts are outstanding.

Financial priorities for 2024/25

The Group's financial priorities for the current financial year are to reduce Net Debt18 via capital-light growth, conclude the discussions with Ageas that could support this objective, continue the growth trajectory of the River Cruise and Travel businesses, and balance the protection and, ultimately, growth of policy sales with the delivery of sustainable profitability within Insurance.

Mark Watkins

Group Chief Financial Officer

10 October 2024

18 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

Principal risks and uncertainties

The Group is subject to a number of risks and uncertainties as part of its activities. The Board regularly considers these and seeks to ensure that appropriate processes are in place to manage, monitor and mitigate these risks. The Board included full details of the risk and uncertainties pertinent to the Group on pages 46 to 49 of its Annual Report and Accounts for the year ended 31 January 2024, available at www.corporate.saga.co.uk/investors/results-reports-presentations/.

Since the publication of the latest Annual Report and Accounts, the Board reviewed the list of principal risks and uncertainties (PRUs) and the outlooks for each. By exception, the following changes were made:

PRUs for which the outlook has worsened

PRU

Reason for change in outlook

Mitigations

Insurance pricing, underwriting and claims

The risk increased primarily in Insurance Broking, due to market-wide headwinds across motor, home and travel insurance.

·  Entered exclusive partnership negotiations.

·  Experienced management and teams.

·  Continued enhancements to our risk and retail pricing tools and models.

·  Continuous monitoring of pricing adequacy performance drivers.

·  Conservative reserving, where best estimate reserves are calculated internally and externally by independent actuaries.

·  Proactive claims management and settlement.

·  Reinsurance and coinsurance programme.

Capability and capacity

Ongoing change in the business has put pressure on key subject matter expert resource.

·  Optimisation of resource in line with our strategic priorities.

·  Key resource plans and strategies in place.

 

PRUs for which the outlook has improved

PRU

Reason for change in outlook

Cyber

There has been significant progress in implementing action plans to reduce the risk exposure.

Breach of Data Protection Act/General Data Protection Regulation

There has been significant progress in implementing action plans to reduce the risk exposure.

 

Condensed consolidated income statement

for the period ended 31 July 2024

 

 

 


Unaudited

6m to

Jul 2024


Unaudited

6m to

Jul 2023


12m to

 Jan 2024


Note


£m


£m


£m



 


 




Revenue from Cruise and Travel services

3

 

226.8

 

196.9


410.0

Revenue from Insurance Broking services

3

 

60.5

 

62.5


128.7

Other revenue (non-Insurance Underwriting)

3

 

14.8

 

13.5


24.8

Non-insurance revenue

3

 

302.1

 

272.9


563.5

Insurance revenue

3

 

102.7

 

85.2


177.6

Total revenue

3


404.8

 

358.1

 

741.1









Increase in credit loss allowance



-


(0.1)


-

Other cost of sales



(157.2)


(143.2)


(301.1)

Cost of sales (non-Insurance Underwriting)

3

 

(157.2)

 

(143.3)

 

(301.1)

 

 

 

 

 

 

 

 

Gross profit (non-Insurance Underwriting)

 

 

144.9

 

129.6

 

262.4









Insurance service expenses

15


(93.4)


(114.8)


(249.2)

Net (expense)/income from reinsurance contracts

15


(8.2)


19.3


40.2

Insurance service result



1.1


(10.3)


(31.4)









Other income



-


-


5.0

Administrative and selling expenses



(94.9)


(101.8)


(214.2)

Increase in credit loss allowance



(0.7)


(0.3)


(1.1)

Impairment of non-financial assets



(138.3)


(68.1)


(118.6)

Net finance expense from insurance contracts

15


(4.9)


(7.6)


(3.5)

Net finance income from reinsurance contracts

15


3.2


4.2


1.9

Net profit/(loss) on disposal of property, plant and equipment and software



0.1


(0.1)


(0.5)

Investment income



9.2


0.3


15.4

Finance costs



(23.7)


(23.7)


(44.4)

Loss before tax

 

 

(104.0)

 

(77.8)

 

(129.0)

Tax (expense)/credit

4


(2.1)


6.8


16.0

Loss for the period

 

 

(106.1)

 

(71.0)

 

(113.0)









Attributable to:








Equity holders of the parent



(106.1)


(71.0)


(113.0)









Loss per share:








Basic

 

6


(75.9p)


(50.9p)


(80.8p)

Diluted

6


(75.9p)


(50.9p)


(80.8p)

 

Condensed consolidated statement of comprehensive income

for the period ended 31 July 2024

 


Unaudited

6m to

Jul 2024


Unaudited

6m to

Jul 2023


12m to

 Jan 2024


£m


£m


£m







Loss for the period

(106.1)

 

(71.0)

 

(113.0)

 

Other comprehensive income

 


 


 

 

Other comprehensive income that may be reclassified to the income statement in subsequent periods

 

 

 


 

Net losses on hedging instruments during the period

(0.8)


