Saga plc · LSE:SAGA
Saga — FY2022/23 Earnings Presentation
38 slides from Saga's earnings presentation, Apr 4, 2023
Slide 1: Preliminary Results for the year ended 31 January 2023
PRELIMINARY RESULTS for the year ended 31 January 2023 4 APRIL 2023
Slide 2: Agenda
AGENDA Euan Sutherland Overview Group CEO James Quin Financial performance Group CFO Strategic progress Euan Sutherland Conclusion Group CEO Q&A 2 Preliminary results for the year ended 31 January 2023
Slide 3: Overview
OVERVIEW Euan Sutherland Group CEO
Slide 4: Strategic progress as we prepare for growth
STRATEGIC PROGRESS AS WE PREPARE FOR GROWTH Significant revenue growth of 54% compared with the prior year Positive momentum as we report an underlying profit in line with guidance: Ocean Cruise load factor and per diem ahead of the prior year delivering significant revenue growth Successful Travel
Slide 5: Continued demonstrable progress across our existing businesses
CONTINUED DEMONSTRABLE PROGRESS ACROSS OUR EXISTING BUSINESSES Cruise Cruise Insurance 75% £318 84% £71 Ocean Ocean Motor and Motor and Cruise Cruise home home margin load factor per diem retention per policy (2021/22 – 68%) (2021 22– £299) (2021 /22– 83%) (2021/22 – £74) Travel Underlying Guest sat
Slide 6: Financial performance
FINANCIAL PERFORMANCE James Quin Group CFO
Slide 7: Significant revenue growth and return to underlying profit
SIGNIFICANT REVENUE GROWTH AND RETURN TO UNDERLYING PROFIT Significant revenue increase driven £m 2022/23 2021/22 Change by Cruise and Travel recovery Revenue 581.1 377.2 54% Return to underlying profit in line with previous guidance Underlying Profit/(Loss) Before Tax 21.5 (6.7) 421% Loss before ta
Slide 8: After a disrupted H1 Cruise and Travel much improved in H2
AFTER A DISRUPTED H1 CRUISE AND TRAVEL MUCH IMPROVED IN H2 Cruise and Travel profit of £1.7m in £m 2022/23 2021/22 Change H2 compared to a loss of £11.6m in H1 Cruise and Travel (9.9) (79.3) 88% as operating conditions returned closer to normal Insurance Broking (earned) 69.1 66.4 4% Insurance Broki
Slide 9: Cruise demand increasing with strong 2023/24 bookings
CRUISE DEMAND INCREASING WITH STRONG 2023/24 BOOKINGS Ocean Cruise River Cruise Ocean Cruise profit of £6.2m in H2 vs. loss of £m 2022/23 2021/22 Change 2022/23 2021/22 Change £6.9m in H1 Revenue 168.3 82.5 104% 28.8 1.7 >1,000% Small River Cruise loss, Gross profit /(loss) 40.2 (7.7) 622% 1.5 0.2 6
Slide 10: Much improved Travel result and positive 2023/24 outlook
MUCH IMPROVED TRAVEL RESULT AND POSITIVE 2023/24 OUTLOOK £m 2022/23 2021/22 Change Much-improved result arising from significantly higher passenger Revenue 108.4 10.5 932% numbers Gross profit /(loss) 20.9 (0.7) >1,000% Revenue of £108.4m, more than 10 Marketing expenses (10.2) (6.5) (57%) times tha
Slide 11: Lower motor and home retail broking result but recovery of Travel contribution
LOWER MOTOR AND HOME RETAIL BROKING RESULT BUT RECOVERY OF TRAVEL CONTRIBUTION Year-on-year movement in written Insurance Broking Underlying Profit Before Tax (£m) 9.5 9.5 4.1 2.2 (1.8) (22.4) 66.6 Motor and home contribution 67.7 (12.9) 1 2 3 4 5 2021/22 New business Renewals PMI Travel CHMC Underl
Slide 12: Underwriting business navigating a challenging inflationary market
UNDERWRITING BUSINESS NAVIGATING A CHALLENGING INFLATIONARY MARKET Result supported by prior year releases (£m) Movement in reserve margin (£m) 2021/22 2022/23 16.7 (3.1) 165.9 151.0 2021/22 (25.1) 35.4 23.9 54.1 2022/23 19.1 Underlying revenue Underlying Profit Before Tax Jan-22 Underlying Basis ch
Slide 13: Continued investment for growth
CONTINUED INVESTMENT FOR GROWTH Underlying marketing costs (£m)* Underlying marketing costs (excl. 3.6 2.3 4.3 written to earned adjustment) (3.1) (3.2) broadly flat due to: investment in TV advertising for Underlying reduction (excluding written to Saga Money 49.6 earned adjustment) of 0.4 53.5 Tra
