SAGA PLC
Annual Report
and Accounts 2024
Strategic Report
4
Chairman’s Statement
5
Group Chief Executive Officer’s
Strategic Review
10
Key performance indicators
12
Market review
14
Purpose and business model
16
Engaging with stakeholders
18
Group Chief Financial
Officer’s Review
37
Environmental, Social and
Governance
44
Risk management
46
Principal risks and uncertainties
50
Viability Statement
51
Key disclosure statements
Governance
Corporate Governance Statement
53
Application of the UK Corporate
Governance Code and
key statements
54
Chairman’s introduction
to governance
56
Board of Directors
58
Board activities
61
Board leadership and
Company purpose
62
Division of responsibilities
63
Composition, succession
and evaluation
64
Nomination Committee Report
67
Audit Committee Report
71
Risk Committee Report
Directors’ Remuneration Report
74
Annual Statement
77
Annual Report on Remuneration
92
Directors’ Report
95
Statements of responsibilities
96
Independent Auditor’s Report
to the Members of Saga plc
Financial statements
Consolidated financial statements
105
Consolidated income statement
106
Consolidated statement of
comprehensive income
107
Consolidated statement of
financial position
108
Consolidated statement of
changes in equity
109
Consolidated statement of
cash flows
110
Notes to the consolidated
financial statements
Company financial statements of Saga plc
181
Balance sheet
182
Statement of changes in equity
183
Notes to the Company
financial statements
Additional information
187
Alternative Performance
Measures Glossary
189
Glossary
193
Shareholder information
In this report
What we offer our customers
1
1
These are our businesses which are focused on the specific needs and wishes of our unique customer group. In our segmental financial reporting, Cruise and Travel
are presented as one, while Money and Publishing form part of Other Businesses
Saga’s purpose is to deliver exceptional experiences every day to
serve the needs of older people.
We strive to constantly develop our understanding of our customers, allowing us to provide them with
the products and services they want, alongside the exceptional service they deserve.
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.
Cruise
Find out more in our
Group Chief Financial
Officer’s Review on
pages 22-23
Our award-winning
Travel business takes
customers all over the
world, offering:
hotel holidays;
escorted tours; and
tailor-made travel.
Travel
Find out more in our
Group Chief Financial
Officer’s Review on
pages 22-23
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
).
Insurance
Find out more in our
Group Chief Financial
Officer’s Review on
pages 24-26
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.
Money
Find out more in our
Group Chief Financial
Officer’s Review on
page 27
Our Publishing business
delivers insightful and
engaging content to
customers through:
our award-winning
Saga Magazine; and
our regular digital
newsletters.
Publishing
Find out more in our
Group Chief Financial
Officer’s Review on
page 27
1
Alternative Performance Measures
In addition to statutory measures, the Group also measures performance using Alternative Performance Measures. These are reconciled to statutory measures
of performance on pages 30-31 of the Group Chief Financial Officer’s Review and defined in full on pages 187-188
2
The prior year has been restated to reflect the adoption of International Financial Reporting Standard (
IFRS
) 17 ‘Insurance Contracts’
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.
Underlying Revenue
1
£
732.7
m
2022/23 – £648.9m
2
Underlying Profit Before Tax
1
£
38.2
m
2022/23 – £15.5m
2
Loss before tax
(£
129.0
m)
2022/23 – (£272.7m
2
)
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
3
“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
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
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 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.
An exciting future ahead
Our investment case is designed to create value for shareholders through the delivery of sustainable long-term,
capital-light growth, alongside continued debt reduction.
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.
Reasons to invest in Saga
Strategic Report
Saga plc
Annual Report and Accounts 2024
4
Chairman’s Statement
“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
Positioning Saga for growth
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.
2023/24
2022/23
(restated
2
)
Underlying Revenue
1
£732.7m
£648.9m
Revenue
£741.1m
£663.7m
Trading EBITDA
1
£116.5m
£92.5m
Underlying Profit Before Tax
1,3
£38.2m
£15.5m
Underlying Profit Before Tax (Under Previous IFRS)
1
£45.3m
£21.5m
Loss before tax
3
(£129.0m)
(£272.7m)
Available Operating Cash Flow
1,3
£143.8m
£54.9m
Net Debt
1,3
£637.2m
£711.7m
Leverage ratio
5.4x
7.5x
Financial performance
1
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
2
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
3
Refer to the key performance indicators on pages 10-11 for definition and explanation
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.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
5
Group Chief Executive Officer’s Strategic Review
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 Tax
4
of £35.5m,
a £36.2m improvement when compared
with the Underlying Loss Before Tax
4
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-term returns for shareholders.
Group Chief Executive Officer’s Strategic Review
continued
Maximising our core businesses
1
In line with previous guidance, our River
Cruise business returned to profit,
reporting an Underlying Profit Before Tax
4
of £3.0m for the year, an improvement of
£8.1m when compared with the Underlying
Loss Before Tax
4
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.