(1.7)


(1.3)

Recycling of previous losses to income statement on matured hedges

0.4


1.3


1.0

Total net losses on cash flow hedges

(0.4)


(0.4)


(0.3)

Associated tax effect

-


0.7


0.6

Total other comprehensive (losses)/income with recycling to income statement

(0.4)


0.3

 

0.3

 

 

 

 

 

 

Other comprehensive income that will not be reclassified to the income statement in subsequent periods

 

 

 

 

 

Remeasurement losses on defined benefit plan

(3.4)


(1.4)


(41.1)

Associated tax effect

0.9


0.3


10.3

Total other comprehensive losses without recycling to income statement

(2.5)


(1.1)


(30.8)







Total other comprehensive losses

(2.9)

 

(0.8)

 

(30.5)

Total comprehensive losses for the period

(109.0)

 

(71.8)

 

(143.5)

 

Attributable to:

 

 

 

 

 

Equity holders of the parent

(109.0)

 

(71.8)

 

(143.5)

 

Condensed consolidated statement of financial position

as at 31 July 2024

 


 


Unaudited

As at

31 Jul 2024

 

 Unaudited

 As at

31 Jul 2023


 

As at

31 Jan 2024


 

Note


£m


£m


£m


 

 


 






Assets

 


 






Goodwill

8


206.4


381.5


344.7


Intangible assets

9


63.8


57.9


60.7


Property, plant and equipment

10


583.6


601.2


593.4


Right-of-use assets

11


28.6


30.7


24.6


Financial assets

12


257.8


242.5


252.2


Current tax assets



4.6


4.7


4.8


Deferred tax assets

4


51.4


30.7


49.4


Reinsurance contract assets

15


173.7


147.9


173.2


Inventories



7.9


7.7


8.1


Trade and other receivables



144.4


134.3


127.7


Trust and escrow accounts



56.6


47.2


37.9


Cash and short-term deposits

13


109.3


207.2


188.7


Assets held for sale

19


17.4


31.2


17.4


Total assets



1,705.5


1,924.7


1,882.8

 

Liabilities



 


 

 

 

 

Retirement benefit scheme liability

14


46.5


8.0

 

47.9


Insurance contract liabilities

15


396.3


353.6

 

399.3


Provisions



2.4


9.4

 

8.0


Financial liabilities

12


727.9


863.7

 

828.4


Deferred tax liabilities

4


17.6


11.7

 

14.6


Contract liabilities



190.7


184.0

 

159.8


Trade and other payables



207.7


200.1

 

201.3


Total liabilities

 


1,589.1


1,630.5

 

1,659.3

 

Equity



 


 

 

 

 

Issued capital

17


21.5


21.1

 

21.3


Share premium



648.3


648.3

 

648.3


Own shares held reserve



(1.4)


(1.0)

 

(1.2)


Retained deficit



(559.6)


(381.7)

 

(452.5)


Share-based payment reserve



10.9


10.4

 

10.5


Hedging reserve



(3.3)


(2.9)

 

(2.9)


Total equity



116.4


294.2

 

223.5

 

Total equity and liabilities



1,705.5


1,924.7

 

1,882.8

 

 

 

Condensed consolidated statement of changes in equity

for the period ended 31 July 2024

 

 

Attributable to the equity holders of the parent

 

 

 

Issued capital

Share premium

Own shares held reserve

Retained (deficit)/

earnings

Share-based payment reserve

Hedging reserve

Total equity

 

£m

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

At 1 February 2024

21.3

648.3

(1.2)

(452.5)

10.5

(2.9)

223.5

Loss for the period

-

-

-

(106.1)

-

-

(106.1)

Other comprehensive losses excluding recycling

-

-

-

(2.5)

-

(0.8)

(3.3)

Recycling of previous losses to income statement

-

-

-

-

-

0.4

0.4

Total comprehensive losses

-

-

-

(108.6)

-

(0.4)

(109.0)

Issue of share capital (Note 17)

0.2

-

(0.2)

-

-

-

-

Share-based payment charge

-

-

-

-

1.9

-

1.9

Transfer upon vesting of share options

-

-

-

1.5

(1.5)

-

-

At 31 July 2024

21.5

648.3

(1.4)

(559.6)

10.9

(3.3)

116.4

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

At 1 February 2023

21.1

648.3

-

(309.7)

8.9

(3.2)

365.4

Loss for the period

-

-

-

(71.0)

-

-

(71.0)

Other comprehensive (losses)/income excluding recycling

-

-

-

(1.1)

-

1.1

-

Recycling of previous gains to income statement

-

-

-

-

-

(0.8)

(0.8)

Total comprehensive (losses)/income

-

-

-

(72.1)

-

0.3

(71.8)

Share-based payment charge

-

-

-

-

2.4

-

2.4

Own shares transferred

-

-

(1.0)

(0.8)

-

-

(1.8)

Transfer upon vesting of share options

-

-

-

0.9

(0.9)