Slide 14: Net debt reducing despite challenging conditions
NET DEBT REDUCING DESPITE CHALLENGING CONDITIONS Movement in Net Debt (£m) 17.8 38.0 6.5 15.8 (46.4) (0.4) (25.0) (23.6) Available Operating Cash Flow before cash support to Cruise and Travel of 49.1 729.0 711.7 1 Feb 2022 Unrestricted Dividend Working Capital River Cruise and Ocean Cruise Debt Non-
Slide 15: Updated net debt outlook
UPDATED NET DEBT OUTLOOK Updated debt trajectory includes largely Deleverage profile Group Net Debt unchanged trading downsides along with other Spirit of Adventure updates Spirit of Discovery Debt continues to reduce over time albeit at a slower pace than anticipated 12 months ago Sale process for
Slide 16: Outlook 2023/24
2023/24 OUTLOOK Ocean Cruise – targeting load factor of >80% and EBITDA (before overheads) of £40m per ship River Cruise and Travel – expecting to return to profit Insurance Broking – challenging market expected to continue, with lower policy sales and margins trending towards £60 per policy, as adv
Slide 17: Strategic progress
STRATEGIC PROGRESS Euan Sutherland Group CEO
Slide 18: Our vision delivered through our three-step growth plan
OUR VISION… DELIVERED THROUGH OUR IS TO BE THE LARGEST THREE-STEP GROWTH PLAN… AND FASTEST-GROWING BUSINESS FOR OLDER 1. 2. 3. PEOPLE IN THE UK… Maximising our Step-changing Creating ‘The existing our ability to Superbrand’ based on the largest active pool of the businesses scale while for older mos
Slide 19: Continued progress towards maximising our existing businesses
CONTINUED PROGRESS TOWARDS MAXIMISING OUR EXISTING BUSINESSES Cruise Travel Insurance Money ✓ Most recent transactional ✓ 2023/24 booked ✓ Navigated a challenging ✓ New leadership to NPS of 81 revenue at £136.6m, market following the develop Money into a 32% ahead of the same implementation of signi
Slide 20: Continued progress towards creating 'The Superbrand' for older people
CONTINUED PROGRESS TOWARDS CREATING ‘THE SUPERBRAND’ FOR OLDER PEOPLE Brand repositioning Database Customer development engagement through Media Creating exceptional insights ✓ Launch of new Travel and Money television adverts ✓ Customer LTV model ✓ Group NPS increased to built 51, up 2 pts from the
Slide 21: Over 65s drive a surplus of £23 billion
£23 OVER 65s DRIVE A SURPLUS OF “ Put simply, they put more into the pot than they take out BILLION Lisa Edgar, Chief Insight Officer ” EVERY YEAR THE OVER 50s GENERATION EXPERIENCE Saga’s contribution study Saga are leading the shows that the ‘experienced’ way in reframing the economy is a net cont
Slide 22: Our new ESG strategic framework
OUR NEW ESG STRATEGIC FRAMEWORK Informed by feedback from 400 internal and 900 external stakeholders, we developed our new strategic framework which is centred around: Championing Acting on climate Strengthening our positive ageing change and biodiversity exceptional culture The ambition to enhance
Slide 23: Conclusion
CONCLUSION Euan Sutherland Group CEO
Slide 24: Building Saga into the largest and fastest-growing business for older people
BUILDING SAGA INTO THE 2022/23 Significant progress made as we returned LARGEST AND FASTEST- to underlying profit and delivered top-line GROWING BUSINESS FOR growth in Cruise, Travel and Money OLDER PEOPLE 2023/24 Strategic pivot towards a capital-light, marketing, content and distribution business
Slide 25: Biff ily;
Biff ily;
Slide 26: Dates for the diary
DATES FOR 2023 THE DIARY 20 June – Annual General Meeting 27 September – Interim results for the six months ending 31 July 2023 26 Preliminary results for the year ended 31 January 2023
Slide 27: Appendix
APPENDIX