Challenges
Geopolitical factors requiring
amendments to itineraries
or destinations.
Financial, regulatory and physical
impacts associated with
climate change.
Restricted capacity, derived from
capital-intensive two-ship model,
limiting scalability.
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:
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.
We plan to deliver capital-light growth
across our businesses by leveraging
strategic partnerships and reducing debt.
Maximising our
core businesses
Reducing debt through
capital-light growth
We aim to not only grow the number of
customers we serve, but also enhance the
frequency and quality of our interactions
with them.
Growing our customer
base and deepening our
customer relationships
1
2
3
4
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Cruise Underlying
Profit/(Loss) Before Tax
4
£
38.5
m
2022/23 – (£5.8m)
“Bookings for 2024/25
are significantly ahead
of the prior year.”
Strategic Report
Saga plc
Annual Report and Accounts 2024
6
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 Tax
5
of £39.8m on an earned basis,
a decline of £31.7m when compared with
£71.5m
6
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.
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 Tax
5
of £1.5m, an improvement of £5.6m when
compared with the Underlying Loss Before
Tax
5
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.
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 Tax
5
£
1.5
m
2022/23 – (£4.1m)
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
6
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
5
,
after expected recoveries from reinsurance
arrangements, of £1.4m, a decline of £12.1m
when compared with an Underlying Profit
Before Tax
5
of £10.7m
6
in the prior year.
5
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
6
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
7
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 Debt
8
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.
Reducing debt through capital-light growth
2
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 Debt
8
£
637.2
m
2022/23 – £711.7m
Money Underlying
Profit Before Tax
8
£
1.1
m
2022/23 – £2.3m
Group Chief Executive Officer’s Strategic Review
continued
7
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
8
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
1
Maximising our core businesses
continued
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 Tax
8
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.
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.
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.
Insurance Underlying
Profit Before Tax
8
£
38.4
m
2022/23 – £82.2m
7
Strategic Report
Saga plc
Annual Report and Accounts 2024
8
Objective
Grow the number of customers we serve,
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.
Growing our customer base and deepening our
customer relationships
3
Contactable customers
on our database
7.2
m
2022/23 – 6.8m
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
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.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
9
Financial KPIs
Purpose and definition
Underlying Profit/(Loss) Before Tax
1,2
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.
Performance
Increase of £22.7m when compared
with 2022/23
3
, reflecting a return to
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.
£38.2m
£15.5m
(£6.7m)
£17.1m
£109.9m
2023/24
2022/23
3
2021/22
2020/21
2019/20
£637.2m
£711.7m
£729.0m
£760.2m
£593.9m
2023/24
2022/23
2021/22
2020/21
2019/20
£
38.2
m
Purpose and definition
Net Debt
1
represents the sum of the
carrying value of the Group’s debt facilities,
less the amount of Available Cash
1
it holds.
Refer to page 33 of the Chief Financial
Officer’s Review for a full breakdown.
Performance
Net Debt
1
reduced by £74.5m when
compared with 31 January 2023, with
increased Available Cash Flow
1
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.
Net Debt
1
£
637.2
m
Key performance indicators
During the financial year, the following key performance indicators (
KPIs
) were used to assess the financial and operational performance
of the Group against our three-step strategic growth plan.
Key
1
Maximising our core businesses
4
2
Reducing debt through capital-light growth
4
3
Growing our customer base and deepening our customer relationships
4
2023/24 Bonus KPIs
Underlying Profit/(Loss) Before Tax
1,2
1
(£129.0m)
(£272.7m)
(£23.5m)
(£61.2m)
(£300.9m)
2023/24
2022/23
3
2021/22
2020/21
2019/20
Purpose and definition
Loss before tax as presented in accordance
with UK-adopted international accounting
standards.
Performance
Loss before tax of £129.0m, a significant
improvement when compared with the
£272.7m
3
in the prior year, benefiting
from a reduced impairment of Insurance
goodwill and continued growth in the
Cruise and Travel businesses.
Loss before tax
2
(£
129.0
m)
1
2
Continued progress
£143.8m
£54.9m
£75.8m
£3.4m
£92.7m
2023/24
2022/23
2021/22
2020/21
2019/20
Purpose and definition
Available Operating Cash Flow
1
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.
Performance
Available Operating Cash Flow
1
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.
Available Operating Cash Flow
1
£
143.8
m
2
Strategic Report
Saga plc
Annual Report and Accounts 2024
10
1
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
2
Underlying Profit/(Loss) Before Tax and loss before tax for 2023/24 and 2022/23 are reported under IFRS 17 and are, therefore, not directly comparable to
preceding years, which were reported under IFRS 4
3
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
4
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
Non-financial KPIs
Purpose and definition
Policies in force refers to the number
of core insurance policies, across all
products, in force at any given financial
year end.