-

-

At 31 July 2023

21.1

648.3

(1.0)

(381.7)

10.4

(2.9)

294.2

 

 

 

 

 

 

 

 

 

 

Attributable to the equity holders of the parent

 

 

 

Issued capital

Share premium

Own shares held reserve

Retained (deficit)/

earnings

Share-based payment reserve

Hedging reserve

Total equity

 

£m

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 February 2023

21.1

648.3

-

(309.7)

8.9

(3.2)

365.4

Loss for the period

-

-

-

(113.0)

-

-

(113.0)

Other comprehensive losses excluding recycling

-

-

-

(30.8)

-

(0.8)

(31.6)

Recycling of previous losses to income statement

-

-

-

-

-

1.1

1.1

Total comprehensive (losses)/income

-

-

-

(143.8)

-

0.3

(143.5)

Issue of share capital (Note 17)

0.2

-

-

-

-

-

0.2

Share-based payment charge

-

-

-

-

3.4

-

3.4

Own shares transferred

-

-

(1.2)

(0.8)

-

-

(2.0)

Transfer upon vesting of share options

-

-

-

1.8

(1.8)

-

-

At 31 January 2024

21.3

648.3

(1.2)

(452.5)

10.5

(2.9)

223.5

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of cash flows

for the period ended 31 July 2024

 


 


Unaudited

6m to

Jul 2024


Unaudited

6m to

Jul 2023


12m to

Jan 2024


Note


£m


£m


£m




 


 



Loss before tax



(104.0)


(77.8)


(129.0)

Depreciation, impairment and loss on disposal, of property, plant and equipment and right-of-use assets



14.7


18.0


35.1

Amortisation and impairment of intangible assets and goodwill, and profit or loss on disposal of software



143.0


72.4


117.2

Impairment of assets held for sale



-


-


10.4

Share-based payment transactions



1.9


1.6


3.4

Net finance expense from insurance contracts

15


4.9


7.6


3.5

Net finance income from reinsurance contracts

15


(3.2)


(4.2)


(1.9)

Finance costs



23.7


23.7


44.4

Interest income from investments



(9.2)


(0.3)


(15.4)

Increase in trust and escrow accounts



(18.7)


(11.0)


(1.7)

Movements in other assets and liabilities



3.1


37.6


40.8




56.2


67.6


106.8

Investment income interest received



6.5


5.0


11.9

Interest paid



(19.9)


(20.7)


(38.2)

Income tax received



-


-


3.2

Net cash flows from operating activities



42.8


51.9


83.7

 



 


 


 

Investing activities



 


 


 

Proceeds from sale of property, plant and equipment and right-of-use assets


 

0.1

 

-

 

-

Purchase of, and payments for the construction of, property, plant and equipment, and intangible assets


 

(9.9)

 

(14.4)

 

(26.7)

Disposal of financial assets



6.7


26.6


56.4

Purchase of financial assets



-


(11.8)


(11.7)

Net cash flows (used in)/from investing activities

 

 

(3.1)

 

0.4

 

18.0




 


 


 

Financing activities


 

 

 

 

 

 

Payment of principal portion of lease liabilities



(3.6)


(6.7)


(11.6)

Proceeds from borrowings

16


75.0


-


-

Repayment of borrowings

16


(181.1)


(31.1)


(62.2)

Net cash flows used in financing activities

 


(109.7)


(37.8)

 

(73.8)

 

 


 


 

 


Net (decrease)/increase in cash and cash equivalents



(70.0)


14.5

 

27.9

Cash and cash equivalents at the start of the period



219.6


191.7

 

191.7

Cash and cash equivalents at the end of the period

13


149.6


206.2

 

219.6

 

Notes to the condensed consolidated interim financial statements

1      Corporate information

Saga plc (the Company) is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 2006 (registration number 08804263). The Company is registered in England and its registered office is located at 3 Pancras Square, London N1C 4AG.

The condensed consolidated interim financial statements of Saga plc and the entities controlled by the Company (its subsidiaries, collectively Saga Group or the Group) for the six-month period ended 31 July 2024 were authorised for issue in accordance with a resolution of the Directors on 10 October 2024.

2.1  Basis of preparation

These financial statements comprise the condensed consolidated interim financial statements (the financial statements) of the Group for the six-month period to 31 July 2024.

The financial statements are prepared on a going concern basis and on a historical cost basis, except as otherwise stated. The Group reviewed the appropriateness of the going concern basis in preparing the financial statements, as set out in Note 2.7. The Directors concluded that it remains appropriate to adopt the going concern basis in preparing the financial statements.

The Group's financial statements are presented in pounds sterling which is also the parent company's functional currency, and all values are rounded to the nearest hundred thousand (£m), except when otherwise indicated.

The financial statements are prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority (FCA) and in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted for use in the UK. The material accounting policies applied by the Group are set out in the Annual Report and Accounts for the year ended 31 January 2024, as referenced in Note 2.3. These are consistent with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board and adopted by the UK Endorsement Board for use in the United Kingdom.

