1
17 April 2024
Saga plc
Preliminary results for the year ended 31 January 2024
Saga delivers underlying profit more than double that of the prior year and
significantly reduces debt
Saga plc (Saga or the Group), the UK’s specialist in products and services for people over 50, announces its
preliminary results for the year ended 31 January 2024. These results are reported under International Reporting
Standard (
IFRS) 17 ‘Insurance Contracts’ and any prior year comparisons have been restated accordingly.
Year ended
31 January 2024
31 January 2023
(restated
1
)
Change
Underlying Revenue
2
£732.7m
£648.9m
13%
Revenue
£741.1m
£663.7m
12%
Trading EBITDA
2
£116.5m
£92.5m
26%
Underlying Profit Before Tax
2
£38.2m
£15.5m
146%
Underlying Profit Before Tax (Under Previous IFRS)
2
£45.3m
£21.5m
111%
Loss before tax
(£129.0m)
(£272.7m)
53%
Available Operating Cash Flow
2
£143.8m £54.9m 162%
Net Debt
2
£637.2m
£711.7m
10%
Leverage ratio
5.4x
7.5x
2.1x
Mike Hazell, Saga’s Group Chief Executive Officer, said:
“Saga has delivered a strong financial performance with underlying revenue growth of 13% and an underlying
profit that was more than double that of the prior year. We have also continued to generate significant positive
cash flows and reduced our net debt by £74.5m over the past 12 months. Off the back of this strong performance,
we are now also taking action to position the business for long-term success. I am excited about the potential that
partnerships present for Saga and, as a result, we are accelerating the work we are doing to explore such
opportunities across both our Ocean Cruise and Insurance businesses.
“Ocean Cruise had an outstanding year and, as a result, we far exceeded our initial earnings targets, while River
Cruise and Travel both returned to profit for the first time since the pandemic. Looking ahead, forward bookings
are strong, with all three of these businesses significantly ahead of the same point in the prior year.
“While our Insurance business continued to be hindered by challenging conditions, with inflationary headwinds
impacting policy volumes and margins, particularly for our three-year fixed-price policies, we are taking the
necessary actions to reposition the business. We are investing in price to improve our competitive position and
stabilise our policy volumes and early signs indicate that this is delivering the expected benefits.
“Alongside this, we continue to develop our 9.6m strong customer database and explore ways in which we can
deepen our relationship with those customers. Saga Publishing is instrumental in this, broadening our reach
through the delivery of purposeful and insightful content in the form of our digital weekly newsletters and our
award-winning magazine. Saga Money is now also set up to serve a broader range of customers following the
launch of four new products.
“I am confident in our strategic direction, which underpinned by the strength of our brand, allows us to continue to
serve our unique customer base. Our decision to accelerate our partnership strategy will provide us with a capital-
light route to growth, reducing debt and delivering long-term sustainable value for all our stakeholders.”
1
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
2
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
2
Operational and financial highlights
• Underlying Revenue
3
increased 13%, reflecting growth across Cruise and Travel. This translated to growth in
Trading EBITDA
3
of 26%, from £92.5m in the prior year to £116.5m in the current year.
• Underlying Profit Before Tax
3
was more than double that of the prior year:
o Under IFRS 17, Underlying Profit Before Tax
3
was £38.2m, compared with £15.5m
4
in the year before.
o Underlying Profit Before Tax (Under Previous IFRS)
3
was £45.3m, £23.8m higher than the £21.5m
reported for the year ended 31 January 2023.
• The reported loss before tax of £129.0m reflects a £104.9m impairment of Insurance goodwill, restructuring
costs of £40.3m and other smaller one-off below-the-line items.
• Net Debt
3
at 31 January 2024 was £637.2m, £74.5m or 10% lower than the £711.7m at 31 January 2023. At the
same date, Available Cash
3
was £169.8m and both the £85.0m facility with Roger De Haan and the £50.0m
Revolving Credit Facility (
RCF) remained undrawn.
Divisional performance
Ocean Cruise – Exceeded initial targets, supported by strong customer demand
• Ocean Cruise reported an Underlying Profit Before Tax
3
of £35.5m, compared with an Underlying Loss Before
Tax
3
of £0.7m in the previous year, a year-on-year improvement of £36.2m.
• Ocean Cruise Underlying Revenue
3
of £215.9m grew 28% when compared with 2022/23, supported by a load
factor of 88% and per diem of £331, significantly ahead of the 75% and £318 in the prior year.
• As a result, the business has now exceeded our target of £40.0m Ocean Cruise Trading EBITDA (Excluding
Overheads)
3
per ship, achieving £45.0m
per ship.
River Cruise – Return to profit, supported by strong load factor and per diem
• River Cruise reported an Underlying Profit Before Tax
3
of £3.0m, which compares with an Underlying Loss
Before Tax
3
of £5.1m in 2022/23, a year-on-year improvement of £8.1m.
• River Cruise revenue of £43.8m was 52% ahead of the year before, supported by a load factor of 85% and per
diem of £285. This reflects a 43% increase in passengers to 16.6k.
Travel – Strong passenger and revenue growth
• Travel returned to profit for the first time since the pandemic, reporting an Underlying Profit Before Tax
3
of
£1.5m, an improvement of £5.6m when compared with the £4.1m Underlying Loss Before Tax
3
last year.
• Revenue was 44% ahead of the prior year at £156.3m, supported by a 22% increase in passengers to 57.8k.
Insurance Broking – Positioning the business for a return to policy growth
• Insurance Broking reported an earned Underlying Profit Before Tax
3
of £39.8m, compared with £71.5m
4
in the
previous year, a year-on-year decline of £31.7m driven by the challenging insurance environment and, in
particular, the impact of net rate inflation.
• The number of total policies in force at 31 January 2024 was 1.5m, 9% behind the prior year.
• Policy sales across the 12-month period were also 9% behind, reflecting a 9% fall in motor and home policies,
alongside 8% and 3% fewer sales of travel and private medical insurance policies respectively.
• In motor and home insurance, inflation impacted margins and customer retention:
o While new business sales were broadly flat, customer retention was 81% compared with 84% in the
prior year, driven by an increase in the number of customers shopping around.
o This impacted the direct share of new business, now 43% compared with 49% in the prior year.
o The margin per policy was £55 compared with £69
4
in the prior year, reflecting continued inflationary
pressure, particularly within our three-year fixed-price policies.
• The impact of this, alongside the short-term effect of the actions taken that will make the business more
competitive, resulted in a further Insurance goodwill impairment of £36.8m, in addition to the £68.1m
recognised in the first half. At 31 January 2024, £344.7m of Insurance goodwill remained on the statement of
financial position.
3
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
4
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
3
Insurance Underwriting – Price increases start to benefit the combined operating ratio
• Our Insurance Underwriting business reported an Underlying Loss Before Tax
5
of £1.4m, a fall of £12.1m when
compared with the Underlying Profit Before Tax
5
of £10.7m
6
in the prior year.
• While still elevated due to the sustained level of claims inflation, the current year net combined operating ratio
(
COR) reduced to 117.1% from 120.5%
6
in the prior year.
Wider strategic progress
• Saga Money reported an Underlying Profit Before Tax
5
of £1.1m compared with £2.3m in the prior year,
reflecting the short-term impact of high interest rates on customer demand for equity release products.
Irrespective of this, good progress was made in positioning this revitalised business area for medium-term
growth through the launch of a range of new products designed to support people over 50 in managing their
finances.
• Our customer database continues to be one of our core assets, containing data on 9.6m, and contact details
for over 7.2m people over 50 in the UK. As a result of our global digital consent programme, we have increased
the size of our marketable email base by more than 9% in the past 12 months.
• Alongside our progress in data, our Publishing business, with our award-winning magazine and weekly digital
newsletters, continues to be instrumental in deepening the connection we have with our customers. The
magazine has more than 120k print subscribers each month and our digital newsletters, when combined, are
reaching 1.2m readers weekly.
• As indicated previously, we delivered a series of efficiencies through the move towards a leaner central
operating model, reducing our central operating expenses by £12.0m within the 2023/24 year. The full £15.0m
annualised benefit of these savings will be reflected in the 2024/25 result.
Financial position
Reducing our level of debt continues to be a key priority and, following a series of actions taken to increase the
Group’s financial flexibility, we have sufficient liquidity to meet the £150.0m bond repayment in May 2024 through
a combination of Available Cash
5
and utilisation of the £85.0m facility with Roger De Haan.
To provide additional financial flexibility following repayment of the bond, the Group has agreed a series of
measures, including an increase to the leverage covenant attached to the RCF to 6.25x until the facility matures,
and a further extension to the £85.0m facility with Roger De Haan from 31 December 2025 to 30 April 2026.
While repayment of the bond will reduce our cash at hand, we will continue to have sufficient liquidity, together
with the currently undrawn £50.0m RCF, to support our business development and plans.
Strategy and outlook
The strong customer demand we have generated across Cruise and Travel is expected to continue and, with an
encouraging pipeline of bookings, these businesses are well set to continue to grow in 2024/25.
Bookings for Ocean Cruise remain exceptionally strong and we have already secured a load factor for 2024/25 of
78%
7
and a per diem of £367
7
. This is 4ppts and 9% ahead of the already strong 74%
7
and £338
7
at the same time
last year.
River Cruise bookings for 2024/25 are also positive and significantly ahead of the same point last year, with a load
factor of 72%
7
and per diem of £339
7
compared with 66%
7
and £299
7
.
In Travel, building on the significant growth in 2023/24, booked revenue for 2024/25 is £140.7m
7
from 45.3k
7
passengers, 12% and 4% ahead of the prior year respectively.
In Insurance, conditions continue to be challenging and we are repositioning the business accordingly, with a focus
on stabilising and recovering volume. We are taking a series of actions, including investment in price to improve
our competitive position and address the recent decline in policy sales, particularly within motor and home
insurance. As we make this change, we expect some short-term impact to earnings, arising from this price
investment, together with the acquisition costs associated with a higher number of new business policies.
5
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
6
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
7
Current year bookings reflect the position at 14 April 2024, while the prior year refers to the position at 16 April 2023
4
As a result, we expect written Underlying Profit Before Tax
8
for Insurance Broking to be materially lower in
2024/25 than in 2023/24. We are already beginning to see signs of stabilisation as a result of our revised
approach.
Having applied significant price increases throughout the past 18 months, the Insurance Underwriting business is
now on a much stronger footing. As these price increases continue to flow through, we expect to report an
Underlying Profit Before Tax
8
for 2024/25 in the low single digits, with an improving current year COR.
The maturity profile of Saga Money’s new products, and the high interest rate environment anticipated for this
year, mean that we expect a similar contribution from this business in 2024/25 to that in 2023/24 before it
delivers a more meaningful proportion of Group earnings over time.
The net result of these is that we expect the Group to generate an Underlying Profit Before Tax
8
that is broadly
consistent with that of 2023/24, reflecting growth across Cruise and Travel, offset by a transitional year in
Insurance, before a planned return to growth thereafter.
Our priorities remain unchanged; to reduce leverage and increase our strategic flexibility. Consistent with our
move towards a capital-light model, we are accelerating our partnership strategy, exploring opportunities in
Ocean Cruise and Insurance that would support our growth ambitions, crystallise value and enhance long-term
returns for our shareholders. In Ocean Cruise, with the current business nearing optimum capacity, we are
evaluating routes to accelerate growth as customer demand continues to build strongly. In Insurance, we are
focused on scaling the business and increasing its efficiency and effectiveness. We believe that such partnerships
could deliver growth, increase flexibility and reduce debt.
The Board remains confident in the strength of the Saga brand, its colleagues and its unique products and
services, and will continue to focus on driving long-term sustainable growth for all our stakeholders.
END
Management will hold a presentation for analysts and investors at 9.30am today. The webcast can be accessed by
registering at www.investis-live.com/saga-group/65f87ab3b095440c00c6695c/fdqaa and a copy of the
presentation slides is available at www.corporate.saga.co.uk/investors/results-reports-presentations/.
A separate live presentation for retail investors will be held via the Investor Meet Company platform on
18 April 2024 at 9.30am. The presentation is open to all existing and potential investors. Questions can be
submitted pre-event via the Investor Meet Company dashboard up until 9.00am on 16 April 2024, or at any time
during the live presentation. Investors can sign up to Investor Meet Company for free and follow Saga plc via
www.investormeetcompany.com/saga-plc/register-investor. Investors who already follow Saga plc on the Investor
Meet Company platform will automatically be invited.
For further information, please contact:
Saga plc
Emily Roalfe, Director of Investor Relations and Treasury Tel: 07732 093 007
Email: emily.roalfe@saga.co.uk
Headland Consultancy
Susanna Voyle Tel: 07980 894 557
Will Smith Tel: 07872 350 428
Tel: 020 3805 4822
Email: 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 travel, insurance, personal finance and media.
www.saga.co.uk
8
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
5
Chairman’s Statement
I am pleased to report that for the year ended 31 January 2024 Saga delivered a strong financial result. Cash flows
and underlying profit were significantly higher than in the prior year, driven by growth within our Cruise and Travel
businesses, alongside actions taken to lower the cost of our central functions. We were also able to reduce our
level of debt by £74.5m.
Our Ocean Cruise business had an outstanding year, with exceptional levels of customer satisfaction and
occupancy, allowing us to take more customers on holiday and exceed our financial targets. Bookings for the year
ahead are even stronger than at the corresponding point last year.
Our River Cruise and Travel businesses also performed well and the growth in passenger numbers helped both
businesses return to profit for the 2023/24 financial year.
Our Insurance operations continued to be challenged by inflation, that has impacted both margins, particularly for
our older three-year fixed-price policies, and policy volumes. Looking forward, we are repositioning this business
by investing in price and implementing efficiencies to improve our competitive position to stabilise our policy
volumes and build a platform for growth.
Our Underwriting business has applied price increases in the last 18 months that have strengthened its position
and we are expecting this to lead that business back to profitability.
We made the decision to reduce our central operating expenses and exit some of our smaller, loss-making
activities. We are committed to, and continue to invest in, providing our customers with engaging purpose-led
content through the Saga Magazine and our increasingly popular newsletters. In addition, Saga Money, which in
the past has reported relatively small returns, is positioned for growth, with the aim of becoming a far more
meaningful proportion of the Group’s earnings over time.
Our current Ocean Cruise operations will, in time, become restrained through a lack of capacity. We are exploring
options to continue to grow this business with the support of a partner. We are also in the early stages of
considering potential partnership opportunities that could support growth in our Insurance operations.
Throughout the past year, there have been a number of changes to the Board. Euan Sutherland, our former Group
Chief Executive Officer (
CEO), and James Quin, our former Chief Financial Officer (CFO), resigned. Eva
Eisenschimmel, an independent Non-Executive Director (
NED) and Chair of the Remuneration Committee, made
the decision to step down. I’d like to thank them all for their contribution to Saga during their time here. Julie
Hopes, an existing NED and Chair of the Risk Committee now chairs the Remuneration Committee. Mike Hazell,
who was appointed as Group CEO, and Mark Watkins, Group CFO, bring a wealth of experience to their new roles
and I am very pleased to see the progress they are making in leading Saga through its current phase of
development.
At Saga, we are at our best when we provide exceptional service to our customers, alongside innovative,
meaningful and good value products that are tailored to suit their needs. We will continue to leverage our insight
and data capabilities, and the considerable collective buying power of the millions we have on our customer
database. With the excellent team we have, and our developing strategy, I believe there is an exciting future for
Saga as we continue to reduce our debt, explore strategic partnerships, new opportunities and grow our core
businesses.
Sir Roger De Haan
Non-Executive Chairman
16 April 2024
6
Group Chief Executive Officer’s Strategic Review
Significant opportunity
When I joined Saga back in October 2023, I had clear views about the strength of the business and the brand,
based on what was already evident to me. Fast-forward to today, and with the benefit of the visibility I now have,
those opinions have only strengthened. It is clear that there is a significant opportunity to drive long-term
sustainable growth for all our stakeholders through maximising our core businesses, reducing debt as we move
towards capital-light business models, growing the number of customers we serve and deepening the connection
we have with them. I believe these objectives can be amplified by the work we are doing to explore partnerships.
Strong demand in Cruise and Travel but Insurance remains challenging
During 2023/24, we generated strong customer demand in our Cruise and Travel businesses; however, conditions
in Insurance remained challenging. Saga Money launched four new products, allowing us to serve more customers,
and we continued to enhance our data and marketing capabilities. Alongside this, we maintained a disciplined
approach to our cost base, identifying efficiencies and moving towards a leaner central model.
Growth in underlying revenue and profit
I am delighted to report that, for the year ended 31 January 2024, Saga delivered a strong financial result.
Underlying Revenue
1
was £732.7m, representing 13% growth when compared with the prior year and, on a
statutory basis, revenue was £741.1m, 12% higher. Following the adoption of International Financial Reporting
Standard (
IFRS) 17, we report an Underlying Profit Before Tax
1
of £38.2m, more than double the £15.5m
2
in the
prior year. This was also the case for Underlying Profit Before Tax (Under Previous IFRS)
1
, which was £45.3m
compared with £21.5m in the prior year. This result reflects a return to profit for Cruise and Travel, but continued
challenges in Insurance.
After reflecting a £104.9m impairment of Insurance goodwill and £40.3m of restructuring costs, alongside other
smaller one-off below-the-line items, we report a loss before tax of £129.0m, which compares with a loss of
£272.7m
2
in the prior year.
Debt reduction continues to be a key strategic priority for the Group and we have continued to make progress in
this area. Net Debt
1
at 31 January 2024 was £637.2m, £74.5m lower than the £711.7m at the same point last year.
The Group also continued to hold sufficient liquidity with Available Cash
1
of £169.8m, alongside the £85.0m
loan facility with Roger De Haan and the £50.0m Revolving Credit Facility (
RCF), both of which remained undrawn
at the year end.
Our strategy
Our ambition is to become the largest and most-trusted brand for older people in the UK. We will achieve this
through the delivery of our growth plan, which has evolved, in line with our ambition, as we continually develop the
business to support the changing needs of our customers. This plan is focused on the following three priorities:
1. Maximising our core businesses
2. Reducing debt through capital-light growth
3. Growing our customer base and deepening our customer relationships
An update on our progress during the past year in each of these areas is set out below.
1. Maximising our core businesses
We plan to drive our core businesses of Cruise, Travel, Insurance and Money, through business-led growth
strategies, supported by our extensive data and Publishing marketing platform.
Cruise
For the year ended 31 January 2024, our Ocean Cruise business delivered an Underlying Profit Before Tax
1
of
£35.5m, a £36.2m improvement when compared with the Underlying Loss Before Tax
1
of £0.7m in the prior year.
We continued to generate strong customer demand, which supported a load factor (being the proportion of our
total capacity that was filled) of 88% and a per diem (being the average price charged per customer per day) of
£331. This was 13ppts and 4% higher than the 75% and £318 respectively in the prior year. These factors, when
combined, meant that we exceeded our target of £40.0m Ocean Cruise Trading EBITDA (Excluding Overheads)
1
per ship, delivering £45.0m per ship.
1
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
2
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
7
In Ocean Cruise, we work hard to set ourselves apart from others in the market and we are continually exploring
new ways to enhance the inclusivity of our offering and increase our differentiation. For departures in 2024/25
and beyond, we made the decision to increase the reach of our VIP chauffeur service, allowing more customers
from further afield to experience what we have to offer.
Bookings for 2024/25 are significantly ahead of the prior year, with a load factor of 78% and per diem of £367 at
14 April 2024. This is 4ppts and 9% ahead of the 74% and £338 at the same point in the prior year, which in itself
was a year of significant growth.
Given this strong momentum in demand for our boutique cruise offering, the business is approaching optimum
capacity with our current two ocean cruise ships. We are exploring opportunities to further optimise the business,
including potential partnership arrangements that, 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.
In line with previous guidance, our River Cruise business returned to profit, reporting an Underlying Profit Before
Tax
3
of £3.0m for the year, an improvement of £8.1m when compared with the Underlying Loss Before Tax
3
of
£5.1m in the prior year. We achieved a 43% increase in the number of customers sailing with us and a load factor
and per diem of 85% and £285 respectively.
River Cruise continues to see strong growth and bookings for 2024/25 are ahead of the same point last year. At 14
April 2024, the booked load factor was 72%, with a per diem of £339. This compares with 66% and £299 at the
same time in the prior year.
Unlike our current Ocean Cruise business, we are able to scale River Cruise in a capital-light way, allowing us to
offer our luxury cruises to an increasing number of customers. We are, therefore, delighted to have welcomed
Spirit of the Douro to our programme in March 2024, with our third purpose-built ship, Spirit of the Moselle, to
follow in July 2025.
The financial performance of the Ocean and River Cruise businesses is driven by our ability to deliver exceptional
experiences for our customers every day. Our key metric for monitoring customer satisfaction is transactional net
promoter score (
tNPS), which improved significantly during the year to 74, from 58 in the previous year, reflecting
a considerable improvement in the rating for River Cruise following the steps taken to more closely align the
customer experience to that of our Ocean Cruise experience.
Travel
For 2023/24, Travel generated revenue of £156.3m, 44% higher than the year before, and returned to profit for
the first time since the pandemic. The business reported an Underlying Profit Before Tax
3
of £1.5m, an
improvement of £5.6m when compared with the Underlying Loss Before Tax
3
of £4.1m in the prior year, reflecting
strong passenger growth of 22%, having taken more than 57k customers on holiday.
Innovation continues to be a key differentiator for Saga and it is the continual development of our offering that has
led to industry-wide recognition, most recently through 28 wins at the 2023 British Travel Awards.
Looking ahead to 2024/25, our pipeline of future bookings continues to grow. At 14 April 2024, booked revenue
was £140.7m from 45.3k passengers, representing growth of 12% and 4% respectively when compared with the
same point in the prior year.
Insurance
Reflecting the continued impact of the market-wide inflationary headwinds and declining policy volumes, Insurance
Broking reported Underlying Profit Before Tax
3
of £39.8m on an earned basis, a decline of £31.7m when compared
with £71.5m
4
in the prior year.
The inflationary environment, and the resulting impact on our pricing, led to the number of policies in force at the
end of the year, across all products, declining by 9%, when compared with the prior year, to 1.5m. Similarly, total
policy sales during the year were also 9% lower.
Revenue generated from the sale of travel insurance remained broadly flat when compared with the previous year,
with increased margins per policy offsetting an 8% fall in the number of policies sold, driven by price increases
applied in the second half of the year.
3
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
4
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
8
Private medical insurance revenue, however, increased 5% when compared with the prior year, despite policy
sales falling by 3%. This reflects the benefit from a one-off contribution in relation to the new partnership secured
with Bupa. Over time, this relationship is expected to open up exciting new opportunities for a digital health and
wellbeing proposition that will not only enhance the offering for our existing customers but also be a key point of
differentiation when attracting new customers.
In motor and home, inflation impacted both our volumes and margins. Our pricing approach, addressing increased
net rates from our panel of underwriters, resulted in a 9% drop in policies in force and policy sales compared with
the prior year, with customer retention of 81%, 3ppts lower. Our margin per policy was £55, compared with £69
5
in the year before, mostly driven by our three-year fixed-price policies that fix the price the customer pays for two
further renewals.
The dynamics within Insurance remain challenging and, as a result, we need to ensure that we balance the business
effectively between protecting and, in time, growing the number of policies sold and the delivery of sustainable
profitability. We are investing in price to improve our market competitiveness and this will impact profitability in
the short term, as will the acquisition costs arising from attracting a higher number of new business policies. While
we expect this approach to drive greater long-term profitability, the anticipated impact of these changes, when
compared with previous growth projections, has resulted in the goodwill allocated to the Insurance Broking
business being impaired by a further £36.8m. This is in addition to the £68.1m impairment in the first half of the
year. At 31 January 2024, £344.7m of goodwill remained on the statement of financial position.
Looking ahead, we are focused on scaling the business and the number of customers we are able to serve,
creating the foundation for a sustainable insurance business model. As part of this, and consistent with our move
towards capital-light models, we are exploring options for partnerships within our Insurance value chain. While still
in the very early stages, we believe that such partnerships could benefit our customers and support us in
delivering our Insurance growth ambitions.
Our Insurance Underwriting business reported an Underlying Loss Before Tax
6
, after expected recoveries from
reinsurance arrangements, of £1.4m, a decline of £12.1m when compared with an Underlying Profit Before Tax
6
of
£10.7m
5
in the prior year.
Over the past 18 months, we have applied significant price increases, balancing the need to provide customers
with fair-value products with the continued market-wide claims inflation. These are now, however, beginning to
flow through to the result, with the current year net combined operating ratio reducing to 117.1% from 120.5%
5
in
the prior year. We expect this to mean that the Insurance Underwriting business returns to profit in the coming
year.
Money
Saga Money reported an Underlying Profit Before Tax
6
of £1.1m, compared with £2.3m in the prior year. This
reflects the short-term impact of high interest rates on the market-wide customer demand for equity release
products.
We made good progress during the year in positioning the business for medium-term growth. With support from a
number of new partners, we launched: a range of fixed savings accounts; legal services including wills, probate and
lasting powers of attorney; investments ISAs; and, more recently, mortgages. Our new range of mortgage
products are all designed exclusively for people over 50, offering assistance with first-time purchases,
remortgages, buy-to-let and equity release to fund intergenerational support.
The quality of, and customer satisfaction in relation to, these services is evident in our sector-leading tNPS, which
increased to 72 from 64 in the prior year.
5
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
6
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
9
2. Reducing debt through capital-light growth
In 2023/24, we continued to make good progress in reducing our debt, with Net Debt
6
at 31 January 2024 being
£637.2m, £74.5m lower than the £711.7m at the previous year end.
To further increase the Group’s financial flexibility, we took a series of actions that included the delivery of £12.0m
of central cost savings in the second half, following the move towards a leaner operating model, and exiting some
of our smaller, loss-making activities, in order to prioritise growth within our core Cruise, Travel, Insurance and
Money operations. We are also grateful for the ongoing support from our Chairman, Roger De Haan, with his
facility being increased to £85.0m, alongside an extended maturity, now April 2026, to support the Group with its
deleveraging plans. In addition, to maximise the Group’s liquidity, we concluded discussions with our lending banks
to increase the leverage covenant associated with our undrawn £50.0m RCF.
3. Growing our customer base and deepening our customer relationships
The third strand of our growth plan is focused on protecting and growing the number of customers we serve and
increasing the frequency and quality of our interactions with them through data-driven insight. By doing so, we can
develop our business around a better understanding of their unique needs and the trusted relationship we have
with them.
Our customer database continues to be one of our core assets in achieving this goal, holding details of 9.6m
people over the age of 50 in the UK. During the past year, we have actively sought to gather consent from more of
this group to contact them about our full range of products and services. As a result of this, at 31 January 2024 we
had consent to contact 7.2m of these individuals, a significant improvement from the 6.8m at the same time in the
prior year.
We have also developed our website, which attracts more than 15m visitors per year, giving everybody the
opportunity to sign up for email updates, providing interesting articles and offers on a range of our products.
The delivery of insightful and relevant content to our unique customer group is key to our success and we continue
to do this through our popular and award-winning Saga Magazine, which reaches more than 120k readers monthly.
Our digital newsletters, covering Travel, Money and the Magazine, when combined, are delivered to 1.2m people
weekly.
We continually monitor the strength of the Saga brand and one of the metrics used is tNPS, which was 59 for the
year, a two point reduction when compared with the prior year. This reflects increases across Cruise and Money,
offset by a lower result in Insurance, due to market-wide increases to pricing, alongside some resultant contact
centre pressure from increased call volumes.
Underpinning all three strands of our growth plan is the ambition to create an exceptional colleague experience.
As diversity, equity and inclusion is a key part of this, we launched a colleague survey, beginning with those in
senior leadership roles and above, to gather data on diversity representation across the organisation. Building on
this, we have set targets to increase female representation in leadership positions from 42% to 50% and,
representation on the Board from 22% to 40% by December 2027.
Positioning Saga for long-term sustainable growth
Before I conclude, it is important to recognise the contribution of our colleagues, not only for their work over the
past year, but also for the way they have welcomed me to the Saga family. In addition, while I have not had a chance
to meet you all, I would like to thank our customers, investors and partners for their continued support.
