Saga Plc · LSE:SAGA
Saga — H1 2022/23 Earnings Presentation
46 slides from Saga's earnings presentation, Sep 27, 2022
Slide 1: Interim Results
INTERIM RESULTS for the six months ended 31 July 2022 27 SEPTEMBER 2022
Slide 2: Agenda
AGENDA Overview Euan Sutherland Group CEO Financial performance James Quin Group CFO Saga Travel John Constable Saga Travel Group CEO Strategy overview Euan Sutherland Conclusion 2 Interim results for the six months ended 31 July 2022
Slide 3: Overview
OVERVIEW Euan Sutherland Group CEO
Slide 4: Return to underlying profit as cruise and travel growth begins
Return to underlying profit for the first half and expect to report RETURN TO underlying profit for the full year in the range of £20-30m UNDERLYING Resilient performance within all business units: PROFIT AS On track to reach target Ocean Cruise load factor with per diems CRUISE AND ahead of plan TR
Slide 5: Maximising our existing businesses
MAXIMISING OUR EXISTING BUSINESSES Cruise and Travel* Insurance Strong Ocean Cruise bookings and progress on River Challenging market conditions with steps taken to Cruise alongside launch of new digital Travel business return to growth 66% £318 8.8 36% +3% £74 83% 50% Ocean Ocean Ocean Cruise Ocean
Slide 6: Financial Performance
FINANCIAL PERFORMANCE James Quin Group CFO
Slide 7: Return to underlying profit in challenging markets
RETURN TO UNDERLYING PROFIT IN CHALLENGING MARKETS Significant increase in revenue and HY 2022 HY 2021 Variance return to underlying profit, supported by the partial recovery Revenue £258.3m £156.4m 65% of Cruise and Travel as we emerge Underlying Profit/(Loss) Before Tax £14.0m (£2.8m) 600% from th
Slide 8: Resilient Insurance, Cruise and Travel starting to recover
RESILIENT INSURANCE, CRUISE AND TRAVEL STARTING TO RECOVER Lower Insurance result mainly a HY 2022 HY 2021 Variance function of higher current-year loss Retail Broking (written) £37.0m £39.5m (6%) ratio in the Underwriting business Significantly improved Cruise and Written to earned adjustment (£1.5
Slide 9: Lower motor and home broking result but improved travel insurance sales
LOWER MOTOR AND HOME BROKING RESULT BUT IMPROVED TRAVEL INSURANCE SALES Year-on-year movement in written Retail Broking Underlying Profit Before Tax £3.3m £4.8m £2.0m (£1.5m) (£0.8m) (£9.7m) (£0.6m) £39.5m Motor and home contribution £37.0m (£6.4m) 1 2 3 4 5 HY 2021 New business Renewals PMI Travel
Slide 10: Taking the right steps to position Insurance for the future
TAKING THE RIGHT STEPS TO POSITION INSURANCE FOR THE FUTURE Very competitive motor market as pricing adjusts to regulatory changes that require equalisation of pricing Market between motor and home new business and renewals context High levels of claims inflation (estimated at 13%) is not fully bein
Slide 11: Underwriting business navigating high levels of claims inflation
UNDERWRITING BUSINESS NAVIGATING HIGH LEVELS OF CLAIMS INFLATION Claims frequency returning to normal Movement in reserve margin HY 2021 HY 2022 £16.7m (£2.2m) £87.0m (£18.4m) £75.7m HY 2021 £35.4m HY 2022 £31.5m £31.1m £16.4m Underlying revenue Underlying Profit Before Tax Jan-22 Underlying Basis c
Slide 12: Impact of claims inflation on 2022/23 outlook
IMPACT OF CLAIMS INFLATION ON 2022/23 OUTLOOK What we’re seeing What we’re doing What’s the impact? Inflation pressures across More cautious prospective Some pressure on current the industry view of claims inflation year underwriting results in 2022/23 and, to a lesser Latest view of inflation is Ex
Slide 13: Cruise and Travel return drives much-improved result
CRUISE AND TRAVEL RETURN DRIVES MUCH- IMPROVED RESULT HY 2022 HY 2021 Variance Ocean Cruise EBITDA and cash positive for the first half, supporting Revenue £136.2m £10.0m >1,000% resumption of ocean cruise ship repayments in June Gross profit /(loss) £20.8m (£18.2m) 214% Small Ocean Cruise loss due
Slide 14: Net debt reducing despite headwinds
NET DEBT REDUCING DESPITE HEADWINDS Movement in net debt £12.6m £18.8m £5.0m £3.5m £6.9m (£26.6m) (£15.0m) (£12.9m) Available Operating Cash Flow before cash support to £729.0m £721.3m Cruise and Travel of £31.2m 1 Feb 2022 Unrestricted Dividend Working Capital River Cruise and Ocean Cruise Debt Non
Slide 15: Updated net debt outlook
UPDATED NET DEBT OUTLOOK Chart to the right shows updated profile of net Deleverage profile Group net debt debt in a range of scenarios Spirit of Adventure Spirit of Discovery More positive travel outlook, but lower insurance profit expectations lead to a slightly slower pace of deleveraging Cruise