The financial statements are unaudited but have been reviewed by KPMG LLP and include their review conclusion. The financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The results from the year ended 31 January 2024 were taken from the Group's Annual Report and Accounts for that year. Therefore, these financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 January 2024 that were prepared in accordance with UK-adopted International Accounting Standards.

Statutory financial statements for the year ended 31 January 2024 were delivered to the Registrar of Companies. The auditor's report on those financial statements: (i) was unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not constitute a statement under Section 498 (2) or (3) of the Companies Act 2006.

2.2  Basis of consolidation

The financial statements comprise the financial position and results of each of the companies within the Group. Where necessary, adjustments were made to the financial position and results of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses were eliminated on consolidation. The policies set out below were applied consistently throughout the periods presented to items considered material to the condensed consolidated interim financial statements.

2.3  Summary of material accounting policies

The financial statements for the period ended 31 July 2024 were prepared, applying the same accounting policies that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 January 2024.

Full details of the accounting policies of the Group can be found in the Annual Report and Accounts for the year ended 31 January 2024, available at www.corporate.saga.co.uk.

2.4  Standards issued but not yet effective

The following is a list of standards, and amendments to standards, that are in issue but are not effective or adopted as at 31 July 2024.

a)     Lack of exchangeability (amendments to IAS 21)

The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. The amendments are effective for annual reporting periods beginning on, or after, 1 January 2025. The amendments are not expected to have a material impact on the Group's financial statements. The amendments are not currently endorsed by the UK Endorsement Board.

b)    IFRS 18 'Presentation and Disclosures in Financial Statements'

IFRS 18 includes requirements for all entities applying IFRS for the presentation and disclosure of information in financial statements. IFRS 18 will replace IAS 1 'Presentation of Financial Statements'. IFRS 18 introduces three defined categories for income and expenses: operating, investing and financing; to improve the structure of the income statement, and requires all companies to provide new defined subtotals, including operating profit. The standard is effective for annual reporting periods beginning on, or after, 1 January 2027. The impact of these amendments on the Group's financial statements is still being assessed. The standard is not currently endorsed by the UK Endorsement Board.

c)     Amendments to IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments

The amendments address matters identified during the post-implementation review of the classification and measurement requirements of IFRS 9 'Financial Instruments'. The standard is effective for annual reporting periods beginning on, or after, 1 January 2026. The amendments are not expected to have a material impact on the Group's financial statements. The amendments are not currently endorsed by the UK Endorsement Board.

2.5  First time adoption of new standards and amendments

The following is a list of standards, and amendments to standards, that became effective, or were adopted, for the first time during the period ended 31 July 2024.

a)     Classification of liabilities as current or non-current (amendments to IAS 1)

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due, or potentially due, to be settled within one year) or non-current. The amendments are effective for annual periods beginning on, or after, 1 January 2024. The amendments had no effect on the Group's financial statements.

b)    Definition of lease liability in a sale and leaseback (amendment to IFRS 16)

The amendment clarifies how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment is effective for annual reporting periods beginning on, or after, 1 January 2024. The amendments had no effect on the Group's financial statements.

c)     Supplier finance arrangements (amendments to IAS 7 and IFRS 7)

The amendments add disclosure requirements, and 'signposts' within existing disclosure requirements, that ask entities to provide qualitative and quantitative information about supplier finance arrangements. The amendments are effective for annual reporting periods beginning on, or after, 1 January 2024. The amendments had no effect on the Group's financial statements.

d)    Non-current liabilities with covenants (amendments to IAS 1)

The amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments are effective for annual reporting periods beginning on, or after, 1 January 2024. The amendments had no effect on the Group's financial statements.

2.6  Significant accounting judgements, estimates and assumptions

Full details of significant accounting judgements, estimates and assumptions used in the application of the Group's accounting policies can be found in the Annual Report and Accounts for the year ended 31 January 2024, available at www.corporate.saga.co.uk. There were no changes to the principles in these critical accounting estimate and judgement areas during the six months ended 31 July 2024.

2.7  Going concern

The Directors have performed an assessment of going concern to determine the adequacy of the Group's financial resources over a period of 16 months from the date of signing these financial statements; a period selected to include consideration of the final covenant test date, at 31 January 2026, of the Group's £50.0m Revolving Credit Facility (RCF).

This assessment is centred on a base case overlaid with risk-adjusted financial projections which incorporate scenario analysis and stress tests on expected business performance.

The Group's base case modelling assumes continued strong performance in the Cruise division on the back of high load factors and per diems. Travel is also expected to achieve continued growth in profits. The Insurance business, however, continues to experience challenge from high inflation in the net rates charged by partners on our underwriting panel, which puts pressure on Broking margins in a competitive consumer marketplace.