Overall, we have made good progress over the past 12 months, growing our Cruise and Travel businesses and
positioning Money for future growth while continuing to navigate the challenging dynamics in Insurance.
Saga is a special brand with a unique purpose and I am excited about our future. Maximising our core businesses
will mean we build this future on solid foundations. We can complement this objective with strategic partnerships
that allow us to focus on our core strengths while leveraging the capabilities of partners to amplify those
strengths. In doing so, we can grow our business and continue to reduce our debt, accelerated through capital-
light business models where it makes sense. At the heart of this remains our customer. Saga was built on its
understanding of the older people it serves, combined with its considerable marketing reach across that
customer base. Our long-term sustainable growth will be built around these fundamentals.
Mike Hazell
Group Chief Executive Officer
16 April 2024
10
Group Chief Financial Officer’s Review
I am delighted to be presenting my first Chief Financial Officer’s report after being appointed to the role in
November 2023. The Group has now adopted International Financial Reporting Standard (
IFRS) 17 and reports an
Underlying Profit Before Tax
1
of £38.2m, more than double the £15.5m
2
reported in the prior year. This
performance is largely in line with expectations and reflects a strong recovery in Cruise and Travel, coupled with a
continuation of the challenging conditions within Insurance. Underlying Profit Before Tax (Under Previous IFRS)
1
was £45.3m compared with £21.5m in the year before.
The positive trading conditions for Ocean Cruise, River Cruise and Travel have continued, being more reflective of
a normal environment after residual pandemic disruption in the prior year, with all three businesses returning to
profitability. Ocean Cruise reported an Underlying Profit Before Tax
1
of £35.5m (2023: Loss of £0.7m) and River
Cruise reported an Underlying Profit Before Tax
1
of £3.0m (2023: Loss of £5.1m), reflective of strong customer
demand driving higher load factors and per diems. Travel reported an Underlying Profit Before Tax
1
of £1.5m
(2023: Loss of £4.1m), with the recovery driven by a 22% increase in passenger volumes.
Industry-wide challenges, however, continue to impact the Group’s Insurance businesses. Insurance Broking
reported an Underlying Profit Before Tax
1
of £39.8m (2023: £71.5m
2
). This reflected ongoing inflationary
headwinds, primarily impacting motor insurance, and the impact on the Group’s three-year fixed-price policies,
where the increase in the cost of net rates cannot be passed on to customers. As a result, margins for motor and
home fell to £55 per policy (2023: £69
2
) for the year. Against this backdrop, our pricing caused lower new
business volumes and lower customer retention, resulting in a 9% decline in policies in force to 1.5m. Our
Insurance Underwriting business is, however, starting to see the benefits of the pricing actions taken over the past
12 months, with the current year net combined operating ratio (
COR) improving to 117.1% (2023: 120.5%
2
).
The dynamics seen in the Insurance business during 2023/24 demonstrate that a different approach is needed to
balance policy volumes and sustainable profits over the long term. Going forward, the Insurance Broking business
is taking pricing action to increase competitiveness, with the aim of stabilising policy volumes. This is expected to
have an adverse impact on profitability in the near term.
The Group reported a loss before tax of £129.0m (2023: loss of £272.7m
2
), that reflects an impairment of
Insurance Broking goodwill of £104.9m and other exceptional items of £62.3m. The impairment of goodwill was
driven by a conservative view of cash flows from Insurance compared with our previous growth projections,
reflecting the different approach being taken by this business in the future. The exceptional items primarily relate
to restructuring costs from the changes made in the second half of 2023/24 to reduce central costs, together
with the costs of exiting some of the smaller, early-stage, loss-making activities of Saga Exceptional, Insight and
Spaces.
The Group remains highly cash-generative and, turning to the Group’s statement of financial position, Net Debt
1
at
31 January 2024 was £637.2m, £74.5m lower than a year ago. This was driven by a £12.3m increase in Available
Cash
1
to £169.8m (31 January 2023: £157.5m) and £62.2m of Cruise ship debt repayments. As a result, the total
leverage ratio reduced to 5.4x (31 January 2023: 7.5x).
Available Operating Cash Flow
1
for 2023/24 increased to £143.8m (2023: £54.9m) driven by the recovery in
Ocean Cruise operating cash flow, a one-off benefit from River Cruise and Travel moving to 70% coverage under
the Civil Aviation Authority (
CAA) escrow arrangement and reduced central costs. This was partially offset by a
decline in Insurance Broking EBITDA.
Looking ahead, the strong customer demand in Cruise and Travel is continuing and the steps we are taking to
reposition the Insurance business are showing encouraging early signs. While 2024/25 will be a transitional year as
we lay the foundations for future growth, we expect Underlying Profit Before Tax
1
to be broadly consistent with
that of 2023/24. Meanwhile, we are continuing to reduce our level of debt through organic cash generation, while
exploring partnership opportunities in our Ocean Cruise and Insurance businesses as part of the move towards a
more capital-light model.
1
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
2
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
11
Operating performance
Group income statement
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
3
)
Underlying Revenue
4
732.7
12.9%
648.9
Underlying Profit/(Loss) Before Tax
4
Cruise and Travel
40.0
>500.0%
(9.9)
Insurance Broking (earned)
39.8
(44.3%)
71.5
Insurance Underwriting
(1.4)
(113.1%)
10.7
Total Insurance
38.4
(53.3%)
82.2
Other Businesses and Central Costs
(17.0)
51.3%
(34.9)
Net finance costs
5
(23.2) (5.9%) (21.9)
Underlying Profit Before Tax
4
38.2
146.5%
15.5
Impairment of Insurance goodwill
(104.9)
(269.0)
Other exceptional items
(62.3)
(19.2)
Loss before tax
(129.0)
52.7%
(272.7)
Tax credit/(expense)
16.0
>500.0%
(0.4)
Loss after tax
(113.0)
58.6%
(273.1)
Basic earnings/(loss) per share
Underlying Earnings Per Share
4
30.0p 132.6% 12.9p
Loss per share
(80.8p)
58.7%
(195.7p)
The Group’s business model is based on providing high-quality and differentiated products to its target
demographic, predominantly focused on cruise, travel and insurance. The Cruise and Travel businesses comprise
Ocean Cruise, River Cruise and Travel. The Insurance business operates mainly as a broker, sourcing underwriting
capacity from selected third-party insurance companies, and, for motor and home, also from the Group’s in-house
underwriter. Other Businesses include Saga Money, Saga Publishing and CustomerKNECT, a mailing and printing
business.
Underlying Revenue
4
Underlying Revenue
4
increased by 12.9% to £732.7m (2023: £648.9m
3
) due to increased trading in the Cruise and
Travel businesses as customer confidence returned to pre-pandemic levels.
Underlying Profit Before Tax
4
The Group generated a total Underlying Profit Before Tax
4
of £38.2m in the current year, compared with £15.5m
3
in the prior year. This is primarily due to a £49.9m improvement in Cruise and Travel, moving from a £9.9m Loss
to a £40.0m Profit, of which £36.2m relates to the Ocean Cruise business. This was partially offset by a £31.7m
reduction in Insurance Broking profitability due to difficult trading conditions within motor and a £12.1m reduction
in Insurance Underwriting profitability due to lower positive changes to liabilities for prior year incurred claims.
Net finance costs
5
in the year were £23.2m (2023: £21.9m), which exclude finance costs that are included within
the Cruise and Travel businesses of £18.2m (2023: £19.2m) and Insurance Underwriting business of £2.5m (2023:
£1.9m
3
).
3
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
4
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
5
Net finance costs exclude Cruise, Travel and Insurance Underwriting finance costs and net fair value gains/(losses) on derivatives
12
Loss before tax
The loss before tax for the year, of £129.0m, includes a £104.9m impairment to Insurance Broking goodwill and
other exceptional items of £62.3m, consisting of:
• Restructuring costs of £40.3m, which have materially increased year on year as a result of the cost-
reduction programme initiated in the second half, alongside the decisions to exit some of our smaller loss-
making activities and rationalise our property portfolio;
• impairments to assets, other than goodwill, of £11.9m (net of amounts recoverable under quota share
arrangements);
• onerous contract provisions of £12.1m on three-year fixed-price policies and on insurance contracts under
IFRS 17;
• fair value profit on debt securities of £3.5m;
• a £1.0m positive change in discount rate on non-periodical payment order (PPO) insurance liabilities;
• discretionary customer ticket refunds, and related costs, within Ocean Cruise of £1.0m;
• costs associated with the unsecured loan facility with Roger De Haan of £0.4m;
• £0.3m costs on the acquisition and disposal of The Big Window Consulting Limited (the Big Window);
• fair value losses of £1.4m on derivatives; and
• foreign exchange gains on River Cruise ship leases of £0.6m.
The loss before tax in the prior year, of £272.7m
6
, includes a £269.0m impairment to Insurance goodwill and other
exceptional items of £19.2m, including:
• restructuring costs of £3.7m;
• impairments to assets, other than goodwill, of £1.1m (net of amounts recoverable under quota share
arrangements);
• an onerous contract provision of £3.8m on insurance contracts under IFRS 17;
• fair value loss on debt securities of £15.0m;
• a £6.3m positive change in discount rate on non-PPO insurance liabilities;
• acquisition costs on the purchase of the Big Window of £0.7m;
• foreign exchange losses on River Cruise ship leases of £2.0m;
• a negative IFRS 16 ‘Leases’ adjustment of £0.6m on River Cruise ships; and
• fair value gain on derivatives in the year of £1.4m.
Tax
The Group’s tax credit for the year was £16.0m (2023: £0.4m expense), representing a tax effective rate of 66.4%
(2023: negative 10.8%), excluding the Insurance goodwill impairment charge. In both the current and prior years,
the difference between the Group’s tax effective rate and the standard rate of corporation tax was mainly due to
the Group’s Ocean Cruise business being in the tonnage tax regime.
There was also an adjustment in the current year for the over-provision of prior year tax of £4.5m credit (2023:
£0.8m expense). Excluding the impact of the Ocean Cruise business being in the tonnage tax regime, the
Insurance goodwill impairment and adjustments to prior year tax, the tax effective rate for the current year is
19.9% (2023: 11.1%).
Earnings/(loss) per share
The Group’s Underlying Basic Earnings Per Share
7
was 30.0p (2023: 12.9p). The Group’s reported basic loss per
share was 80.8p (2023: loss of 195.7p
6
).
6
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
7
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
13
Effect of IFRS 17 on Underlying Profit Before Tax
8
and loss before tax
£m
12m to
Jan 2024
Change
12m to
Jan 2023
Underlying Profit Before Tax (Under Previous IFRS)
8
45.3
23.8
21.5
New approach to reserve margin
(2.4)
(0.1)
(2.3)
Change in valuation of PPO reserves (other than due to margin)
(3.9)
0.5
(4.4)
Discounting of non-PPO reserves (other than change in discount rate)
(2.6)
(1.8)
(0.8)
Effect of expensing insurance acquisition costs when incurred
0.6
(3.7)
4.3
Other individually immaterial adjustments
1.2
4.0
(2.8)
Impact of IFRS 17 on Underlying Profit Before Tax
8
(7.1)
(1.1)
(6.0)
Underlying Profit Before Tax
8
38.2
22.7
15.5
For the year ended 31 January 2024, the transition to IFRS 17 resulted in an Underlying Profit Before Tax
8
reduction of £7.1m, compared with a £6.0m reduction in the prior year. The material movements between the
IFRS 17 impact on Underlying Profit Before Tax
8
across the two years are detailed below:
• The new approach to reserve margin adjusts for differences in reserving between the previous standard,
IFRS 4 ‘Insurance Contracts’, and IFRS 17. Specifically, management margins included within the IFRS 4
results are reversed, while new provisions for events not in data (
ENIDs) and the risk adjustment are
included under IFRS 17. In the current year, the reversal of the change in management margins reduced
IFRS 17 profit by £6.2m and this was partially offset by a reduction in ENIDs of £2.1m and a reduction in the
risk adjustment of £1.7m, net of reinsurance, totalling £2.4m.
• £1.8m negative impact arising from the discounting of non-PPO reserves that under previous IFRS, were
not subject to discounting. The negative impact in the current and prior year largely arises from the
increase in recoveries under the quota share reinsurance agreement, with these recoveries discounted
over a longer duration than that of the underlying claims.
• The impact of expensing insurance acquisition costs when incurred produced a benefit to Underlying
Profit Before Tax
8
in both the current and prior years. This is due to decreasing acquisition costs linked to
lower sales of policies underwritten by Acromas Insurance Company Limited (
AICL). The £3.7m
movement, when compared with the prior year, reflects a slowdown of that trend.
• £4.0m positive change in the impact of other individually immaterial adjustments, in part due to
remeasurement of the three-year fixed-price obligation.
£m
12m to
Jan 2024
Change
12m to
Jan 2023
Loss before tax (under previous IFRS)
(130.7)
123.5
(254.2)
Impact of IFRS 17 on Underlying Profit Before Tax
8
(7.1)
(1.1)
(6.0)
Impact of discount rate change on non-PPO reserves
1.0
(5.4)
6.4
Fair value gains/(losses) on investments
3.4
18.5
(15.1)
Net expense from onerous contracts
(9.0)
(5.2)
(3.8)
Reversal of deferred acquisition cost impairment under IFRS 4
13.4
13.4
-
Impact of IFRS 17 on loss before tax
1.7
20.2
(18.5)
Loss before tax
(129.0)
143.7
(272.7)
8
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
14
In the year ended 31 January 2024, the adoption of IFRS 17 decreased the loss before tax by £1.7m (2023: £18.5m
increase). The most material movements are as follows:
• £7.1m negative impact arising from the movements in Underlying Profit Before Tax
9
described on the
previous page.
• £1.0m positive impact from the increase in the period in the discount rate used to value non-PPO claim
liabilities, with this discount rate being linked to market interest rates. This positive impact was £5.4m
lower than the positive impact in the prior year, when there was a more significant increase in market
interest rates.
• £3.4m positive impact from changing the classification of the debt securities that support the Group’s
insurance liabilities. Under the new classification, fair value gains or losses in each period are presented
within profit or loss, whereas, under the previous classification, any such gains or losses were reported
outside profit or loss, within other comprehensive income. The significant improvement, when compared
with the prior year, arises from a tightening of credit spreads and interest rate movements.
• £9.0m in relation to the provision for onerous contracts. The higher provision is due to a combination of
an increase in contracts that are onerous at initial recognition (primarily due to renewals in years two and
three of three-year fixed-price policies) and an upwards revaluation of the existing provision due to
prolonged claims inflation.
• £13.4m in relation to the reversal of an impairment of deferred acquisition costs under IFRS 4 as these are
expensed immediately under IFRS 17. No such impairment existed in the prior year.
9
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
15
Cruise and Travel
12m to Jan 2024
12m to Jan 2023
£m
Ocean
Cruise
River
Cruise
Travel
Total
Cruise
and
Travel
Change
Ocean
Cruise
River
Cruise
Travel
Total
Cruise
and
Travel
Underlying Revenue
10
215.9
43.8
156.3
416.0
36.2%
168.3
28.8
108.4
305.5
Gross profit
81.1
11.3
30.0
122.4
95.5%
40.2
1.5
20.9
62.6
Marketing expenses
(12.3)
(4.4)
(9.6)
(26.3)
(7.8%)
(11.0)
(3.2)
(10.2)
(24.4)
Other operating expenses
(15.1)
(4.0)
(19.6)
(38.7)
(33.9%)
(10.7)
(3.4)
(14.8)
(28.9)
Investment return
-
0.1
0.7
0.8
100.0%
-
-
-
-
Finance costs
(18.2)
-
-
(18.2)
5.2%
(19.2)
-
-
(19.2)
Underlying Profit/(Loss)
Before Tax
10
35.5
3.0
1.5
40.0
504.0%
(0.7)
(5.1)
(4.1)
(9.9)
Average revenue per
passenger (£)
4,683 2,639 2,704 3,452 6.8% 4,714 2,483 2,297 3,233
Ocean Cruise load factor
88%
88%
13ppts
75%
75%
Ocean Cruise per diem (£)
331
331
4.1%
318
318
River Cruise load factor
85%
85%
n/a
n/a
n/a
River Cruise per diem (£) 285
285 n/a n/a n/a
Passengers (‘000)
46.1
16.6
57.8
120.5
27.5%
35.7
11.6
47.2
94.5
Ocean Cruise
The Ocean Cruise business owns two ocean cruise ships, Spirit of Discovery and Spirit of Adventure.
In the current year, the business returned to fully operational conditions for the first time since the pandemic and
achieved a load factor of 88% (2023: 75%) and a per diem of £331 (2023: £318). These two factors, when
combined, equated to Underlying Revenue
10
growth of 28.3% and resulted in a return to profitability from an
Underlying Loss Before Tax
10
of £0.7m in the prior year to an Underlying Profit Before Tax
10
of £35.5m in the
current year.
In the prior year, there were some adverse impacts on a small number of cruises due to COVID-19, while the
conflict in Ukraine dampened customer demand for departures to the Baltics and Black Sea, resulting in late
itinerary changes and some limited cancellations.
River Cruise
The River Cruise business has 10-year leases in place for two boutique river cruise ships, Spirit of the Rhine and
Spirit of the Danube, alongside other charters that are largely managed on an annual basis.
In the current year, the business returned to more normal operating conditions. For 2023/24, we aligned
management information for River Cruise to the Ocean Cruise business, so load factor and per diems became key
performance indicators for River Cruise. The business achieved a load factor of 85% and a per diem of £285 for
the year. This resulted in Underlying Revenue
10
growth of 52.1% and a return to profitability from an Underlying
Loss Before Tax
10
of £5.1m in the prior year to an Underlying Profit Before Tax
10
of £3.0m in the current year.
In the prior year, although the business was operating, both the Omicron variant of COVID-19 and the conflict in
Ukraine impacted the number of passengers travelling, due to continued customer caution in relation to Central
Europe.
Travel
The Travel business, which includes both the Saga Holidays and Titan brands, saw increased volumes when
compared with the prior year, with passenger numbers increasing from 47.2k to 57.8k. The business also
generated higher revenue per passenger in the year, increasing from £2,297 to £2,704.
This led to Underlying Revenue
10
growth of 44.2% and a return to profitability from an Underlying Loss Before
Tax
10
of £4.1m in the prior year to an Underlying Profit Before Tax
10
of £1.5m in the current year.
In the first half of the prior year, the recovery in volumes was impacted by a level of disruption from a variety of
factors, including operational challenges faced by airlines and airports. In the second half of the prior year, we saw
customer cancellations returning closer to pre-pandemic levels.
10
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
16
Forward Cruise and Travel sales
The Ocean Cruise load factor for 2024/25 is ahead of the same point last year for 2023/24 by 4ppts. This is due
to an improved load factor in the first quarter when compared with the prior year. The per diem for 2024/25 is
8.6% higher than the same point last year, reflecting the inflationary impact on operating costs in customer
pricing.
The River Cruise load factor and per diem for 2024/25 are also ahead of the same point last year, by 6ppts and
13.4% respectively. This is due to increased customer demand for 2024/25, following the introduction of our third
spirit-class ship, Spirit of the Douro.
Travel bookings for 2024/25 are ahead of the same point last year by 12.1% and 3.7% for revenue and passengers
respectively. The increased revenue is due, in part, to higher passenger numbers, but also higher average selling
prices as a result of enhanced revenue management processes. The increase in passenger numbers is due to
increased uptake of short-haul travel within our Titan brand and hotel holidays within our Saga brand, as customer
confidence returns.
Current year departures
14 April 2024
Change
16 April 2023
Ocean Cruise revenue (£m)
200.8
11.6%
179.9
Ocean Cruise load factor
78%
4ppts
74%
Ocean Cruise per diem (£)
367
8.6%
338
River Cruise revenue (£m)
41.5
17.2%
35.4
River Cruise load factor
72%
6ppts
66%
River Cruise per diem (£)
339
13.4%
299
Travel revenue (£m)
140.7
12.1%
125.5
Travel passengers (‘000)
45.3
3.7%
43.7
17
Insurance
Insurance Broking
The Insurance Broking business provides tailored insurance products and services, principally motor, home,
private medical and travel insurance.
Its role is to price the policies and source the lowest risk price, whether through the panel of motor and home
underwriters or through solus arrangements for private medical and travel insurance. The Group’s in-house
insurer, AICL, sits on the motor and home panels and competes for that business with other panel members on
equal terms. AICL offers its underwriting capacity on the home panel through a coinsurance deal with a third
party, so the Group takes no underwriting risk for that product. Even if underwritten by a third party, the product
is presented as a Saga product and the Group manages the customer relationship.
12m to Jan 2024
12m to Jan 2023 (restated
11
)
Motor
Home
Other
Motor
Home
Other
£m
broking
broking
broking
Total
Change
broking
broking
broking
Total
Gross Written Premiums
12
(GWP)
Brokered
114.1
162.4
131.0
407.5
7.5%
105.0
150.1
123.9
379.0
Underwritten
195.5
-
3.0
198.5
7.8%
180.9
-
3.2
184.1
GWP
309.6
162.4
134.0
606.0
7.6%
285.9
150.1
127.1
563.1
Broker revenue
4.5
25.4
45.1
75.0
(28.1%)
35.7
26.5
42.1
104.3
Instalment revenue
3.4
3.3
-
6.7
9.8%
3.1
3.0
-
6.1
Add-on revenue
8.1
9.5
-
17.6
(10.2%)
9.2
10.4
-
19.6
Other revenue
27.1
17.3
(3.3)
41.1
(10.8%)
25.2
17.7
3.2
46.1
Written Underlying Revenue
12
43.1
55.5
41.8
140.4
(20.3%)
73.2
57.6
45.3
176.1
Written gross profit
35.9
55.5
49.7
141.1
(19.0%)
66.7
57.6
49.8
174.1
Marketing expenses
(9.6)
(6.2)
(5.6)
(21.4)
15.1%
(13.0)
(6.7)
(5.5)
(25.2)
Written Gross Profit After
Marketing Expenses
12
26.3
49.3
44.1
119.7
(19.6%)
53.7
50.9
44.3
148.9
Other operating expenses
(36.6)
(29.6)
(19.1)
(85.3)
(3.5%)
(36.8)
(28.4)
(17.2)
(82.4)
Written Underlying (Loss)/Profit
Before Tax
12
(10.3)
19.7
25.0
34.4
(48.3%)
16.9
22.5
27.1
66.5
Written to earned adjustment
5.4
-
-
5.4
8.0%
5.0
-
-
5.0
Earned Underlying (Loss)/Profit
Before Tax
12
(4.9)
19.7
25.0
39.8
(44.3%)
21.9
22.5
27.1
71.5
Policies in force
700k
605k
194k
1,499k
(9.3%)
800k
645k
207k
1,652k
Policies sold
750k
633k
192k
1,575k
(8.7%)
849k
670k
206k
1,725k
Third-party panel share
13
33.6%
0.9ppts
32.7%
Insurance Broking Underlying Profit Before Tax
12
,
on a written basis (which excludes the impact of the written to
earned adjustment deferring the revenue on policies underwritten over the term of the policy), decreased to
£34.4m, from £66.5m
11
.
A key metric for the Insurance Broking business is Written Gross Profit After Marketing Expenses
12
, but before
deducting overheads. This reduced from £148.9m
11
in the prior year to £119.7m in the current year, due mainly to
lower renewal volumes and margins on motor business. There were falls in Written Gross Profits After Marketing
Expenses
12
in motor of £27.4m, in home of £1.6m and in other broking of £0.2m.
For motor and home insurance, in terms of the total Written Gross Profit After Marketing Expenses
12
, the new
business proportion increased by £3.4m, while there was a £32.4m reduction in the renewal proportion.
The reduction in profitability of the motor business is attributable to significant inflationary pressures on the net
rates charged by panel partners, which have increased at a faster pace than the price that can be charged to
consumers in a competitive marketplace. This has been accentuated by the fact that a significant number of
motor policies are on three-year fixed-price deals, which fix the customer price for two renewals. Lower new
business volumes in the prior year have also led to a 13% reduction in the level of renewal volumes in the current
year.
11
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
12
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
13
Third-party underwriter's share of the motor panel for policies
18
The three-year fixed-price product remains important, with 582k policies sold in the year, 42% of total motor and
home policies, with 28% of direct new business customers taking the product despite cost of living pressures. This
product remains highly attractive to our customer base and, while current profitability has been impacted by high
industry inflation, this is a short-term challenge, as all policies will have been repriced by the middle of 2025.
Inflation for the three-year fixed-price home product is within expectations.
The challenging motor environment led to the average gross margin per policy for motor and home combined,
calculated as Written Gross Profit After Marketing Expenses
14
divided by the number of policies sold, reducing to
£54.7 in the current year, compared with £68.9
15
in the prior year.
In addition, customer retention decreased from 84% to 81%, overall motor and home policies in force decreased
9% when compared with 31 January 2023 and direct new business sales reduced by 6ppts to 43%, as the Group
rebalanced volumes towards price-comparison website distribution channels.
Written profit and gross margin per policy for motor and home are stated after allowing for deferral of part of the
revenues from three-year fixed-price policies, which is then recognised in profit or loss when the option to renew
those policies at a predetermined fixed price is exercised or lapses, recognising the inflation risk inherent in these
products. As at 31 January 2024, £10.6m (2023: £9.7m
15
) of income had been deferred in relation to three-year
fixed-price policies, £8.9m (2023: £7.9m
15
) of which related to income written in the year to 31 January 2024.
Motor broking
Gross Written Premiums
14
increased by 8.3% due to a 22.6% increase in average premiums, partially offset by an
11.7% reduction in core policies sold. Gross Written Premiums
14
, from business underwritten by AICL, increased
8.1% to £195.5m (2023: £180.9m), due to a 43.2% increase in average premiums, offset by a 24.5% decrease in
core policies sold.
Written Gross Profit After Marketing Expenses
14
was £26.3m (2023: £53.7m
15
), contributing £35.1 per policy
(2023: £63.3
15
per policy). The decrease in written gross profits, and margin per policy, is mainly due to the
adverse impact of inflation on motor renewal profitability.
Home broking
Gross Written Premiums
14
increased by 8.2% due to a 14.6% increase in average premiums, partially offset by a
5.5% reduction in core policies sold.
Written Gross Profit After Marketing Expenses
14
was £49.3m (2023: £50.9m), equating to £77.9 per policy (2023:
£76.0 per policy). The increase in renewal margins and a 10.0% increase in new business policies sold was more
than offset by lower new business margins and an 8.1% reduction in renewal policies sold.
Other broking
Other broking primarily comprises private medical insurance (PMI) and travel insurance.
Gross Written Premiums
14
increased 5.4% as a result of higher average premiums on both PMI and travel
insurance policies, with policy sales broadly stable at 33k (2023: 34k) for PMI and a slight reduction, to 146k
(2023: 158k), for travel insurance.
As a result, Written Gross Profits After Marketing Expenses
14
relating to travel insurance products decreased by
£0.6m.
While sales of PMI were stable, Written Gross Profit After Marketing Expenses
14
was £1.6m higher. This increase is
mainly due to a one-off payment from Bupa as part of the agreed terms for migrating the book from AXA.
