Saga Plc 2024 Annual Report And Accounts

In this report

Strategic Report

1. Chairman's Statement
2. Group Chief Executive Officer's Strategic Review

1. Key performance indicators

1. Market review

1. Purpose and business model

1. Engaging with stakeholders

18 Group Chief Financial Officer's Review

37 Environmental, Social and Governance

44 Risk management

1. Principal risks and uncertainties

1. Viability Statement
2. Key disclosure statements

Governance

Corporate Governance Statement

1. Application of the UK Corporate Governance Code and
   key statements
2. Chairman's introduction to governance

1. Board of Directors

1. Board activities

1. Board leadership and Company purpose
2. Division of responsibilities
3. Composition, succession and evaluation
4. Nomination Committee Report

1. Audit Committee Report

1. Risk Committee Report

Directors' Remuneration Report

74 Annual Statement

77 Annual Report on Remuneration

92 Directors' Report

1. Statements of responsibilities
2. Independent Auditor's Report to the Members of Saga plc

Financial statements

Consolidated financial statements

1. Consolidated income statement
2. Consolidated statement of comprehensive income
3. Consolidated statement of financial position
4. Consolidated statement of changes in equity
5. Consolidated statement of cash flows
6. Notes to the consolidated financial statements

Company financial statements of Saga plc

1. Balance sheet
2. Statement of changes in equity
3. Notes to the Company financial statements

Additional information

187 Alternative Performance Measures Glossary

189 Glossary

193 Shareholder information

Cruise

Our Cruise business offers a wide range of luxury experiences on board:

our two boutique ocean cruise ships, Spirit of Discovery and Spirit of Adventure; and our fleet of smaller river cruise ships, exploring Europe's waterways.

Find out more in our Group Chief Financial Officer's Review on pages 22-23

Travel

Our award-winning Travel business takes customers all over the world, offering:

hotel holidays;

escorted tours; and tailor-made travel.

Find out more in our Group Chief Financial Officer's Review on pages 22-23

Insurance

Our Insurance business, focused on providing our customers with peace of mind, comprises:

Insurance Broking, offering a range of products primarily focused on motor, home, travel and private medical insurance; and Insurance Underwriting, representing our in-house underwriter, Acromas Insurance Company Limited (AICL).

Find out more in our Group Chief Financial Officer's Review on pages 24-26

Money

Our Money business offers a range of financial products, including:

savings accounts;

equity release;

legal services, including wills, probate and lasting powers of attorney;

mortgages; and investments.

Find out more in our Group Chief Financial Officer's Review on page 27

Publishing

Our Publishing business delivers insightful and engaging content to customers through:

our award-winning Saga Magazine; and our regular digital newsletters.

Find out more in our Group Chief Financial Officer's Review on page 27

DELIVERING SIGNIFICANT GROWTH

Our focus on delivering exceptional experiences for our customers every day, alongside greater optimisation of our businesses, has resulted in strong cash generation, significant revenue growth and underlying profitability of more than double that in the prior year. Looking ahead, we remain committed to continuing to reduce our level of debt as we position Saga for long-term sustainable growth.

Strategic Report

Governance

Financial statements

Additional information

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 areeven strongerthanatthecorrespondingpoint last year.

Our River Cruise and Travel businesses also performed well and the growth in passenger numbers helped both businesses retuto 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-yearfixed-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 independentNon-ExecutiveDirector(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-ExecutiveChairman 16 April 2024

How we are different

Saga focuses on people over 50, the fastest-growing, most affluent and influential segment in the UK. Our deep customer insight gives us a unique view into our customers' lives. We exist to deliver exceptional experiences every day to serve the needs of older people.

The model works

We offer differentiated products which are underpinned by a trusted brand and exceptional customer service. Our business model is cash generative, providing the flexibility to balance investment in our brand and businesses with debt reduction and delivery of long-term returns to shareholders.

Confidence in future delivery

We have a clear and compelling strategy, focused on returning the business to growth through maximising our core businesses; reducing debt through capital-light growth; and growing our customer base, while deepening our customer relationships.

It is this focus that will position Saga as the largest and most-trusted brand for older people in the UK.

Group Chief Executive Officer's Strategic Review

Positioning Saga for growth

"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."

Mike Hazell

Group Chief Executive Officer

Strategic Report

Governance

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 Revenue1 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 Tax1 of £38.2m, more than double the £15.5m2 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 retuto profit

Financial statements

Financial performance

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-offbelow-the-line items, we report a loss before tax of £129.0m, which compares with a loss of £272.7m2 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 Debt1 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 Cash1 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.

Additional information

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

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.

2 Reducing debt through capital-light growth

We plan to deliver capital-light growth across our businesses by leveraging strategic partnerships and reducing debt.

3 Growing our customer base and deepening our customer relationships

We aim to not only grow the number of customers we serve, but also enhance the frequency and quality of our interactions with them.

1 Maximising our core businesses Cruise

Objective

Build Ocean Cruise into an exceptional experience every day, while optimising our returns, and build a River Cruise proposition that mirrors Ocean.

Progress in 2023/24

For the year ended 31 January 2024, our Ocean Cruise business delivered an Underlying Profit Before Tax4 of £35.5m,

1. £36.2m improvement when compared with the Underlying Loss Before Tax4 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)4 per ship, delivering £45.0m per ship.

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-termreturnsforshareholders.