The Group's severe but plausible stressed scenario incorporates lower load factors for Ocean Cruise, lower levels of demand in River Cruise, and slower growth in the Travel business. Downside risks modelled for the Insurance business reflect the possibility that planned actions to limit inflation of underwriting net rates do not deliver the expected benefits.

As a result of actions undertaken by management to reduce the administrative overhead and central cost base last year, both scenarios include an assumption that the ensuant levels of savings are maintained throughout the assessment period.

Following the repayment of the £150.0m senior bonds in May of this year, the Group now operates with a lower level of Available Cash132F. This has reduced the Group's ability to withstand possible events that are beyond those contemplated in the severe but plausible stressed scenario modelled. Notwithstanding this, the Group expects to meet scheduled Ocean Cruise debt principal repayments as they fall due over the next 16 months, and to also meet the financial covenants relating to its secured Cruise debt.

In addition, in both the base case and the stressed scenario, the £50.0m RCF is forecast to remain available for the Group to access throughout the assessment period, ensuring the Group has sufficient resources to continue in operation for at least the next 16 months.

Noting that it is not possible to accurately predict all possible future risks to the Group's trading, based on this analysis and the scenarios modelled, the Directors concluded that the Group will have sufficient funds to continue to meet its liabilities as they fall due for a period of at least 16 months from the date of approval of the condensed consolidated interim financial statements. They have, therefore, deemed it appropriate to prepare the financial statements for 31 July 2024 on a going concern basis.

1 Refer to the Alternative Performance Measures Glossary for definition and explanation

 

3      Segmental information

For management purposes, the Group is organised into business units based on their products and services. The Group has three reportable operating segments as follows:

· Cruise and Travel: comprises the operation and delivery of ocean and river cruise holidays, as well as package tour and other holiday products. The Group owns and operates two ocean cruise ships. All other holiday and river cruise products are packaged together with third-party supplied accommodation, flights and other transport arrangements.

· Insurance: comprises the provision of general insurance products. Revenue is derived primarily from insurance premiums and broking revenues. The segment is further analysed into four product sub-segments:

Insurance Broking, consisting of:

§ Motor broking

§ Home broking

§ Other broking

Insurance Underwriting

·    Other Businesses and Central Costs: comprises the Group's other businesses and its central cost base. The other businesses primarily include Saga Money (the personal finance product offering), Saga Publishing and the Group's mailing and printing business, CustomerKNECT.

Segment performance is evaluated using the Group's key performance measure of Underlying Profit Before Tax233F. Items not allocated to a segment relate to transactions that do not form part of the ongoing segment performance or which are managed at a Group level.

Transfer prices between operating segments are set on an arm's-length basis in a manner similar to transactions with third parties. Segment income, expenses and results include transfers between business segments which are then eliminated on consolidation.

All revenue is generated solely in the UK.

Seasonality

The Group is subject to seasonal fluctuations in both its Insurance, and Cruise and Travel, segments resulting in varying profits over each quarter.

The Insurance segment experiences increased motor insurance sales in the month of March and, to a lesser degree, September due to the issue of new vehicle registration plates; and increased home insurance sales in March, June and September coinciding with the historic quarter days. In the motor Insurance Underwriting business, a greater proportion of claims are notified in the second half of the financial year.

Typically, increased holiday departures in the shoulder months of May, June and September and low departure volumes during July and August create seasonal fluctuations in the profit of the Cruise and Travel segment.

Unaudited

6m to

Jul 2024

 

Cruise and Travel £m

Insurance

 

 

 

Motor broking

£m

Home broking

£m

Other broking

£m

Under-writing £m

Total

£m

Other

Businesses

and Central

Costs

£m

Adjustments

£m

Total

£m

 

Non-insurance revenue

226.8

22.1

21.0

17.4

4.9

65.4

12.3

(2.4)

302.1

 

Insurance revenue

5.1334F

0.5

97.1

102.7

-

102.7

 

Revenue

226.8

27.2

21.0

17.9

102.0

168.1

12.3

(2.4)

404.8

 

Cost of sales (non-Insurance Underwriting)

(149.7)

(8.3)

4.0

(4.3)

(3.2)

-

(157.2)

 

Gross profit/(loss) (non-Insurance Underwriting)

77.1

13.8

21.0

21.4

4.9

61.1

9.1

(2.4)

144.9

 

Insurance service expenses

(11.4)

(82.0)

(93.4)

(93.4)

 

Net income from reinsurance contracts

(0.3)

(7.9)

(8.2)

(8.2)

 

Insurance service result

(6.6)

0.5

7.2

1.1

1.1

 

Administrative and selling expenses

(38.1)

(10.7)

(15.4)

(16.6)

-

(42.7)

(17.2)

2.4

(95.6)

 

Impairment of non-financial assets

(138.3)

(138.3)

 

Net finance expense from insurance contracts

(4.9)

(4.9)

-

(4.9)

 

Net finance income from reinsurance contracts

3.2

3.2

-

3.2

 

Net loss on disposal of property, plant and equipment

0.1

-

0.1

 