14
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
15
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
19
Insurance Underwriting
12m to Jan 2024
12m to Jan 2023 (restated
16
)
£m
Gross
Re-
insurance
Net
Gross
change
Gross
Re-
insurance
Net
Insurance Underlying Revenue
17
A
169.8
(17.0)
152.8
7.1%
158.5
(14.8)
143.7
Incurred claims (current year)
B
(170.9)
22.3
(148.6)
3.0%
(176.1)
32.4
(143.7)
Claims handling costs in relation to
incurred claims
C (15.6)
-
(15.6) (19.1%) (13.1) - (13.1)
Changes to liabilities for incurred
claims (prior year)
D (15.3)
33.9
18.6 (154.3%) 28.2 6.4 34.6
Other incurred insurance service
expenses
E (14.7)
-
(14.7) 10.4% (16.4) - (16.4)
Insurance service result
(46.7)
39.2
(7.5)
(147.1%)
(18.9)
24.0
5.1
Net finance (expense)/income from
(re)insurance (excludes impact of
change in discount rate on non-PPO
liabilities)
(5.6)
3.1
(2.5) (100.0%) (2.8) 0.9 (1.9)
Investment return (excludes fair
value gains/losses on debt securities)
8.6
-
8.6 14.7% 7.5 - 7.5
Underlying (Loss)/Profit Before Tax
17
(43.7)
42.3
(1.4)
(207.7%)
(14.2)
24.9
10.7
Reported loss ratio
(B+D)/A
109.7%
85.1%
(16.4ppts)
93.3%
75.9%
Expense ratio
(C+E)/A
17.8%
19.8%
0.8ppts
18.6%
20.5%
Reported COR
(B+C+D+E)/A
127.5%
104.9%
(15.6ppts)
111.9%
96.5%
Current year COR
(B+C+E)/A
118.5%
117.1%
11.2ppts
129.7%
120.5%
Number of earned policies
539k
(18.6%)
662k
Policies in force – Saga motor
463k
(13.5%)
535k
The Group’s in-house underwriter, AICL, underwrites over 65% of the motor business sold by Insurance Broking,
alongside a smaller proportion of business on other panels. Alongside this, AICL underwrites a portion of Saga’s
home panel, although all home underwriting risk is passed to third-party insurance and reinsurance providers.
AICL also has excess of loss and funds-withheld quota share reinsurance arrangements in place, relating to its
motor underwriting line of business, which transfer a significant proportion of motor insurance risk to third-party
reinsurers.
In line with the wider market, AICL has experienced a prolonged period of elevated claims inflation that in the 12
months to 31 January 2024, was estimated at around 15%. In response to this, material price increases have been
applied over the past 12 months; however, these take time to fully flow through to insurance revenue.
Gross insurance revenue increased 7.1% to £169.8m (2023: £158.5m
16
), reflecting a 31.6% increase in average
earned premiums. This was only partially offset by the 18.6% reduction in the number of earned policies
underwritten by AICL, particularly those underwritten for Saga as opposed to other panels.
While claims trends in the first half of 2022/23 were somewhat adverse to expectations, inflationary pressures
really started to accelerate from mid-2022 onwards. Results for the second half of the prior year were heavily
impacted by these pressures, as well as from an increased frequency of large losses. These trends continued into
the first half of 2023/24, albeit with some moderation in large loss frequency and with pricing actions over the
past 12 months starting to benefit revenue.
The above factors, when combined, result in a reduced current year gross COR of 118.5% (2023: 129.7%
16
);
however, after allowing for reinsurance arrangements, this reduced further to 117.1% (2023: 120.5%
16
).
Following the increases applied over the past year, pricing now reflects recent and emerging trends and, as a
result, the COR is expected to reduce over time as these higher prices flow through to the result.
Positive changes to liabilities for incurred claims reduced from £34.6m in the prior year to £18.6m in the current
year. This was driven by a deterioration in gross liabilities for claims incurred in prior years in 2023/24, which in
turn was driven by further claims inflation and an adverse development on one specific large claim. The net finance
expense line includes the unwind of the discount of opening claims liabilities, which materially increased in the
prior year due to the increase in the claims discount rate over the past 12 months. This also includes modest
adjustments to the valuation of PPO liabilities, which were a net £1.0m positive in the current year, compared with
nil in the prior year.
16
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
17
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
20
Other Businesses and Central Costs
12m to Jan 2024
12m to Jan 2023 (restated
18
)
£m
Other
Businesses
Central
Costs
Total
Change
Other
Businesses
Central
Costs
Total
Underlying Revenue
19
Money
6.4
-
6.4
(19.0%)
7.9
-
7.9
Publishing and CustomerKNECT
12.3
-
12.3
19.4%
10.3
-
10.3
Insight
-
-
-
(100.0%)
0.6
-
0.6
Other
-
-
-
(100.0%)
-
1.0
1.0
Total Underlying Revenue
19
18.7
-
18.7
(5.6%)
18.8
1.0
19.8
Gross profit
7.2
5.0
12.2
(8.3%)
8.1
5.2
13.3
Operating expenses
(6.3)
(28.3)
(34.6)
29.7%
(8.9)
(40.3)
(49.2)
Investment income
-
5.4
5.4
440.0%
-
1.0
1.0
Net finance costs
-
(23.2)
(23.2)
(5.9%)
-
(21.9)
(21.9)
Underlying Profit/(Loss) Before Tax
19
0.9
(41.1)
(40.2)
29.2%
(0.8)
(56.0)
(56.8)
The Group’s Other Businesses include Saga Money, Saga Publishing and CustomerKNECT.
Underlying Profit Before Tax
19
for Other Businesses, when combined, increased by £1.7m, from a £0.8m
Underlying Loss Before Tax
19
in the prior year to an Underlying Profit Before Tax
19
of £0.9m in the current year,
largely due to the decision to exit some of our smaller, loss-making activities of Saga Exceptional and Saga Insight.
Revenue in Saga Money decreased by £1.5m due to market-wide equity release challenges arising from the
inflationary environment.
Central operating expenses decreased to £28.3m (2023: £40.3m
18
). Gross administration costs, before Group
recharges, decreased by £10.5m in the year, as a result of a cost-reduction programme enacted in the second half
of the year and lower property costs following closure of the Group’s unused offices. Net costs decreased by a
further £1.5m due to higher Group recharges to the business units.
Net finance costs in the year were £23.2m (2023: £21.9m), excluding finance costs included within the Cruise and
Travel businesses of £18.2m (2023: £19.2m) and Insurance Underwriting business of £2.5m (2023: £1.9m).
18
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
19
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
21
Cash flow and liquidity
Available Operating Cash Flow
20
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
21
)
Insurance Broking Trading EBITDA
20
47.2
(39.6%)
78.2
Other Businesses and Central Costs Trading EBITDA
20
(12.2)
58.6%
(29.5)
Trading EBITDA
20,22
from unrestricted businesses
35.0
(28.1%)
48.7
Dividends paid by Insurance Underwriting business
14.0
(44.0%)
25.0
Working capital and non-cash items
9.4 206.8% (8.8)
Capital expenditure funded with Available Cash
20
(21.6)
(36.7%)
(15.8)
Available Operating Cash Flow
20
before cash repayment from/(injection into)
Cruise and Travel operations
36.8
(25.1%)
49.1
Cash repayment from/(injection into) River Cruise and Travel businesses
14.9
183.7%
(17.8)
Ocean Cruise Available Operating Cash Flow
20
92.1
290.3%
23.6
Available Operating Cash Flow
20
143.8
161.9%
54.9
Restructuring costs
(28.8)
(>500.0%)
(1.4)
Interest and financing costs
(39.3)
(3.4%)
(38.0)
Business acquisitions
-
100.0%
(0.9)
Tax receipts
4.6
91.7%
2.4
Other (payments)/receipts
(5.8)
(>500.0%)
0.3
Change in cash flow from operations
74.5
330.6%
17.3
Change in Ocean Cruise ship debt
(62.2)
(34.1%)
(46.4)
Cash at 1 February
157.5
(15.6%)
186.6
Available Cash
20
at 31 January
169.8
7.8%
157.5
Available Operating Cash Flow
20
is made up of the cash flows from unrestricted businesses and the dividends paid
by restricted companies, less any cash injections to those businesses. Unrestricted businesses include Insurance
Broking (excluding specific ring-fenced funds to satisfy Financial Conduct Authority (
FCA) regulatory
requirements), Other Businesses and Central Costs, and the Group’s Ocean Cruise business. Restricted
businesses include AICL, River Cruise and Travel.
As a result of significantly improved cash generation from the Ocean Cruise business and cash repayments from
the River Cruise and Travel businesses, partially offset by a reduction in cash generation from unrestricted
businesses, Available Operating Cash Flow
20
increased from an inflow of £54.9m in the prior year to £143.8m in
the current year.
Excluding cash transfers to and from the Cruise and Travel businesses, the Group continued to be cash-
generative in the year, with an Available Operating Cash Flow
20
of £36.8m compared with £49.1m in the prior year.
Trading EBITDA
20,22
from unrestricted businesses reduced by £13.7m, mainly as a result of reduced motor
margins in the Insurance Broking segment, partially offset by significant cost savings enacted in Other Businesses
and Central Costs during the second half of the year. Changes in working capital were a £9.4m inflow in the
current year, compared with an £8.8m
21
outflow in the prior year, mainly due to an increase in net premiums
payable to our panel of underwriters following price increases in the year due to high claims inflation. This was only
partially offset by price increases to customers, as a result of the reduction in motor margins and the inability to
pass these price rises on to fixed-price product holders. Dividends from AICL reduced by £11.0m, as expected.
For River Cruise and Travel, the Group was repaid £14.9m in the year. This is an improvement of £32.7m when
compared with the £17.8m provided to the businesses to cover trading cash flows in the prior year. The
improvement is due to the businesses, in agreement with the CAA, moving from a fully ring-fenced trust
arrangement, where the businesses could not access 100% of customer cash until they returned from their river
cruise or holiday, to a ring-fenced escrow arrangement where only 70% of customer cash is restricted until they
return. At 31 January 2024, the ring-fenced businesses held cash of £49.1m, of which £37.9m was held in escrow.
The Group must hold a minimum of £8.1m of cash outside of escrow within the ring-fenced businesses, as agreed
with the CAA.
The Ocean Cruise business reported an Available Operating Cash Flow
20
of £92.1m (2023: £23.6m), with an
increase in advance customer receipts of £13.7m (2023: decrease of £4.1m) and net trading income of £82.2m
(2023: £31.6m), partially offset by capital expenditure of £3.8m (2023: £3.9m). Net of interest costs of £15.2m
(2023: £15.2m) and exceptional costs of £1.0m (2023: nil), the Ocean Cruise business reported a net cash inflow,
before capital repayments on the ship debt, of £75.9m for 2023/24 compared with £8.4m in the prior year.
20
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
21
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
22
Trading EBITDA includes the line-item impact of IFRS 16 with the corresponding impact to net finance costs included in net cash flows used
in financing activities
22
Other cash flow movements
Restructuring costs of £28.8m (2023: £1.4m) were significantly higher than in the prior year, largely arising from
the cost-reduction programme initiated in the second half of the current year, alongside the decisions to exit
some of our smaller, loss-making activities and rationalise our property portfolio.
Interest and financing costs increased in the current year due to higher floating interest costs on the ship debt
deferral loans.
In the prior year, business acquisitions related to the purchase of the Big Window.
Tax receipts of £4.6m (2023: £2.4m) include the benefit of repayments in relation to tax overpaid in prior years.
The Group continued to make the agreed payments to the defined benefit pension fund as part of the deficit
recovery plan of £5.8m (2023: £5.8m). These are included within other payments. In the prior year, other receipts
also included £5.0m of restricted cash released to Available Cash
23
that the Group had previously agreed with the
FCA to hold on a temporary basis and a further £1.1m in respect of the Threshold Condition 2.4 balance that the
Insurance Broking business holds as restricted cash.
In the current year, the Group continued to make capital repayments against its ship debt facilities, with two
payments totalling £30.6m (2023: £30.6m) on Spirit of Discovery’s debt facility and two payments totalling
£31.6m (2023: £15.8m) on Spirit of Adventure’s debt facility.
23
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
23
Reconciliation between operating and reported metrics
Available Operating Cash Flow
24
reconciles to net cash flows from operating activities as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
Net cash flows from/(used in) operating activities (reported)
83.7
702.2%
(13.9)
Exclude cash impact of:
Trading of restricted divisions
(13.0)
(136.8%)
35.3
Non-trading costs
34.6
361.3%
7.5
Interest paid
38.2
1.6%
37.6
Tax (received)/paid
(3.2)
(455.6%)
0.9
56.6
(30.4%)
81.3
Cash released from restricted divisions
28.9
301.4%
7.2
Include capital expenditure funded from Available Cash
24
(21.6)
(36.7%)
(15.8)
Include Ocean Cruise capital expenditure
(3.8)
2.6%
(3.9)
Available Operating Cash Flow
24
143.8
161.8%
54.9
Underlying Revenue
24
reconciles to the statutory measure of revenue as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
25
)
Underlying Revenue
24
732.7
12.9%
648.9
Ceded reinsurance premiums earned on business underwritten by the Group
17.0
14.9%
14.8
Onerous contract provision
(3.1)
(100.0%)
-
Ocean Cruise insurance compensation for refunds paid to customers
(5.0)
(100.0%)
Ocean Cruise discretionary customer ticket refunds
(0.9)
(100.0%)
-
Insurance Underwriting profit commission
(0.9)
(100.0%)
-
Exit from smaller, loss-making activities
1.3
100.0%
-
Revenue
741.1
11.7%
663.7
Trading EBITDA
24
reconciles to Underlying Profit Before Tax
24
as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
25
)
Insurance Broking Trading EBITDA
24
47.2
(39.6%)
78.2
Insurance Underwriting Trading EBITDA
24
1.2
(90.7%)
12.9
Ocean Cruise Trading EBITDA
24,26
74.8
91.8%
39.0
River Cruise and Travel Trading EBITDA
24
5.5
167.9%
(8.1)
Other Businesses and Central Costs Trading EBITDA
24
(12.2)
58.6%
(29.5)
Trading EBITDA
24
116.5
25.9%
92.5
Depreciation and amortisation
(34.4)
(1.2%)
(34.0)
Net finance costs (including Cruise, Travel and Insurance Underwriting)
(43.9)
(2.1%)
(43.0)
Underlying Profit Before Tax
24
38.2
146.5%
15.5
24
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
25
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
26
Ocean Cruise Trading EBITDA includes Ocean Cruise overheads
24
Adjusted Trading EBITDA
27
is used in the Group’s leverage calculation for the Revolving Credit Facility (RCF)
covenant and is calculated as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
28
)
Trading EBITDA
27
116.5
25.9%
92.5
Impact of accounting standard changes since 31 January 2017
1.7
(39.3%)
2.8
Spirit of Discovery and Spirit of Adventure Trading EBITDA
27,29
(74.8)
(91.8%)
(39.0)
Adjusted Trading EBITDA
27
43.4
(22.9%)
56.3
Ocean Cruise Trading EBITDA
27,29
reconciles to Ocean Cruise Trading EBITDA (Excluding Overheads)
27
as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
Ocean Cruise Trading EBITDA
27,29
74.8
91.8%
39.0
Ocean Cruise overheads
15.1
(41.1%)
10.7
Ocean Cruise Trading EBITDA (Excluding Overheads)
27
89.9
80.9%
49.7
27
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
28
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
29
Ocean Cruise Trading EBITDA includes Ocean Cruise overheads
25
Statement of financial position
Goodwill
During the first half of 2023, high claims cost inflation, particularly in motor, put pressure on the Insurance
business. Combined with the impact of Saga’s three-year fixed-price products and highly competitive market
conditions, this led to lower margins per policy and lower overall Underlying Profit Before Tax
30
for the Insurance
Broking business, compared with prior growth assumptions. The Group, therefore, conducted an impairment
review of the £449.6m Insurance goodwill asset that was included on the statement of financial position at 31
January 2023.
The Group’s five-year financial forecasts incorporated the impact of the changes in the market environment,
including the impact of continued pressure on margins. Further stress tests were considered, including the
continuation of high claims cost inflation for an extended period and further downsides compared with revised
base case assumptions. This resulted in management taking the decision to impair Insurance goodwill by £68.1m
as at 31 July 2023.
The market challenges in Insurance persisted through the second half of the year and our latest five-year
forecasts have, therefore, been focused on effectively balancing the protection and, ultimately, growth of policy
sales with the longer-term sustainability of the business. This, however, is expected to result in reduced
profitability in the short term, when compared with previous growth projections. Management therefore
considered it necessary to perform a further impairment assessment of goodwill as at 31 January 2024. Forecast
cash flows, consistent with the latest five-year plan and further stress tests, including the impact of a slower
recovery from high claims inflation, have been modelled. As a result, management has taken the decision to impair
Insurance goodwill by a further £36.8m, taking the total impairment charge for the year to £104.9m. Consistent
with the approach taken in previous years, this impairment is not included within Underlying Profit Before Tax
30
.
Carrying value of Ocean Cruise ships
At 31 January 2024, the carrying value of the Group’s Ocean Cruise ships was £586.7m (31 January 2023:
£607.0m). Trading performance in the current year has been very positive, and, with strong bookings for
2024/25, the Directors concluded that there were no indicators of impairment at 31 January 2024.
30
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
26
Investment portfolio
The majority of the Group’s financial assets are held by its Insurance Underwriting entity and represent premium
income received and invested to settle claims and meet regulatory capital requirements.
The amount held in invested funds decreased by £28.0m to £251.9m (31 January 2023: £279.9m), partly due to
the payment of £14.0m of dividends from AICL in the year. At 31 January 2024, 100% of the financial assets held
by the Group were invested with counterparties with a risk rating of BBB or above, compared with 97% in the
prior year, reflecting the relatively stable credit risk rating of the Group’s investment holdings.
Credit risk rating
At 31 January 2024
AAA
AA
A
BBB
Unrated
Total
£m
£m
£m
£m
£m
£m
Investment portfolio:
Debt securities
23.9
59.2
70.4
65.6
-
219.1
Money market funds
32.8
-
-
-
-
32.8
Total invested funds
56.7
59.2
70.4
65.6
-
251.9
Derivative assets
-
-
0.3
-
-
0.3
Total financial assets
56.7
59.2
70.7
65.6
-
252.2
Credit risk rating
At 31 January 2023
AAA
AA
A
BBB
Unrated
Total
£m
£m
£m
£m
£m
£m
Investment portfolio:
Debt securities
23.5
74.9
64.2
91.8
-
254.4
Money market funds
19.6
-
-
-
-
19.6
Loan funds
-
-
-
-
5.9
5.9
Total invested funds
43.1
74.9
64.2
91.8
5.9
279.9
Derivative assets
-
-
2.5
-
-
2.5
Total financial assets
43.1
74.9
66.7
91.8
5.9
282.4
Insurance reserves
Analysis of insurance contract liabilities at 31 January 2024 and 31 January 2023 is as follows:
At 31 January 2024
At 31 January 2023 (restated
31
)
£m
Gross
Reinsurance
assets
Net
Gross
Reinsurance
assets
Net
Incurred claims – estimate of the present value
of future cash flows
286.4 (141.3) 145.1 259.2 (87.6) 171.6
Incurred claims – risk adjustment
40.2
(33.7)
6.5
35.6
(27.4)
8.2
Remaining coverage – excluding loss
component
56.6 3.1 59.7 44.3 5.5 49.8
Remaining coverage – loss component
16.1
(1.3)
14.8
8.4
(2.7)
5.7
Total
399.3
(173.2)
226.1
347.5
(112.2)
235.3
The Group’s total insurance contract liabilities, net of reinsurance assets, decreased by £9.2m in the year to 31
January 2024 from the previous year end, primarily due to a £26.5m reduction in net incurred claims reserves.
This was partially offset by a £19.0m increase in net remaining coverage claims reserves. This was driven by a
deterioration in gross liabilities for claims incurred in prior years in 2023/24, which in turn, was driven by further
claims inflation and an adverse development on one specific large claim.
31
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
27
Financing
At 31 January 2024, the Group’s Net Debt
32
was £637.2m, £74.5m lower than at the beginning of the financial
year. The Group’s total leverage ratio was 5.4x as at 31 January 2024 (31 January 2023: 7.5x).
Net Debt
32
is analysed as follows:
Adjusted Net Debt
32
is used in the Group’s leverage calculation and reconciles to Net Debt
32
as follows:
£m
31 January
2024
31 January
2023
Net Debt
32
637.2
711.7
Exclude ship loans
(407.0)
(469.2)
Exclude Ocean Cruise Available Cash
32
2.7
1.4
Adjusted Net Debt
32
232.9
243.9
Excluding the impact of debt and earnings relating to the Ocean Cruise ships, the Group’s leverage ratio
applicable to the RCF was 5.4x at 31 January 2024 (31 January 2023: 4.3x), within the increased 6.25x covenant.
In order to increase the Group’s financial flexibility, we concluded discussions with our RCF lending banks,
agreeing a series of amendments to the facility, including:
• an increase to the 31 January 2024 and all subsequent leverage covenants to 6.25x;
• quarterly covenant testing, irrespective of whether the loan is drawn;
• the introduction of a restriction whereby, post repayment of the 2024 bond, no utilisation of the facility is
permitted if free liquidity is below £40.0m; and
• consent requirement for any early repayment of corporate debt or payment of shareholder dividends.
At 31 January 2024, the RCF remained undrawn.
The Group made repayments on its Ocean Cruise ship debt facilities in March 2023 and September 2023 for
Spirit of Adventure and in June 2023 and December 2023 for Spirit of Discovery.
During the year, the Group agreed an extension of the loan facility in place with Roger De Haan, increasing the
amount that can be drawn from £50.0m to £85.0m. The facility, which came into effect on 1 January 2024, and
was undrawn at 31 January 2024, is unsecured, and the interest rate remains at 10% provided that drawn funds
are used to repay the corporate bonds due in May 2024. If the loan facility is drawn for general corporate
purposes, the interest rate increases to 18%. While the Group expects to draw down the loan facility as part of the
2024 bond repayment, it is not likely to draw the funds for any other purpose. The revision included some other
amendments that are not considered significant but, for the most part, it continues to follow the wording of the
Group’s RCF. The termination date of the facility with Roger De Haan was also extended from 30 June 2025 to 31
December 2025.
Subsequent to the financial year end, a reduction to the notice period required for drawdown of the loan to 10
business days was agreed, in addition to a further extension to the termination date of the facility from 31
December 2025 to 30 April 2026.
32
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
33
Maturity date represents the date that the principal must be repaid, other than the ocean cruise ship loans, which are repaid in instalments
over the next eight years
34
Refer to Note 13 of the financial statements for information as to how this reconciles to a statutory measure of cash
£m
Maturity date
33
31 January
2024
31 January
2023
3.375% Corporate bond
May 2024
150.0
150.0
5.5% Corporate bond
July 2026
250.0
250.0
RCF
May 2025
-
-
Loan facility with Roger De Haan
April 2026
-
-
Spirit of Discovery ship loan
June 2031
173.6
204.2
Spirit of Adventure ship loan
September 2032
233.4
265.0
Less Available Cash
32,34
(169.8) (157.5)
Net Debt
30
637.2
711.7
28
Pensions
The Group’s defined benefit pension scheme liability, as measured on an International Accounting Standard 19R
basis, increased by £35.8m to a £47.9m liability as at 31 January 2024 (31 January 2023: £12.1m).
£m
31 January
2024
31 January
2023
Fair value of scheme assets
204.5
224.1
Present value of defined benefit obligation
(252.4)
(236.2)
Defined benefit pension scheme liability
(47.9)
(12.1)
The movements observed in the scheme’s assets and obligations have been impacted by macroeconomic factors
during the year where, at a global level, there have been continued inflation and cost of living pressures, as well as
shifts in long-term market yields. The present value of defined benefit obligations increased by £16.2m, to
£252.4m, and the fair value of scheme assets decreased by £19.6m, to £204.5m. The net liability position moved
adversely due to asset returns being significantly lower than expected, as well as the impact of using updated data
from the 2023 triennial actuarial valuation, which is in progress.
Over 2023, asset performance was impacted by a repositioning of the growth part of the scheme’s portfolio
following the gilts crisis in 2022. Substantive changes to the overall asset allocation and, in particular, growth
assets were required to support the scheme’s interest rate and inflation hedging during, and in the months
following, the gilts crisis. The portfolio, therefore, became overweight to illiquid assets and underweight to liquid
growth assets, which impacted performance. Changes to the asset allocation occurred over 2023 as capital was
returned from the illiquid assets and repositioned into more liquid growth assets.
Meanwhile, the use of updated data from the 2023 draft triennial actuarial valuation had the dual impact of
capturing experience up to 31 January 2023 not already quantified within previous disclosures, and also allowing
for any difference in the roll-forward and assumption changes of the liability once allowing for the updated
underlying liability profile and cash flows. The primary component of the adverse experience adjustment reflects a
change in the shape of the yield curve assumption compared with the prior year, which in a period of
unprecedented market volatility between 30 September 2022 and 31 January 2023 in the wake of the September
2022 mini-budget, has acted to increase the liabilities of the scheme.
These adverse movements have been partly offset by a reduction in the value placed on the liabilities as a result of:
changes in market conditions; future life expectancies; the level of commutation assumed and the use of the latest
commutation factors; and a £5.8m deficit funding contribution being paid by the Group in February 2023. This
related to a recovery plan agreed under the latest approved triennial valuation of the scheme as at 31 January 2020.
Net assets
Since 31 January 2023, total assets have decreased by £66.5m and total liabilities have increased by £75.4m,
resulting in an overall decrease in net assets of £141.9m.
The decrease in total assets is primarily due to:
• a decrease in goodwill of £104.9m, following impairments to Insurance Broking goodwill in the year;
• a decrease in financial assets of £30.2m, mainly relating to a reduction in the Insurance Underwriting
investment portfolio, partly to fund £14.0m of dividends from AICL;
• an increase in reinsurance assets of £61.0m due to the receivable on the quota share contract with AICL’s
reinsurance increasing in the year; and
• an increase in cash and short-term deposits of £12.2m.
The increase in total liabilities largely reflects:
• an increase of £33.3m in contract liabilities due to the improved forward booking position of the Cruise
and Travel businesses;
• an increase in retirement benefit scheme liability of £35.8m;
• an increase in insurance contract liabilities of £51.8m;
• an increase in trade and other payables of £14.8m; and
• a decrease of £68.4m in financial liabilities, which is mainly due to a reduction of £58.4m in bond and bank
loans, as a result of capital repayments on Spirit of Discovery and Spirit of Adventure facilities.
29
Effect of IFRS 17 on net assets
£m
31 Jan 2024
Change
31 Jan 2023
Net assets (under previous IFRS)
228.9
(140.6)
369.5
Reversal of management margin under previous IFRS
17.8
(6.1)
23.9
ENIDs under IFRS 17
(5.9)
2.1
(8.0)
IFRS 17 risk adjustment
(6.6)
1.7
(8.3)
New approach to reserve margin
5.3
(2.3)
7.6
Revised PPO carer wage inflation assumption
(16.6)
24.9
(41.5)
Different discount rate for PPOs and related reinsurance assets
9.3
(28.8)
38.1
Change in valuation of PPO reserves (other than due to ‘margin’)
(7.3)
(3.9)
(3.4)
Discounting non-PPO liabilities and related reinsurance assets
10.4
(1.7)
12.1
Expense acquisition costs when incurred
-
13.9
(13.9)
Onerous contract provision (net of related reinsurance assets)
(14.8)
(9.1)
(5.7)
Other individually immaterial items
(0.8)
1.3
(2.1)
Deferred taxation
1.8
0.5
1.3
Impact of IFRS 17 on net assets
(5.4)
(1.3)
(4.1)
Net assets under IFRS 17
223.5
(141.9)
365.4
At 31 January 2024, net assets under IFRS 17 were £5.4m lower than under previous IFRS (31 January 2023:
£4.1m). The material components of this negative year-on-year movement are included below:
• £9.1m increase in the net onerous contracts provision held in relation to motor insurance contracts. This
was driven by a combination of an increase in contracts that were onerous at initial recognition (primarily
due to renewals in years two and three of three-year fixed-price policies) and an upwards revaluation of
the provision due to prolonged claims inflation.
• £2.3m reduction in the positive impact of the new approach to reserve margin. This is due to a £6.1m
reduction in the management margin held under previous IFRS being greater than the £3.8m reduction in
IFRS ‘margin’ (ENIDs and risk adjustment).
• £3.9m negative movement due to a change in the impact of revaluing PPO reserves under IFRS 17. The
two impacts of IFRS 17 changes to PPO valuation assumptions (being the carer wage inflation assumption
and the discount rate) would typically largely offset each other, however, this is not exact due to the
complexities of valuing PPO liabilities, including related potential lump sum awards. This is particularly the
case in a changing economic environment.
• £1.7m negative movement in the impact of discounting non-PPO claim reserves at the IFRS 17 discount
rate. This is due to a reduction in the Group’s net non-PPO claim reserves, which in turn, is due to an
increase in the proportion of gross non-PPO reserves that are ceded to reinsurers.
