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(SAGA) Share Chat

Discussion in 'General Share Chat' started by Groucho, Jun 11, 2019.

  1. Groucho

    Groucho Member

    4 April 2019

    Saga plc

    Preliminary Results for the full year ended 31 January 2019

    Saga to refocus on its heritage as a direct to consumer brand with membership at its core

    Saga plc ("Saga" or "the Group"), the UK's specialist in products and services for life after 50, announces its preliminary results for the twelve months ended 31 January 2019.

    Lance Batchelor, Group Chief Executive Officer, said:

    "Over recent years Saga has faced increasing challenges from the commoditisation of the markets in which we operate, especially in Insurance. This has had an impact on both customer numbers and profitability. Although Underlying Profit Before Tax for the 2018/19 financial year is in line with our expectations, the long-term challenges we face and the results demonstrate that Saga cannot grow without a clearly differentiated offering to its customers.

    In response, today we are launching a fundamental change to the Group's strategy to return the whole business to its heritage as an organisation that offers differentiated products and services. This will give our customers and members a compelling reason to come to us and stay with us.

    As a first step, we are announcing the launch of a new approach to Insurance. This focuses on direct channels and products that offer attractive innovative features, moving the conversation from price to value. Our new three-year fixed price insurance offering is a powerful indication of our change in approach.

    As a result of lower margins in Insurance, a change in approach to renewal pricing, lower reserve releases and investment in new products, Underlying Profit Before Tax for the 2019/20 financial year is expected to be between £105m-120m. Therefore, we have taken the difficult decision to reduce our final dividend and write down goodwill. The fundamental changes we are making are essential to address the long-term challenges facing our business. They will support future growth in customers and profits, and generate attractive cash flows for Saga."

    Financial highlights

    Performance in 2018

    · Underlying Profit Before Tax down 5.4% at £180.3m reflecting strong reserve releases but disappointing Retail Broking result

    - Retail Broking down 19.1% at £105.8m

    - Underwriting up 9.3% at £86.7m, supported by underlying reserve releases of £78m

    - Travel up 2.4% at £21.1m, with strong forward bookings in Cruise

    - Emerging businesses and central costs (excluding finance costs) improved by 21.5% to (£21.6m)

    · Loss before tax of (£134.6m) after Goodwill impairment of £310m

    · Available operating cash flow £180.6m

    · Net debt reduced to £391.3m with net debt to trading EBITDA at 1.7x

    · Proposed full year dividend reduced to 4.0p with expected future payout of approximately 50%

    Strategic Change

    · Fundamental shift in strategy to address long term challenges

    · Saga to refocus on its heritage as a direct to consumer brand with membership at its core, providing differentiated products and services that customers can't get elsewhere

    · Launch of new Insurance approach focused on growing direct channels, with the launch of a 3 year fixed price proposition, and with a new approach to renewal pricing

    · Accelerating transformation of Tour Operations

    · Continue the Cruise transformation

    · Investment behind new products and membership to build on early signs of traction

    · 2019/20 Underlying profit before tax expected to be £105-£120m due to a reduction in reserve releases, as well as a decline in Broking gross margins (less marketing costs) from £80 to between £71-£74 per policy

    · Action on dividend and amendments to banking facilities provide robust balance sheet to support strategic change

    Last edited: Jun 11, 2019
  2. Groucho

    Groucho Member

    11 June 2019

    Saga plc announces savings partnership with Marcus by Goldman Sachs

    Saga plc ("Saga" or "the Group"), theUK'sspecialist in products and services for life after 50, today announces that Marcus by Goldman Sachs ("Marcus") is to become its new long-term savings partner. Saga and Marcus will launch new products together from autumn 2019.

    Marcus launched in theUKin September 2018 with an easy-access savings account. It has been praised for its strong customer service and, to date, has attracted over 250,000 customers in theUK.

    This announcement is one of several strategic initiatives by the Group that are aimed at returning Saga to its heritage of delivering high quality products and services to its customers.

    Lance Batchelor, Chief Executive Officer of Saga said: "This is an exciting time for Saga and our customers as we announce our new long-term savings partnership. We know that our customers hold a large proportion of their wealth in savings and want to know that they're getting a great return with a brand they can trust.

    "This is an important strategic partnership for Saga that will help us provide innovative and high- quality products that will be designed not just to meet our customers' needs, but to exceed their expectations."