Investment income

0.8

0.5

7.2

7.7

0.7

9.2

 

Finance costs

(9.5)

(14.2)

(23.7)

 

Profit/(loss) before tax

30.4

(3.0)

5.6

5.3

17.6

25.5

(21.6)

(138.3)

(104.0)

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Underlying Profit/(Loss) Before Tax235F

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

30.4

(3.0)

5.6

5.3

17.6

25.5

(21.6)

(138.3)

(104.0)

 

Net fair value loss on derivative financial instruments

0.6

0.6

 

Impairment of goodwill

138.3

138.3

 

Costs associated with Roger De Haan loan facility

1.2

1.2

 

Restructuring costs

0.6

1.2

0.1

1.3

2.3

4.2

 

Foreign exchange movement on river cruise lease liabilities

(0.5)

(0.5)

 

Fair value gains on debt securities

(2.7)

(2.7)

(2.7)

 

Changes in underwriting discount rates on non-periodical payment order (PPO) liabilities

(0.3)

(0.3)

(0.3)

 

Onerous contract provisions

3.1

(12.8)

(9.7)

(9.7)

 

IFRS 16 adjustment on river cruise vessels

0.1

0.1

 

Underlying Profit/(Loss) Before Tax2

31.2

1.3

5.6

5.3

1.9

14.1

(18.1)

27.2

 

 

Unaudited

6m to

Jul 2023

Cruise and Travel £m

Insurance

 

 

 

Motor broking

£m

Home broking

£m

Other broking

£m

Under-writing £m

Total

£m

Other

Businesses

and Central

Costs

£m

Adjustments

£m

Total

£m

 

Non-insurance revenue

196.9

14.1

26.7

21.7

3.5

66.0

12.9

(2.9)

272.9

 

Insurance revenue

9.8336F

0.4

75.0

85.2

-

85.2

 

Revenue

196.9

23.9

26.7

22.1

78.5

151.2

12.9

(2.9)

358.1

 

Cost of sales (non-Insurance Underwriting)

(139.6)

(4.2)

3.8

(0.4)

(3.3)

-

(143.3)

 

Gross profit/(loss) (non-Insurance Underwriting)

57.3

9.9

26.7

25.5

3.5

65.6

9.6

(2.9)

129.6

 

Insurance service expenses

(13.6)

(101.2)

(114.8)

(114.8)

 

Net income from reinsurance contracts

0.2

19.1

19.3

19.3

 

Insurance service result

(3.6)

0.4

(7.1)

(10.3)

(10.3)

 

Administrative and selling expenses

(35.0)

(10.5)

(18.1)

(13.6)

-

(42.2)

(27.7)

2.8

(102.1)

 

Impairment of non-financial assets

(68.1)

(68.1)

 

Net finance expense from insurance contracts

(7.6)

(7.6)

-

(7.6)

 

Net finance income from reinsurance contracts

4.2

4.2

-

4.2

 

Net loss on disposal of property, plant and equipment

(0.1) 

-

(0.1)

 

Investment income/(loss)

0.1 

0.1

(0.5)

(0.4)

0.6

0.3

 

Finance costs

(11.2)

(12.5)

(23.7)

 

Profit/(loss) before tax

11.1

(4.1)

8.6

12.3

(7.5)

9.3

(30.0)

(68.2)

(77.8)

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Underlying Profit/(Loss) Before Tax2F

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

11.1

(4.1)

8.6

12.3

(7.5)

9.3

(30.0)

(68.2)

(77.8)

 

Net fair value loss on derivative financial instruments

0.9

0.9

 

Impairment of goodwill

68.1

68.1

 

Arrangement fee on Roger De Haan loan facility

1.0

1.0

 

Restructuring costs

0.9

5.0

5.9

 

Acquisition costs relating to the Big Window Consulting Limited (the Big Window)

0.1

0.1

 

Foreign exchange movement on river cruise lease liabilities

(0.6)

(0.6)

 

Fair value losses on debt securities

4.8

4.8

4.8

 

Changes in underwriting discount rates on non-PPO liabilities

(3.1)

(3.1)

(3.1)

 

Onerous contract provisions

7.0

2.2

9.2

9.2

 

IFRS 16 adjustment on river cruise vessels

(0.5)

(0.5)

 

Underlying Profit/(Loss) Before Tax2

11.8

2.9

8.6

12.3

(3.6)

20.2

(24.0)

8.0

 

 

 

12m to

Jan 2024

Cruise and Travel £m

Insurance

 

 

 

Motor broking

£m

Home broking

£m

Other broking

£m

Under-writing £m

Total

£m

Other

Businesses

and Central

Costs

£m

Adjustments

£m

Total

£m

 

Non-insurance revenue

410.0

32.3

55.4

41.0

4.8

133.5

25.1

(5.1)

563.5

 

Insurance revenue

12.7338F2

0.8

164.1

177.6

-

177.6

 

Revenue

410.0

45.0

55.4

41.8

168.9

311.1

25.1

(5.1)