These are, however, partially offset by:
• £13.9m reduction to the negative impact of expensing insurance acquisition costs when incurred under
IFRS 17, instead of deferring them over the life of the policy under previous IFRS. This reduced impact is
the result of an impairment to the deferred acquisition costs asset that would have been recognised in the
year to 31 January 2024 under IFRS 4;
• £1.3m of other individually immaterial adjustments; and
• £0.5m deferred tax impact of the above adjustments.
30
Going concern
The Directors have performed an assessment of going concern to determine the adequacy of the Group’s
financial resources over a period of 15 months from the date of signing these financial statements, a period
selected to include consideration of the expiry date of the Group’s currently undrawn £50.0m RCF in May 2025
and the first covenant test date falling due after that expiry for the Group’s ship debt facilities.
This assessment is centred on a base case, overlaid with risk-adjusted financial projections, that incorporate
scenario analysis, and stress tests on expected business performance.
The Group’s base case modelling assumes continued strong performance in the Cruise business on the back of
high load factors and per diems. Travel is also expected to achieve continued growth in profits. After a challenging
2023/24 for Insurance, which saw a year of high cost and claims inflation and reducing policy volumes in a
competitive market, the plan for this area of the business focuses on stabilisation over the assessment period and
preparation for future growth.
The Group’s severe but plausible stressed scenario incorporates lower load factors for Ocean Cruise, lower levels
of demand in River Cruise and slower growth in the Travel business. Downside risks modelled for the Insurance
business reflect the possibility that the expected benefits from planned cost-saving initiatives may not be realised in
full.
Following actions undertaken by management to reduce the administrative overhead and central cost base in the
second half of 2023/24, both scenarios include an assumption that the resultant levels of savings are maintained
throughout the assessment period.
Under all scenarios modelled, the Group expects to meet scheduled Ocean Cruise debt principal repayments as
they fall due over the next 15 months, and to meet the financial covenants relating to its secured cruise debt.
In addition, in both the base and stressed scenario, and further incorporating a drawdown under the Group’s
£85.0m loan facility with Roger De Haan, repayable in April 2026, the Group expects to have sufficient resources
to enable repayment of the £150.0m senior bonds on maturity in May 2024 from Available Cash
35
resources.
Over the same time frame and on the same basis, the Group also expects to remain within the renegotiated
financial covenants and other terms relating to its £50.0m RCF, as set out in Note 16, in both the base case and
the stressed case scenario, enabling it to draw down on this currently undrawn facility, until maturity in May 2025,
to meet short-term working capital requirements, should the need arise.
Following the repayment of the £150.0m senior bonds, the Group will operate with a lower level of Available
Cash
35
. This may lower the Group’s ability to withstand events that are beyond those contemplated in the severe
but plausible stressed scenario. Notwithstanding this, the Group has sufficient resources in both the base and
severe but plausible stressed scenarios to continue in operation for at least the next 15 months.
Noting that it is not possible to accurately predict all possible future risks to the Group’s trading, based on this
analysis and the scenarios modelled, the Directors have concluded that the Group will have sufficient funds to
continue to meet its liabilities as they fall due for a period of at least 15 months from the date of approval of the
financial statements. They have, therefore, deemed it appropriate to prepare the financial statements to 31
January 2024 on a going concern basis.
35
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
31
Viability
The Directors have considered the viability of the Group over the five years to January 2029 and the full Viability
Statement will be published within the 2024 Annual Report and Accounts. Although the outlook for the Cruise and
Travel businesses is healthy, the conditions in Insurance remain challenging. Against this backdrop, the Directors
and Operating Board have taken steps to strengthen the Group’s financial position to help it mitigate this period
of transition.
The Directors have considered the resilience of the Group, taking account of its current position, the principal
risks facing the business in severe but plausible scenarios and the effect of any mitigating actions. Under all
scenarios modelled, the Directors have identified a need for additional mitigating action beyond the scope of
normal trading to manage the solvency of the Group at key pressure points over the five-year period. These points
include the maturity of the £85.0m loan facility with Roger De Haan in April 2026, and the maturity of the Group’s
£250.0m unsecured bond in July 2026. A range of options are currently being explored, including potential
partnership arrangements, which would release capital and enable the Group to restructure its debt; new liquidity
facilities; and an evaluation of corporate refinancing.
Based on an assessment of these planned actions, the Directors have a reasonable expectation that the Group will
be able to continue in operation and meet its liabilities as they fall due over the next five years. The Directors,
however, note that successful execution of the planned mitigating actions is not fully within their control and that
uncertainty increases over time and, therefore, future outcomes cannot be guaranteed.
Dividends and financial priorities for 2024/25
Dividends
Given the Group’s priority of reducing Net Debt
36
, the Board of Directors does not recommend payment of a final
dividend for the 2023/24 financial year, nor would this currently be permissible under financing arrangements and
while the ship debt facility deferred amounts are outstanding.
Financial priorities for 2024/25
The Group’s financial priorities for the current financial year are to reduce Net Debt
36
via capital-light growth,
explore partnership opportunities that could support this objective, continue the growth trajectory of the River
Cruise and Travel businesses, and balance the protection and, ultimately, growth of policy sales with the delivery of
sustainable profitability within Insurance.
Mark Watkins
Group Chief Financial Officer
16 April 2024
36
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
32
Principal risks and uncertainties
The principal risks and uncertainties (PRUs) shown below are the principal risks facing the Group, including those
that would threaten its business model, future performance, solvency or liquidity. The table also includes the
mitigating actions being taken to manage these risks. The trend denotes the anticipated future direction of each
risk after mitigation, which is influenced by known key external or internal factors. Saga takes a ‘bottom-up’ and
‘top-down’ approach to developing and reviewing its PRUs, which occurs at least twice a year with oversight from
the Operating Board and the plc Board. Each PRU has been aligned to the most relevant strategic priorities.
Key to strategy elements
1
1. Maximising our core businesses
2. Reducing debt through capital-light growth
3. Growing our customer base and deepening our customer relationships
Risk
Risk trend
2
Risk
category
Link to
strategy
Mitigation
Liquidity risk/debt refinancing
The Group relies on a number of
sources of funding and, as such, is
exposed to the risks associated
with repaying or refinancing this
funding as it reaches maturity.
Stable
Liquidity
2
The Group increased, and extended, its
currently undrawn unsecured facility
with Roger De Haan and we expect to
pay the £150.0m bond due in May 2024
through this, alongside Available Cash
3
resources.
In addition, we amended the leverage
ratio covenant on the Group’s undrawn
Revolving Credit Facility to 6.25x, from
January 2024 until maturity, to maintain
additional liquidity.
Cyber
There is a risk that a cyber security
breach occurs due to failures in
keeping pace with external threat
actor capabilities and regulatory
expectations, resulting in system
lockdown, ransom demands and/or
compromise of substantial data.
This could result in customer/
colleague compensation and
regulatory sanctions
Improving
Operational
Reputational
1
Ongoing vulnerability management
programme in place, including industry
benchmarking and external penetration
testing, to help maintain security
posture.
Continued investment in cyber
prevention, detection and intelligence
technologies to help mitigate attacks.
Awareness and testing programme in
place to protect against social
engineering attacks on colleagues.
Strategy in place to further reduce our
footprint of potential system targets.
Breach of Data Protection Act
(DPA)/General Data Protection
Regulation (GDPR)
There is a risk that Saga fails to
process and manage customer
data in accordance with their
expectations, UK GDPR and DPA
2018. This could result in potential
customer harm, compensation cost
and Information Commissioner’s
Office fine/regulatory censure.
Worsening
Operational
Reputational
1 and 3
Refreshed Data Management
Committee, which maintains oversight of
the management of our most key data
risks, ensuring alignment across all
business units.
1
Since the year end, the strategic pillars have evolved as we continually develop the business to support the changing needs of our customers.
The strategic pillars that applied during the 2023/24 financial year were set out in the 2023 Annual Report and Accounts. These were
maximising our existing businesses; step-changing our ability to scale while reducing debt; and creating ‘The Superbrand’ for older people
2
Risk trend is the current reporting period trend, not the trend relative to the last Annual Report and Accounts
3
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
33
Risk
Risk
trend
4
Risk
category
Link to
strategy
Mitigation
Third-party suppliers
There is a risk of business interruption,
financial loss and reputational damage
arising from loss of key third parties.
Worsening
Operational
1 and 3
Our supplier risk management
framework ensures an appropriate risk-
based approach for selecting third-party
partners and overseeing their
performance and operational and
financial resilience.
Regulatory action
Risk of customer harm because of our
actions/in-action or failure to implement
regulatory change correctly,
which could
result in customer remediation, or
regulatory scrutiny, and/or sanction.
Stable
Operational
Reputational
1
Continued development of the risk
framework to ensure it evolves in line
with regulatory standards. Horizon-
scanning reports produced to identify
upcoming regulatory changes and
necessary action.
Delivery and execution
There is a risk that key business change
initiatives fail to be delivered effectively,
or at all, due to one or a combination of
the following: resource capability or
capacity; unexpected business as usual
risk issues; new regulation; or material
defects in the delivery.
Improving
Operational
1 and 2
Review and delivery of our revised
operating model to ensure we are set up
to achieve any operational changes
planned.
Insurance pricing modelling error
There is a risk that uncertainty in the
Insurance Broking and Underwriting
businesses leads to material pricing,
reserving and/or underwriting issues
that cause significant financial impact
and/or customer harm.
Stable
Operational
Insurance
1
Product and pricing governance is in
place and we regularly monitor pricing
information against expectation.
Organisational resilience
A risk of failure in one or more key
resources supporting critical services or
operations, and inability to recover
within defined
parameters in the context
of a complex, dynamic risk environment
and ongoing change and transformation.
Stable
Operational
1, 2 and 3
Continued development of the
organisational resilience strategy and
plan. Response and recovery planning,
and a resilience testing plan are in place,
supported by an operational resilience
self-assessment.
Environmental, Social and Governance
(
ES G
)/climate change
There is a risk that Saga does not
maintain compliance with increasing
ESG-related regulation, or fails to
deliver on its stated ESG strategy in line
with stakeholder expectations, causing
reputational, customer and financial
impacts.
Stable
Strategic
Operational
Reputational
1 and 3
ESG strategy and governance has been
defined and implemented, with ESG
embedded into the risk management
framework.
Capability and capacity
There is a risk that the capability and
capacity of colleagues does not align to
significant organisational change needed
to deliver strategic objectives.
Improving
Strategic
Operational
2
Focus on retention of key colleagues,
alongside review and optimisation of our
operating model, ensuring it supports the
planned organisational changes.
4
Risk trend is the current reporting period trend, not the trend relative to the last Annual Report and Accounts
34
Risk
Risk
trend
5
Risk
category
Link to
strategy
Mitigation
Fraud and financial crime
There is a risk that we experience
increased risk of internal or external
fraud and financial crime, driven by
remote working and general
macroeconomic conditions.
Stable
Operational
1
Ongoing monitoring and management of
claims fraud, with regular colleague
training and awareness in place. Financial
crime risk frameworks in place and
tailored to each business unit.
Pandemic
Risk to the Cruise and Travel businesses
and financial resilience of Saga in the
event of new and/or significant
pandemic.
Stable
Operational
1, 2 and 3
More in-depth analysis to be carried out
to understand the businesses’ resilience
to a new pandemic based on the current
diversification of the Group, with
business response plans and any
necessary actions identified carried out.
Culture
There is a risk that Saga’s culture does
not transform in line with the purpose,
values and strategy to deliver the
financial results expected per the five-
year plan.
Improving
Operational
Reputational
1 and 3
Ongoing measurement and monitoring of
culture using colleague surveys, ensuring
we take on board, and act on,
feedback to
continually improve it.
Saga brand and relevance
There is a risk that the Saga brand and
products do not appeal sufficiently to
our target market, such that
competitors gain market share and
customer volumes continue to decline.
Stable
Strategic
Reputational
3
Ongoing monitoring of customer
transactional net promoter score, and
engagement with customers via the
Experienced Voices panel to understand
customer sentiment towards the brand.
5
Risk trend is the current reporting period trend, not the trend relative to the last Annual Report and Accounts
35
Consolidated income statement
for the year ended 31 January 2024
1
For details of the restatement, please see Notes 2.4, 12a and 15
2024
2023
(restated
1
)
Note
£m
£m
Revenue from Cruise and
Travel services 3
410.0
305.5
Revenue from Insurance Broking services
3
128.7
147.8
Other revenue (non
-Insurance Underwriting) 3
24.8
17.4
Non
-insurance revenue 3
563.5
470.7
Insurance revenue
3
177.6
193.0
Total revenue
3
741.1
663.7
Decrease in credit loss allowance
–
1.3
Other cost of sales
(301.1)
(249.8)
Cost of sales (non-Insurance Underwriting)
3
(301.1)
(248.5)
Gross profit (non-Insurance Underwriting)
262.4
222.2
Insurance service
expenses 15
(249.2)
(215.8)
Net income from reinsurance contracts
15
40.2
27.3
Insurance service result
(31.4)
4.5
Other income
5.0 –
Administrative and selling expenses
(214.2) (181.5)
Increase in credit loss allowance
(1.1)
(0.9)
Impairment of non
-financial assets
(118.6) (271.2)
Net finance (expense)/income from insurance contracts
15
(3.5)
8.2
Net finance income/(expense) from reinsurance contracts
15
1.9
(3.7)
Net (loss)/profit on disposal of
property, plant and equipment and software
(0.5)
0.1
Investment income/(
loss)
15.4
(9.7)
Finance costs
(44.4)
(42.2)
Finance income
–
1.5
Loss before tax
(129.0)
(272.7)
Tax credit/(expense)
4
16.0
(0.4)
Loss for the year
(113.0)
(273.1)
Attributable to:
Equity holders of the parent
(113.0)
(273.1)
Loss per share:
Basic
6
(80.8p)
(195.7p)
Diluted
6
(80.8p)
(195.7p)
36
Consolidated statement of comprehensive income
for the year ended 31 January 2024
2
For details of the restatement, please see Notes 2.4, 12a and 15
2024
2023
(restated
2
)
Note
£m
£m
Loss for the year
(113.0)
(273.1)
Other comprehensive income
Other comprehensive income to be reclassified to income statement in subsequent years
Net
losses on hedging instruments during the year 12
(1.3)
(2.0)
Recycling of previous losses to income statement on matured hedges
12
1.0
0.3
Total net losses on cash flow hedges
(0.3)
(1.7)
Associated tax effect
0.6
(0.8)
Total other
comprehensive income/(losses) with recycling to income statement
0.3
(2.5)
Other comprehensive income not to be reclassified to income statement in subsequent
years
Remeasurement losses on defined benefit plans
(41.1
)
(19.1)
Associated tax effect
10.3
4.8
Total other comprehensive losses without recycling to income statement
(30.8)
(14.3)
Total other comprehensive losses
(30.5)
(16.8)
Total comprehensive losses for the year
(143.5)
(289.9)
Attributable to:
Equity holders of the parent
(143.5
)
(289.9)
37
Consolidated statement of financial position
as at 31 January 2024
3
For details of the restatement, please see Notes 2.4, 12a and 15
2024
2023
(restated
3
)
1 Feb 2022
(restated
3
)
Assets
Note
£m
£m
£m
Goodwill
8
34
4.7
449.6
718.6
Intangible assets
9
60.7
51.3
47.1
Retirement benefit scheme surplus
14
–
–
1.1
Property, plant and equipment
10
593.4
611.0
646.5
Right
-of-use assets
11
24.6
30.7
36.0
Financial assets
12
252.2
282.4
332.1
Current tax assets
4.8
4.4
4.3
Deferred tax assets
4
4
9.4
20.8
15.0
Reinsurance
contract assets
15
173.2
112.2
81.1
Inventories
8.1
7.0
6.3
Trade and other receivables
127.7
136.0
115.6
Trust and escrow accounts
37.9
36.2
23.4
Cash and short
-term deposits
13
188.7
176.5
226.9
Assets held for sale
19
17.4
31.2
12.9
Total assets
1,882.8
1,949.3
2,266.9
Liabilities
Retirement benefit scheme liability
14
4
7.9
12.1
–
I
nsurance contract liabilities
15
399.3
347.5
359.6
Reinsurance contract liabilities
15
–
–
1.1
Provisions
8.0
5.2
5.4
Financial liabilities
12
828.4
896.8
936.2
Deferred tax liabilities
4
14.6
9.3
7.8
Contract liabilities
159.
8
126.5
118.1
Trade and other payables
201.3
186.5
187.3
Total liabilities
1,659.3
1,583.9
1,615.5
Equity
Issued capital
17
21.3
21.1
21.1
Share premium
648.3
648.3
648.3
Own shares held reserve
(1.2)
–
–
Retained deficit
(452.5)
(309.7)
(24.7)
Share
-based payment reserve
10.5
8.9
7.4
Hedging reserve
(2.9)
(3.2)
(0.7)
Total equity
223.5
365.4
651.4
Total equity and liabilities
1,882.8
1,949.3
2,266.9
38
Consolidated statement of changes in equity
for the year ended 31 January 2024
4
For details of the restatement, please see Notes 2.4, 12a and 15
Attributable to the equity holders of the parent
Issued
capital
Share
premium
Own
shares
held
reserve
Retained
(deficit)/
earnings
Share-
based
payment
reserve
Fair
value
reserve
Hedging
reserve
Total
equity
£m
£m
£m
£m
£m
£m
£m
£m
At 1 February 2023 (restated
4
)
21.1
648.3
–
(309.7)
8.9
–
(3.2)
365.4
Loss for the year –
–
–
(113.0
)
–
–
–
(113.0
)
Other comprehensive losses excluding
recycling
–
–
–
(30.8
)
–
–
(0.8)
(31.6
)
Recycling of previous losses to income
statement
–
–
–
–
–
–
1.1
1.1
Total comprehensive (losses)/income
–
–
–
(143.8
)
–
–
0.3
(143.5
)
Issue of share capital (Note 17) 0.2
–
–
–
–
–
–
0.2
Share-based payment charge –
–
–
–
3.4
–
–
3.4
Own shares transferred –
–
(1.2)
(0.8)
–
–
–
(2.0
)
Transfer upon vesting of share options –
–
–
1.
8
(1.8)
–
–
–
At 31 January 2024
21.3
648.3
(1.2)
(452.5)
10.5
–
(2.9)
223.5
Attributable to the equity holders of the parent
Issued
capital
Share
premium
Own
shares
held
reserve
Retained
(deficit)/
earnings
Share-
based
payment
reserve
Fair value
reserve
Hedging
reserve
Total
equity
£m
£m
£m
£m
£m
£m
£m
£m
At 1 February 2022 (as reported)
21.1
648.3
–
(22.4)
7.4
(0.8)
(0.7)
652.9
Effect of adoption of IFRS 17
–
–
–
(2.3)
–
0.8
–
(1.5)
At 1 February 2022 (restated
4
)
21.1
648.3
–
(24.7)
7.4
–
(0.7)
651.4
Loss for the year –
–
–
(273.1)
–
–
–
(273.1)
Other comprehensive losses excluding
recycling
–
–
–
(14.3)
–
–
(2.9)
(17.2)
Recycling of previous losses to income
statement
–
–
–
–
–
–
0.4
0.4
Total comprehensive losses
–
–
–
(287.4)
–
–
(2.5)
(289.9)
Share-based payment charge –
–
–
–
3.9
–
–
3.9
Transfer upon vesting of share options
–
–
–
2.4
(2.4)
–
–
–
At 31 January 2023 (restated
4
)
21.1
648.3
–
(309.7)
8.9
–
(3.2)
365.4
39
Consolidated statement of cash flows
for the year ended 31 January 2024
5
For details of the restatement, please see Notes 2.4, 12a and 15
2024
2023
(restated
5
)
Note
£m
£m
Loss before tax
(129.0)
(272.7)
Depreciation, impairment and loss on disposal, of property, plant and equipment
and right
-of-use assets
35.1
32.9
Amortisation and impairment of intangible assets and goodwill, and profit or loss on
disposal of software
1
17.2
278.6
Impairment of assets held for sale
19
10.4
1.2
Share
-based payment transactions
3.4
3.9
Net finance expense/(income) from insurance contracts
15
3.5
(8.2)
Net finance (income)/expense from reinsurance contracts
15
(1.9)
3.7
Finance costs
44.4
42.2
Finance income
–
(1.5)
Interest (income)/expense from investments
(15.4)
9.7
Increase in trust and escrow accounts
(1.7)
(12.8)
Movements in other assets and liabilities
40.8
(57.8)
106.8
19.2
Investment income interest received
11.9
5.4
Interest paid
(38.2)
(37.6)
Income tax
received/(paid)
3.2
(0.9)
Net cash flows from/(used in) operating activities
83.7
(13.9)
Investing activities
Proceeds from
sale of property, plant and equipment, and right-of-use assets
–
0.2
Purchase of, and payments for
, the construction of property, plant and equipment
and intangible assets
(26.7)
(20.8)
Disposal of financial assets
56.4
65.8
Purchase of financial assets
(11.7)
(40.2)
Disposal of subsidiary, net of cash in business disposed of
7
–
–
Acquisition of subsidiary, net of cash in business acquired
7
–
(0.9)
Net cash flows from investing activities
18.0
4.1
Financing activities
Payment of principal portion of lease liabilities
(11.6)
(7.8)
Repayment of borrowings
(62.2)
(46.4)
Net cash flows used in financing activities
(73.8)
(54.2)
Net increase/(decrease) in cash and cash equivalents
27.9
(64.0)
Cash and cash equivalents at the start of the year
191.7
255.7
Cash and cash equivalents at the end of the year
13
219.6
191.7
40
Notes to the consolidated financial statements
1 Corporate information
Saga plc (the Company) is a public limited company incorporated and domiciled in the United Kingdom under
the Companies Act 2006 (registration number 8804263). The Company is registered in England and its
registered office is located at 3 Pancras Square, London N1C 4AG.
The consolidated financial statements of Saga plc and the entities controlled by the Company (its subsidiaries,
collectively
Saga Group or the Group) for the year ended 31 January 2024 were approved for issue by the
Board of Directors on 16 April 2024 and will be made available on the Company’s website in due course.
2.1 Basis of preparation
The results in this preliminary announcement have been taken from the Group’s 2024 Annual Report and
Accounts. The consolidated financial statements of the Group have been prepared in accordance with UK-
adopted international accounting standards.
The basis of preparation, basis of consolidation and summary of material accounting policies applicable to the
Group’s consolidated financial statements will be published in the Notes to the consolidated financial
statements in the 2024 Annual Report and Accounts.
The consolidated financial statements have been prepared on a going concern basis and on a historical cost
basis, except as otherwise stated. The Group has reviewed the appropriateness of the going concern basis in
preparing the financial statements, details of which are included below. Based on those assumptions, the
Directors have concluded that it remains appropriate to adopt the going concern basis in preparing the
financial statements.
The preliminary announcement for the year ended 31 January 2024 does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006.
The consolidated financial statements for the full year ended 31 January 2024 and 31 January 2023 have been
audited by KPMG LLP. Their report was unqualified and did not contain any statement under Section 498(2)
or Section 498(3) of the Companies Act 2006.
41
Notes to the consolidated financial statements (continued)
2.1 Basis of preparation (continued)
Going concern
The Directors have performed an assessment of going concern to determine the adequacy of the Group’s
financial resources over a period of 15 months from the date of signing these financial statements, a period
selected to include consideration of the expiry date of the Group’s currently undrawn £50.0m Revolving
Credit Facility (
RCF) in May 2025 and the first covenant test date falling due after that expiry for the Group’s
ship debt facilities.
This assessment is centred on a base case, overlaid with risk-adjusted financial projections, that incorporate
scenario analysis, and stress tests on expected business performance.
The Group’s base case modelling assumes continued strong performance in the Cruise business on the back
of high load factors and per diems. Travel is also expected to achieve continued growth in profits. After a
challenging 2023/24 for Insurance, which saw a year of high cost and claims inflation and reducing policy
volumes in a competitive market, the plan for this area of the business focuses on stabilisation over the
assessment period and preparation for future growth.
The Group’s severe but plausible stressed scenario incorporates lower load factors for Ocean Cruise, lower
levels of demand in River Cruise and slower growth in the Travel business. Downside risks modelled for the
Insurance business reflect the possibility that the expected benefits from planned cost-saving initiatives may
not be realised in full.
Following actions undertaken by management to reduce the administrative overhead and central cost base in
the second half of 2023/24, both scenarios include an assumption that the resultant levels of savings are
maintained throughout the assessment period.
Under all scenarios modelled, the Group expects to meet scheduled Ocean Cruise debt principal repayments
as they fall due over the next 15 months, and to meet the financial covenants relating to its secured cruise
debt.
In addition, in both the base and stressed scenario, and further incorporating a drawdown under the Group’s
£85.0m loan facility with Roger De Haan, repayable in April 2026, the Group expects to have sufficient
resources to enable repayment of the £150.0m senior bonds on maturity in May 2024 from Available Cash
6
resources.
Over the same time frame and on the same basis, the Group also expects to remain within the renegotiated
financial covenants and other terms relating to its £50.0m RCF, as set out in Note 16, in both the base case
and the stressed case scenario, enabling it to draw down on this currently undrawn facility, until maturity in
May 2025, to meet short-term working capital requirements, should the need arise.
Following the repayment of the £150.0m senior bonds, the Group will operate with a lower level of Available
Cash
6
. This may lower the Group’s ability to withstand events that are beyond those contemplated in the
severe but plausible stressed scenario. Notwithstanding this, the Group has sufficient resources in both the
base and severe but plausible stressed scenarios to continue in operation for at least the next 15 months.
Noting that it is not possible to accurately predict all possible future risks to the Group’s trading, based on this
analysis and the scenarios modelled, the Directors have concluded that the Group will have sufficient funds to
continue to meet its liabilities as they fall due for a period of at least 15 months from the date of approval of the
financial statements. They have, therefore, deemed it appropriate to prepare the financial statements to 31
January 2024 on a going concern basis.
6
For details of the restatement, please see Notes 2.4, 12a and 15
42
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies
There have been no significant changes to the accounting policies of the Group during the year ended 31
January 2024, except for changes required as a result of the transition to a new accounting standard for
insurance and reinsurance contracts, IFRS 17 ‘Insurance Contracts’. Full details of the accounting policies of
the Group will be published in the Annual Report and Accounts for the year ended 31 January 2024 available
at www.corporate.saga.co.uk
.
In addition, as a result of IFRS 17 being adopted and applied, the Group has changed the classification of debt
securities under IFRS 9 ‘Financial Instruments’, from fair value through other comprehensive income (
FVOCI)
to fair value through profit or loss (
FVTPL). IFRS 17 permits financial assets to be classified as FVTPL on
transition to IFRS 17 if doing so eliminates, or significantly reduces, a measurement or recognition
inconsistency. For the debt securities that support the Group’s insurance liabilities, this condition is met as
fair value gains or losses on these securities are expected to be offset, to a significant degree, by the impact of
changes in the discount rate on the measurement of IFRS 17 liabilities for incurred claims (net of the impact on
related reinsurance assets).
IFRS 17 is effective for annual reporting periods beginning on, or after, 1 January 2023. The Group has initially
applied IFRS 17 in its consolidated financial statements for the year ending 31 January 2024, with the date of
initial application being 1 February 2023 and the transition date being 1 February 2022.
Details of the new accounting policies for insurance contracts underwritten by the Group and reinsurance
contracts are disclosed below.
a) Revenue recognition – Insurance
The amounts received from customers for insurance policies comprise three main elements: the premium
charged to the customer in respect of the insurance cover (
gross premium); insurance premium tax (IPT); and
an arrangement fee, where applicable (only applied to policies that are brokered via a panel). The gross
premium itself comprises two elements: the premium charged by the underwriter of each policy (
net
premium), which may be provided by the Group’s in-house underwriter or by a third-party underwriter, plus
any adjustment to the net premium that is applied by the Group’s broker during the broking service (
street
pricing adjustment).
The Group may also charge additional amounts, where the customer pays in instalments, for mid-term
cancellations or for adjustments made to policies mid-term.