Performance
At 31 January 2024, the number of
policies in force was 0.2m lower than at
the same point in the prior year, reflecting
a reduction across motor, home and
other insurance broking, as a result of
our approach to pricing in the context
of highly competitive market conditions.
Purpose and definition
Load factor is the most sensitive driver of
Cruise profit before tax and represents
the booked proportion of the total capacity
across our two ocean ships. It is calculated
by dividing the number of berths booked
by the total berths available.
Performance
For 2023/24, the Ocean Cruise load
factor increased significantly, to 88%,
13ppts ahead of the prior year, reflecting
increased customer demand and a return
to pre-pandemic operating conditions.
Policies in force
5
Ocean Cruise load factor
6
1.5
m
88
%
Purpose and definition
Travel passengers represents the number
of customers who have travelled on either
a Saga or Titan holiday during a given year.
Performance
In 2023/24, the number of passengers
who travelled with us increased by 22%
when compared with the prior year,
reflecting continued recovery following
the COVID-19 pandemic.
Purpose and definition
Customer tNPS represents the willingness
of customers to recommend Saga products
and services to family, friends and colleagues
following a recent transaction. The score
is calculated by analysing customer
survey responses, then subtracting the
percentage of detractors (those scoring
six or less) from the percentage of
advocates (those scoring nine or more).
Performance
Customer tNPS was 59, a two point
reduction when compared with the
prior year, reflecting increases across
Cruise and Money, offset by market-wide
increases to Insurance pricing, alongside
some resultant call centre pressure.
Travel passengers
5,7
Customer transactional net promoter score (
tNPS
)
5,8
57.8
k
59
Purpose and definition
Colleague engagement provides an
indication of how committed and
enthusiastic colleagues are towards
Saga and their work. It is measured
through responses to colleague surveys
hosted by an independent third party.
Performance
Colleague engagement reduced
compared with the previous year,
reflecting significant change as we moved
towards a leaner central operating model.
Purpose and definition
This represents the number of times we
ask for customer consent through our
contact centres. If granted, this allows
Saga to contact customers about a range
of products and services across our
businesses. The data is captured by
business unit and then calculated using
a weighted average.
Performance
The customer consent attempt rate for
the Group significantly improved year on
year, reflecting increases in Insurance and
Cruise, as a result of enhanced system
configuration and colleague awareness.
Colleague engagement
9
Customer consent attempts
5,10
6.6
out of 10
89
%
1
1
1
1
1
3
3
3
3
5
The KPIs presented have been updated to align with those used to determine executive remuneration and the most sensitive drivers of profit in our significant
businesses. As a result, motor and home insurance customer retention, Ocean Cruise per diem, customer net promoter score and marketable database have been
removed and policies in force, Travel passengers, customer tNPS and customer consent attempts have been added
6
No comparative data prior to 2021/22 has been provided for Ocean Cruise, as operations were suspended for much of 2020/21, with the offering prior to that not
comparable with our two current ships
7
As River Cruise was, historically, reported within Travel, no comparable data is available prior to 2021/22
8
The Group began monitoring tNPS in 2020/21 and, therefore, no previous comparable data is available
9
During 2020/21, Saga appointed a new third-party survey provider. As such, the data prior to February 2021 is not comparable and, therefore, not presented
10
The tracking of customer consent attempts began in April 2021 and, as such, no comparable data is available prior to this
1.5m
1.7m
1.7m
1.7m
1.8m
31 Jan 24
31 Jan 23
31 Jan 22
31 Jan 21
31 Jan 20
88%
75%
68%
2023/24
2022/23
2021/22
6.6
8.0
7.7
Jan 24
Nov 22
Nov 21
89%
78%
25%
2023/24
2022/23
2021/22
57.8k
47.2k
8.4k
2023/24
2022/23
2021/22
59
61
67
67
2023/24
2022/23
2021/22
2020/21
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
11
Saga operates in highly
attractive markets, serving the
fastest-growing demographic
with significant opportunity
for growth.
Saga provides people over 50 with a
range of products and services, tailored
specifically to meet their needs,
accompanied by exceptional experiences.
This unique group is the fastest-growing
and most affluent
2
segment of the
UK population.
We understand that the ageing process
changes peoples’ views, needs and
priorities, and it’s for this reason that we
strive to continually adapt to these changes.
Through our unique insight, extensive
database and growing capabilities, we
provide our customers with compelling and
relevant products and services that offer
great value, support and peace of mind.
We continue to face a high level of
competition in the commoditised markets
we operate in, however, we use our unique
understanding to offer our customers
exceptional experiences.
Cruise
We provide our customers with truly
all-inclusive cruises, on board our
luxury ships.