Slide 16: Travel
TRAVEL John Constable Saga Travel Group CEO
Slide 17: We are building 'the' travel company for the experienced market
WE ARE BUILDING 'THE' TRAVEL COMPANY FOR THE EXPERIENCED MARKET P A dynamic and digital offering that allows us to penetrate a market that makes 52m trips per year P A world-class escorted touring business using both the Saga and Titan brands P A product offering and service proposition that keeps t
Slide 18: Building what our customers want and concept feedback is positive
BUILDING WHAT OUR …AND CONCEPT CUSTOMERS WANT… FEEDBACK IS POSITIVE “Saga is a A wider range, beyond hosted resort stays and tours, tailored to the wants of people over 50 more up to date, “It looks like Saga is more modern keeping up with Saga offering a wider range – makes the brand more attractiv
Slide 19: There is significant opportunity
THERE IS SIGNIFICANT OPPORTUNITY Our target customers continue to grow and their lifestyles are changing They are eager to travel and more confident than ever using technology The Saga Exceptional Attract younger UK 50+ market predicted to grow by 2.3m Departure Experience customers by 2030; focus o
Slide 20: Travel transformation from today to 2027
TRAVEL TRANSFORMATION FROM TODAY TO 2027 We’ve already made Leverage consented database significant operational simplifications… Today of 2.2m, growing at c.70k per month Three reservation systems Attract new and existing Leverage market opportunity customers to Saga consolidated into one Two phone
Slide 21: Tailor-made by Saga - delivering growth
TAILOR-MADE BY SAGA - DELIVERING GROWTH A new dynamic, digital travel business, delivering innovative products and exclusive short term offers, improving speed to market and customer choice Curated product range Independent and private touring Self-drive itineraries Motorhome holidays Tailor-made Sh
Slide 22: Touring - an insight-led strategy focused on future customers
TOURING – AN INSIGHT-LED STRATEGY FOCUSED ON FUTURE CUSTOMERS Touring appeals for many reasons: 1 3 Adventurous destinations Product Commercial Hassle-free planning innovation growth Interesting itineraries Premium jet tour launch New distribution (Titan) Growth requires a much higher level of first
Slide 23: Early innovation began with premium jet service and product development constant
EARLY INNOVATION …AND PRODUCT BEGAN WITH… DEVELOPMENT WILL BE …our new premium jet service CONSTANT Stand-out tour proposition in an uncrowded space Inspiring innovating, challenging to replicate Sector leadership 1 tour delivers £1.9m revenue 70% sold 10 weeks after launch …the experienced gap year
Slide 24: What does success look like?
WHAT DOES SUCCESS LOOK LIKE? Saga is the UK's number one travel provider for the experienced generation… …and constant …with a proposition that is innovation 100% personal, local, that delivers completely door-to-door Exceptional and complimented by Experiences exceptional service… Every day for our
Slide 25: Strategy Overview
STRATEGY OVERVIEW Euan Sutherland Group CEO
Slide 26: The Saga vision E3 = R2
THE SAGA VISION Our formula is simple: E3 = R2 Delivering Exceptional Experiences Every day leads to customers always Returning and Recommending us By 2027, our ambition is to be The largest and fastest growing commercial network for older people in the UK, …with the Our priority is largest active p
Slide 27: Focused on our three-step growth plan
FOCUSED ON OUR THREE-STEP GROWTH PLAN 1. 2. 3. Maximising our existing Step-changing our ability to Creating THE Superbrand businesses scale while reducing debt for older people in the UK Specific growth plans for each Grow existing businesses while Re-position the brand to business enabling growth,
Slide 28: Significant opportunity to create a diversified growth business
WE SEE SIGNIFICANT OPPORTUNITY TO CREATE A DIVERSIFIED GROWTH BUSINESS Now Next year Five years Ten years Insurance Travel Cruise Money Media Note that the Insurance charts on the dominates left reflect an Insurance illustrative earnings but becoming a lower All Business units driving E3=R2 level of
Slide 29: Good early progress in H1 2022
GOOD EARLY PROGRESS IN H1 2022 Continued Colleague Building exceptional Revenue growth Weekly email Saga improvement in engagement grew customer insights in Saga Money Magazine reaching customer and appointment again to over through the Big Window with NPS of CEO 8.0 out of 10 customer Jerry (HY 202
Slide 30: What's next for H2 2022/23?