IPT is excluded from all revenue recognised by the Group.
i) For 12-month insurance policies with no option to fix the premium at renewal (annual policies)
For insurance policies underwritten by the Group:
• the gross insurance premium, and any amounts received as a result of the policyholder opting to pay in
instalments, are recognised as insurance revenue on a straight-line, time-apportioned basis over the
coverage period;
• any such amounts received in advance of coverage being provided to the policyholder are deferred within
insurance contract liabilities in the statement of financial position;
• mid-term adjustments to premiums are recognised on a straight-line, time-apportioned basis over the
remaining coverage period of the policy; and
• reductions in premiums arising from mid-term cancellations are recognised on the effective date of the
cancellation.
The above treatment is in line with the requirements of IFRS 17.
43
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
a) Revenue recognition – Insurance (continued)
i) Annual policies (continued)
For insurance policies not underwritten by the Group:
• the portion of the gross premium that is retained by the Group, otherwise referred to as the street pricing
adjustment, is allocated to performance obligations and recognised as those performance obligations are
satisfied. The most material amount is allocated to the performance obligation relating to the brokerage
service, which is recognised on the inception date of the insurance contract; and
• the portion of the gross premium charged by the third-party underwriter, otherwise referred to as the net
premium, is not recognised as revenue in the income statement.
The above treatment is in line with the requirements of IFRS 15 ‘Revenue from Contracts with Customers’.
For all insurance policies:
• the arrangement fee that is charged in respect of the broking service is recognised within revenue from
Insurance Broking services on the date that each policy is arranged; and
• any fee income charged for a mid-term cancellation or adjustment is recognised on the date the
adjustment is made, being the point that the mid-term service is fulfilled. Where these amounts arise from
insurance contracts underwritten by the Group, they are presented within Insurance revenue, otherwise
they are presented within revenue from Insurance Broking services.
ii) For 12-month insurance policies with the option to fix the premium over three years (three-year fixed-
price policies)
The policyholder’s option to fix the premium at the first and second renewal points is accounted for under
IFRS 15 as a promise to the customer.
Where the related insurance policy is not underwritten by the Group, this promise is accounted for as a
separate performance obligation to the brokerage service.
Where the related insurance policy is underwritten by the Group, this promise is a distinct service that is
accounted for separately from the host insurance contract as:
• the cash flows and risks of the price promise service are not highly interrelated with those of the
insurance contract; and
• the Group does not provide a significant service in integrating the price promise with the insurance
underwriting service.
Therefore, the accounting treatment of the Group’s obligation to fix the premium does not depend on whether
the related insurance policy is underwritten by the Group.
For all three-year fixed-price policies, the Group allocates a portion of the gross premiums received at
inception and at the first renewal point to the price promise service. The amount allocated to this service is an
estimate of its standalone selling price, being an actuarial estimate of the cost of transferring the obligation to
a third-party plus an appropriate profit margin.
Amounts allocated to the price promise service are initially deferred within contract liabilities in the statement
of financial position and subsequently recognised as revenue as the option to fix is exercised by the customer
(and the Group’s performance obligation is satisfied).
If a customer cancels a three-year fixed-price policy mid-term, or chooses not to renew in the second or third
years, any remaining deferred revenue is recognised within revenue at the point the cover ends, being the
point that the Group is released from the obligation to fix the price at renewal.
The Group previously entered into contracts to transfer part of the risk arising from the Group’s promise to
fix the customer’s premium for three-year fixed-price policies. The Group continues to recognise amounts
arising from those contracts. Those contracts are classified as insurance contracts held.
44
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
a) Revenue recognition – Insurance (continued)
iii) Other sources of revenue relating to insurance policies
Profit commissions due to the Group, from acting as an insurance intermediary on behalf of third-party
underwriters, are recognised and valued in accordance with the contractual terms to which they are subject,
when it is highly probable that a significant reversal of revenue will not occur.
Where claims arise on insurance policies that are not the fault of the insured, the Group may earn revenue
from:
• referrals to credit hire companies (in relation to policies underwritten by the Group or by third parties);
and
• referrals to credit repair companies (in relation to policies underwritten by third parties only).
This revenue is recognised at the point of referral.
b) Cost recognition – Insurance
i) Costs of acquiring insurance contracts
Acquisition costs arising from the selling, or renewing, of insurance policies underwritten by the Group
(
insurance acquisition cash flows) are expensed when they are incurred within insurance service expenses in
the income statement.
For insurance policies not underwritten by the Group, fees charged by price-comparison websites are
recognised as a contract cost asset within trade and other receivables and amortised in line with the pattern
of revenue recognition for the related insurance policies. This takes into account revenue expected to be
generated from future renewals. Other incremental costs of obtaining insurance policies not underwritten by
the Group, such as payment processing costs, would be incurred again if the insurance contract renews.
Therefore, the pattern of revenue recognition relating to these incremental costs is one year. As permitted by
IFRS 15, such costs are expensed when incurred.
ii) Claims costs
Claims costs incurred in respect of insurance policies underwritten by the Group are included within
insurance service expenses in the income statement. These costs include estimates in respect of losses
reported as having occurred during the period, an estimate for the cost of claims incurred during the period
but not reported as at the reporting date, and any adjustments to claims outstanding from previous periods.
The portion of claims costs recoverable from reinsurance contracts is recognised within net income from
reinsurance contracts in the income statement. These recoveries are recognised in the same period in which
the claims costs are recognised.
c) Insurance contracts underwritten by the Group and reinsurance contracts
i) Classification
The Group issues insurance contracts, under which it accepts significant insurance risk from policyholders,
and also enters into reinsurance contracts, under which it transfers significant insurance risk related to
underlying insurance contracts. ‘Reinsurance contracts’ refers to reinsurance contracts held by the Group.
The Group does not issue any reinsurance contracts.
Insurance and reinsurance contracts can also expose the Group to financial risk.
45
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
c) Insurance contracts underwritten by the Group and reinsurance contracts (continued)
ii) Separating components from insurance and reinsurance contracts
When the Group underwrites an insurance contract, a number of separate contracts may be entered into at
the same time. These contracts may involve more than one legal entity within the Group.
As the set of contracts is designed to achieve an overall commercial effect for the Group, for accounting
purposes the following steps are taken:
• The total cash flows arising from all contracts are initially considered as a whole (together the host
insurance contract).
• The Group then identifies any service components that are distinct and, therefore, require separation for
accounting purposes. A service is distinct if the policyholder can benefit from it either on its own or with
other resources that are readily available to the policyholder. The following distinct service components
were identified:
o The brokerage of the core insurance contract (where it has first been subject to the competitive
pricing panel that the Group operates).
o The brokerage of any add-on cover underwritten by a third-party.
o The promise to fix the premium for three years (where this option is taken by the policyholder).
These distinct service components are accounted for as separate customer contracts under IFRS 15.
• The total cash inflows from the combined set of contracts are then allocated, for accounting purposes,
between:
o any distinct service components; and
o the insurance component of the host insurance contract.
This allocation is performed based on the standalone selling price of each component.
• Cash outflows that relate directly to each component are attributed to that component, with any
remaining cash outflows attributed on a systematic and rational basis, reflecting the cash outflows the
Group would expect to arise if that component were a separate contract.
iii) Aggregation of insurance and reinsurance contracts
The Group applies the requirements of IFRS 17 at the level of groups of insurance contracts issued. Groups of
insurance contracts are determined by identifying portfolios of insurance contracts, which comprise
contracts that are subject to similar risks and managed together, and dividing each portfolio into annual
cohorts (i.e. by year of issue) and each annual cohort into three groups based on the expected profitability of
each contract at initial recognition:
• Any contracts that are onerous at initial recognition.
• Any contracts that, at initial recognition, have no significant risk of becoming onerous.
• Any other contracts.
Groups of reinsurance contracts are established such that each group comprises a single contract.
46
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
c) Insurance contracts underwritten by the Group and reinsurance contracts (continued)
iv) Recognition of insurance and reinsurance contracts
The Group recognises insurance contracts issued from the earliest of:
• the beginning of the coverage period;
• when the first payment from a policyholder becomes due or, if there is no due date, when the first
payment is received; and
• when facts and circumstances indicate that the contract is onerous. This could be as early as the date on
which the contract is first entered into.
When a contract is recognised, it is added to an existing group of contracts or, if the contract does not qualify
for inclusion in an existing group, it forms a new group to which future contracts are added. Groups of
contracts are established on initial recognition and their composition is not revised once all contracts have
been added to the group.
The Group recognises groups of reinsurance contracts as follows:
• Groups of reinsurance contracts that provide proportionate coverage (primarily quota share
arrangements) are recognised when any underlying insurance contract is initially recognised.
• All other groups of reinsurance contacts (primarily excess of loss arrangements) are recognised from the
earlier of:
o the beginning of the coverage period of the group of reinsurance contracts; or
o the date on which an onerous group of underlying contracts is recognised (provided that the
related reinsurance contract was entered into on, or before, that date).
v) Contract boundaries
The measurement of groups of insurance contracts issued, and reinsurance contracts, reflects all future cash
flows arising from insurance coverage within the boundary of each contract (the
contract boundary).
Cash flows are within the contract boundary if they arise from substantive rights and obligations that exist
during the reporting period in which the Group can compel the policyholder to pay premiums or has a
substantive obligation to provide services.
vi) Measurement – insurance contracts
The Group measures all groups of insurance contracts issued in accordance with IFRS 17’s simplified premium
allocation approach (
PAA). They are eligible for the PAA as the coverage period of each contract in each group
is one year or less.
The following sections set out the Group’s approach to measuring groups of insurance contracts under the
PAA.
Measurement at initial recognition
On initial recognition, the liability for remaining coverage of groups of insurance contracts issued is measured
as:
• any premiums received at, or before, initial recognition; plus
• for groups of contracts that are onerous (expected to be loss-making) at initial recognition, a loss
component measured as the excess of the fulfilment cash flows over the carrying amount of the liability for
remaining coverage, excluding the loss component. A corresponding loss is recognised in profit or loss. At
initial recognition, the loss component is only recognised and measured in respect of policies that
individually meet the recognition criteria at that date.
47
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
c) Insurance contracts underwritten by the Group and reinsurance contracts (continued)
vi) Measurement – insurance contracts (continued)
Subsequent measurement
At the end of each reporting period, each group of contracts is measured as the sum of the liability for
remaining coverage and the liability for incurred claims.
Liability for remaining coverage
At the end of each reporting period, the carrying amount of the liability for remaining coverage (excluding the
loss component) of each group of contracts is equal to:
• the opening carrying amount of the liability for remaining coverage;
• plus premiums received in the period;
• less the amount recognised as insurance revenue for coverage provided in the period. Insurance revenue
is the amount of total expected premium receipts (excluding premium taxes) allocated to each period of
coverage on the basis of the passage of time (i.e. a straight-line basis). This is appropriate as, for the
insurance contracts that the Group issues, the expected pattern of release of risk during the coverage
period does not differ significantly from the passage of time.
The liability for remaining coverage (excluding the loss component) is not adjusted for the time value of money.
For groups of contracts that were onerous at initial recognition:
• the loss component of the liability for remaining coverage is increased in respect of any individual policies
added to the group;
• the loss component is reversed as coverage is provided, reducing the liability for remaining coverage. A
corresponding credit to profit or loss means that the onerous loss is not recognised a second time when a
liability for incurred claims is established as coverage is provided; and
• the expected profitability of remaining coverage is reassessed at each reporting date, with any changes
since initial recognition reflected in the valuation of the remaining loss component of the liability for
remaining coverage, with a corresponding entry in profit or loss.
For other groups of contracts, at each reporting date the Group considers whether the remaining coverage
has become onerous. If so, a loss component of the liability for remaining coverage is established with a
corresponding loss recognised in profit or loss.
Liability for incurred claims
As coverage is provided, the Group establishes a liability for incurred claims. The liability is estimated based
on the fulfilment cash flows relating to incurred claims, including both claims that have been notified (i.e.
outstanding claims) and claims incurred but not reported (
IBNR). These fulfilment cash flows:
• include an estimate of claims handling costs and the expected value of salvage and other recoveries;
• incorporate, in an unbiased way, all reasonable and supportable information available without undue cost
or effort about the amount, timing and uncertainty of those future cash flows;
• reflect current estimates from the Group’s perspective;
• are adjusted to reflect the time value of money and effect of financial risk (a discounting adjustment). The
Group has not taken the PAA option to not discount claims expected to be paid within one year of the loss
event; and
• include an explicit adjustment for non-financial risk (the risk adjustment), which reflects the compensation
required for bearing uncertainty about the amount and timing of cash flows that arises from non-financial
risk.
48
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
c) Insurance contracts underwritten by the Group and reinsurance contracts (continued)
vii) Measurement – reinsurance contracts
The Group also measures all groups of reinsurance contracts in accordance with the PAA. Groups of excess of
loss reinsurance contracts are eligible for the PAA as each contract has a coverage period of one year or less.
Groups of other reinsurance contracts (primarily the motor quota share arrangement) are eligible for the
PAA as, at initial recognition, the Group expects that the resulting measurement of the asset for remaining
coverage would not differ materially to that under the IFRS 17 general measurement model.
Groups of reinsurance contracts are measured on the same basis as the underlying insurance contracts,
adapted as appropriate to reflect the different features of reinsurance contracts, including:
• where the Group recognises a loss on initial recognition of an onerous group of underlying insurance
contracts, or when further onerous insurance contracts are added to a group, the Group establishes a
loss-recovery component of the asset for remaining coverage for groups of reinsurance contracts
depicting any recovery of losses. The loss-recovery component is calculated by multiplying the loss
recognised on the underlying insurance contracts and the percentage of claims on the underlying
insurance contracts the Group expects to recover from the group of reinsurance contracts;
• reinsurance cash flows that are contingent on claims experience are treated as part of the claims
expected to be reimbursed. This applies to profit commission clauses within the Group’s motor quota
share reinsurance contracts; and
• the Group assesses the risk that the counterparties to its reinsurance contracts are not able to fulfil their
obligations (non-performance risk, or default risk), including by considering available data on the financial
strength of the reinsurers. An allowance is included in the relevant estimate of the present value of future
cash flows to reflect this risk.
viii) Measurement – insurance acquisition cash flows
The Group identifies insurance acquisition cash flows, being the costs of selling, underwriting and starting
insurance contracts. The costs are primarily commissions paid to intermediaries, including price-comparison
websites, and an allocation of other operating expenses.
The Group has taken the IFRS 17 option to expense insurance acquisition cash flows immediately where the
coverage period of the related contract is one year or less. As all the Group’s insurance contracts have a
coverage period of one year or less, all insurance acquisition cash flows are expensed when they are incurred.
ix) Modification and derecognition
An insurance contract is derecognised when:
• it is extinguished (i.e. when the obligation expires or is discharged or cancelled); or
• there is a modification of the contract that is treated as a derecognition and recognition of a new contract.
This is the case where the modified terms, if applied at inception, would have resulted in:
o a change in the measurement model or the applicable standard for measuring a component of
the contract;
o a substantially different contract boundary; or
o the contract being included in a different group of contracts.
When a modification is not treated as a derecognition, the Group recognises amounts paid, or received, for
the modification as an adjustment to the relevant liability for remaining coverage relating to the existing
contract.
49
Notes to the consolidated financial statements (continued)
2.2 Summary of material accounting policies (continued)
c) Insurance contracts underwritten by the Group and reinsurance contracts (continued)
x) Presentation
The Group disaggregates the total amount recognised in the statement of profit or loss into an insurance
service result, comprising insurance revenue and insurance service expenses, and insurance finance income
or expenses.
Separate presentation of portfolios in an asset or liability position
In the statement of financial position, where applicable, the Group separately presents the carrying amount of
portfolios of insurance contracts issued that are assets, portfolios of insurance contracts issued that are
liabilities, portfolios of reinsurance contracts that are assets and portfolios of reinsurance contracts that are
liabilities.
Changes in the risk adjustment
The Group disaggregates the change in risk adjustment for non-financial risk between a financial and non-
financial portion, included within insurance finance expenses and the insurance service result respectively.
Reinsurance
On the face of the consolidated income statement, income or expenses from reinsurance contracts (other
than insurance finance income or expenses) are presented as a single amount, separately from the income or
expenses from insurance contracts issued.
Insurance finance income or expenses
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance
contracts arising from:
• the effect of the time value of money and changes in the time value of money; and
• the effect of financial risk and changes in financial risk.
This largely represents:
• the unwind of the discounting of the liability for incurred claims;
• the impact of changes in the discount rate used in the measurement of the liability for incurred claims; and
• the impact of changes in the care worker inflation assumption used in the measurement of claims settled
as periodical payment orders (
PPOs).
Reinsurance finance income, or expense, is the change in the carrying value of amounts relating to reinsurance
contracts arising for the same reasons.
The Group does not disaggregate insurance finance income or expenses between profit or loss and other
comprehensive income (
OCI) as permitted by the standard.
xi) Transition
In adopting IFRS 17, the Group applied a full retrospective approach to transition. Under the full retrospective
approach to transition, at 1 February 2022, the Group:
• identified, recognised and measured each group of insurance and reinsurance contracts as if IFRS 17 had
always been applied;
• derecognised previously reported balances that would not have existed if IFRS 17 had always been applied
(e.g. insurance receivables and payables that under IFRS 17, are included in the measurement of the
insurance contracts); and
• recognised any resulting net difference in equity.
However, the Group applied a transition exemption to not disclose previously unpublished information about
claims development that occurred earlier than five years before the end of the annual reporting period in
which it first applied IFRS 17.
50
Notes to the consolidated financial statements (continued)
2.3 Standards issued but not yet effective
The following is a list of standards, and amendments to standards, that are in issue but are not effective, or
adopted, as at 31 January 2024.
a) Classification of liabilities as current or non-current (amendments to International Accounting Standard
(IAS) 1)
The amendments aim to promote consistency in applying the requirements by helping companies determine
whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date
should be classified as current (due, or potentially due, to be settled within one year) or non-current. The
amendments are effective for annual periods beginning on, or after, 1 January 2024 and are not likely to have a
material effect on the Group’s financial statements because it presents the items included in its statement of
financial position by order of liquidity. The amendments have been endorsed by the UK Endorsement Board.
b) Definition of lease liability in a sale and leaseback (amendment to IFRS 16)
The amendment clarifies how a seller-lessee subsequently measures sale and leaseback transactions that
satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment is effective for annual
reporting periods beginning on, or after, 1 January 2024. The amendment is not expected to have a material
impact on the Group’s financial statements. This amendment has been endorsed by the UK Endorsement
Board.
c) Supplier finance arrangements (amendments to IAS 7 and IFRS 7)
The amendments add disclosure requirements, and ‘signposts’ within existing disclosure requirements, that
ask entities to provide qualitative and quantitative information about supplier finance arrangements. The
amendments are effective for annual reporting periods beginning on, or after, 1 January 2024. The
amendments are not expected to have a material impact on the Group’s financial statements. The
amendments have been endorsed by the UK Endorsement Board.
d) Lack of exchangeability (amendments to IAS 21)
The amendments contain guidance to specify when a currency is exchangeable and how to determine the
exchange rate when it is not. The amendments are effective for annual reporting periods beginning on, or
after, 1 January 2025. The amendments are not expected to have a material impact on the Group’s financial
statements. The amendments are not currently endorsed by the UK Endorsement Board.
51
Notes to the consolidated financial statements (continued)
2.4 First-time adoption of new standards and amendments
The following is a list of standards, and amendments to standards, that became effective, or were adopted, for
the first time during the year ended 31 January 2024.
a) IFRS 17 ‘Insurance Contracts’
The Group adopted IFRS 17 ‘Insurance Contracts’ for the first time in the year ended 31 January 2024, with
prior period comparatives also restated. IFRS 17 is a comprehensive new accounting standard that applies to
all insurance and reinsurance contracts, covering the principles of recognition, measurement, presentation
and disclosure.
IFRS 17 only applies to insurance contracts that are underwritten by the Group and related reinsurance
contracts held. It does not affect the accounting for the Group’s Insurance Broking activities.
The changes introduced by IFRS 17 are summarised as follows:
The Group has applied IFRS 17’s simplified PAA to all insurance contracts issued and reinsurance contracts
held.
Applying the PAA, the measurement of liabilities for remaining coverage continues to be based on a deferred
premium approach, as under previously reported IFRS. However, key differences compared with previously
reported IFRS are as follows:
• IFRS 17 requires identification of any contracts that are expected to be onerous at initial recognition. The
expected losses are recognised immediately in profit or loss, with a liability (a loss component) established
on the statement of financial position. Under previously reported IFRS, onerous contracts were assessed
at a more aggregated level, which resulted in fewer onerous contract losses being explicitly recognised.
Instead, any expected losses on individual policies were typically recognised in profit or loss over the
coverage period of the insurance contracts.
• The Group has taken the PAA option to expense insurance acquisition costs immediately in profit or loss,
meaning that the deferred insurance acquisition cost asset held under previously reported IFRS has not
been recognised.
The measurement of insurance contract liabilities in relation to coverage provided before the statement of
financial position date, referred to as liabilities for incurred claims under IFRS 17, has changed. Under IFRS 17,
liabilities for incurred claims are now measured as the sum of the following components (collectively referred
to as the
fulfilment cash flows):
• The expected future cash flows, all of which are discounted using a risk-free rate adjusted to reflect the
liquidity characteristics of the insurance contracts.
• A risk adjustment, being an explicit margin above the expected future cash flows that represents the
compensation required for bearing non-financial uncertainty. The Group has derived the risk adjustment
by selecting an appropriate confidence interval using the expected loss distribution for incurred claims.
This differs from previously reported IFRS, under which:
• only certain long-tail claim liabilities were discounted. This discounting used a discount rate that did not
typically move in line with market interest rates; and
• the reserve margin was not explicit or linked to a target confidence level.
52
Notes to the consolidated financial statements (continued)
2.4 First-time adoption of new standards and amendments (continued)
a) IFRS 17 ‘Insurance Contracts’ (continued)
The presentation of the consolidated income statement changes under IFRS 17, including:
• introduction of ‘Insurance revenue’, which is similar to gross earned premiums from previously reported
IFRS. Further changes to the presentation of revenue have been made as follows:
o Revenue from Cruise and Travel services and Insurance Broking services are shown separately
(this is not required by IFRS 17).
o Total revenue is no longer stated after the deduction of reinsurance premiums (the presentation
of amounts arising from reinsurance contracts is explained below).
• introduction of an ‘Insurance service expenses’ line item, comprising all expenses relating to insurance
contracts (except for ‘Net finance (expense)/income from insurance contracts’);
• introduction of a single line item including all income and expenses arising from reinsurance contracts
(except for ‘Net finance income/(expense) from reinsurance contracts’);
• introduction of ‘Net finance (expense)/income from insurance contracts’ and an equivalent for
reinsurance. This caption includes:
o the unwind of the discounting of the liability for incurred claims. Under previously reported IFRS,
only PPO liabilities were discounted, with the unwind of discounting implicitly included within gross
claims incurred;
o the impact of changes in the discount rate used in the measurement of the liability for incurred
claims; and
o the impact of changes in the care worker inflation assumption used in the measurement of claims
settled as PPOs.
• the netting down of amounts relating to quota share reinsurance arrangements so that only amounts
expected to be paid, or received, are accounted for. Under previously reported IFRS, quota share
reinsurance arrangements were grossed up in the income statement, with large nominal premiums ceded
and claims recovered balances that do not necessarily reflect amounts expected to be paid or received.
Full details of the new accounting policy for insurance and reinsurance contracts are included in Note 2.2.
b) Deferred tax related to assets and liabilities arising from a single transaction (amendments to IAS 12)
The amendments clarify that the initial recognition exemption does not apply to transactions in which equal
amounts of deductible and taxable temporary differences arise on initial recognition. They will typically apply
to transactions such as leases of lessees and will require the recognition of additional deferred tax assets and
liabilities. The amendments are effective for annual reporting periods beginning on, or after, 1 January 2023.
The amendments had no effect on the Group’s financial statements.
c) Disclosure of accounting policies (amendments to IAS 1 and IFRS Practice Statement 2)
The amendments require that an entity discloses its material accounting policies, instead of its significant
accounting policies. Further amendments explain how an entity can identify a material accounting policy. The
amendments are effective for annual reporting periods beginning on, or after, 1 January 2023. The
amendments had no effect on the Group’s financial statements.
53
Notes to the consolidated financial statements (continued)
2.5 First-time adoption of new standards and amendments (continued)
d) Definition of accounting estimates (amendments to IAS 8)
The amendments clarify the distinction between changes in accounting estimates, changes in accounting
policies and the correction of errors. Under the new definition, accounting estimates are “monetary amounts
in financial statements that are subject to measurement uncertainty”. The amendments clarify that a change
in accounting estimate that results from new information, or new developments, is not the correction of an
error. The amendments are effective for annual reporting periods beginning on, or after, 1 January 2023. The
amendments had no effect on the Group’s financial statements.
e) International tax reform – Pillar Two model rules (amendments to IAS 12)
The amendments provide a mandatory temporary exception to the requirements regarding deferred tax
assets and liabilities related to Pillar Two income taxes. The application (issued 23 May 2023) of the exception
and disclosure of that fact is effective immediately with the other disclosure requirements effective for annual
reporting periods beginning on, or after, 1 January 2023. The amendments had no impact on the Group’s
consolidated financial statements as the Group is not in scope of the Pillar Two model rules since: (a) it is UK
based, with all revenue being generated solely in the UK; and (b) excluding revenue subject to tonnage tax, the
Group’s revenue is less than €750m per annum.
54
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires the Group to select accounting policies and make estimates
and assumptions that affect items reported in the primary consolidated financial statements and Notes to the
consolidated financial statements.
The major areas of judgement used as part of accounting policy application are summarised below.
Accounting policy references below are to the Notes to the Annual Report and Accounts for the year ended 31
January 2024.
a) Significant judgements
Acc.
policy
Items involving
judgement
Critical accounting judgement
2.3a
Revenue recognition –
identification of
performance obligations
arising from insurance
policies brokered by the
Group
Management has exercised judgement in identifying separate
performance obligations arising from insurance policies brokered by the
Group, namely:
• where the insurance contract is also underwritten by the
Group, the judgement that the arrangement of the insurance
policy is a service (performance obligation) that is distinct from
the insurance underwriting service. The revenue allocated to
the arrangement performance obligation is recognised earlier
than the revenue that is allocated to the insurance
underwriting service; and
• the judgement that the option to fix the customer’s premium at
renewal for three-year fixed-price insurance policies is a
separate performance obligation to the arrangement of the
insurance policy. This results in the deferral of a portion of
revenue from policy years one and two to policy years two and
three.
Please refer to Note 2.3a for further information on the Group’s
approach to revenue recognition for each performance obligation.
2.3r
Classification of the
Group’s risk transfer
arrangements as
reinsurance contracts
This judgement is now made by applying the principles of IFRS 17 rather
than IFRS 4 (the previous international accounting standard for
insurance and reinsurance contracts). This has not resulted in any
changes to the conclusions reached.
The Group’s excess of loss and funds-withheld quota share reinsurance
arrangements, relating to its motor underwriting line of business, are
deemed to transfer significant insurance risk to the reinsurers. They
are, therefore, classified as reinsurance contracts under IFRS 17.
Separately, the Group had previously entered into contracts to transfer
part of the risk arising from the Group’s promise to fix the customer’s
annual premium for three-year fixed-price policies. The Group
continues to recognise amounts arising from those contracts. As the
underlying promise is not an insurance contract, the contracts that
transfer part of the risk arising from the promise are not classified as
reinsurance contracts. Instead, they are classified as insurance
contracts held, which are not in the scope of IFRS 17.
55
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions (continued)
a) Significant judgements (continued)
Acc.
policy
Items involving
judgement
Critical accounting judgement
2.3h
Impairment testing of
goodwill and other major
classes of assets
Goodwill
The Group determines whether goodwill needs to be impaired at least
annually and twice-yearly if indicators of impairment exist at the interim
reporting date of 31 July.
New pricing rules set by the Financial Conduct Authority (
FCA
) came
into effect on 1 January 2022, following the conclusion of the General
Insurance Pricing Practices (
GIPP
) market study. As a result of the
impact of the GIPP changes on customer pricing, especially in the highly
competitive motor insurance market, there was a fall in policy volumes
in the period to 31 July 2022, year to 31 January 2023, period to 31 July
2023 and year to 31 January 2024, with a consequential adverse impact
on the profitability of the Insurance business. Management considered
this to be an indicator of impairment and therefore conducted full
impairment reviews of the Insurance Broking cash generating unit
(
CGU
) as at 31 July 2022, 31 January 2023, 31 July 2023 and 31 January
2024. As a result of these reviews, management deemed it necessary to
impair the goodwill allocated to the Insurance Broking CGU by £269.0m
at 31 July 2022, by £68.1m at 31 July 2023 and by £36.8m at 31 January
2024.
