REG - SAGA Plc - Trading Update

SagaAnnouncement

30/01/2024 07:00

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RNS Number : 2862B  SAGA PLC  30 January 2024

30 January 2024

Saga plc

Trading Update

Saga on track to deliver significant growth for the full year

 

Saga plc (Saga or the Group), the UK's specialist in products and services for
people over 50, provides the following update on trading covering the period
from 1 August 2023 to 29 January 2024.

 

Mike Hazell, Saga Group Chief Executive Officer, said:

"For 2023/24, Saga remains on track to deliver significant growth in revenue,
in addition to an underlying profit more than double that of the prior
year(1), exceeding our previous guidance. Our Cruise and Travel businesses
have had an outstanding year, having taken around 120k passengers on holiday,
with customers continuing to be drawn to the strength of the Saga brand and
offer. As a result, these businesses will return to profitability, in line
with expectations. In Insurance, the market-wide inflationary environment and
declining policy volumes are continuing to impact our performance.

"The year ahead will see a continuation of these trends across our business.
Bookings for the new seasons in Cruise and Travel are robust, showing good
overall progress. The dynamics in Insurance remain challenging and we need to
ensure we balance the business effectively between protecting and, in time,
growing volume and the delivery of sustainable profitability. More widely, we
will build on the successful cost and efficiency savings achieved in 2023/24,
further develop our Money business and continue to execute our data and brand
strategy.

"In delivering my first update as Group CEO, it is clear that Saga is a
business with strong fundamentals in place, underpinned by an outstanding
brand, brilliant colleagues, loyal customers and an opportunity to drive
long-term sustainable growth, as we unlock value through optimising our core
businesses and reducing debt."

 

2023/24 Outlook

·      The Group is expected to report revenue growth of between 10-15%
and an Underlying Profit Before Tax more than double that of the prior
year(1).

·      Ocean Cruise revenue growth is expected to be around 30%
year-on-year, delivered through a load factor of 87% and per diem of £331,
both significantly ahead of the 75% and £318 in the prior year. As a result,
and in line with previous guidance, we expect to exceed our target of £40.0m
Ocean Cruise Trading EBITDA (Excluding Overheads) per ship.

·      River Cruise is expected to return to underlying profit,
supported by a load factor of 85% and a per diem of £285. This equates to
revenue of around £44m and 17k passengers, which compares with £29m and 12k
passengers in the prior year.

·      Travel revenue growth is expected to be between 40-45%, with 58k
passengers, an increase of more than 20% when compared with the prior year. In
line with previous guidance, Travel (when combined with River Cruise for
consistency with previous reporting) is on track to return to pre-pandemic
Underlying Profit Before Tax.

·      Conditions facing our Insurance businesses are broadly unchanged.
In Insurance Broking, both policies in force and policy sales across all
products, are expected to be around 9% lower than in the prior year. In motor
and home specifically:

o  policy sales are expected to be 9% behind, with customer retention of 81%,
compared with 84% in the year before; and

o  the margin per policy is expected to be around £54, compared with £69 in
the prior year(1) and £56 in the first half.

·      Insurance Underwriting expects to report an Underlying Profit
Before Tax in the low-single digits and a gross current year combined
operating ratio lower than the 136.4% reported in the first half of the year,
as the significant price increases applied begin to flow through.

·      Following the cost efficiencies reported in our interim results
and subsequent actions taken, central costs are expected to be significantly
lower than in the prior year, at around £30m, compared with £37.7m in the
year before.

·    Available Cash is expected to be in the range of £135-145m at 31
January 2023, excluding the £50m revolving credit facility and the £85m
facility with Roger De Haan which both remain undrawn. Total Net Debt is
expected to be slightly higher than at 31 July 2023, in line with guidance.

 

Looking ahead to 2024/25

·      At 28 January 2024, the 2024/25 Ocean Cruise booked load factor
and per diem were materially ahead of the prior year at 66% and £368
respectively, compared with 62% and £337 in the prior year.

·      Given the ongoing momentum in Ocean Cruise, the business is now
approaching optimum capacity, building on the continued high demand for our
successful boutique cruise offer. We are exploring opportunities to optimise
the business, including potential partnership arrangements which, consistent
with our move to a capital-light business model, would support further growth,
crystallise value, reduce debt and enhance long-term returns for shareholders.

·      The River Cruise booked load factor, at 28 January 2024, was 59%
with a per diem of £335, both significantly ahead of the 52% and £295
respectively at the same time last year.

·      Our Travel business is also making progress, largely in line with
the dynamics over the last year. At 28 January 2024, booked revenue for
2024/25 was £115m, 12% ahead of the same point in the prior year, with
passengers of 35k, 2% ahead.

·      The conditions in Insurance remain challenging and, against this
backdrop, we are focused on effectively balancing the protection and,
ultimately, growth of policy sales with the delivery of sustainable
profitability. This reshaping will take place over time as the market
challenges begin to wane, however, the likely changes are expected to impact
profitability in the short-term.

·      In 2023/24, we refocused on our core businesses of Cruise,
Travel, Insurance and Money, underpinned by our data and brand strategy,
having exited our smaller loss-making businesses of Saga Exceptional, Insight
and Spaces. Moving into 2024/25, our purposeful and insightful customer-driven
content will be showcased within our popular magazine and regular newsletters.

·      The full year impact of the central cost efficiencies delivered
will continue to flow through into the coming year, in line with guidance, as
we embed our leaner operating model.

·      As we have previously indicated, we expect to repay the £150m
bond due in May 2024 through Available Cash resources and the £85.0m facility
with Roger De Haan.

 

 1  Refers to the 2022/23 financials, restated to reflect the adoption of
International Financial Report Standard 17 'Insurance Contracts'

 

For further information, please contact:

 

 Saga plc                                                   Tel: 07732 093 007
 Emily Roalfe, Director of Investor Relations and Treasury  Email: emily.roalfe@saga.co.uk (mailto:emily.roalfe@saga.co.uk)

 Headland Consultancy                                       Tel: 07980 894 557
 Susanna Voyle                                              Tel: 07872 350 428
 Will Smith                                                 Tel: 020 3805 4822

                                                            Email: saga@headlandconsultancy.com (mailto:saga@headlandconsultancy.com)

 

 

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 brands in the UK
and 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 (http://www.saga.co.uk)

END

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