Saga Plc · LSE:SAGA
Saga — H1 2025 Earnings Presentation
38 slides from Saga's earnings presentation, Oct 11, 2024
Slide 1: Saga plc Interim Results
SAGA PLC INTERIM RESULTS for the six months ended 31 July 2024 11 OCTOBER 2024
Slide 2: Speakers and Agenda
SPEAKERS AGENDA Mark Watkins Mike Hazell Steve Kingshott 1. Overview Group CFO Group CEO Insurance CEO 2. Financial performance 3. Strategic progress 4. Conclusion 5. Q&A 2 Interim results for the six months ended 31 July 2024
Slide 3: Overview
OVERVIEW Mike Hazell Group CEO
Slide 4: Strong underlying profit growth alongside significant deleveraging
STRONG UNDERLYING PROFIT GROWTH ALONGSIDE SIGNIFICANT DELEVERAGING Underlying Revenue grew 11% and Underlying Profit Before Tax of £27.2m increased more than threefold when compared with the prior year Continued growth across Cruise and Travel reflects strong customer demand Insurance conditions rem
Slide 5: Strong progress with continued growth across Cruise and Travel
STRONG PROGRESS IN THE FIRST HALF WITH CONTINUED GROWTH ACROSS CRUISE AND TRAVEL Cruise Travel Insurance Money Return to River Cruise load factor first half Policy sales Higher ↑ 3ppts underlying ↓ 13% conversion Ocean Cruise (86% vs. 83%) profit Current year (0.7m vs. 0.8m) on equity release Passen
Slide 6: Financial Performance
FINANCIAL PERFORMANCE Mark Watkins Group CFO
Slide 7: Significant top line growth alongside continued deleveraging
SIGNIFICANT TOP LINE GROWTH, ALONGSIDE CONTINUED DELEVERAGING £m HY 2024 HY 2023 Change Continued growth in revenue and Trading EBITDA driven by Cruise and Travel Underlying Revenue 393.3 355.3 11% Underlying Profit Before Tax increased threefold Revenue 404.8 358.1 13% Loss before tax includes Insu
Slide 8: Cruise and Travel drive threefold growth in UPBT despite Insurance challenges
CRUISE AND TRAVEL DRIVE THREEFOLD GROWTH IN UPBT DESPITE INSURANCE CHALLENGES £m HY 2024 HY 2023 Change Cruise and Travel increase primarily driven by higher Ocean Cruise load factor and per diems Cruise and Travel 31.2 11.8 164% In line with guidance, Insurance Broking is materially lower Insurance
Slide 9: Ocean Cruise: demand drives further growth
OCEAN CRUISE £m HY 2024 HY 2023 Change DEMAND DRIVES Revenue 121.5 103.8 17% FURTHER GROWTH Gross profit 52.1 36.1 44% Significant revenue growth driven by increased load factor Marketing expenses (6.8) (6.5) (5%) and per diem, now at 90% and £362 Other operating expenses (9.1) (7.0) (30%) Increased
Slide 10: River Cruise continues to build momentum
RIVER CRUISE £m HY 2024 HY 2023 Change CONTINUES TO Revenue 26.4 23.4 13% BUILD MOMENTUM Gross profit 7.8 6.5 20% Increased revenue and gross profit driven by higher load Marketing expenses (2.4) (2.8) 14% factor and per diem, at 86% and £340, 3ppts and 15% ahead of the prior year Other operating ex
Slide 11: Travel: revenue growth drives return to profit
REVENUE GROWTH DRIVES £m HY 2024 HY 2023 Change TRAVEL RETURN TO PROFIT Revenue 78.9 69.7 13% Gross profit 16.5 13.6 21% Reported revenue growth of 13%, driven by increased Marketing expenses (5.9) (5.4) (9%) average revenues per passenger Other operating expenses (10.9) (10.9) - On a like-for-like
Slide 12: Lower Insurance Broking contribution reflecting ongoing challenges
LOWER INSURANCE BROKING CONTRIBUTION REFLECTING ONGOING CHALLENGES 1 Motor contribution recovering year-on-year due to higher renewal margins, particularly for our three-year policies 2 Lower home policy numbers coming into the year, combined with net rate inflation pressure, impacting competitivene
Slide 13: Insurance Underwriting: pricing action continues to earn through
INSURANCE UNDERWRITING Combined operating ratio (net) PRICING ACTION CONTINUES TO HY 2024 16.8% EARN THROUGH (0.8%) HY 2024 101.7% 100.9% 84.9% HY 2023 Reported Expense ratio Current year Prior year Reported 102.0 current year loss combined development combined ratio operating ratio operating ratio