No further impairment was deemed necessary at 31 January 2023.
Given the low materiality of the amounts in question, the Group decided
to write off, in full, the £0.5m goodwill arising on acquisition of The Big
Window Consulting Limited (
the Big Window
) in the period to 31 July
2022.
Property, plant and equipment
Following the continued impact of the COVID-19 pandemic on the
Group’s Cruise and Travel operations, management concluded that
potential indicators of impairment existed and conducted impairment
reviews at 31 July 2022 of the Group’s two ocean cruise ships, Spirit of
Discovery and Spirit of Adventure. Management considered a range of
scenarios and used its judgement to conclude that no impairment was
necessary.
As at 31 January 2024, 31 July 2023 and 31 January 2023, management
did not consider it necessary to conduct an impairment review of the
Group’s two ocean cruise ships since no new indicators of impairment
were identified. Please refer to Note 17 for further detail.
In the year ended 31 January 2024, management exercised its
judgement in relation to the impairment of plant and equipment assets
and performed an impairment review of the recoverable amount of
plant and equipment assets used by the Group. As a result of this
review, management deemed it necessary to impair plant and
equipment assets by £0.1m in the Central Costs division. Please refer to
Note 17 for further detail.
56
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions (continued)
a) Significant judgements (continued)
Acc.
policy
Items involving
judgement
Critical accounting judgement
2.3h
(cont.)
Impairment testing of
goodwill and other major
classes of assets
(continued)
Right-of-use assets
In the years to 31 January 2024 and 31 January 2023, management did
not consider it necessary to conduct an impairment review of right-of-
use river cruise ship assets, since no indicators of impairment were
identified.
In the year ended 31 January 2024, management exercised its
judgement in relation to the impairment of right-of-use assets used by
the Group’s Publishing business following a restructuring exercise. As a
result of this review, management deemed it necessary to impair long
leasehold land and buildings assets by £0.1m in that business. Please
refer to Note 18a for further detail.
Assets held for sale
In the years to 31 January 2024 and 31 January 2023, in light of the
Group obtaining updated freehold property market valuation reports,
management exercised judgement in relation to the impairment of
property assets held for sale. As a consequence of the remeasurement of
the properties to the lower of, fair value less cost to sell, and the carrying
value, management concluded that a net impairment charge of £10.4m
(2023: £1.2m) was accordingly recognised. Please refer to Note 38 for
further detail.
Intangible assets
In the year ended 31 January 2024, following the cessation of
development work and the decision to exit some of the Group’s smaller,
loss-making activities, management exercised its judgement in relation
to the impairment of software assets and performed an impairment
review of the recoverable amount of software assets used by the
Insurance Broking and Central Costs divisions. As a result of this review,
management deemed it necessary to impair software assets by £1.2m in
the Insurance Broking business and also impair the software assets in
the Central Costs division by £1.9m. Please refer to Note 16b for further
detail.
57
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions (continued)
a) Significant judgements (continued)
Acc.
policy
Items involving
judgement
Critical accounting judgement
2.3r
Insurance contract
liabilities (and related
reinsurance contract
assets)
Eligibility of reinsurance contracts for the PAA
Some of the Group’s groups of reinsurance have a coverage period of
more than 12 months, including the motor quota share arrangement,
which has a three-year coverage period. Management has applied
judgement in concluding that these groups are eligible for the PAA on
the basis that, at initial recognition, it expects that the measurement of
the asset for remaining coverage under the PAA would not differ
materially to that under the IFRS 17 general measurement model.
Liability for incurred claims
This judgement relates to the estimation of future claims costs in
relation to areas of uncertainty. It is relevant to both components of the
IFRS 17 liability for incurred claims:
• The estimate of the present value of future cash flows
• The risk adjustment
The approach to determining the risk adjustment within the liability for
incurred claims is a key area of judgement. Under IFRS 17, the risk
adjustment reflects the compensation required for bearing uncertainty
about the amount and timing of the cash flows that arises from non-
financial risk.
The Group determines the risk adjustment at the level of each IFRS 17
portfolio of insurance contracts, the most material of which is the motor
portfolio, using a confidence level technique (also referred to as a Value
at Risk (
VaR
) approach). Following this approach, the total liability for
incurred claims (net of reinsurance) is set at the 85% confidence level
(ultimate basis), with the net risk adjustment being the difference
between this total net liability for incurred claims and the net estimate
of the present value of future cash flows. The gross risk adjustment is
derived in a similar way, with the reinsurance risk adjustment being the
difference between the gross and net risk adjustments. This approach,
and, in particular, the use of the 85% confidence level, results in a risk
adjustment that meets the IFRS 17 requirement as a key judgement.
As the risk adjustment is determined at the level of each IFRS 17
portfolio, the confidence level referred to above does not reflect
diversification of risk across these portfolios.
A further key area of judgement relates to the discount rate that is
applied to the estimate of future cash flows. Under IFRS 17, the discount
rate used should reflect the liquidity characteristics of the insurance
liabilities. Assessing the liquidity characteristics of the liabilities requires
significant judgement. Management concluded that cash flows relating
to the liability for incurred claims are illiquid and, therefore, the discount
rate should include an illiquidity premium above the risk-free rate.
58
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions (continued)
b) Significant estimates
All estimates are based on management’s knowledge of current facts and circumstances, assumptions based
on that knowledge and predictions of future events and actions. Actual results may, therefore, differ from
those estimates.
The table below sets out those items the Group considers to have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities, together with the relevant accounting policy.
Accounting policy references below are to the Notes to the Annual Report and Accounts for the year ended 31
January 2024.
Acc.
Policy
Items involving
estimation
Sources of estimation uncertainty
2.3ai
Revenue
recognition –
three-year fixed-
price insurance
policies
The standalone selling price of the option to fix within the Group’s three-year
fixed-price insurance policies has been estimated using the expected cost plus
a margin approach, as set out in paragraph 79 (b) of IFRS 15.
An allowance has also been made for the likelihood that the option will be
exercised by factoring in the expected rate of renewal at the first and second
renewal dates. The amount of revenue deferred upon initial recognition is,
therefore, reduced to the extent that it is estimated that customers will not
exercise the option because they either decide not to renew or they make a
claim that releases the Group from its obligation to fix the customer price.
2.3f &
2.3i
Useful economic
lives and residual
values of
software,
intangible assets
and ocean cruise
ships
The useful economic lives and residual values of software assets classified as
intangible assets (Note 15) and ocean cruise ship assets classified as property,
plant and equipment (Note 17) are assessed upon the capitalisation of each
asset and, at each reporting date, are based upon the expected consumption of
future economic benefits of the asset.
2.3h
Goodwill
impairment
testing
The Group determines whether goodwill needs to be impaired on an annual
basis, or more frequently as required. This requires an estimation of the value-
in-use of the CGUs to which goodwill is allocated. The value-in-use calculation
requires the Group to estimate the future cash flows expected to arise from
the CGUs, discounted at a suitably risk-adjusted rate to calculate present
value.
The impact of changes to pricing rules set by the FCA following the completion
of the GIPP market study, especially the highly competitive motor insurance
market and the adverse impact on profit before tax for the current and prior
year, has increased the estimation uncertainty in the Insurance Broking CGU.
The outcome of the impairment reviews conducted concluded that impairment
charges of £269.0m, £68.1m and £36.8m be recognised against the Group’s
Insurance Broking CGU as at 31 July 2022, 31 July 2023 and 31 January 2024
respectively.
Sensitivity analysis was undertaken to determine the effect of changing the
discount rate, the terminal value and future cash flows on the present value
calculation, as shown in Note 16a.
59
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions (continued)
b) Significant estimates (continued)
Acc.
Policy
Items involving
estimation
Sources of estimation uncertainty
2.3h
Impairment of
ocean and river
cruise ships
Following the continued impact of the COVID-19 pandemic on the Group’s
operations, management conducted impairment reviews at 31 July 2022 of the
Group’s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure.
Based on these impairment reviews and looking at the probability of a range of
outcomes, the Group remained comfortable that there was headroom over and
above the carrying value of the two ocean cruise ship assets and, therefore,
concluded that no impairment charges were necessary.
No impairment indicators were identified in relation to the Group’s two ocean
cruise ships, or its river cruise ships, as at 31 January 2023 and 31 January
2024 and, therefore, no impairment reviews were conducted at these dates.
2.3r
Valuation of
insurance
contract
liabilities (and
related
reinsurance
contract assets)
Estimates of future cash flows to fulfil liabilities for incurred claims
For insurance contracts, estimates have to be made for the expected cost of
claims known but not yet settled (case reserves) and for the expected cost of
IBNR claims, as at the reporting date. It can take a significant period of time
before the ultimate claims cost can be established with certainty.
The ultimate cost of incurred claims is estimated by using a range of standard
actuarial claims projection techniques, such as the Chain-Ladder and
Bornhuetter-Ferguson methods. The main assumption underlying these
techniques is that past claims development experience can be used to project
future claims development and hence ultimate claims costs. As such, these
methods extrapolate the development of paid and incurred losses, average
costs per claim and claim numbers based on the observed development of
earlier years. Historical claims development is primarily analysed by accident
year, geographical area, significant business line and peril. Additional qualitative
judgement is used to assess the extent to which past trends may not apply in
the future (e.g. to reflect one-off occurrences, changes in external or market
factors such as public attitudes to claiming, economic conditions, levels of
claims inflation, judicial decisions and legislation, as well as internal factors such
as portfolio mix, policy features and claims handling procedures) in order to
arrive at the best estimate of the ultimate cost of claims.
The estimate of future cash flows arising from PPO liabilities requires an
assumption for carer wage inflation. This assumption is currently set at 1.5%
above the discount rate applied to liabilities for incurred claims (see below).
This assumption will continue to be assessed at future measurement dates.
60
Notes to the consolidated financial statements (continued)
2.5 Significant accounting judgements, estimates and assumptions (continued)
b) Significant estimates (continued)
Acc.
Policy
Items involving
estimation
Sources of estimation uncertainty
2.3r
(cont.)
Valuation of
insurance
contract
liabilities (and
related
reinsurance
contract assets)
(continued)
Discount rate applied to liabilities for incurred claims
All the Group’s liabilities for incurred claims (and related reinsurance assets) are
discounted.
The determination of the discount rate applied to liabilities for incurred claims is
an estimate. This discount rate reflects the current risk-free interest rate in the
currency of the insurance liabilities, being British Pounds (GBP), plus an
illiquidity premium. Such a discount rate is not observable and, therefore, must
be estimated. The discount rate is estimated by removing from the yield curve of
a portfolio of GBP-denominated corporate bonds an estimate of the
components of that yield that relate to expected and unexpected credit losses.
The portfolio of corporate bonds used reflects the debt securities that the
Group holds to support its insurance liabilities.
Following this approach, the GBP discount rate curves that were applied to
liabilities for incurred claims were as follows:
1 year
3 years
5 years
10 years
20 years
30 years
31 January 2024
4.9%
4.4%
4.1%
4.3%
4.9%
4.9%
31 January 2023 4.2% 4.1% 4.0% 4.1% 4.4% 4.3%
The sensitivity of this assumption is shown in Note 20(a)(iii).
Risk adjustment
The confidence level technique used by the Group to determine the risk
adjustment requires estimation of the probability distribution of the present
value of future cash flows arising from liabilities for incurred claims, including
estimates of possible favourable and unfavourable outcomes. These probability
distributions are estimated both gross and net of reinsurance.
2.3u
Valuation of
pension benefit
obligation
The cost of defined benefit pension plans, and the present value of the pension
obligation, are determined using actuarial valuations. Actuarial valuations involve
making assumptions about discount rates, expected rates of return on assets,
future salary increases, mortality rates and future pension increases. Due to the
complexity of the valuation, the underlying assumptions and its long-term
nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date.
All significant assumptions and estimates involved in arriving at the valuation of
the pension scheme obligation are set out in Note 27.
61
Notes to the consolidated financial statements (continued)
3 Segmental information
For management purposes, the Group is organised into business units based on their products and services.
The Group has three reportable operating segments as follows:
• Cruise and Travel: comprises the operation and delivery of ocean and river cruise holidays, as well as
package tour and other holiday products. The Group owns and operates two ocean cruise ships. All other
holiday and river cruise products are packaged together with third-party supplied accommodation, flights
and other transport arrangements.
• Insurance: comprises the provision of general insurance products. Revenue is derived primarily from
insurance premiums and broking revenues. The segment is further analysed into four product sub-
segments:
o Insurance Broking, consisting of:
Motor broking
Home broking
Other broking
o Insurance Underwriting
• Other Businesses and Central Costs: comprises the Group’s other businesses and its central cost base.
The other businesses primarily include Saga Money (the personal finance product offering), Saga
Publishing and the Group’s mailing and printing business, CustomerKNECT.
Segment performance is evaluated using the Group’s key performance measure of Underlying Profit/(Loss)
Before Tax
7
. Items not included within a specific segment relate to transactions that do not form part of the
ongoing segment performance or are managed at a Group level.
All revenue is generated solely in the UK.
Transfer prices between operating segments are set on an arm’s-length basis in a manner similar to
transactions with third parties. Segment income, expenses and results include transfers between business
segments that are then eliminated on consolidation.
Goodwill, bonds and the RCF are not included within segments as they are managed on a Group basis.
7
For details of the restatement, please see Notes 2.4, 12a and 15
62
Notes to the consolidated financial statements (continued)
3 Segmental information (continued)
2024
Cruise
and
Travel
£m
Insurance
Motor
broking
£m
Home
broking
£m
Other
broking
£m
Under-
writing
£m
Total
£m
Other
Businesses
and Central
Costs
£m
Adjustments
£m
Total
£m
Non
-insurance revenue
410.0
32.3
55.4
41.0
4.8
133.5
25.1
(5.1)
563.5
Insurance revenue
–
12.7
8
–
0.8
164.1
177.6
–
–
177.6
Revenue
410.0
45.0
55.4
41.8
168.9
311.1
25.1
(5.1)
741.1
Cost of sales (non
-
Insurance
Underwriting)
(292.5) (8.7) – 7.9 – (0.8) (7.8) – (301.1)
Gross profit/(loss) (non-
Insurance Underwriting)
117.5
23.6
55.4
48.9
4.8
132.7
17.3
(5.1)
262.4
Insurance service expenses
–
(22.0)
–
–
(227.2)
(249.2)
–
–
(249.2)
Net income from
reinsurance contracts
– 0.1 – – 40.1 40.2 – – 40.2
Insurance service result
–
(9.2)
–
0.8
(23.0)
(31.4)
–
–
(31.4)
Other income
5.0
–
–
–
–
–
–
–
5.0
Administrative and selling
expenses
(67.7) (23.7) (35.7) (24.7) – (84.1) (68.3) 4.8 (215.3)
Impairment of assets
– (1.2) – – (4.1) (5.3) (8.4) (104.9) (118.6)
Net
finance expense from
insurance contracts
– – – – (3.5) (3.5) – – (3.5)
Net finance income from
reinsurance contracts
– – – – 1.9 1.9 – – 1.9
Net loss on disposal of
property, plant and
equipment and software
– (0.1) – – – (0.1) (0.4) – (0.5)
Investment income
0.8 0.3 – – 12.1 12.4 2.2 – 15.4
Finance costs
(20.8) (0.1) – – – (0.1) (23.5) – (44.4)
Profit/(loss) before tax
34.8
(10.4)
19.7
25.0
(11.8)
22.5
(81.1)
(105.2)
(129.0)
Reconciliation to Underlying
Profit/(Loss) Before Tax
9
Profit/(loss) before tax
34.8
(10.4)
19.7
25.0
(11.8)
22.5
(81.1)
(105.2)
(129.0)
Net fair value loss on
derivative financial
instruments
1.4 – – – – – – – 1.4
Impairment of goodwill
– – – – – – – 104.9 104.9
Impairment/loss on disposal
of assets
– 1.2 – – 1.9 3.1 8.8 - 11.9
Amortisation
of fees and
costs on Roger De Haan
loan
– – – – – – 0.4 – 0.4
Restructuring costs
3.4 3.8 – – 1.4 5.2 31.7 – 40.3
Acquisition
and disposal
costs relating to the Big
Window
– – – – – – – 0.3 0.3
Foreign exchange
movement on lease liabilities
(0.6) – – – – – – – (0.6)
Fair value
gains on debt
securities
– – – – (3.5) (3.5) – – (3.5)
Changes in underwriting
discount rates on non
-PPO
liabilities
– – – – (1.0) (1.0) – – (1.0)
Onerous contract
provisions
– 0.5 – – 11.6 12.1 – – 12.1
Ocean Cruise discretionary
ticket refunds and costs
1.0 – – – – – – – 1.0
Underlying Profit/(Loss)
Before Tax
9
40.0
(4.9)
19.7
25.0
(1.4)
38.4
(40.2)
–
38.2
8
This relates to amounts received by the Group's insurance broking entity in relation to insurance policies that are underwritten by the Group,
which are accounted for as insurance premiums. This includes the street pricing adjustment
9
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
63
Notes to the consolidated financial statements (continued)
3 Segmental information (continued)
2023 (restated
10
)
Cruise
and
Travel
£m
Insurance
Motor
broking
£m
Home
broking
£m
Other
broking
£m
Under-
writing
£m
Total
£m
Other
Businesses
and Central
Costs
£m
Adjustments
£m
Total
£m
Non
-insurance revenue 305.5
45.8
57.6
44.4
(2.4)
145.4
24.3
(4.5)
470.7
Insurance revenue
–
31.2
11
–
0.9
160.9
193.0
–
–
193.0
Revenue
305.5
77.0
57.6
45.3
158.5
338.4
24.3
(4.5)
663.7
Cost of
sales (non-
Insurance
Underwriting)
(242.5) (4.0) – 4.5 – 0.5 (6.5) – (248.5)
Gross profit/(loss) (non-
Insurance Underwriting)
63.0
41.8
57.6
48.9
(2.4)
145.9
17.8
(4.5)
222.2
Insurance service expenses
– (32.5) – – (183.3) (215.8) – – (215.8)
Net (expense)/income from
reinsurance contracts
– (0.1) – – 27.4 27.3 – – 27.3
Insurance service result
–
(1.4)
–
0.9
5.0
4.5
–
–
4.5
Administrative and selling
expenses
(57.5) (19.4) (35.1) (22.7) – (77.2) (52.2) 4.5 (182.4)
Impairment of assets
– – – – (1.2) (1.2) (0.5) (269.5) (271.2)
Net finance income from
insurance contracts
– – – – 8.2 8.2 – – 8.2
Net finance expense from
reinsurance contracts
– – – – (3.7) (3.7) – – (3.7)
Net profit on disposal of
software
– 0.1 – – – 0.1 – – 0.1
Investment loss
– – – – (7.5) (7.5) (2.2) – (9.7)
Finance costs
(20.2) – – – – – (22.0) – (42.2)
Finance income
1.4 – – – – – 0.1 – 1.5
(Loss)/profit before tax
(13.3)
21.1
22.5
27.1
(1.6)
69.1
(59.0)
(269.5)
(272.7)
Reconciliation to Underlying
(Loss)/Profit Before Tax
12
(Loss)/profit before tax
(13.3)
21.1
22.5
27.1
(1.6)
69.1
(59.0)
(269.5)
(272.7)
Net fair value gain on
derivative financial
instruments
(1.4) – – – – – – – (1.4)
Impairment of goodwill
– – – – – – – 269.5 269.5
Impairment of assets
– – – – 0.6 0.6 0.5 – 1.1
Restructuring costs
2.2 – – – – – 1.5 – 3.7
Acquisition costs relating to
the Big Window
– – – – – – 0.2 – 0.2
Foreign exchange
movement on lease liabilities
2.0 – – – – – – – 2.0
Fair value losses on debt
securities
– – – – 15.0 15.0 – – 15.0
Changes in underwriting
discount rates
on non-PPO
liabilities
– – – – (6.3) (6.3) – – (6.3)
Onerous contract provision
– 0.8 – – 3.0 3.8 – – 3.8
IFRS 16
lease adjustment on
river cruise vessels
0.6 – – – – – – – 0.6
Underlying (Loss)/Profit
Before Tax
12
(9.9)
21.9
22.5
27.1
10.7
82.2
(56.8)
–
15.5
10
For details of the restatement, please see Notes 2.4, 12a and 15
11
This relates to amounts received by the Group's insurance broking entity in relation to insurance policies, which are underwritten by the
Group, that are accounted for as insurance premiums. This includes the street pricing adjustment
12
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
64
Notes to the consolidated financial statements (continued)
3 Segmental information (continued)
Analysis of total assets less liabilities by segment:
2024
2023
(restated
13
)
£m
£m
Cruise and Travel 89.3 93.7
Insurance 37.0 53.6
Other Businesses and Central Costs 152.6 167.9
Adjustments (55.4) 50.2
223.5
365.4
Total assets less liabilities detailed as adjustments relates to the following unallocated items:
2024
2023
£m
£m
Goodwill (Note 8) 344.7 449.6
Bonds (400.1) (399.4)
(55.4)
50.2
13
For details of the restatement, please see Notes 2.4, 12a and 15
65
Notes to the consolidated financial statements (continued)
3 Segmental information (continued)
Disaggregation of revenue
The following table provides a disaggregation of the Group’s revenue by major product line, analysed by its
core operating segments.
2024
Insurance
Major product lines
Cruise
and
Travel
£m
Underwriting
£m
Broking
£m
Other
revenue
£m
Total
Insurance
£m
Other
Businesses
and Central
Costs
£m
Total
£m
Ocean Cruise
210.0
210.0
River Cruise and Travel
200.0
200.0
Motor broking
12.7 32.3 – 45.0
45.0
Home broking
– 55.4 – 55.4
55.4
Other broking
0.8 41.0 – 41.8
41.8
Insurance Underwriting
164.1 – 4.8 168.9 168.9
Money
6.4 6.4
Publishing
and
CustomerKNECT
12.5 12.5
Other
1.1 1.1
410.0
177.6
128.7
4.8
311.1
20.0
741.1
2023 (restated
14
)
Insurance
Major product lines
Cruise
and
Travel
£m
Underwriting
£m
Broking
£m
Other
revenue
£m
Total
Insurance
£m
Other
Businesses
and Central
Costs
£m
Total
£m
Ocean Cruise
168.3
168.3
River Cruise and Travel
137.2
137.2
Motor broking
31.2 45.8 – 77.0
77.0
Home broking
– 57.6 – 57.6
57.6
Other broking
0.9 44.4 – 45.3
45.3
Insurance Underwriting
160.9 – (2.4) 158.5 158.5
Money
7.9 7.9
Publishing
and
CustomerKNECT
10.3 10.3
Other
1.6 1.6
305.5
193.0
147.8
(2.4)
338.4
19.8
663.7
Included in Insurance Broking revenue is instalment interest income on premium financing of £6.7m (2023:
£6.1m (restated
14
)).
14
For details of the restatement, please see Notes 2.4, 12a and 15
66
Notes to the consolidated financial statements (continued)
4 Tax
The major components of the income tax expense are:
2024
2023
(restated
15
)
£m
£m
Consolidated income statement
Current income tax
Current income tax charge
-
1.1
Adjustments in respect of previous years
(3.6)
(0.4)
(3.6)
0.7
Deferred tax
Relating to origination and reversal of temporary differences
(11.5)
(1.5)
Adjustments in respect of previous years
(0.9)
1.2
(12.4)
(0.3)
Tax (credit)/expense in the income statement
(16.0)
0.4
The Group’s tax credit for the year was £16.0m (2023: £0.4m expense (restated
15
)) representing a tax
effective rate of 66.4% before the impairment of goodwill (2023: negative 12.5% (restated
15
)).
Adjustments in respect of previous years includes an adjustment for the over-provision of tax in prior years of
£4.5m credit (2023: £0.8m expense (restated
15
)), which includes £3.2m (2023: £nil) of repayments from HM
Revenue & Customs in respect of the years ended 31 January 2019 and 31 January 2020.
Reconciliation of net deferred tax assets
2024
2023
(restated
15
)
£m
£m
At 1 February
11.5
7.2
Tax credit recognised in the income statement 12.4
0.3
Tax credit recognised in OCI 10.9
4.0
At 31 January
34.8
11.5
On 3 March 2021, it was announced that the corporation tax rate would increase from 19% to 25% from 1 April
2023. This increase was substantively enacted on 24 May 2021. As a result, the closing deferred tax balances
at the statement of financial position date have been reflected at 25%. Net deferred tax assets are expected
to be normally settled in more than 12 months.
5 Dividends
The Board of Directors does not recommend the payment of a final dividend for the 2023/24 financial year
(2023: nil pence per share).
For the current and prior year, no interim or final dividends were declared, or paid, during the year.
The distributable reserves of Saga plc are £407.6m deficit as at 31 January 2024, which are equal to the
retained earnings reserve. If necessary, its subsidiary companies hold significant reserves from which a
dividend could be paid. Subsidiary distributable reserves are available immediately, with the exception of
companies within the River Cruise, Travel and Insurance Underwriting businesses, which require regulatory
approval before any dividends can be declared and paid. Under the terms of the ship debt facilities, dividends
remain restricted until the ship debt principal repayments that were deferred as part of the ship debt
repayment holiday are fully repaid (Note 16). In addition, under the terms of the RCF, dividends also remain
restricted.
15
For details of the restatement, please see Notes 2.4, 12a and 15
67
Notes to the consolidated financial statements (continued)
6 Loss per share
Basic loss per share is calculated by dividing the loss after tax for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted loss per share is calculated by also including the weighted average number of ordinary shares that
would be issued on conversion of all potentially dilutive options.
There have been no other transactions involving ordinary shares, or potential ordinary shares, between the
reporting date and the date of authorisation of these financial statements.
The calculation of basic and diluted loss per share is as follows:
2024
2023
(restated
16
)
£m
£m
Loss attributable to ordinary equity holders
(113.0) (273.1)
Weighted average number of ordinary shares
‘m
‘m
Ordinary shares as at 1 February
139.5
139.5
Deferred Bonus Plan (
DBP
) share options exercised
0.1
-
Restricted Share Plan (
RSP
) share options exercised
0.2
-
Ordinary shares as at 31 January
139.8
139.5
Weighted average number of ordinary shares for basic loss per
share and diluted loss per share
139.8
139.5
Basic loss per share
(80.8p)
(195.7p)
Diluted loss per share
(80.8p)
(195.7p)
The table below reconciles between basic loss per share and Underlying Basic Earnings Per Share
17
.
2024
2023
(restated
16
)
Basic loss per share
(80.8p)
(195.7p)
Adjusted for:
Net fair value loss/(gain)
on derivative financial instruments 0.8p (1.2p)
Impairment, and net
loss on disposal, of assets 6.8p 0.9p
Impairment of Insurance goodwill
75.0p 192.8p
Acquisition
and disposal costs relating to the Big Window (Notes 7b and 7c) 0.2p 0.5p
Onerous contract provision
6.9p 3.2p
Amortisation
of fees and costs on Roger De Haan loan 0.2p –
Foreign exchange movement on lease liabilities
(0.4p) 1.7p
Fair value
(gains)/losses on debt securities (2.0p) 12.4p
Changes in underwriting discount rates
on non-PPO liabilities (0.6p) (5.3p)
Restructuring costs
23.3p 3.1p
Ocean Cruise discretionary ticket refunds
and associated costs 0.6p –
IFRS 16
lease accounting adjustment on river cruise vessels – 0.5p
Underlying Basic Earnings Per Share
17
30.0p
12.9p
16
For details of the restatement, please see Notes 2.4, 12a and 15
17
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
68
Notes to the consolidated financial statements (continued)
7 Business combinations and disposals
a) Acquisitions during the year ended 31 January 2024
There were no business acquisitions in the year ended 31 January 2024.
b) Acquisitions during the year ended 31 January 2023
On 16 February 2022, the Group acquired the Big Window, a specialist research and insight business focusing
on ageing.