    Harit Talwar, Global Head of Marcus by Goldman Sachs, said: "We are excited to collaborate with brands such as Saga and to provide savings products to their customers. This partnership is an example of our ambition to bring our global scale and deep capabilities to meet a broad range of personal finance and investment needs."
  3. Groucho

    Groucho Member


    Chair of the Remuneration Committee, Gareth Williams said in relation to the voting results of the Resolution 2:

    "I am pleased that a significant majority of shareholders have voted in favour of the Annual Report on Remuneration. However, the Committee has noted that approximately 28% of shareholders voted against the Report.

    We started consulting with shareholders on 1 May 2019 on changes to the future performance conditions for our Long-Term Incentive Plan to align with our new Strategy. I issued an update on this consultation through an RNS Announcement issued on 12 June 2019 in which I stated our intention to continue the consultation process to enable this dialogue between the Committee and shareholders to continue. This extension to the process will allow us to receive replies from some shareholders who had not responded prior to 12 June and to continue discussions with others on the performance conditions.

    We will now extend this consultation to ask those shareholders who voted against the Annual Report on Remuneration the reasons for their vote. In line with the UK Corporate Governance Code we will issue an announcement on the feedback received from those shareholders and the action the Committee intends to take within six months of the date of this Annual General Meeting; with a full explanation set out in the Remuneration Report for 2019/20."

    SAGA Plc - Result of AGM @SagaUK https://www.voxmarkets.co.uk/rns/announcement/41b3414c-e46d-4be1-8b4a-60d0362d0a29
  4. Groucho

    Groucho Member

    Daily Mail 20/6/19

    Attached Files:

  5. Groucho

    Groucho Member

    Mail on Sunday 14/07/19
    Megster likes this.
  6. Groucho

    Groucho Member

    Activist fund manager Elliott has taken a 5 per cent stake in Saga, the travel and financial services company that has seen its shares fall from a peak of around 225p to less than 50p. Saga says ‘we have good and open relations with all of our shareholders and expect to be in contact with Elliott shortly.’ Observers speculate that Elliott could propose a split of the company’s tour operating and financial services businesses.
  7. Groucho

    Groucho Member

    City AM 18/07/19
  8. Groucho

    Groucho Member

    Sunday Telegraph 01/09/19
  9. Groucho

    Groucho Member


    Chairman's statement

    Saga has made good progress in returning to its heritage as a company that delivers high quality, differentiated products and services that resonate with its core customer group. It is early days in our transformation programme and there remains much to do but what we have seen so far gives us confidence that we are pursuing the right strategy. This, plus a focus on the profitability of our core Travel and Insurance businesses, are the things that will help us return to sustainable growth and, over time, restore significant value for our shareholders.

    The Board is actively looking at ways to improve efficiency and accelerate the implementation of the strategic direction set out in April. I am pleased to report that, in their first year, new members of the Board have brought their considerable experience to bear. In Insurance Julie Hopes and Gareth Hoskin have been integral to our plans to build on the early success of 3-year fixed price, and Eva Eisenschimmel has helped lead discussions around the future of the Saga brand and customer proposition.

    The Search for a Group CEO is progressing well. We are targeting a leader who can drive the next phase of Saga's transformation and deliver a sustainable and growing business.

    While there are still challenges, the business has made a good start in addressing the issues we described in April. There is strength in the Saga Brand for our core target market, where it has a clear role to represent and deliver trusted service and peace of mind. We know that, in order to realise the value of our strategy and maximise the benefits of our brand, we must serve our customers well with the right products and great service so that we continue to deserve the trust they place in Saga.

    On behalf of the Board, I thank all our employees sincerely for their intensive effort in helping us make such a strong start in resetting our direction, and for their advocacy of our customers. Getting back to growth will require exceptional commitment and execution from everyone at Saga. I remain confident the business will rise to the challenge.

    Group CEO's statement


    At the beginning of this year we relaunched our strategy and in the first 6 months of the year we have made good progress in both our Insurance and Cruise businesses. Our 3-year fixed price product has now sold over 175,000 policies and we have launched, on time and on budget, the first of our two new cruise ships, Spirit of Discovery. Customer feedback on our Cruise offering has been fantastic. Forward bookings of over 50% to date, of the significantly increased capacity we are offering for 2020/21, underpin our EBITDA target for each new ship of £40m per annum. Nonetheless, we have more to do to continue this early progress in stabilising our Insurance business and strengthening our direct customer relationship.