Marketplace and position
While we have a significant number of
competitors in both Ocean and River
Cruise, we are the only operator to cater
exclusively for people over 50, designing
itineraries and experiences around this
under-served group.
Key competitors
Fred Olsen, Cunard, P&O Cruises, Riviera
and Viking
Travel
We offer hotel holidays, escorted tours
and tailor-made travel, underpinned by
our unique insight into our customers,
which allows us to continually expand the
range of destinations on offer.
Marketplace and position
In a highly competitive and commoditised
market, we are one of the market-leading
tour operators for people over 50 in the UK.
Key competitors
On the Beach, TUI, Trailfinders and Riviera
Insurance
We provide customers with reassurance
and peace of mind through a series of
motor, home, travel and private medical
insurance products.
Marketplace and position
The insurance market, while cyclical in
nature, continues to be extremely
competitive, demonstrated by the recent
consolidation of some of our peers. We,
however, are well-placed and continue
to be the sole provider of insurance
exclusively for people over 50 in the UK.
Key competitors
Admiral, Direct Line, Hastings, Ageas,
LV and Aviva
Money
We offer customers support through
alternative financial solutions in the form
of savings products, equity release, legal
services and mortgages.
Marketplace and position
We are the only provider of financial
products and services designed for people
over 50 in the UK. Over the past 12 months,
we have further strengthened our market
position through expansion of the range
of products on offer.
Key competitors
Post Office and John Lewis Finance
Publishing
We deliver engaging content to our unique
audience, creating regular and insightful
interaction with this group.
Marketplace and position
Saga Magazine is one of the UK’s most
loved and respected monthly lifestyle
magazines, generating regular coverage
in the print and digital press.
Competitors
Good Housekeeping and The Oldie
Our customers
Our businesses
3
There were an estimated
26.2
m
individuals in the UK aged
over 50 during 2023
1
…and this is the only age group
expected to grow over the
next 10 years
1
(2.0)
(1.0)
–
1.0
2.0
2023 2025 2027 2029
2031 2033
Predicted population
growth
by age (m)
0-29-year-olds
30-49-year-olds
50+ year-olds
1.9
m
additional 50+ year-olds by 2033
1
1
Office for National Statistics – 2021-based interim national population projections
2
Office for National Statistics – Wealth and assets survey
3
These are our businesses which are focused on the specific needs and wishes of our unique customer group. In our segmental financial reporting, Cruise and Travel
are presented as one, while Money and Publishing form part of Other Businesses
Strategic Report
Saga plc
Annual Report and Accounts 2024
12
Market review
Opportunity
for growth in an
under-served
market
Background
The Ocean Cruise business is regulated by
the International Maritime Organization
and the Maritime and Coastguard Agency,
and is a member of the Cruise Lines
International Association, the UK Chamber
of Shipping and the Association of British
Travel Agents (
ABTA
). The River Cruise
and Travel businesses are regulated by
the Civil Aviation Authority and are a
member of ABTA as well as Accredited
Agents of the International Air Transport
Association. Our Insurance Broking and
Money businesses are regulated by the
Financial Conduct Authority (
FCA
), with
the Insurance Broking business also
regulated by the Jersey Financial Services
Commission (
JFSC
). The Insurance
Underwriting business is regulated by
the FCA, the Gibraltar Financial Services
Commission, and the JFSC, and operates
under the Solvency II Directive.
Saga also operates processes and
procedures to comply with other
regulations and legislation that apply to
its business including, but not limited to,
the Data Protection Act 2018, the
Bribery Act 2010, the Equality Act 2010
and health and safety legislation.
Developments during
the year
From January 2024, the European Union
(
EU
) Emissions Trading System (
ETS
)
applied to our Ocean Cruise ships on
certain voyages, which require the
purchase, and use, of EU ETS emission
allowances for each tonne of reported
carbon dioxide, or equivalent, emissions
in the scope of the system. This has been
accounted for within our financial planning
and forecasts.
The FCA’s Consumer Duty which sets
higher and clearer standards of consumer
protection across financial services
firms, came into effect on 31 July 2023.
It introduced a new Consumer Principle
which requires firms to deliver good
outcomes for customers and is
underpinned by more detailed rules.
At Saga, we remain focused on providing
our customers with exceptional
experiences every day and Consumer
Duty serves as a good companion to
our values.
In July 2023, the FCA also issued a
guidance paper on supporting customers
in financial difficulty. At Saga, we have been
mindful of the financial challenges many
individuals have faced over the past
18 months as the cost of living increases
have placed strain on some households.
As a result, we have increased the level of
support we offer to those affected and have
also sought to encourage our customers
to contact us should they need help.
Regulatory expectations concerning
operational resilience continue to develop
and Saga is committed to ensuring its
capability keeps pace with these changes.