741.1

 

Cost of sales (non-Insurance Underwriting)

(292.5)

(8.7)

7.9

(0.8)

(7.8)

-

(301.1)

 

Gross profit/(loss) (non-Insurance Underwriting)

117.5

23.6

55.4

48.9

4.8

132.7

17.3

(5.1)

262.4

 

Insurance service expenses

(22.0)

(227.2)

(249.2)

(249.2)

 

Net income from reinsurance contracts

0.1

40.1

40.2

40.2

 

Insurance service result

(9.2)

0.8

(23.0)

(31.4)

(31.4)

 

Other income

5.0

-

-

-

5.0

 

Administrative and selling expenses

(67.7)

(23.7)

(35.7)

(24.7)

-

(84.1)

(68.3)

4.8

(215.3)

 

Impairment of non-financial assets

(1.2)

(4.1)

(5.3)

(8.4)

(104.9)

(118.6)

 

Net finance expense from insurance contracts

(3.5)

(3.5)

-

(3.5)

 

Net finance income from reinsurance contracts

1.9

1.9

-

1.9

 

Net loss on disposal of property, plant and equipment and software

(0.1)

(0.1)

(0.4)

(0.5)

 

Investment income

0.8

0.3

12.1

12.4

2.2

15.4

 

Finance costs

(20.8)

(0.1)

(0.1)

(23.5)

(44.4)

 

Profit/(loss) before tax

34.8

(10.4)

19.7

25.0

(11.8)

22.5

(81.1)

(105.2)

(129.0)

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Underlying Profit/(Loss) Before Tax239F

 

 

 

 

 

 

 

 

 

 

Profit/(loss) profit before tax

34.8

(10.4)

19.7

25.0

(11.8)

22.5

(81.1)

(105.2)

(129.0)

 

Net fair value loss on derivative financial instruments

1.4

1.4

 

Impairment of goodwill

104.9

104.9

 

Impairment/loss on disposal of assets

1.2

1.9

3.1

8.8

-

11.9

 

Amortisation of fees and costs on Roger De Haan loan facility

0.4

0.4

 

Restructuring costs

3.4

3.8

1.4

5.2

31.7

40.3

 

Acquisition and disposal costs relating to the Big Window

0.3

0.3

 

Foreign exchange movement on river cruise lease liabilities

(0.6)

(0.6)

 

Fair value gains on debt securities

(3.5)

(3.5)

(3.5)

 

Changes in underwriting discount rates on non-PPO liabilities

(1.0)

(1.0)

(1.0)

 

Onerous contract provision

0.5

11.6

12.1

12.1

 

Ocean Cruise discretionary ticket refunds and costs

1.0

1.0

 

Underlying Profit/(Loss) Before Tax 2

40.0

(4.9)

19.7

25.0

(1.4)

38.4

(40.2)

38.2

 

 

a)     Disaggregation of revenue

Unaudited

6m to Jul 2024

 

 

 

 

 

Insurance

 

 

Major product lines

Cruise and Travel

£m

Underwriting

£m

Broking

£m

Other revenue

£m

Total Insurance

£m

Other

Businesses

and Central

Costs

£m

Total

£m

 

 

 

 

 

 

 

 

Ocean Cruise

121.5

 

 

 

 

 

121.5

River Cruise and Travel

105.3

 

 

 

 

 

105.3

Motor broking

 

5.1

22.1

-

27.2

 

27.2

Home broking

 

-

21.0

-

21.0

 

21.0

Other broking

 

0.5

17.4

-

17.9

 

17.9

Insurance Underwriting

 

97.1

-

4.9

102.0

 

102.0

Money

 

 

 

 

 

2.8

2.8

Publishing and CustomerKNECT

 

 

 

 

 

6.8

6.8

Other

 

 

 

 

 

0.3

0.3

 

226.8

102.7

60.5

4.9

168.1

9.9

404.8

 

Unaudited

6m to Jul 2023

 

 

 

 

 

Insurance


 

Major product lines

Cruise and Travel

£m

Underwriting

£m

Broking

£m

Other revenue

£m

Total Insurance

£m

Other

Businesses

and Central

Costs

£m

Total

£m

 

 

 

 

 

 

 

 

Ocean Cruise

103.8

 

 

 

 

 

103.8

River Cruise and Travel

93.1

 

 

 

 

 

93.1

Motor broking

 

9.8

14.1

-

23.9

 

23.9

Home broking

 

-

26.7

-

26.7

 

26.7

Other broking

 

0.4

21.7

-

22.1

 

22.1

Insurance Underwriting

 

75.0

-

3.5

78.5

 

78.5

Money

 

 

 

 

 

3.7

3.7

Publishing and CustomerKNECT

 

 

 

 

 

5.8

5.8

Other

 

 

 

 

 

0.5

0.5

 

196.9

85.2

62.5

3.5

151.2

10.0

358.1

 

 

12m to Jan 2024

 

 

 

 

 

 