WHAT’S NEXT FOR H2 2022/23? 84% £320 Launch of Ocean Cruise load factor Ocean Cruise per diem Cruise Media Media strategy £137.6m On track to deliver booked revenue for 2022/23 Customer 3m new consents (River Cruise and Travel bookings at Travel by year-end 18 September 2022) data Implementation of
Slide 31: Conclusion
CONCLUSION Euan Sutherland Group CEO
Slide 32: On track to build Saga into the Superbrand for older people
ON TRACK TO BUILD SAGA Expect to see improved operating performance in 2023/24, with growth in INTO THE SUPERBRAND Saga Cruise, Travel and Money, a FOR OLDER PEOPLE stabilised Insurance business and scale-up opportunity in Saga Media Expected accelerated delivery of our three-step growth plan with t
Slide 33: Q&A
Q&A
Slide 34: Dates for the diary
Slide design to be added Slide to be left up on screen after Q&A (as attendees mingle) 2022 10-14 October – Interim results roadshow DATES FOR THE DIARY 2023 24 January - Trading Update 24 January - Capital markets event (Media, Money and Data) TBC March – 2022/23 Preliminary results 34 Interim resu
Slide 35: Appendix
APPENDIX
Slide 36: Summary of guidance for 2022/23
SUMMARY OF GUIDANCE FOR 2022/23 Full year underlying profit to be in the range of £20-30m (compared with previous Group financials guidance of £35-50m) Expect net debt to continue to reduce, despite challenging markets Motor and home policy sales like to be similar to H1 Motor and home margin per po
Slide 37: Saga plc consolidated income statement
SAGA PLC CONSOLIDATED INCOME STATEMENT HY 2022 Change HY 2021 Revenue £258.3m 65% £156.4m Underlying Profit/(Loss) Before Tax Retail Broking (earned) £35.5m (6%) £37.9m Underwriting £16.4m (47%) £31.1m Insurance £51.9m (25%) £69.0m Ocean Cruise (£6.9m) 81% (£35.4m) River Cruise and Holidays (£4.7m)
Slide 38: Continued investment for the future
CONTINUED INVESTMENT FOR THE FUTURE Underlying marketing costs* £1.6m £2.1m £0.9m £0.6m £2.6m underlying increase vs. the prior year: (£0.5m) £0.9m incremental Cruise and Travel spend to Underlying increase (excl. written to earned support future bookings as operations begin to adjustment) of £2.6m
Slide 39: Underlying to statutory marketing and administration costs
UNDERLYING TO STATUTORY MARKETING AND ADMINISTRATION COSTS HY 2022 HY 2021 Underlying marketing costs (page 38) £23.6m £18.9m Underlying administration costs (page 38) £74.0m £71.8m Total underlying marketing and administration costs £97.6m £90.7m Restructuring costs £2.2m £0.4m IAS 19 charge - £1.2
Slide 40: Insurance retail broking income statement
INSURANCE RETAIL BROKING INCOME STATEMENT Motor Home Other Total HY Total HY Broking Broking Broking 2022 Change 2021 Broked £45.3m £71.9m £61.6m £178.8m 2% £175.8m Underwritten £97.1m - £1.8m £98.9m (7%) £106.9m Gross written premiums £142.4m £71.9m £63.4m £277.7m (2%) £282.7m Broker revenue £19.9m
Slide 41: Insurance underwriting income statement
INSURANCE UNDERWRITING INCOME STATEMENT Underlying Underlying Reported Quota share HY 2022 Change HY 2021 Net earned premium £24.2m (£50.2m) £74.4m (12%) £84.1m Other revenue £1.3m - £1.3m (55%) £2.9m Revenue A £25.5m (£50.2m) £75.7m (13%) £87.0m Claims costs B (£23.2m) £47.0m (£70.2m) (10%) (£64.1m
Slide 42: Reserve releases
RESERVE RELEASES HY 2022 prior year reserve releases by accident year (£’m) 10.4 7.3 3.3 3.0 1.5 1.5 1.5 0.5 0.5 (12.0) Pre - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 Accident Year to 31 January 42 Interim results for the six months ended 31 July 2022
Slide 43: Cruise and Travel income statement
CRUISE AND TRAVEL INCOME STATEMENT HY 2022 HY 2021 River Total River Total Ocean Cruise and Cruise and Ocean Cruise and Cruise and Cruise Travel Travel Change Cruise Travel Travel Revenue £75.7m £60.5m £136.2m >1,000% £8.0m £2.0m £10.0m Gross profit/(loss) £11.9m £8.9m £20.8m 214% (£17.0m) (£1.2m) (
Slide 44: Other businesses and central costs income statement
OTHER BUSINESSES AND CENTRAL COSTS INCOME STATEMENT HY 2022 HY 2021 Other Central Other Central Businesses Costs Total Change Businesses Costs Total Revenue Money £4.1m - £4.1m 46% £2.8m - £2.8m Media and printing £5.1m - £5.1m 4% £4.9m - £4.9m Other - £0.8m £0.8m - - £0.8m £0.8m Total revenue £9.2m
Slide 45: Cash flow and liquidity
CASH FLOW AND LIQUIDITY HY 2022 Change HY 2021 Retail Broking Trading EBITDA £38.8m (5%) £40.9m Other Businesses and Central Costs Trading EBITDA (£12.2m) (85%) (£6.6m) Trading EBITDA from unrestricted entities £26.6m (22%) £34.3m Dividends paid by Underwriting business £15.0m 25% £12.0m Working cap
Slide 46: Cruise and Travel cash flows
CRUISE AND TRAVEL CASH FLOWS Ocean Cruise Available Operating Cash Flow of £12.9m Increase in advance customer receipts as £10.2m bookings increase (£1.3m) Net trading income represents cash received £4.0m on departed cruises, partially offset by running (£7.3m) costs associated of those cruises £8.