Slide 14: Continued progress towards net debt reduction
CONTINUED PROGRESS TOWARDS NET DEBT REDUCTION Available Operating Cash Flow of £54.4m, lower than the prior year, primarily reflecting the one -off prior year benefit from the move to a River Cruise and Travel escrow arrangement, alongside lower Insurance Broking EBITDA and Underwriting dividends Co
Slide 15: Outlook: Group Net Debt
Group Net Debt UPDATED NET DEBT £711.7m Spirit of Adventure OUTLOOK Spirit of Discovery £637.2m £614.6m Debt reduction remains a key strategic priority Net Debt, at 31 July 2024, was £614.6m, £42.8m lower than at 31 July 2023 Repaid the £150.0m bond in May 2024 through a combination of Available Cas
Slide 16: Full Year Outlook
FULL YEAR OUTLOOK Ocean Cruise – second half profitability lower than H1, largely due to a routine dry dock for Spirit of Adventure River Cruise – H2 underlying profit lower than H1, reflecting normal seasonality Travel – Increased passenger volume in H2 expected to drive material increase in UPBT I
Slide 17: Strategic Progress
STRATEGIC PROGRESS Mike Hazell Group CEO
Slide 18: Delivered through our growth plan
OUR VISION is to be the largest and most-trusted brand for older people in the UK… DELIVERED THROUGH OUR GROWTH PLAN 1. 2. 3. Reducing debt Growing our Maximising through customer base our core capital-light and deepening businesses growth our customer relationships Driving our core businesses of Cr
Slide 19: Ocean and River Cruise forward bookings ahead of prior year
OCEAN CRUISE FORWARD …WITH RIVER CRUISE ALSO BOOKINGS AHEAD OF DEMONSTRATING THE PRIOR YEAR… STRONG MOMENTUM £359 £327 Per diem Per diem (2023/24 - £331) New (2023/24 - £285) Enhanced 90% BBC 88% service Load factor 2024/251 Studios Load factor (2023/24 – 85%) 2024/251 onboard (2023/24 –87%) partner
Slide 20: Travel forward bookings continue to grow
TRAVEL FORWARD BOOKINGS CONTINUE TO GROW £162.2m Revenue (2023/24 - £140.3m) 54.4k Website Passengers 2024/251 enhanced (2023/24 – 50.3k) for bookings journey More 21.9k 2025/261 departures from Passengers regional (2024/25 – 21.1k) airports £77.1m Revenue (2024/25 - £72.8m) 1 Current year bookings
Slide 21: Insurance Underwriting on a strong footing
INSURANCE UNDERWRITING ON A STRONG FOOTING, WITH REVENUE AND PROFIT GROWING Return Net Net to first half Insurance Underlying Underlying Underlying Revenue Profit Before Tax Profit Before ↑ 32% ↑ 153% Tax (£93.0m vs. £70.5m) (£1.9m vs. (£3.6m)) Price increases over the past 62% Earned policies Net o
Slide 22: Challenges impacting our Insurance Broking business
Challenges impacting our Insurance Exploring partnerships to drive Broking business long-term growth Short-term stabilisation measures Crystallise Improve value and customer Motor service reduce recovery Investment in pricing competitiveness efficiency and debt driving growth Investment in cost-effi
Slide 23: Actions ongoing to support the medium-term growth opportunity
The trends observed towards the end of the first half are expected to continue for the second… Continued improvement in AICL profitability , underpinned by pricing discipline ACTIONS ONGOING TO SUPPORT THE Why it’s getting worse MEDIUM-TERM GROWTH Motor and home broking impacted by fewer policies co
Slide 24: Transition to partnership model in Insurance
TRANSITION TO PARTNERSHIP MODEL IN INSURANCE WOULD ALLOW US TO PROVIDE MORE CUSTOMERS WITH HIGH-QUALITY PRODUCTS AND SERVICES Insurance today Group strategy Future Insurance Core to customer proposition Three key strategic priorities: Continuation of high-quality insurance products and customer serv
Slide 25: Exclusive negotiations with Ageas for partnership and underwriting sale