Persistent claims inflation
The cost of settling insurance claims
across the industry has continued to
increase, driven by multiple factors such
as the costs of labour and energy, and
evolving technology. At Saga, we continue
to focus on balancing the need to provide
customers with fair value products,
particularly given increases in the cost of
living, while adapting to market conditions.
Price increases have been applied in
response to inflated claims experience and
will continue to reflect changes in the cost
of claims. There is, however, a risk that
increases in insurance premiums and the
broader cost of living challenges drive
consumers to opt for lower levels of cover.
Geopolitical considerations
While Saga has not been significantly
exposed to either the war in Ukraine or
the Israel-Gaza war, these, alongside the
UK exit from the EU, have contributed
to delays in processing motor insurance
claims due to the availability of parts.
Our Insurance businesses have been
able to mitigate this, to some extent, by
making improvements in the supply chain
and implementing efficiencies to improve
the customer journey.
The Cruise and Travel businesses continue
to monitor travel advice from the Foreign,
Commonwealth & Development Office
and, in line with its guidance, cruises and
tours to Israel are not taking place.
Recruitment and retention
The labour market was tight in 2023, with
some easing towards the end of the year,
however, this has not materially impacted
Saga’s ability to attract and retain
colleagues. While there has been a shift in
sentiment within financial services around
homeworking, with most firms increasing
the presence in offices, Saga continues
to offer radically flexible working
arrangements including remote and
hybrid, enabling recruitment from a
wider geographical area.
Regulatory and legislative developments
Macroeconomic conditions
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
13
Each of our businesses operate autonomously,
while leveraging our core strengths across the
Group to build deeper, long-lasting relationships
with our customers.
Our strengths
Our businesses
1
What we do
We provide our customers with ocean and river cruises to a wide
range of destinations on board our fleet of boutique, luxury ships.
How we add value
We offer customers a truly all-inclusive cruising experience
which includes fine dining and drinks, gratuities, a chauffeur
service, private balconies with all cabins and selected
shore excursions.
Customers sail with additional peace of mind through our
included travel insurance, our price promise guarantee and
our ‘Love it first time’ guarantee for newcomers.
Cruise
Our colleagues and culture
Our colleagues are the key to delivering exceptional
experiences every day for our customers. We aim to build
a culture that celebrates individualism, encouraging our
colleagues to be their authentic selves and enabling them
to do the best work of their lives.
Find out more in our
2024 Environmental,
Social and Governance Report
Our brand
The Saga brand has always been exceptionally well-known
among people over 50 and is often a key point of differentiation
in the highly competitive markets we operate in. Our
unrelenting focus on service provides peace of mind and
reassurance, while building trust, which in turn, is rewarded
with loyalty as our customers return again and again.
Our customers and insight
Our customers are at the heart of our business and we aim
to provide them with truly exceptional experiences during each
interaction with us. Our unique insights into this fast-growing,
under-served and ever-changing group allow us to develop
products and services tailored specifically for them.
Supplier partnerships
We aim to develop deep, mutually beneficial, long-term
relationships with our partners and suppliers, allowing us to
leverage their specialist expertise, resources and capital.
These partnerships are fundamental in providing the best
possible products and services to our customers.
Proprietary data and technology
The size of our database, and the depth of information we hold
on our customer group, is one of the Group’s core assets.
The continual expansion and enhancement of this data enables
us to increase the frequency and quality of the contact with
our customers, providing an opportunity to not only attract
new customers but also promote a greater range of products
and services to our existing customers.
Customers travelled
62.7
k
2022/23 – 47.3k
What we do
We offer our customers a variety of handcrafted experiences,
including hotel holidays, escorted tours and tailor-made travel.
How we add value
We provide customers with expertise, ease and reassurance
through home-to-airport pick-up across our touring range, local
hosts at our hotels and flexible dining for our tailor-made getaways.
Further peace of mind is provided through an escrow
arrangement, which safeguards customer money until they
return from their holiday.
Travel
Customers travelled
57.8
k
2022/23 – 47.2k
1
These are our businesses which are focused on the specific needs and wishes of our unique customer group. In our segmental financial reporting, Cruise and
Travel are presented as one, while Money and Publishing form part of Other Businesses
Strategic Report
Saga plc
Annual Report and Accounts 2024
14
A platform for growth
Purpose and business model
Our purpose is to deliver exceptional experiences every day to serve the needs of older people. We are
fundamentally a marketing, content and distribution business with unique customer insights that help us
build deep and long-lasting relationships.
Saga is committed to maximising value for our
key stakeholders.
Creating value
What we do
We partner with specialist third parties to deliver a range of
personal finance products, including savings accounts, equity
release, legal services, mortgages and investments.
How we add value
We offer customers easy-to-use products and services tailored
to them, with the added security and support of the Saga brand,
providing confidence and trust.