The fair values of the identifiable assets and liabilities of the Big Window acquired on the date of acquisition
were:
Assets
£m
Trade and other receivables 0.1
Cash 1.3
Total assets 1.4
Liabilities
Trade and other payables 0.1
Corporation tax liability 0.1
Total liabilities 0.2
Total identifiable net assets at fair value
1.2
Goodwill arising on acquisition 0.5
Cash purchase consideration transferred
1.7
The purchase consideration of £1.7m was settled in cash. In addition to the £1.7m cash purchase consideration
transferred as part of the purchase agreement, the Group granted a £0.5m share-based payment
arrangement that was transferred in cash to the Group’s share administrators on the date of completion.
Cash of £1.3m was acquired with the Big Window, resulting in a net cash outflow of £0.9m. The resultant
goodwill of £0.5m recognised on acquisition was fully written off in the year to 31 January 2023.
The Big Window contributed £0.6m of revenue and a loss of £1.0m to the Group loss before tax from the date
of acquisition to 31 January 2023.
c) Disposals
During the year ended 31 January 2024, as a result of the decision to exit some of our smaller loss-making
activities, the Group made the decision to dispose of the Big Window. On 31 December 2023, the Group sold
the Big Window back to its founder and Chief Executive Officer for a nominal sum of £1. The disposal did not
meet the requirements of IFRS 5 to be classified as a discontinued operation.
Details of the sale of the Big Window are as follows:
£m
Cash consideration received –
Cash and short-term deposits disposed of as part of the transaction –
Carrying value of net liabilities disposed
–
Loss on disposal before tax –
Tax expense on gain –
Loss on disposal after tax
–
69
Notes to the consolidated financial statements (continued)
7 Business combinations and disposals (continued)
c) Disposals (continued)
The carrying amounts of assets and liabilities as at the date of disposal were:
Assets
£m
Trade and other receivables 0.1
Cash –
Total assets 0.1
Liabilities
Contract liabilities 0.1
Total liabilities 0.1
Net liabilities disposed
–
There were no business disposals in the year ended 31 January 2023.
70
Notes to the consolidated financial statements (continued)
8 Goodwill
Goodwill acquired through business combinations has been allocated to CGUs for the purpose of impairment
testing. The carrying value of goodwill by CGU is as follows:
2024
2023
£m
£m
Insurance Broking 344.7 449.6
344.7
449.6
The Group tests all goodwill balances for impairment at least annually and twice-yearly if indicators of
impairment exist at the interim reporting date of 31 July. The impairment test compares the recoverable
amount of each CGU to the carrying value of its net assets, including the value of the allocated goodwill.
On 1 January 2022, new pricing rules arising from the implementation of recommendations included in the
FCA’s GIPP market study came into effect. As a result, and against the background of a highly competitive
motor insurance market, the Group saw a fall in policy volumes in the period to 31 July 2022 and year to 31
January 2023. In the years to 31 January 2024 and 31 January 2023, high claims cost inflation in a competitive
market continued to have an adverse impact on the profitability of the Insurance business. Management
considered these trading impacts to constitute indicators of impairment and, therefore, conducted full
impairment reviews of the Insurance Broking CGU as at 31 July 2022, 31 January 2023, 31 July 2023 and 31
January 2024.
The recoverable amount of the Insurance Broking CGU has been determined based on a value-in-use
calculation using nominal cash flow projections from the Group’s latest five-year financial forecasts to
2028/29, which are derived using past experience of the Group’s trading, combined with the anticipated
impact of changes in macroeconomic and regulatory factors. A terminal value has been calculated using the
Gordon Growth Model based on the fifth year of those projections and an annual growth rate of 2.0% (July
2023: 2.0%; January 2023: 2.0%) as the expected long-term average nominal growth rate of the UK
economy. The cash flows have then been discounted to present value using a suitably risk-adjusted nominal
discount rate based on a market-participant view of the cost of capital and debt relevant to the insurance
industry.
As at 31 January 2024, the pre-tax discount rate used for the Insurance Broking CGU was 13.0% (July 2023:
13.8%; January 2023: 13.0%). The Group’s five-year financial forecasts incorporate the modelled impact of
the new pricing rules and the estimated impact this will likely have on future new business pricing and
retention rates. As per IAS 36.44, incremental cash flows directly attributable to growth initiatives not yet
enacted at the statement of financial position date have then been removed for the purpose of the value-in-
use calculation.
The Group has also considered the impact of downside stresses, both in terms of adverse impacts to the cash
flow projections and to the discount rate. For the cash flow stress test, the Group has modelled the impact of
a more prudent outlook on the current competitive challenges seen in the insurance broking market, in
combination with a more cautious nominal terminal growth rate of 1.5% (July 2023: 1.5%; January 2023: 1.5%),
reflecting a more conservative outlook for growth in the UK economy. For the discount rate stress test, the
Group applied risk premia of +0.2ppt at 31 January 2024 (July 2023: +0.7ppt; January 2023: +1.3ppt).
The (deficit)/headroom for the Insurance Broking CGU against the carrying value of goodwill at the time of the
review of £381.5m at 31 January 2024 (after recognising an impairment charge of £68.1m at 31 July 2023),
and £449.6m at 31 July 2023 and 31 January 2023, was as follows:
Headroom/(deficit) £m
Base scenario
Cash flow stress test scenario
Discount rate stress test scenario
31
January
2024
31
July
2023
31
January
2023
31
January
2024
31
July
2023
31
January
2023
31
January
2024
31
July
2023
31
January
2023
Insurance
Broking
(17.8)
11.6 153.9
(55.7)
(88.7) 12.0
(25.0)
(9.8) 92.6
At 31 July 2023, the Group again determined that the recoverable amount of the goodwill was below the
carrying value, and so the Directors took the decision to impair the goodwill by a further £68.1m, based on a
probability-weighted assessment of the base and stressed forecast cash flows modelled.
71
Notes to the consolidated financial statements (continued)
8 Goodwill (continued)
The market challenges in Insurance persisted through the second half of the year. Management, therefore,
considered it necessary to perform a further impairment assessment of goodwill as at 31 January 2024.
Forecast cash flows consistent with the latest five-year plan and further stress tests, including the impact of a
slower recovery from high claims inflation, have been modelled. Again, and applying a probability weighting to
the base and stressed forecast cash flows modelled, management has taken the decision to impair goodwill by
a further £36.8m, taking the total impairment charge for the year to £104.9m.
The headroom calculated is sensitive to the discount rate and terminal growth rate assumed, and to changes
in the projected cash flows of the CGU. Increased inflationary pressures on claims, the evolving market
response to the regulatory changes introduced in early 2022 and, in particular, the extent to which market
prices move against Saga in a period of heightened global economic uncertainty, combine to increase the
range of possible cash flow outcomes in management’s modelling. A quantitative sensitivity analysis for each of
these as at 31 January 2024, and its impact on the base scenario headroom against the carrying value of
goodwill at the time of the review of £381.5m, is as follows:
Pre-tax discount rate
Terminal growth rate
Cash flow (annual)
+1.0ppt
£m
–1.0ppt
£m
+1.0ppt
£m
–1.0ppt
£m
+10%
£m
–10%
£m
Insurance Broking (28.2) 33.9 30.8 (24.7) 32.0 (32.0)
In the prior year, goodwill of £0.5m arising on the acquisition of the Big Window was immediately impaired in
full (Note 7b).
9 Intangible fixed assets
During the year, the Group capitalised £21.7m (2023: £13.4m) of software assets, disposed of assets with a net
book value of £0.3m (2023: £nil) and charged £12.0m of amortisation and impairment to its intangible assets
(2023: £9.2m).
72
Notes to the consolidated financial statements (continued)
10 Property, plant and equipment
During the year, the Group capitalised assets with a cost of £2.1m (2023: £8.2m), reclassified to assets held
for sale assets with a net book value of £nil (2023: £19.5m), reclassified from assets held for sale assets with a
net book value of £3.4m (2023: £nil), disposed of assets with a net book value of £0.2m (2023: £0.2m) and
charged £22.9m of depreciation and impairment to its property, plant and equipment (2023: £24.0m).
Impairment review of property, plant and equipment
Due to the continued impact of the COVID-19 pandemic on the Group’s Cruise and Travel operations in the
first half of the prior financial year, management concluded that potential indicators of impairment continued
to exist as at 31 July 2022 for both of its ocean cruise ships, Spirit of Discovery and Spirit of Adventure.
Management therefore conducted impairment reviews at 31 July 2022 for both vessels, following previous
reviews conducted at 31 January 2022.
The impairment test was conducted using a methodology consistent with that applied at 31 January 2022. The
recoverable amount of each ocean cruise ship was determined based on a value-in-use calculation using cash
flow projections from the Group’s five-year financial forecasts to 2026/27 and applying a constant annual
growth rate of 2% thereafter for subsequent periods until the end of the ship’s useful economic life of 30
years, at which point a residual value of 15% of original cost was assumed. This was then discounted back to
present value using a suitably risk-adjusted discount rate. The underlying forecast cash flows were updated
for the latest impact of the COVID-19 pandemic. In addition, a stress test of the potential adverse medium-
term impact that the pandemic may have on demand for ocean cruises was also considered, with load factors
capped at 80% throughout 2023/24. The annual growth rate beyond the fifth year of management forecasts
was reduced to 1.5% in the stress test scenario, reflecting a more cautious outlook for long-term growth in the
UK economy.
Potential environmental regulatory changes were also considered as part of this assessment. The shipping
industry has made a commitment to reduce CO
2
emissions by 40% by 2030 (from a 2008 baseline), and the
UK Government has made commitments to reach net zero emissions by 2050. The Energy Efficiency eXisting
ship Index and Carbon Intensity Indicator regulations were introduced internationally in 2023 to enable the
industry to meet the 2030 target and both of Saga’s ocean cruise ships meet the requirements of these
regulations. The end of their useful economic lives of 30 years will have been reached by 2049 in the case of
Spirit of Discovery and 2051 in the case of Spirit of Adventure.
The Group did not factor in any potential fuel modifications that may occur in the future into the cash flow
forecasts used for the impairment assessment of either ship. While alternative fuels may present a viable
route to decarbonisation for the Ocean Cruise business, there are significant upstream supply challenges, that
will need to be resolved before these become viable for deployment. The main engines currently installed in
the Group’s ocean cruise ships are capable of being modified for use with certain alternative fuels. Being new
vessels, the design and specification of the Group’s ocean cruise ships was guided by a desire to maximise
efficiency through deployment of the most up-to-date technology. Their hull design maximises fuel efficiency,
onboard technology minimises fuel consumption and catalytic converters reduce carbon emissions.
Additionally, the Group has commenced the retro-fit of shore power connections to one of its vessels and is
planning on doing the same to the other vessel, allowing them to use clean energy, where available, in ports of
call, and has commenced a study to evaluate other emerging technologies. The capital expenditure required
for the shore power connections has been included in the forecast cash flows used in the assessment.
There is also currently no technological alternative to either oil or gas to power large vessels and it is not clear
if such technology will ever be commercially viable, or in what time frame this might be achieved.
The cash flows were discounted to present value using a pre-tax discount rate of 8.6% for both vessels. As at
31 July 2022, the headroom for each of the ships against the carrying value was as follows:
Headroom £m
Base
scenario
Lower trading stress
test scenarios
Spirit of Discovery 169.0 146.5
Spirit of Adventure 114.7 91.6
73
Notes to the consolidated financial statements (continued)
10 Property, plant and equipment (continued)
Impairment review of property, plant and equipment (continued)
Based on these impairment tests, and looking at the likelihood of a range of outcomes, the Group was satisfied
that no impairment of either vessel was necessary as at 31 July 2022.
Subsequent to 31 July 2022, further COVID-19 restrictions were lifted for cruise passengers and the business
returned to fully operational conditions. Discount rates have risen, but not to the extent that they materially
change the headroom in the impairment calculation. The Directors, therefore, concluded that there were no
additional indicators of impairment at 31 January 2024 and 31 January 2023 and, accordingly, no further
impairment review was deemed necessary.
In addition, management has assessed the recoverable amount of plant and equipment assets as at 31 January
2024 and concluded that an impairment charge of £0.1m was required in the Group’s Central Costs division.
As the Group planned to vacate its properties (Note 19), management concluded that this constituted an
indicator of impairment and duly conducted an impairment review as at 31 January 2023 of the Group’s
freehold and long leasehold land and buildings, and related fixtures and fittings. In relation to these freehold
and long leasehold properties, value-in-use is negligible and so the Group obtained market valuations to
determine the fair value of each building. The outcome of these impairment reviews concluded that an
impairment charge totalling £0.5m relating to fixtures and fittings should be recognised against the Group’s
assets as at 31 January 2023. At 31 January 2023, the Group reclassified assets with a net book value of
£19.5m to assets held for sale (Note 19).
During the current year, the Group declassified one of the properties classified as held for sale at 31 January
2023 to property, plant and equipment since it was no longer being actively marketed for disposal (Note 19).
The carrying value of this property as at 31 January 2023 was £3.4m.
11 Right-of-use assets
During the year, the Group capitalised assets with a cost of £5.9m (2023: £25.6m), disposed of assets with a
net book value of £nil (2023: £nil), reduced net book value for reassessment of lease terms by £nil (2023:
£22.0m) and charged £12.0m of depreciation and impairment to its right-of-use assets (2023: £8.9m).
The total cash outflow for leases amounted to £13.6m (2023: £9.1m).
River cruise ship additions in the year ended 31 January 2023 relate to the river cruise vessels, Spirit of the
Danube, MS River Discovery II and MS Serenade 1.
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise
charter agreements. As a consequence, a proportion of costs previously included as lease costs for Spirit of
the Rhine were reassessed as costs of ongoing service provision. Accordingly, the right-of-use asset and
liability relating to this ship were adjusted in the prior year, reflecting a prospective change in estimate as
required under IAS 8.
Impairment review of right-of-use assets
In the year to 31 January 2024, management decided to restructure the Group’s Publishing business. As a
result of this exercise, management performed an impairment review of right-of-use assets used by the
Publishing business. The outcome of this review concluded that an impairment charge of £0.1m be recognised
against the Group’s long leasehold land and buildings as at 31 January 2024.
With the exception of the above, the Group does not consider it necessary to conduct an impairment review of
right-of-use assets as at 31 January 2024 since no indicators of impairment exist. In the prior year, the
Directors concluded that there were no indicators of impairment at 31 January 2023 and, accordingly, no
impairment review was deemed necessary.
74
Notes to the consolidated financial statements (continued)
12 Financial assets and financial liabilities
a) Financial assets
2024
2023
(restated
18
)
£m
£m
FVTPL
Foreign exchange forward contracts
–
0.4
Loan funds
–
5.9
Money market funds
32.8
19.6
Debt securities
18
219.1
254.4
251.9
280.3
FVTPL designated in a hedging relationship
Foreign exchange forward contracts
–
2.1
Fuel oil swaps
0.3
–
0.3
2.1
Total financial assets
252.2
282.4
Current
74.1
62.8
Non-current
178.1
219.6
252.2
282.4
b) Financial liabilities
2024
2023
£m
£m
FVTPL
Foreign exchange forward contracts
0.5
0.2
0.5
0.2
FVTPL designated in a hedging relationship
Foreign exchange forward contracts
2.7
1.0
Fuel oil swaps
0.8
4.0
3.5
5.0
Amortised cost
Bond and ship loans (Note 16)
796.2
854.6
Lease liabilities
26.3
32.6
Bank overdrafts
1.9
4.4
824.4
891.6
Total financial liabilities
828.4
896.8
Current
238.2
118.6
Non-current
590.2
778.2
828.4
896.8
18
As a result of the adoption of IFRS 17 during the current year, the Group has changed classification of debt securities under IFRS 9 from
FVOCI to FVTPL, with effect from 1 February 2022.This change applies to the whole amount of debt securities shown in the table. IFRS 17
permits financial assets to be classified as FVTPL on transition to IFRS 17 if doing so eliminates, or significantly reduces, a measurement or
recognition inconsistency. For the debt securities that support the Group’s insurance liabilities, this condition is met as fair value gains or
losses on these securities are expected to be offset, to a significant degree, by the impact of changes in the discount rate on the
measurement of IFRS 17 liabilities for incurred claims (net of the impact on related reinsurance assets)
75
Notes to the consolidated financial statements (continued)
12 Financial assets and financial liabilities (continued)
c) Fair value hierarchy
As at 31 January 2024
As at 31 January 2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
£m
£m
£m
£m
£m
£m
£m
£m
Financial assets measured at fair value
Foreign exchange forwards
–
–
–
–
–
2.5
–
2.5
Fuel oil swaps
–
0.3
–
0.3
–
–
–
–
Loan funds
–
–
–
–
5.9
–
–
5.9
Debt securities
219.1
–
–
219.1
254.4
–
–
254.4
Money market funds
32.8
–
–
32.8
19.6
–
–
19.6
Financial liabilities measured at fair value
Foreign exchange forwards
–
3.2
–
3.2
–
1.2
–
1.2
Fuel oil swaps
–
0.8
–
0.8
–
4.0
–
4.0
Financial liabilities for which fair values
are disclosed
Bond
s and ship loans
356.3
3
56.1
–
712.4
–
788.9
–
788.9
Lease liabilities
–
26.3
–
26.3
–
32.6
–
32.6
Bank overdrafts
–
1.9
–
1.9
–
4.4
–
4.4
d) Other information
Debt securities, loan funds and money market funds relate to monies held by the Group’s Insurance
Underwriting business, are subject to contractual restrictions and are not readily available to be used for
other purposes within the Group. The values of the debt securities, money market funds and loan funds are
based upon publicly available market prices.
Following a review of the Group’s loans and borrowings during the year, bonds have been transferred from
Level 2 to Level 1 in the fair value hierarchy. There have been no non-recurring fair value measurements of
assets and liabilities during the year (2023: none). The Group’s policy is to recognise transfers into, and out of,
fair value hierarchy levels as at the end of the reporting period.
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They
are also adjusted for counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with
reference to the valuations provided by third parties, which use current Platts index rates, discounted to
present value.
Bonds are valued at quoted market bid prices.
Ship loans are valued using discounted cash flows at the current rates of interest.
The Group operates a programme of economic hedging against its foreign currency and fuel oil exposures.
During the year, the Group designated 126 (2023: 352) foreign exchange forward currency contracts as
hedges of highly probable foreign currency cash expenses in future periods and designated 37 (2023: 68) fuel
oil swaps as hedges of highly probable fuel oil purchases in future periods. As at 31 January 2024, the Group
has designated 208 (2023: 446) forward currency contracts and 65 (2023: 68) fuel oil swaps as hedges.
During the year, the Group recognised net losses of £1.3m (2023: £2.0m losses) on cash flow hedging
instruments through OCI into the hedging reserve. The Group recognised £nil gains (2023: £nil) through the
income statement in respect of the ineffective portion of hedges measured during the year.
During the year, the Group has de-designated 12 foreign currency forward contracts, with a transaction value
of £1.3m, where forecast cash flows are no longer expected to occur with a sufficiently high degree of certainty
to meet the requirements of IFRS 9. The accumulated losses in relation to these contracts of £0.1m have been
reclassified from the hedging reserve into profit or loss during the year. The Group has not de-designated any
fuel oil swaps during the year. During the year, the Group recognised a £1.0m loss (2023: £0.3m loss) through
the income statement in respect of matured hedges that have been recycled from OCI.
76
Notes to the consolidated financial statements (continued)
13 Cash and cash equivalents
2024
2023
£m
£m
Cash at bank and in hand 57.8 52.0
Short-term deposits and money market funds held outside of the Insurance
business 130.9 124.5
Cash and short-term deposits
188.7
176.5
Money market funds held within the Insurance business (Note 12)
32.8
19.6
Bank overdraft (1.9) (4.4)
Cash and cash equivalents in the consolidated statement of cash flows
219.6
191.7
Included within cash and cash equivalents are amounts held by the Group’s River Cruise, Travel and Insurance
businesses, which are subject to contractual or regulatory restrictions. The amounts held are not readily
available to be used for other purposes within the Group and total £49.8m (2023: £34.2m). Available Cash
19
excludes these amounts.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are
typically made for varying periods of between one day and three months, depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.
The bank overdraft is subject to a guarantee in favour of the Group’s bankers and is limited to the amount
drawn. The bank overdraft is repayable on demand.
19
Refer to the Alternative Performance Measures Glossary on pages 90-92 for definition and explanation
77
Notes to the consolidated financial statements (continued)
14 Retirement benefit schemes
The Group operates retirement benefit schemes for the employees of the Group consisting of a defined
contribution plan and a legacy defined benefit plan.
In July 2021, following the completion of a review of the Group’s pension arrangements, a consultation process
with active members was launched. The consultation process concluded during October 2021 and, with effect
from 31 October 2021, the Group closed both its existing schemes to future accrual: the Saga Pension
Scheme (its defined benefit plan) and the Saga Workplace Pension Plan (its defined contribution plan). In their
place, the Group launched a new defined contribution pension scheme arrangement, operated as a master
trust. This move served to reduce the risk of further deficits developing in the future on the defined benefit
scheme, while moving to a fairer scheme for all colleagues.
a) Defined contribution plans
There was one defined contribution scheme in the Group at 31 January 2024 (2023: three). The total charge
for the year in respect of the defined contribution schemes was £11.6m (2023: £9.9m). The assets of these
schemes are held separately from those of the Group in funds under the control of trustees.
b) Defined benefit plan
The Group operated a funded defined benefit scheme, the Saga Pension Scheme, which was closed to future
accrual on 31 October 2021. From 1 November 2021, members moved from active to deferred status, with
future indexation of deferred pensions before retirement measured by reference to the Consumer Price
Index. There will be no further service charges relating to the scheme and no future monthly employer
contributions for current service.
The fair value of the assets and present value of the obligations of the Saga defined benefit scheme are as
follows:
2024
2023
£m
£m
Fair value of scheme assets 204.5 224.1
Present value of defined benefit obligation (252.4) (236.2)
Defined benefit scheme liability
(47.9)
(12.1)
The present values of the defined benefit obligation have been measured using the projected unit credit
valuation method.
During the year ended 31 January 2024, the net liability position of the Saga scheme increased by £35.8m,
resulting in an overall scheme deficit of £47.9m. The movements observed in the scheme’s assets and
obligations have been impacted by macroeconomic factors during the year where, at a global level, there have
been continued inflation and cost of living pressures, as well as shifts in long-term market yields. The present
value of defined benefit obligations increased by £16.2m to £252.4m and the fair value of scheme assets
decreased by £19.6m to £204.5m. The net liability position moved adversely due to asset returns being
significantly lower than expected, as well as the impact of using updated data from the 2023 triennial actuarial
valuation, which is in progress.
Over 2023, asset performance was impacted by a repositioning of the growth part of the scheme’s portfolio
following the gilts crisis in 2022. Substantive changes to the overall asset allocation and in particular growth
assets were required to support the scheme’s interest rate and inflation hedging during, and in the months
following, the gilts crisis. The portfolio, therefore, became overweight to illiquid assets and underweight to
liquid growth assets, which impacted performance. Changes to the asset allocation occurred over 2023 as
capital was returned from the illiquid assets and repositioned into more liquid growth assets.
78
Notes to the consolidated financial statements (continued)
14 Retirement benefit schemes (continued)
Meanwhile, the use of updated data from the 2023 draft triennial actuarial valuation had the dual impact of
capturing experience up to 31 January 2023 not already quantified within previous disclosures and also
allowing for any difference in the roll-forward and assumption changes of the liability once allowing for the
updated underlying liability profile and cash flows. The primary component of the adverse experience
adjustment reflects a change in the shape of the yield curve assumption compared with the prior year, which in
a period of unprecedented market volatility between 30 September 2022 and 31 January 2023 in the wake of
the September 2022 mini-budget, has acted to increase the liabilities of the scheme.
These adverse movements have been partly offset by a reduction in the value placed on the liabilities as a
result of: changes in market conditions; future life expectancies; the level of commutation assumed and the
use of the latest commutation factors; and a £5.8m deficit funding contribution being paid by the Group in
February 2023. This related to a recovery plan agreed under the latest approved triennial valuation of the
scheme as at 31 January 2020.