IN EXCLUSIVE NEGOTIATIONS WITH AGEAS FOR A 20-YEAR AFFINITY PARTNERSHIP AND SALE OF INSURANCE UNDERWRITING 1 Sale of AICL for total consideration of £67.5m1,2,3 2 20-year affinity partnership between SSL and Ageas for motor and home insurance, with upfront consideration of £80m3 Proposed partnership
Slide 26: Money is building a platform for growth
MONEY IS BUILDING A PLATFORM FOR GROWTH Building Saga awareness of our Money new News products and other website enhancements Weekly newsletter reach of 800k Launched Sector-leading1 webinars tNPS promoting financial (62 in HY 2024 vs. 72 in HY awareness on a 2023) range of topics 26 Interim results
Slide 27: Continued progress in driving customer engagement
CONTINUED PROGRESS IN DRIVING CUSTOMER ENGAGEMENT Consented customer base ↑ 16% (3.8m vs. 3.3m) Celebrating 40 years of our award-winning Website magazine enhancements made, with visits ↑ 21% (14.6m vs. 12.1m) Launched Saga magazine in stores 27 Interim results for the six months ended 31 July 2024
Slide 28: Conclusion
CONCLUSION Mike Hazell Group CEO
Slide 29: Creating a platform for sustainable capital-light growth
CREATING A PLATFORM FOR SUSTAINABLE CAPITAL-LIGHT GROWTH Significant progress in the first half of the year Underlying profit increased threefold, driven by exceptional growth in Cruise and Travel Exclusive negotiations for an Insurance partnership and Underwriting disposal with Ageas A platform for
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Slide 31: Appendix
APPENDIX
Slide 32: Saga plc Consolidated Income Statement
SAGA PLC CONSOLIDATED INCOME STATEMENT £m HY 2024 Change HY 2023 Underlying Revenue 393.3 11% 355.3 Underlying Profit/(Loss) Before Tax Cruise and Travel 31.2 164% 11.8 Insurance Broking (earned) 12.2 (49%) 23.8 Insurance Underwriting 1.9 153% (3.6) Total Insurance 14.1 (30%) 20.2 Other Businesses a
Slide 33: Cruise and Travel Income Statement
CRUISE AND TRAVEL INCOME STATEMENT £m Ocean River Travel HY 2024 Change Ocean River Travel HY 2023 Cruise Cruise Cruise and Cruise Cruise Cruise and Travel Travel Revenue 121.5 26.4 78.9 226.8 15% 103.8 23.4 69.7 196.9 Gross profit 52.1 7.8 16.5 76.4 36% 36.1 6.5 13.6 56.2 Marketing expenses (6.8) (
Slide 34: Insurance Broking Income Statement
INSURANCE BROKING INCOME STATEMENT Motor Home Other HY 2024 Change HY 2023 £m Broking Broking Broking Broked 65.1 81.1 64.8 211.0 - 210.2 Underwritten 88.0 - 1.2 89.2 1% 88.6 Gross Written Premiums 153.1 81.1 66.0 300.2 - 298.8 Broker revenue 4.7 6.7 20.5 31.9 (20%) 40.1 Instalment revenue 1.6 1.7 -
Slide 35: Insurance Underwriting Income Statement
INSURANCE UNDERWRITING INCOME STATEMENT Gross Re- HY 2024 Change HY 2023 £m insurance Net Gross Insurance Underlying Revenue A 102.0 (9.0) 93.0 30% 78.5 Incurred claims (current year claims) B (78.4) (0.6) (79.0) 14% (91.5) Claims handling costs in relation to incurred claims C (8.3) - (8.3) (5%) (7
Slide 36: Other Businesses and Central Costs Income Statement
OTHER BUSINESSES AND CENTRAL COSTS INCOME STATEMENT £m Other Central HY 2024 Change Other Central HY 2023 Businesses Costs Total Businesses Costs Total Underlying Revenue Money 2.8 - 2.8 (24%) 3.7 - 3.7 Publishing and CustomerKNECT 6.8 - 6.8 17% 5.8 - 5.8 Insight - - - (100%) 0.5 - 0.5 Total Underly
Slide 37: Cash Flow and Liquidity
CASH FLOW AND LIQUIDITY £m HY 2024 Change HY 2023 Insurance Broking Trading EBITDA 15.9 (42%) 27.5 Other Businesses and Central Costs Trading EBITDA (2.7) 73% (10.0) Trading EBITDA from unrestricted businesses 13.2 (25%) 17.5 Dividends paid by Insurance Underwriting business - (100%) 7.0 Working cap
Slide 38: Cruise and Travel Cash Flows
CRUISE AND TRAVEL CASH FLOWS Available Operating Cash Flow of 54.1 Ocean Cruise 47.7 Positive net advance customer receipts, reflecting growing (0.8) pipeline of bookings alongside usual seasonality (7.0) Net trading income 52% ahead of the corresponding HY 2023 position 7.2 (31.1) £31.1m repayment