Slide 28: Saga plc consolidated income statement
SAGA PLC CONSOLIDATED INCOME STATEMENT £m 2022/23 Change 2021/22 Revenue 581.1 54% 377.2 Underlying Profit/(Loss) Before Tax Cruise and Travel (9.9) 88% (79.3) Insurance Broking (earned) 69.1 4% 66.4 Insurance Underwriting 19.1 (65%) 54.1 Total Insurance 88.2 (27%) 120.5 Other Businesses and Central
Slide 29: Underlying to statutory marketing and administration costs
UNDERLYING TO STATUTORY MARKETING AND ADMINISTRATION COSTS £m 2022/23 2021/22 Underlying marketing costs (page 13) 53.5 49.6 Underlying administration costs (page 13) 166.7 158.6 Total underlying marketing and administration costs 220.2 208.2 Restructuring costs 3.7 6.3 The Big Window acquisition co
Slide 30: Cruise and Travel income statement
CRUISE AND TRAVEL INCOME STATEMENT 2022/23 2021/22 Cruise Cruise Ocean River and Ocean River and £m Cruise Cruise Travel Travel Change Cruise Cruise Travel Travel Revenue 168.3 28.8 108.4 305.5 223% 82.5 1.7 10.5 94.7 Gross profit/(loss) 40.2 1.5 20.9 62.6 863% (7.7) 0.2 (0.7) (8.2) Marketing expens
Slide 31: Insurance Broking income statement
INSURANCE BROKING INCOME STATEMENT Motor Home Other Total Total £m Broking Broking Broking 2022/23 Change 2021/22 Broked 105.0 150.1 123.9 379.0 7% 354.7 Underwritten 180.9 - 3.2 184.1 (12%) 208.9 Gross written premiums 285.9 150.1 127.1 563.1 - 563.6 Broker revenue 31.4 26.5 42.1 100.0 (5%) 105.4 I
Slide 32: Insurance Broking navigating a challenging environment
INSURANCE BROKING NAVIGATING A CHALLENGING ENVIRONMENT New business Renewals Total 000s 2022/23 2021/22 Variance 2022/23 2021/22 Variance 2022/23 2021/22 Variance Motor 142 283 (50%) 707 660 7% 849 943 (10%) Home 90 109 (17%) 580 587 (1%) 670 696 (4%) Motor and home 232 392 (41%) 1,287 1,247 3% 1,51
Slide 33: Insurance Underwriting income statement
INSURANCE UNDERWRITING INCOME STATEMENT 2022/23 2021/22 £m Reported Quota share Underlying Change Underlying Net earned premium 49.6 (98.7) 148.3 (8%) 161.5 Other revenue 25.6 22.9 2.7 (39%) 4.4 Revenue a 75.2 (75.8) 151.0 (9%) 165.9 Claims costs b (79.0) 83.0 (162.0) (23%) (132.0) Reserve releases
Slide 34: Reserve releases
RESERVE RELEASES 2022/23 prior year reserve releases by accident year (£’m) 11.5 9.6 4.4 3.8 3.4 1.2 1.7 1.8 0.2 0.8 (13.3) Pre - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 Accident Year to 31 January 34 Preliminary results for the year ended 31 January 2023
Slide 35: Other Businesses and Central Costs income statement
OTHER BUSINESSES AND CENTRAL COSTS INCOME STATEMENT 2022/23 2021/22 £m Other Central Other Central Businesses Costs Total Change Businesses Costs Total Revenue Money 7.9 - 7.9 34% 5.9 - 5.9 Media and printing 10.3 - 10.3 4% 9.9 - 9.9 Insight 0.6 - 0.6 100% - - - Other - 1.0 1.0 (33%) - 1.5 1.5 Total
Slide 36: Cash flow and liquidity
CASH FLOW AND LIQUIDITY £m 2022/23 Change 2021/22 Insurance Broking Trading EBITDA 75.9 4% 73.2 Other Businesses and Central Costs Trading EBITDA (29.5) (37%) (21.5) Trading EBITDA from unrestricted businesses 46.4 (10%) 51.7 Dividends paid by Insurance Underwriting business 25.0 (29%) 35.0 Working
Slide 37: Cruise and Travel cash flows
CRUISE AND TRAVEL CASH FLOWS Ocean Cruise Available Operating Cash Flow of 23.6 Small reduction in advance receipts relating to Q1 departures 31.6 Net trading income represents cash received (3.9) on departed cruises, partially offset by running 4.7 (15.2) 34.7 costs associated of those cruises 1.4
Slide 38: Terms of the new loan facility
TERMS OF THE NEW LOAN FACILITY General Pricing £50m revolving loan facility provided by Sir Roger Fixed rate of 10% per annum De Haan on an arm’s-length basis Arrangement fee of 2% payable immediately Guaranteed by Saga plc, Saga MidCo and Saga Services Drawing fee of 2% payable on the drawing date