Insurance


 

Major product lines

Cruise and Travel

£m

Underwriting

£m

Broking

£m

Other revenue

£m

Total Insurance

£m

Other

Businesses

and Central

Costs

£m

Total

£m

 

 

 

 

 

 

 

 

Ocean Cruise

210.0

 

 

 

 

 

210.0

River Cruise and Travel

200.0

 

 

 

 

 

200.0

Motor broking

 

12.7

32.3

-

45.0

 

45.0

Home broking

 

-

55.4

-

55.4

 

55.4

Other broking

 

0.8

41.0

-

41.8

 

41.8

Insurance Underwriting

 

164.1

-

4.8

168.9

 

168.9

Money

 

 

 

 

 

6.4

6.4

Publishing and CustomerKNECT

 

 

 

 

 

12.5

12.5

Other

 

 

 

 

 

1.1

1.1

 

410.0

177.6

128.7

4.8

311.1

20.0

741.1

 

2 Refer to the Alternative Performance Measures Glossary for definition and explanation

3 This relates to amounts received by the Group's Insurance Broking entity in relation to insurance policies that are underwritten by the Group, which are accounted for as insurance premiums. This includes the street pricing adjustment

4      Tax

The major components of the income tax expense/(credit) are:

 

Unaudited

6m to

Jul 2024

 

Unaudited

6m to

Jul 2023


12m to

Jan 2024


£m

 

£m


£m

 






Condensed consolidated income statement






Current income tax






Current income tax charge



Adjustments in respect of previous periods

0.2


(0.3)


(3.6)

 

0.2


(0.3)


(3.6)

Deferred tax






Relating to origination and reversal of temporary differences

2.4


(5.6)


(11.5)

Adjustments in respect of previous periods

(0.5)


(0.9)


(0.9)


1.9


(6.5)


(12.4)







Tax expense/(credit) in the income statement

2.1


(6.8)


(16.0)

 

The Group's tax charge for the period was £2.1m (July 2023: £6.8m credit) representing a tax effective rate of 6.1% (July 2023: 70.1%) before the impairment of goodwill. In both the current and prior periods, the difference between the Group's tax effective rate and the standard rate of corporation tax, was mainly due to the Group's Ocean Cruise business being in the tonnage tax regime.

Adjustments in respect of previous periods include adjustments for the over-provision of the tax charge in prior periods of £0.3m (July 2023: £1.2m over-provision).

Reconciliation of net deferred tax assets

 

Unaudited

6m to

July 2024

 

Unaudited

6m to

Jul 2023


 12m to

Jan 2024


£m

 

£m


£m

 

 

 

 

 

 

At 1 February

34.8

 

11.5

 

11.5

Tax (charge)/credit recognised in the income statement

(1.9)


6.5


12.4

Tax credit recognised in other comprehensive income

0.9


1.0


10.9

At the end of the period

33.8

 

19.0

 

34.8

 

On 3 March 2021, it was announced that the corporation tax rate will increase from 19% to 25% from 1 April 2023. This increase was substantively enacted on 24 May 2021. As a result, the closing deferred tax balances at the statement of financial position date were reflected at 25%. Net deferred tax assets are expected to be normally settled in more than 12 months.

5      Dividends

No ordinary dividends were declared, nor paid, during the current and prior periods.

The distributable reserves of Saga plc are in a deficit position as at 31 July 2024, and are equal to the retained earnings reserve. If necessary, its subsidiary companies hold reserves from which a dividend could be paid. Subsidiary distributable reserves are available immediately, with the exception of companies within the River Cruise, Travel and Insurance Underwriting businesses, which require regulatory approval before any dividends can be declared and paid. Under the terms of the Ocean Cruise ship debt facilities, dividends remain restricted until the ship debt principal repayments that were deferred as part of the ship debt repayment holiday are fully repaid (Note 16). In addition, under the terms of the RCF, dividends also remain restricted.

6      Loss per share

Basic loss per share is calculated by dividing the loss after tax for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is calculated by also including the weighted average number of ordinary shares that would be issued on conversion of all potentially dilutive options.

There were no transactions involving ordinary shares, or potential ordinary shares, between the reporting date and the date of authorisation of these financial statements.

The calculation of basic and diluted loss per share is as follows:

 

 

Unaudited

 

 Unaudited



 

 

6m to

 

 6m to


 12m to

 

 

Jul 2024

 

 Jul 2023


 Jan 2024



 £m


 £m


£m








Loss attributable to ordinary equity holders


(106.1)


(71.0)


(113.0)








Weighted average number of ordinary shares


'm


'm


'm








Ordinary shares as at 1 February


139.8


139.5


139.5

Movement during the period


-


(0.1)


0.3

Ordinary shares as at the end of the period


139.8


139.4


139.8








Weighted average number of ordinary shares for

basic loss per share and diluted loss per share


139.8


139.4


139.8








Basic loss per share

 

(75.9p)

 

(50.9p)

 

(80.8p)