We use our expertise in sourcing and managing partners to
provide customers with unique offers and exceptional experiences.
Money
Customers
144
k
2022/23 – 139k
Delivering for our customers is at the heart of everything we
do. We aim to deliver exceptional experiences for this unique
group every day, while providing ease and reassurance.
Customers
Colleagues
To enable colleagues to do their best work, we are focused
on their development and wellbeing, creating a culture of
acceptance and recognition.
Saga strives to have a positive impact on our communities
through colleague volunteering schemes and charitable giving.
Communities
Through our partnerships, suppliers benefit from access to
our well-known and trusted brand, alongside knowledge and
insight into our unique customer group.
Partners and suppliers
Find out more about engaging with stakeholders on
pages 16-17
Saga is committed to creating long-term value for our
shareholders and investors by maximising our businesses,
delivering sustainable growth and reducing our debt.
Shareholders and investors
What we do
We provide our customers with tailored insurance products,
principally motor, home, private medical and travel insurance.
How we add value
We offer products to suit a variety of needs, from our lower-cost
standard one-year motor policies through to our premium
three-year fixed-price products.
Alongside our in-house underwriter, AICL, we use a third-party
panel of underwriting partners to ensure that customers receive
the best possible price.
Insurance
Policies in force
1.5
m
31 January 2023 – 1.7m
What we do
We maintain regular and insightful interactions with our audience
through the award-winning Saga Magazine, alongside regular
updates in the form of our increasingly popular digital newsletters.
How we add value
We blend the experience of our magazine columnists and design
team with high-profile guest exclusives, to deliver purposeful
and insightful content, which informs, inspires and entertains
our readers.
Our digital newsletters provide readers with high-quality
digestible articles across a range of topics.
Publishing
Magazine subscribers
121
k
2022/23 – 159k
In full bloom
Sigourney Weaver on gardening,
grandchildren & growing in confidence
Experience is everything
Jane
Seymour
Throwing
everything but
the kitchen sink
at life
Inside
HARRY REDKNAPP
STEWART COPELAND
JENNI MURRAY
PAUL LEWIS
SUSIE DENT
EMILY DEAN
&
JEREMY PAXMAN
Experience is everything
Fit, fearless &
finally getting
some sleep
Experience is everything
Louise
Minchin
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
15
Our customers are at the heart of our
business. Our success relies on the
engagement of new customers and
deepening the connection with our
existing customers.
What matters to them
Value for money products and
services that are designed specifically
for their needs.
Exceptional customer service each and
every time they interact with Saga.
Clear and informative communication
in a format that best suits them.
How we engage
Our ambition is to increase the frequency
of engagement with our customers and
become a partner in their everyday lives.
We engage with our customers through
telephone and email interaction, social
media, the Saga Magazine and our
Experienced Voices customer panel.
Customer satisfaction is monitored at
each interaction through our tNPS.
Board oversight
The Board receives regular reports from
the Group Chief Executive Officer (
CEO
),
Executive Directors and management
based on customer insights and feedback.
Our colleagues, and the culture in which
they operate, are incredibly important to
Saga. We aim to create a supportive and
inclusive environment, allowing them to
be their authentic selves.
What matters to them
A culture of acceptance, where they
feel appreciated for the characteristics
that make them individual.
Clear and transparent communication,
which allows them to speak up and
be heard.
Being recognised and rewarded for
their contribution.
How we engage
We ensure that communication with
colleagues is always collaborative and
takes a variety of forms. These include
our internal communications platform,
Workplace, engagement surveys, regular
one-to-one catch-ups with people
managers, collaborative team events,
colleague forums and through the
People Committee.
Find out more
in our 2024
Environmental,
Social and
Governance Report
Board oversight
Julie Hopes, one of our Non-Executive
Directors, is our nominated People
Champion and regularly attends our
People Committee meetings, alongside
our Group CEO and members of our
Operating Board. The Board is also kept
informed through updates from our
Chief People Officer regarding colleague
engagement, feedback from our
surveys and progress against our
colleague strategy.
In order for us to deliver exceptional
experiences every day for our customers,
we depend on the support of our partners
and suppliers. We continue to prioritise
the development of long-term, mutually
beneficial relationships with this
important group.
What matters to them
Long-term reliable relationships that
support their strategic ambitions.
Regular and informative updates,
including two-way feedback.
Innovation that encourages simplicity
and efficiency, where possible.
How we engage
Our relationships with our supply chain
are governed by our Supplier Relationship
Management and Supplier Risk
Management Policies, which provide
a framework for our operations. This
approach ensures a consistent standard
of communication with suppliers,
allowing us to continually develop our
ways of working. These relationships are
managed and controlled by our individual
business units.