Travel

Objective

Create a market-leading, more digital travel business, from a low-cost operating platform, to accelerate growth and modernise the business.

Progress in 2023/24

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 Tax5 of £1.5m, an improvement of £5.6m when compared with the Underlying Loss Before Tax5 of £4.1m in the prior year, reflecting strong passenger growth of 22%, having taken more than 57k customers on holiday.

Innovationcontinuestobeakeydifferentiator 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.

Challenges

Geopolitical factors requiring amendments to itineraries or destinations.

Potential for cost of living increases to reduce levels of discretionary spending from our customer group.

Changes to itineraries, financial and regulatory impacts associated with climate change.

Travel Underlying

Profit/(Loss) Before Tax5

£1.5m

2022/23 - (£4.1m)

Insurance

Objective

Create a long-term sustainable insurance proposition, built on growing customer numbers and deeper relationships, offering a differentiated suite of products and services, designed with our customer in mind.

Progress in 2023/24

Reflecting the continued impact of the market-wide inflationary headwinds and declining policy volumes, Insurance Broking reported Underlying Profit Before Tax5 of £39.8m on an earned basis, a decline of £31.7m when compared with £71.5m6 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.

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 £696 in the year before, mostly driven by our three-yearfixed-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-lightmodels,weareexploringoptions 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 Tax5, after expected recoveries from reinsurance arrangements, of £1.4m, a decline of £12.1m when compared with an Underlying Profit Before Tax5 of £10.7m6 in the prior year.

Strategic Report

Governance

Financial statements

Additional information

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%7

in the prior year. We expect this to mean that the Insurance Underwriting business returns to profit in the coming year.

Challenges

Potential for cost of living increases to drive customers to opt for lower levels of cover and shop around for their insurance.

Inflationary increases on the cost of settling insurance claims causing pressure on earnings.

Implementation of, and management of customer impacts arising from, regulatory changes.

Insurance Underlying

Profit Before Tax8

£38.4m

2022/23 - £82.2m7

Money

Objective

Attract new customers, accelerate growth within existing equity release and savings products and add new products to deepen our customer relationships.

Progress in 2023/24

Saga Money reported an Underlying Profit Before Tax8 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.

Challenges

 Risk of interest rate fluctuations causing market uncertainty and lower demand for our products.

 Regulatory restrictions applicable to our third-party partners, limiting the number and value of products that we are able to sell.

Money Underlying

Profit Before Tax8

£1.1m

2022/23 - £2.3m

Objective

Deliver capital-light growth across our businesses by leveraging strategic partnerships, while reducing debt.

Progress in 2023/24

In 2023/24, we continued to make good progress in reducing our debt, with Net Debt8 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.

Challenges

Balancing the level of investment required to scale our operations with maximising cash generation and accelerating debt reduction.

Net Debt8

£637.2m

2022/23 - £711.7m

3 Growing our customer base and deepening our customer relationships

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

Strategic

Objective

Growthenumberofcustomersweserve, while enhancing the frequency and quality of our interactions with them.

Progress in 2023/24

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.

Challenges

The impact of regulatory changes on the number of customers we are able to communicate with.

The pace of change in relation to the wants and needs of our customers.

Converting our exceptional levels of consideration for the Saga brand into customers who believe that Saga is for them.

Contactable customers on our database

7.2m

2022/23 - 6.8m

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

Watch our Group Chief Executive Officer, Mike Hazell, presenting our full year results

Report

Governance

Financial statements

Additional information

Underlying Profit/(Loss) Before Tax1,2

£38.2m

Loss before tax2

(£129.0m)

Purpose and definition

Underlying Profit/(Loss) Before Tax1,2 is the Group's primary KPI and a meaningful representation of underlying trading performance. It is defined as loss before tax excluding items which are not expected to recur. Refer to page 187 for full definition and explanation.

Purpose and definition

Loss before tax as presented in accordance with UK-adopted international accounting standards.

1

Performance

Increase of £22.7m when compared with 2022/233, reflecting a retuto pre-pandemic operating within Cruise and Travel and a reduced central cost base. These were, however, partially offset by a lower Insurance result, reflecting continued difficult market conditions.

1

Performance

Loss before tax of £129.0m, a significant improvement when compared with the £272.7m3 in the prior year, benefiting from a reduced impairment of Insurance goodwill and continued growth in the Cruise and Travel businesses.

Available Operating Cash Flow1

£143.8m

Net Debt1

Purpose and definition

Available Operating Cash Flow1 represents net cash flow from operating activities which is not subject to regulatory restriction, after capital expenditure but before tax, interest paid, restructuring costs, business acquisitions and other non-trading items. Refer to page 188

for full definition and explanation.

2

Performance

Available Operating Cash Flow1 improved by £88.9m due to significantly higher cash generation from the Cruise and Travel businesses and reduced central costs, which are only partly offset by lower Insurance Broking EBITDA and Underwriting dividends, alongside increased capital expenditure.

2

£637.2m

Key

1 Maximising our core businesses4

Purpose and definition

Net Debt1 represents the sum of the carrying value of the Group's debt facilities, less the amount of Available Cash1 it holds. Refer to page 33 of the Chief Financial Officer's Review for a full breakdown.

Performance

Net Debt1 reduced by £74.5m when compared with 31 January 2023, with increased Available Cash Flow1 generation supporting continued repayment of our two ocean cruise ship facilities. Refer to page 28 of the Group Chief Financial Officer's Review for full details.