    As we expected, Underlying Profit Before Tax2 for the first half declined to £52.8m (H1 2018: £107.5m) reflecting the lower level of reserve releases from AICL, lower margins in our Retail Broking business, and the short-term impact of the retirement of Saga Pearl II in the first half. Reported profit before tax declined to £52.6m (H1 2018: £109.7m) which was driven by the trading factors described above and the £2.3m gain on fair value of derivatives offset by £2.2m of restructuring costs. Our full year guidance for Underlying Profit Before Tax of between £105m and £120m remains unchanged.

    Group Available Operating Cash Flow2 was £24.9m, 28.6% of Trading EBITDA2. The decrease of £65.3m compared to the previous year is due to a reduction in broking earnings and a decrease in dividends from AICL, as well as two non-recurring effects with a combined impact of £40m. These were expected and more detail is included in the Operating and Financial Review. Excluding these two one-offs, Group operating cash would have been around 75% of Trading EBITDA for the first half.


    Retail Broking

    We have seen encouraging signs of progress in Retail Broking despite a tough market environment in UK personal lines insurance. The business has stabilised after a challenging second half of last year.

    The launch of 3-year fixed price products in Motor and Home continues to progress as we expected. As of 8 September we have sold over 175,000 3-year fixed price policies, of which over 70,000 relate to new business and 105,000 relate to renewals. More than half of our direct new Saga branded Home and Motor customers have chosen the 3-year fixed price product. This has allowed us to increase our direct distribution, and over 50% of our new customers are now coming to us direct compared to 44% in H2 last year.

    Saga branded Home and Motor policies slightly declined by 1.9% to 811k due to a 1 ppt increase in retention offset by lower new business volumes. Motor and Home margins (after marketing expenses) were £75.5 per policy, in line with expectations for the first half. Our Home and Motor retention rates have increased as a result of several initiatives to retain customers for longer.

    We will build on this early success by continuing to enhance our direct distribution model, repositioning our PCW strategy to complement our direct strategy, improving customer retention further and expanding our insurance footprint in both Home and Motor. A key element will be a broader underwriting footprint and so I am pleased to see Sabre join our Motor panel.


    AICL has achieved a reported COR (excluding quota share) of 81.7% (H1 2018: 61.5%), generating profit before tax of £21.3m (H1 2018: £45.6m). Claims inflation is running slightly ahead of expected levels in relation to theft and some other smaller components of risk, but this is within normal ranges overall and the level of reserve releases in the first half is in line with our expectations.


    The first passenger cruise of Spirit of Discovery was a major milestone and the culmination of many years of work for the Saga team and our ship yard partner Meyer Werft. We are less than a year away from the delivery of our second ship, Spirit of Adventure, which will complete the transformation of our Cruise business. We have now achieved the full year revenue and booking targets for 2019/20, with forward bookings of over 50% of our sales target for 2020/21. This underpins our ambitious plans for £40m of EBITDA per annum from each new ship.

    The performance of our Tour Operations business reflects challenging markets in which the continued Brexit uncertainty has impacted customer demand. The Underlying PBT of £4.2m has been impacted by lower gross profits resulting from fewer passengers and a high level of discounting across the industry. These factors are not expected to continue into the second half given our visibility over forward bookings.


    We have made steady progress with our membership programme, Possibilities, with a 61% increase in the number of members who are engaged (more than three responses). We are now able to email half of our 1.1m members and response rates remain at very high levels. Marketing consent remains at around 90%.

    We have strong evidence of the value of membership as a route to our customers. We have sold 3,500 cruise passenger bookings to members in the first half compared with our aspiration to sell 4,000 Travel passenger bookings by the end of the year. Importantly, over 65% of these bookings were first time Cruise travellers with us.

    Our activities in the second half will be focused on improving the membership programme's digital experience and regional availability, two areas identified by non-engaged members as key.


    The Group continues to monitor developments in the regulatory environment, including the outcome of the market study that is being conducted by the UK Financial Conduct Authority (FCA). The FCA has indicated that they expect to publish a preliminary outcome from this study in the next month. Saga welcomes the work being undertaken by the FCA and has taken proactive steps to improve renewal pricing for long-tenured customers and to further improve pricing practices. We will evaluate the outcome of the FCA review during the second half of the year.


    We have made sufficient progress in the first half to confirm our confidence in achieving Underlying Profit Before Tax of between £105m and £120m for the full year. Our focus over the next six months will be in building on this to ensure that we can grow our core businesses and continue to improve cost and capital efficiency.

    SAGA Plc - Interim Results @SagaUK https://www.voxmarkets.co.uk/rns/announcement/87444511-a087-4f05-b086-1b43198f76e9

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