Board oversight
The Risk Committee is kept informed of
any changes to supplier risk management
through our Operating Board and Internal
Audit and Assurance Director, with matters
escalated to the Board as appropriate.
Customers
Colleagues
Partners and
suppliers
Strategic Report
Saga plc
Annual Report and Accounts 2024
16
Engaging with stakeholders
Deepening our relationships
To fulfill our purpose, and best serve the
needs of older people, it is important that
we understand and carefully consider the
impact of every decision we make.
What matters to them
Maintaining clear and open
communication to ensure that they are
aware of our strategy and plans, as well
as any potential impacts to them.
The opportunity to share what is
important to them and how we may
be able to support that.
A chance to share knowledge and
skills between our colleagues and
the wider community.
How we engage
Our colleagues are encouraged to take
one paid volunteering day per year, allowing
them to support a cause of their choice.
Board oversight
Our Group CEO attends each community
meeting, allowing him to feed back directly
to the Board.
We are focused on delivery against our
strategic plan in order to deliver long-term
sustainable value for our shareholders.
We aim to treat all shareholders fairly,
providing them with opportunities to
express their views.
What matters to them
Creation of long-term value.
Active engagement with the Group CEO,
Group Chief Financial Officer (
CFO
) and
Investor Relations (
IR
) team.
Regular updates regarding the Group’s
financial performance and progress
against our strategy.
How we engage
We frequently communicate with our
shareholders and investors through
results announcements, press releases,
updates to our corporate and shareholder
websites, group events, one-on-one
meetings and ad hoc email and telephone
interaction.
Board oversight
At each Board meeting, the agenda
includes a review of an IR report providing
an update on shareholder interaction and
feedback received. Our Group CEO and
Group CFO meet with our investors on
a regular basis and the Non-Executive
Chairman on request, assisted by our
Director of IR and Treasury. In addition,
the Chair of the Remuneration Committee
meets with shareholders throughout the
year and provides the Board with any
feedback. Furthermore, in-person events
such as the Annual General Meeting and
results presentations also provide an
opportunity for the Board to meet with
shareholders and investors.
Our regulators set the framework within
which we operate and it is, therefore, vital
that we maintain strong relationships
with them.
What matters to them
Proactive and transparent
communication.
Protection of our customers and the
industries that we operate in.
Increasing the trust of the public and
encouraging market competition.
How we engage
Relationships with our regulators are
maintained at subsidiary level and
monitored by the respective audit,
risk and compliance committees.
Board oversight
Subsidiary boards, and their committees,
report as necessary to the plc Risk
Committee which is responsible for
escalating any matters of strategic or
reputational importance directly to the
Board. The Chairs of our financial services
regulated businesses, Saga Personal
Finance Limited (
SPF
), Saga Services
Limited (
SSL
) and AICL, are also plc
Directors and report on our relationships
with regulators.
Find out more in our Risk Committee
Report on pages 71-73
Communities
Shareholders
and investors
Regulators
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
17
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.
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.
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.
Group Chief Financial Officer’s Review
“The Group has now adopted
International Financial Reporting
Standard 17 and reports an Underlying
Profit Before Tax
1
of £38.2m, more
than double the £15.5m
2
reported
in the prior year.”
Mark Watkins
Group Chief Financial Officer
Strategic Report
Saga plc
Annual Report and Accounts 2024
18
Delivering significant growth
1
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
2
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
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
(80.8)p
58.7%
(195.7p)
Operating performance
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
).
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.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
19
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 187-188 for definition and explanation
5
Net finance costs exclude Cruise, Travel and Insurance Underwriting finance costs and net fair value gains/(losses) on derivatives
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 187-188 for definition and explanation
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.
Group Chief Financial Officer’s Review
continued
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
).
Strategic Report
Saga plc
Annual Report and Accounts 2024
20
8
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
9
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
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.
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
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
8
described above.
£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.
£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)
Underlying Profit Before Tax
8
£
38.2
m
2023 – £15.5m
9
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
21
Group Chief Financial Officer’s Review
continued
10
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
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
Cruise and Travel
Our Cruise business comprises our Ocean and River Cruise operations,
while Travel offers hotel holidays, escorted tours and tailor-made packages.
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.
Strategic Report
Saga plc
Annual Report and Accounts 2024
22
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
11
growth
of 44.2% and a return to profitability from
an Underlying Loss Before Tax
11
of £4.1m
in the prior year to an Underlying Profit
Before Tax
11
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.
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
11
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
23
Group Chief Financial Officer’s Review
continued
12
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
13
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
14
Third-party underwriter’s share of the motor panel for policies
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
12
)
£m
Motor
broking
Home
broking
Other
broking
Total
Change
Motor
broking
Home
broking
Other
broking
Total
Gross Written Premiums
13
(
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
13
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
13
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
13
(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
13
(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
14
33.6%
0.9ppt
32.7%
Insurance encompasses our motor, home and other broking operations and
our in-house Insurance Underwriting business.