79
Notes to the consolidated financial statements (continued)
15 Insurance contract liabilities and reinsurance assets
The Group has adopted IFRS 17 ‘Insurance Contracts’ for the first time in the year ended 31 January 2024,
with the date of initial application being 1 February 2023 and the transition date being 1 February 2022. The
comparatives for the year ended 31 January 2023 have been restated onto an IFRS 17 basis. For further
details of the restatement, please see Note 2.4.
a) Reconciliation of opening and closing balances
The following tables reconcile the opening and closing balances held in relation to insurance and reinsurance
contracts:
Liabilities for remaining
coverage
Liabilities for incurred
claims
Excluding
loss
component
Loss
component
Estimate
of the
present
value of
future
cash
flows
Risk
adjustment
Total
£m
£m
£m
£m
£m
As at 1 February 2023 (restated)
Insurance contract liabilities
(44.3)
(8.4)
(259.2)
(35.6)
(347.5)
Insurance revenue 177.6 –
– –
177.6
Incurred claims and related expenses – 17.4
(176.0) (9.7)
(168.3)
Changes to liabilities for incurred
claims – –
(20.9) 5.5
(15.4)
Insurance acquisition cash flows
expensed (26.0) –
– –
(26.0)
Losses on onerous contracts and
changes in such losses – (25.1)
– –
(25.1)
Other incurred insurance service
expenses – –
(14.4) –
(14.4)
Insurance service expenses (26.0) (7.7)
(211.3) (4.2)
(249.2)
Insurance finance expense
–
–
(3.1)
(0.4)
(3.5)
Total changes in the consolidated
income statement
151.6
(7.7)
(214.4)
(4.6)
(75.1)
Cash flows
Premiums received (189.9) – – – (189.9)
Insurance acquisition cash flows
incurred
26.0 – – – 26.0
Claims and other expenses paid – – 187.2 – 187.2
Total cash flows
(163.9)
–
187.2
–
23.3
As at 31 January 2024
Insurance contract liabilities
(56.6)
(16.1)
(286.4)
(40.2)
(399.3)
80
Notes to the consolidated financial statements (continued)
15 Insurance contract liabilities and reinsurance assets (continued)
a) Reconciliation of opening and closing balances (continued)
Assets for remaining coverage
Amounts recoverable on
incurred claims
Excluding
loss-
recovery
component
Loss-
recovery
component
Estimate
of the
present
value of
future
cash
flows
Risk
adjustment
Total
£m
£m
£m
£m
£m
As at 1 February 2023 (restated)
Reinsurance contract
(liabilities)/assets
(5.5)
2.7
87.6
27.4
112.2
Allocation of reinsurance premiums
(17.0)
–
–
–
(17.0)
Amounts recoverable for incurred
claims and other expenses – (3.7)
21.5 3.2
21.0
Changes to amounts recoverable for
incurred claims – –
32.0 2.8
34.8
Loss-recovery on onerous underlying
contracts and adjustments – 2.3
– –
2.3
Effect of changes in the risk of non-
performance of reinsurance contracts – –
(0.9) –
(0.9)
Net (expense)/income from
reinsurance contracts (17.0) (1.4)
52.6 6.0
40.2
Reinsurance finance income
–
–
1.6
0.3
1.9
Total changes in the consolidated
income statement
(17.0)
(1.4)
54.2
6.3
42.1
Cash flows
Premiums paid 19.4 –
– –
19.4
Amounts received – –
(0.5) –
(0.5)
Total cash flows
19.4
–
(0.5)
–
18.9
As at 31 January 2024
Reinsurance contract
(liabilities)/assets
(3.1)
1.3
141.3
33.7
173.2
81
Notes to the consolidated financial statements (continued)
15 Insurance contract liabilities and reinsurance assets (continued)
a) Reconciliation of opening and closing balances (continued)
Liabilities for remaining
coverage
Liabilities for incurred
claims
Excluding
loss
component
Loss
component
Estimate
of the
present
value of
future
cash
flows
Risk
adjustment
Total
£m
£m
£m
£m
£m
As at 1 February 2022 (restated)
Insurance contract liabilities
(54.9)
(1.9)
(267.6)
(35.2)
(359.6)
Insurance revenue 193.0 –
– –
193.0
Incurred claims and related expenses – 4.4
(182.7) (10.7)
(189.0)
Changes to liabilities for incurred
claims – –
19.0 9.3
28.3
Insurance acquisition cash flows
expensed (29.5) –
– –
(29.5)
Losses on onerous contracts and
changes in such losses – (10.9)
– –
(10.9)
Other incurred insurance service
expenses – –
(14.7) –
(14.7)
Insurance service expenses (29.5) (6.5)
(178.4) (1.4)
(215.8)
Insurance finance income
–
–
7.2
1.0
8.2
Total changes in the consolidated
income statement
163.5
(6.5)
(171.2)
(0.4)
(14.6)
Cash flows
Premiums received (182.4) – – – (182.4)
Insurance acquisition cash flows
incurred
29.5 – – – 29.5
Claims and other expenses paid – – 179.6 – 179.6
Total cash flows
(152.9)
–
179.6
–
26.7
As at 31 January 2023 (restated)
Insurance contract liabilities
(44.3)
(8.4)
(259.2)
(35.6)
(347.5)
82
Notes to the consolidated financial statements (continued)
15 Insurance contract liabilities and reinsurance assets (continued)
a) Reconciliation of opening and closing balances (continued)
Assets for remaining coverage
Amounts recoverable on
incurred claims
Excluding
loss-
recovery
component
Loss-
recovery
component
Estimate
of the
present
value of
future
cash
flows
Risk
adjustment
Total
£m
£m
£m
£m
£m
As at 1 February 2022 (restated)
Reinsurance contract liabilities (1.1) –
– –
(1.1)
Reinsurance contract assets (5.1) –
63.7 22.5
81.1
Net reinsurance contract
(liabilities)/assets
(6.2)
–
63.7
22.5
80.0
Allocation of reinsurance premiums
(14.8)
–
–
–
(14.8)
Amounts recoverable for incurred
claims and other expenses – (0.3)
29.2 3.9
32.8
Changes to amounts recoverable for
incurred claims – –
4.2 2.0
6.2
Loss-recovery on onerous underlying
contracts and adjustments – 3.0
– –
3.0
Effect of changes in the risk of non-
performance of reinsurance contracts – –
0.1 –
0.1
Net (expense)/income from
reinsurance contracts (14.8) 2.7
33.5 5.9
27.3
Reinsurance finance expense
–
–
(2.7)
(1.0)
(3.7)
Total changes in the consolidated
income statement
(14.8)
2.7
30.8
4.9
23.6
Cash flows
Premiums paid 15.5 –
– –
15.5
Amounts received – –
(6.9) –
(6.9)
Total cash flows
15.5
–
(6.9)
–
8.6
As at 31 January 2023 (restated)
Reinsurance contract
(liabilities)/assets
(5.5)
2.7
87.6
27.4
112.2
83
Notes to the consolidated financial statements (continued)
15 Insurance contract liabilities and reinsurance assets (continued)
b) Claims development tables
The following tables show the Group’s initial estimate of ultimate gross and net claims incurred in previous
financial years and the re-estimation at subsequent financial period ends. In producing these tables, the Group
has applied an IFRS 17 transition exemption to not disclose previously unpublished information about claims
development that occurred earlier than five years before the end of the annual reporting period in which it
first applied IFRS 17.
i) Gross claims development
Gross loss occurring in financial
2020
2021
2022
2023
2024
years ending:
£m
£m
£m
£m
£m
31 January 2019 and prior financial years
3,146.5 3,085.3 3,032.3 3,101.7 3,182.8
31 January 2020
203.7
196.9
181.5
174.1
167.5
31 January 2021
130.9
125.9
117.6
102.2
31 January 2022
146.8
221.6
279.1
31 January 2023
222.4
221.9
31 January 2024
259.2
Cumulative payments to date
(3,478.2)
Gross undiscounted liabilities – losses arising
from financial years 2020-2024
734.5
Claims handling expenses
6.8
Effect of discounting
(455.1)
Risk adjustment
40.4
Total gross liability for incurred claims
326.6
ii) Net claims development
Net loss occurring in financial
2020
2021
2022
2023
2024
years ending:
£m
£m
£m
£m
£m
31 January 2019 and prior financial years
2,965.6 2,943.5 2,916.6 2,935.7 2,956.2
31 January 2020
181.7
185.9
175.4
171.7
166.1
31 January 2021
121.9
114.9
116.8
101.1
31 January 2022
136.5
170.8
146.0
31 January 2023
171.3
149.5
31 January 2024
60.4
Cumulative net payments to date
(3,425.1)
Net undiscounted liabilities – losses arising from
financial years 2020-2024
154.2
Claims handling expenses
6.8
Net effect of discounting
(16.0)
Net risk adjustment
6.6
Total net liability for incurred claims
151.6
84
Notes to the consolidated financial statements (continued)
16 Loans and borrowings
2024
2023
£m
£m
Bond
400.0
400.0
Ship loans
407.0
469.2
Accrued interest and fees payable
4.8
5.5
811.8 874.7
Less: deferred issue costs (15.6) (20.1)
796.2
854.6
a) Bonds, RCF and loan facility with Roger De Haan
At 31 January 2024, the Group’s financing facilities consisted of a £150.0m seven-year senior unsecured bond
(repayable May 2024), a £250.0m five-year senior unsecured bond (repayable July 2026), a £50.0m five-year
RCF (expiring in May 2025) and an £85.0m loan facility with Roger De Haan (expiring April 2026). The RCF
and the loan facility with Roger De Haan were undrawn as at 31 January 2024.
i) Bonds
The bonds are listed on the Irish Stock Exchange (Euronext Dublin) and are guaranteed by Saga Services
Limited and Saga Mid Co Limited.
Interest on the 2024 corporate bond is incurred at an annual interest rate of 3.375%. Interest on the 2026
corporate bond is incurred at an annual interest rate of 5.5%.
ii) RCF
Interest payable on the Group’s RCF, if drawn down, is incurred at a variable rate of Sterling Overnight Index
Average (
SONIA) plus a bank margin that is linked to the Group’s leverage ratio.
During the year to 31 January 2023, the Group agreed amendments with its banks to simplify the RCF
arrangement to remove certain clauses that were introduced during the COVID-19 pandemic and reduce the
aggregate facility cost. The amendments to the RCF include:
• removal of the £40.0m minimum liquidity requirement;
• removal of the condition that the facility (if drawn) is repaid on 1 March 2024, if the existing 2024
bond has not been redeemed prior to this date; and
• reduction of the RCF commitment from £100.0m to £50.0m.
In addition, dividends remained restricted while leverage (excluding Cruise) is above 3.0x.
85
Notes to the consolidated financial statements (continued)
16 Loans and borrowings (continued)
a) Bonds, RCF and loan facility with Roger De Haan (continued)
ii) RCF (continued)
Also, during the year to 31 January 2023, the Group had further discussions with its lending banks behind the
RCF and agreed the following amendments to the facility:
• The introduction of a restriction whereby no utilisation of the facility is permitted prior to repayment
of the 2024 bond if leverage exceeds 5.5x, or liquidity is below £170.0m.
• During 2023 and 2024, should the RCF be drawn, leverage covenant testing will be quarterly.
• Repayment of the 2024 bond, ahead of maturity, is restricted while leverage remains above 3.75x.
• Amendments to the leverage and interest cover covenants attached to the facility, as follows:
Leverage (excl.
Ocean Cruise)
Interest cover
31 January 2023 4.75x 2.5x
30 April 2023 6.75x n/a
31 July 2023 6.75x 2.5x
31 October 2023 6.75x n/a
31 January 2024 5.5x 2.75x
30 April 2024 5.5x n/a
31 July 2024 5.5x 3.0x
31 October 2024 5.5x n/a
31 January 2025 4.75x 3.0x
During the year to 31 January 2024, the Group also announced that it had reached agreement with its banks
to amend the covenants on its RCF. The covenants within the Group’s RCF were amended as follows:
• Increase in the leverage ratio (excluding Cruise debt) covenant for 31 January 2024 from 5.5x to
6.25x.
Since 31 January 2024, the Group concluded further discussions with the lenders associated with the RCF to
increase the Group’s financial flexibility. As a result, the following amendments were agreed, in addition to
smaller, immaterial changes:
• Increase to the leverage ratio for all remaining testing periods to 6.25x.
• Quarterly covenant testing, irrespective of whether the loan is drawn.
• The introduction of a restriction whereby, post repayment of the 2024 bond, no utilisation of the
facility is permitted if free liquidity is below £40.0m.
• Consent requirement for any early repayment of corporate debt or payment of shareholder
dividends.
At 31 January 2024, the Group’s £50.0m RCF remained undrawn. Accrued interest and fees payable on the
Group’s bonds and undrawn RCF at 31 January 2024 are £1.8m (2023: £2.2m).
86
Notes to the consolidated financial statements (continued)
16 Loans and borrowings (continued)
a) Bonds, RCF and loan facility with Roger De Haan (continued)
iii) Loan facility with Roger De Haan
In April 2023, the Group entered into a forward starting loan facility agreement with Roger De Haan,
commencing on 1 January 2024, under which the Group could draw down up to £50.0m with 30 days’ notice
to support liquidity needs and specifically the repayment of £150.0m bonds maturing in May 2024. The facility
is provided on an arm’s-length basis and is guaranteed by Saga plc, Saga Mid Co Limited and Saga Services
Limited. Per the original terms of agreement, interest will accrue on the drawn total of the facility at the rate of
10% and is payable on the last day of the period of the loan; and the facility was originally due to mature on 30
June 2025, at which point any outstanding amounts, including interest, were due to be repaid. The facility is
subject to a 2% arrangement fee, payable on entering into the arrangement. A drawdown fee of 2% on any
amount drawn down under the facility is payable on the drawing date; and milestone fees of 2% on any
uncancelled amount of the facility become payable on 31 March 2024 and 31 December 2024 respectively.
In September 2023, the Group agreed an increase and extension to the existing loan facility with Roger De
Haan. This increase was for the value of £35.0m, taking the total facility to £85.0m, and extended to expire on
31 December 2025, previously 30 June 2025. The interest rate paid on funds on the drawn total under this
facility to finance the repayment of notes issued by Saga plc, or to provide cash collateral demanded by
providers of bonding facilities to the Group, remains at 10%, but increases to 18% for any amounts drawn to
support general corporate purposes. In addition, the previous arrangement and milestone fees of 2% remain
payable; however, the drawdown fee of 2% increases to 5% for drawdowns for general corporate purposes.
The amended facility has been provided on the basis of certain conditions being met; including:
• no professional advisers may be appointed to or retained by Saga plc without prior approval of the
Board; and
• no incremental financial indebtedness, over and above the facilities already in place, may be incurred
by Group companies.
Subsequent to the financial year end, a reduction of the notice period required for drawdown of the loan to 10
business days was agreed, in addition to a further extension to the termination date of the facility, from 31
December 2025 to 30 April 2026.
b) Ocean cruise ship loans
In June 2019, the Group drew down £245.0m of financing for its ocean cruise ship, Spirit of Discovery. The
financing represents a 12-year fixed-rate sterling loan, secured against the Spirit of Discovery cruise ship
asset, and backed by an export credit guarantee. The initial loan was repayable in 24 broadly equal
instalments, with the first payment of £10.2m paid in December 2019.
The Board announced on 22 June 2020 that it had secured a debt holiday and covenant waiver for the
Group’s ship facilities. The Group’s lenders agreed to a deferral of £32.1m in principal payments under the
ship facilities that were due up to 31 March 2021. These deferred amounts were to be paid between June 2021
and December 2024 for Spirit of Discovery and between September 2021 and March 2025 for Spirit of
Adventure, and interest remained payable.
On 29 September 2020, the Group drew down £280.8m of financing for its ocean cruise ship, Spirit of
Adventure. The financing, secured against the Spirit of Adventure cruise ship asset, represents a 12-year
fixed-rate sterling loan, backed by an export credit guarantee. The loan is repayable in 24 broadly equal
instalments, with the first payment originally due six months after delivery in March 2021, but initially deferred
to September 2021 as a result of the debt holiday described above.
87
Notes to the consolidated financial statements (continued)
16 Loans and borrowings (continued)
b) Ocean cruise ship loans (continued)
In March 2021, the Group reached agreement of a one-year extension to the debt deferral on its ocean cruise
ship facilities. As part of an industry-wide package of measures to support the cruise industry, an extension of
the existing debt deferral was agreed to 31 March 2022. The key terms of this deferral were:
• all principal payments to 31 March 2022 (£51.8m) deferred and repaid over five years;
• all financial covenants until 31 March 2022 waived; and
• dividends remain restricted while the deferred principal is outstanding.
During the year to 31 January 2024, the Group concluded discussions with its Cruise lenders in respect of the
covenant restrictions attaching to its two ship debt facilities. Lenders agreed to a waiver of the EBITDA to
debt repayment covenant ratio for the 31 July 2023 testing date. In addition, lenders agreed to amend the
covenants on the two ship debt facilities to reduce the EBITDA to debt repayment ratio from 1.2x to 1.0x for
the additional periods up to, and including, 31 January 2025.
Interest on the Spirit of Discovery ship loan is incurred at an effective annual interest rate of 4.31% (including
arrangement and commitment fees). Interest on the Spirit of Adventure ship loan is incurred at an effective
annual interest rate of 3.30% (including arrangement and commitment fees). Interest payable on the Group’s
ocean cruise ship debt deferrals is incurred at a variable rate of SONIA plus a bank margin.
Accrued interest payable on the Group’s ocean cruise ship loans at 31 January 2024 is £3.0m (2023: £3.3m).
c) Total debt and finance costs
At 31 January 2024, debt issue costs were £15.6m (2023: £20.1m). The movement in the year represents
expense amortisation for the year.
During the year, the Group charged £40.2m (2023: £41.0m) to the income statement in respect of fees and
interest associated with the bonds, RCF and ship loans. In addition, finance costs recognised in the income
statement include £1.9m (2023: £1.2m) relating to interest and finance charges on lease liabilities, £0.5m
(2023: £nil) relating to net finance expense on pension schemes, £0.4m (2023: £nil) in respect of
arrangement and milestone fees associated with the loan facility agreement with Roger De Haan, as disclosed
above, and net fair value losses on derivatives of £1.4m (2023: £nil). The Group has complied with the financial
covenants of its borrowing facilities during the current and prior year.
17 Called up share capital
Ordinary shares
Number
Nominal
value
£
Value
£m
Allotted, called up and fully paid
At 1 February 2022 140,337,271 0.15 21.1
At 31 January 2023
140,337,271 0.15 21.1
Issue of shares – 1 August 2023
1,458,551 0.15 0.2
At 31 January 2024
141,795,822 0.15 21.3
On 1 August 2023, Saga plc issued 1,458,551 new ordinary shares of 15p each, with a value of £0.2m, for
transfer into an employee benefit trust to satisfy employee incentive arrangements. The newly issued shares
rank pari passu with existing Saga shares.
88
Notes to the consolidated financial statements (continued)
18 Share-based payments
The Group has granted a number of different equity-based awards that it has determined to be share-based
payments. New awards granted during the year were as follows:
a) On 26 May 2023, nil cost options over 376,557 shares were issued under the DBP to Executive Directors,
reflecting their deferred bonus in respect of 2022/23, which vest and become exercisable on the third
anniversary of the grant date. Under the DBP, executives receive a maximum of two-thirds of the bonus
award in cash and a minimum of one-third in the form of rights to shares of the Company.
b) During the year, nil cost options over 2,269,377 shares were issued under the RSP to certain Directors
and other senior employees that vest and become exercisable on the third anniversary of the grant date,
subject to continuing employment.
c) On 8 August 2023, 595,791 shares were awarded to eligible employees on the ninth anniversary of the
initial public offering and allocated at nil cost; these shares become beneficially owned over a three-year
period from allocation, subject to continuing service.
The fair values of all awards granted during the year under the equity-settled and cash-settled share-based
remuneration schemes operated by the Group are assessed using market price and the Monte Carlo model.
The Group charged £3.4m (2023: £3.9m) during the year to the income statement in respect of equity-
settled share-based payment transactions. This has been charged to administrative and selling expenses.
19 Assets held for sale
At the end of the year ended 31 January 2021, the Group made the decision to initiate an active programme to
locate buyers for a number of its freehold properties. At the point of reclassification to held for sale, the
carrying values of £16.9m were considered to be equal to, or below, fair value less costs to sell, and hence no
revaluation at the point of reclassification was required.
At 31 January 2023, the Group obtained updated market valuations of its freehold properties held for sale, to
determine the fair value of each building. As a consequence of the remeasurement of the properties to the
lower of fair value less cost to sell and the carrying value, management concluded that net impairment charges
totalling £1.2m should be recognised against the Group’s property assets held for sale as at 31 January 2023.
At the end of the year ended 31 January 2023, the Group made the decision to initiate an active programme
to locate buyers for a further two of its freehold properties and one of its long leasehold properties. The
Group also reclassified, to held for sale, the related fixtures and fittings associated with one of these freehold
properties. At the point of reclassification to held for sale, the carrying values of £15.9m for the properties and
£3.6m for the related fixtures and fittings, totalling £19.5m, were considered to be equal to, or below, fair value
less costs to sell, and hence no revaluation at the point of reclassification was required. These properties are
being actively marketed and the disposals are expected to be completed within 12 months of the end of the
current financial year.
During the year, the Group declassified one of the properties held for sale at 31 January 2023 to property,
plant and equipment since it was no longer being actively marketed for disposal. The carrying value of this
property as at 31 January 2023 was £3.4m. Other than this one property, there have been no changes in
relation to the Group’s intention to sell any of the properties classified as held for sale at 31 January 2023 and
so the held for sale designation is considered to remain appropriate for the remaining properties as at 31
January 2024.
At 31 January 2024, the Group obtained updated market valuations of its freehold properties held for sale, to
determine the fair value of each building. As a consequence of the remeasurement of the properties to the
lower of fair value less cost to sell and the carrying value, management concluded that net impairment charges
totalling £10.4m should be recognised against the Group’s property assets held for sale as at 31 January
2024.
As at 31 January 2024, the carrying values of the properties classified as held for sale, totalling £17.4m, are
representative of either each property’s fair value or historic cost less accumulated depreciation and any
impairment charges to date, whichever is lower.
Other than the net impairment charges, no gains or losses
were recognised with respect to the properties during the year ended 31 January 2024.
89
Notes to the consolidated financial statements (continued)
20 Related party transactions
As set out in Note 16, in April 2023, the Company entered into a forward starting loan facility agreement with
Roger De Haan, commencing on 1 January 2024, under which the Company could draw down up to £50.0m
with 30 days’ notice to support liquidity needs and, specifically, the repayment of £150.0m bonds maturing in
May 2024. The facility is provided on an arm’s-length basis and is guaranteed by Saga plc, Saga Mid Co
Limited and Saga Services Limited. Per the original terms of agreement, interest will accrue on the facility at
the rate of 10% and is payable on the last day of the period of the loan; and the facility was originally due to
mature on 30 June 2025, at which point any outstanding amounts, including interest, were due to be repaid.
The facility is subject to a 2% arrangement fee, payable on entering into the arrangement. A drawdown fee of
2% on any amount drawn down under the facility is payable on the drawing date; and milestone fees of 2% on
any uncancelled amount of the facility become payable on 31 March 2024 and 31 December 2024 respectively.
In September 2023, the Group agreed an increase and extension to the existing loan facility with Roger De
Haan. This increase is for the value of £35.0m, taking the total facility to £85.0m, and extended to expire on 31
December 2025, previously 30 June 2025. The interest rate paid on funds drawn under this facility to finance
the repayment of notes issued by Saga plc, or to provide cash collateral demanded by providers of bonding
facilities to the Group, remains at 10%, but increases to 18% for any amounts drawn to support general
corporate purposes. In addition, the previous arrangement and milestone fees of 2% remain payable, however,
the drawdown fee of 2% increases to 5% for drawdowns for general corporate purposes. The amended facility
has been provided on the basis of certain conditions being met, including:
• no professional advisers may be appointed to or retained by Saga plc without prior approval of the
Board; and
• no incremental financial indebtedness, over and above the facilities already in place, may be incurred
by Group companies, including contracts classed as finance lease arrangements under previous IFRS.
Subsequent to the financial year end, a reduction of the notice period required for drawdown of the loan to 10
business days was agreed, in addition to a further extension to the termination date of the facility, from 31
December 2025 to 30 April 2026.
21 Events after the reporting period
Since 31 January 2024, the Group agreed a further extension to the termination date of the loan facility with
Roger De Haan, from 31 December 2025 to 30 April 2026, details of which are set out in Notes 16 and 20
above, in addition to a reduction in the notice period required for drawdown of the loan to 10 business days.
90
Alternative Performance Measures Glossary
The Group uses a number of Alternative Performance Measures (APMs), which are not required or commonly
reported under International Financial Reporting Standards, the Generally Accepted Accounting Principles
(
GAAP) under which the Group prepares its financial statements, but which are used by the Group to help the
user of the accounts better understand the financial performance and position of the business.
Definitions for the primary APMs used in this report are set out below. APMs are usually derived from financial
statement line items and are calculated using consistent accounting policies to those applied in the financial
statements, unless otherwise stated. APMs may not necessarily be defined in a consistent manner to similar APMs
used by the Group’s competitors. They should be considered as a supplement to, rather than a substitute for,
GAAP measures.
Underlying Revenue
Underlying Revenue represents revenue, net of ceded reinsurance premiums earned on business underwritten by
the Group, excluding the onerous contract provision, Insurance Underwriting profit commission and Ocean Cruise
insurance compensation and discretionary ticket refunds to customers, but including revenue associated with the
exit from some of our smaller, loss-making activities.
This measure is useful for presenting the Group’s underlying trading performance as it excludes non-cash
technical accounting adjustments and one-off financial impacts that are not expected to recur. It is reconciled to
statutory revenue within the Group Chief Financial Officer’s Review on page 23.
Underlying Profit/(Loss) Before Tax
Underlying Profit/(Loss) Before Tax represents the loss before tax excluding:
• unrealised fair value gains and losses on derivatives;
• the net loss on disposal of assets;
• discretionary Ocean Cruise customer ticket refunds and associated costs;
• impairment of the carrying value of assets, including Insurance goodwill;
• impact of changes in the discount rate on non-periodical payment order (PPO) liabilities
1
;
• fair value losses on debt securities;
• foreign exchange movements on river cruise ship leases;
• costs and amortisation of fees relating to the facility with Roger De Haan;
• movements in the insurance onerous contract provisions (net of reinsurance recoveries)
2
;
• costs in relation to the acquisition and disposal of the Big Window;
• the IFRS 16 lease accounting adjustment on river cruise vessels; and
• restructuring costs.
It is reconciled to statutory loss before tax within the Group Chief Financial Officer’s Review on page 11.
This measure is the Group’s key performance indicator and is useful for presenting the Group’s underlying trading
performance, as it excludes non-cash technical accounting adjustments and one-off financial impacts that are not
expected to recur.
Underlying Profit Before Tax (Under Previous IFRS)
Underlying Profit Before Tax (Under Previous IFRS) represents Underlying Profit Before Tax, as described above,
but under the previous IFRS 4 ‘Insurance Contracts’, as opposed to IFRS 17 ‘Insurance Contracts’. The measure is
consistent with the forecasts of external analysts that are collated into the company-compiled consensus and
allows stakeholders to make meaningful comparisons with historic reporting.
1
This adjustment reduces the risk of residual volatility from changes in market interest rates adversely affecting Underlying Profit Before Tax
2
The IFRS 17 onerous contract requirements create a timing mismatch between when claims are incurred and when they are recognised in
profit before tax. Underlying Profit Before Tax adjusts for this timing mismatch by reversing the impact of these requirements
91
Trading EBITDA/Adjusted Trading EBITDA
Trading EBITDA is defined as earnings before interest payable, tax, depreciation and amortisation, and excludes
the IAS 19R pension charge, exceptional costs and impairments. Adjusted Trading EBITDA also excludes the
impact of IFRS 16 ‘Leases’ and the Trading EBITDA relating to the two ocean cruise ships, Spirit of Discovery and
Spirit of Adventure, in line with the covenant on the Group’s Revolving Credit Facility (
RCF). It is reconciled to
Underlying Profit Before Tax within the Group Chief Financial Officer’s Review on page 23. Underlying Profit
Before Tax is reconciled to statutory loss before tax within the Group Chief Financial Officer’s Review on page 11.
This measure is linked to the covenant on the Group’s RCF, being the denominator in the Group’s leverage ratio
calculation.
Ocean Cruise Trading EBITDA (Excluding Overheads)
Ocean Cruise Trading EBITDA (Excluding Overheads) reflects the Trading EBITDA for the Ocean Cruise business,
adjusted to exclude the corresponding overheads for those operations. This measure is comparable with the
£40.0m per annum per ship target that was set at the time the ocean cruise ships were purchased and is
reconciled to Ocean Cruise Trading EBITDA on page 24 of the Group Chief Financial Officer’s Review.
Gross Written Premiums
Gross Written Premiums represent the total premium that the Group charges to customers for a core insurance
product, excluding insurance premium tax but before the deduction of any outward reinsurance premiums,
measured with reference to the cover start date of the policy. This measure is widely used by insurers so provides
a meaningful comparison of performance with our peers. It is analysed further within the Group Chief Financial
Officer’s Review on page 17.
Written Gross Profit After Marketing Expenses
Written Gross Profit After Marketing Expenses is calculated as written revenue, less cost of sales and marketing
expenses. This measure provides a meaningful view of the contribution of each Insurance Broking product, before
accounting for operating expenses, and is analysed further within the Group Chief Financial Officer’s Review on
page 17.
Underlying Basic Earnings/(Loss) Per Share
Underlying Basic Earnings Per Share represents basic loss per share excluding the post-tax effect of:
• unrealised fair value gains and losses on derivatives;
• the net loss on disposal of assets;
• discretionary Ocean Cruise customer ticket refunds and associated costs;
• impairment of the carrying value of assets, including Insurance goodwill;
• impact of changes in the discount rate on non-PPO liabilities
3
;
• fair value losses on debt securities;
• foreign exchange gains on river cruise ship leases;
• costs and amortisation of fees relating to the facility with Roger De Haan;
• movements in the insurance onerous contract provisions (net of reinsurance recoveries)
4
;
• costs in relation to the acquisition and disposal of the Big Window;
• the IFRS 16 lease accounting adjustment on river cruise vessels; and
• restructuring costs.
This measure is reconciled to the statutory basic loss per share in Note 6 to the accounts on page 67.
This measure is linked to the Group’s key performance indicator Underlying Profit Before Tax and represents
what management considers to be the underlying shareholder value generated in the year.
3
This adjustment reduces the risk of residual volatility from changes in market interest rates adversely affecting Underlying Profit Before Tax
4
The IFRS 17 onerous contract requirements create a timing mismatch between when claims are incurred and when they are recognised in
profit before tax. Underlying Profit Before Tax adjusts for this timing mismatch by reversing the impact of these requirements
92
Available Cash
Available Cash represents cash held by subsidiaries within the Group that is not subject to regulatory restrictions,
net of any overdrafts held by those subsidiaries. This measure is reconciled to the statutory measure of cash in
Note 13 to the accounts on page 76.
Available Operating Cash Flow
Available Operating Cash Flow is net cash flow from operating activities after capital expenditure but before tax,
interest paid, restructuring costs, proceeds from business and property disposals and other non-trading items,
which is available to be used by the Group as it chooses and is not subject to regulatory restriction. It is reconciled
to statutory net cash flow operating activities within the Group Chief Financial Officer’s Review on page 23.
Net Debt
Net Debt is the sum of the carrying values of the Group’s debt facilities less the amount of Available Cash it holds
and is analysed further within the Group Chief Financial Officer’s Review on page 27.
Adjusted Net Debt
Adjusted Net Debt is the sum of the carrying values of the Group’s debt facilities less the amount of Available Cash
it holds, but excludes the Ocean Cruise ship debt and Available Cash. It is linked to the covenant on the Group’s
RCF, being the numerator in the Group’s leverage ratio calculation, and is analysed further within the Group Chief
Financial Officer’s Review on page 27.