Insurance
Strategic Report
Saga plc
Annual Report and Accounts 2024
24
15
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
16
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
Insurance Broking Underlying Profit
Before Tax
15
, 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
16
.
A key metric for the Insurance Broking
business is Written Gross Profit After
Marketing Expenses
15
, but before
deducting overheads. This reduced from
£148.9m
16
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
15
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
15
, 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.
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
15
divided by the number of
policies sold, reducing to £54.7 in the
current year, compared with £68.9
16
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
16
)
of income had been deferred in relation to
three-year fixed-price policies, £8.9m
(2023: £7.9m
16
) of which related to income
written in the year to 31 January 2024.
Motor broking
Gross Written Premiums
15
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
15
, 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
15
was £26.3m (2023: £53.7m
16
),
contributing £35.1 per policy (2023:
£63.3
16
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
15
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
15
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
15
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
15
relating to travel
insurance products decreased by £0.6m.
While sales of PMI were stable, Written
Gross Profit After Marketing Expenses
15
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.
Insurance Underlying
Profit Before Tax
15
£
39.8
m
2023 – £71.5m
16
Motor and home gross margin
£
54.7
per policy
2023 – £68.9
16
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
25
Group Chief Financial Officer’s Review
continued
Insurance Underwriting
12m to Jan 2024
12m to Jan 2023 (restated
17
)
£m
Gross
Re-
insurance
Net
Gross
change
Gross
Re-
insurance
Net
Insurance Underlying Revenue
18
A
169.8
(17.0)
152.8
7.1%
158.5
(14.8)
143.7
Incurred claims
(current year claims)
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 claims)
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
18
(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
17
), 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%
17
);
however, after allowing for reinsurance
arrangements, this reduced further
to 117.1% (2023: 120.5%
17
).
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.
17
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
18
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Strategic Report
Saga plc
Annual Report and Accounts 2024
26
19
The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
20 Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Other Businesses and Central Costs
The Group’s Other Businesses include
Saga Money, Saga Publishing and
CustomerKNECT.
Underlying Profit Before Tax
20
for Other
Businesses, when combined, increased
by £1.7m, from a £0.8m Underlying Loss
Before Tax
20
in the prior year to an
Underlying Profit Before Tax
20
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
19
). 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.
12m to Jan 2024
12m to Jan 2023 (restated
19
)
£m
Other
Businesses
Central
Costs
Total
Change
Other
Businesses
Central
Costs
Total
Underlying Revenue
20
:
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
20
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
20
0.9
(41.1)
(40.2)
29.2%
(0.8)
(56.0)
(56.8)
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).
Other Businesses Underlying
Profit/(Loss) Before Tax
20
£
0.9
m
2023 – (£0.8m)
Central operating expenses
(£
28.3
m)
2023 – (£40.3m)
19
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
27
Group Chief Financial Officer’s Review
continued
21
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
22 The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
23
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
Available Operating Cash Flow
21
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
21
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
21
of £36.8m compared with £49.1m
in the prior year. Trading EBITDA
21,23
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
22
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.
Cash flow and liquidity
Available Operating Cash Flow
21
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
22
)
Insurance Broking Trading EBITDA
21
47.2
(39.6%)
78.2
Other Businesses and Central Costs Trading EBITDA
21
(12.2)
58.6%
(29.5)
Trading EBITDA
21,23
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
21
(21.6)
(36.7%)
(15.8)
Available Operating Cash Flow
21
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
21
92.1
290.3%
23.6
Available Operating Cash Flow
21
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
21
at 31 January
169.8
7.8%
157.5
Strategic Report
Saga plc
Annual Report and Accounts 2024
28
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
24
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.
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
24
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.
24
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
29
25
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
26 The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
27
Ocean Cruise Trading EBITDA includes Ocean Cruise overheads
Reconciliation between operating and reported metrics
Available Operating Cash Flow
25
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
25
(21.6)
(36.7%)
(15.8)
Include Ocean Cruise capital expenditure
(3.8)
2.6%
(3.9)
Available Operating Cash Flow
25
143.8
161.8%
54.9
Underlying Revenue
25
reconciles to the statutory measure of revenue as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
26
)
Underlying Revenue
25
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
25
reconciles to Underlying Profit Before Tax
25
as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
(restated
26
)
Insurance Broking Trading EBITDA
25
47.2
(39.6%)
78.2
Insurance Underwriting Trading EBITDA
25
1.2
(90.7%)
12.9
Ocean Cruise Trading EBITDA
25,27
74.8
91.8%
39.0
River Cruise and Travel Trading EBITDA
25
5.5
167.9%
(8.1)
Other Businesses and Central Costs Trading EBITDA
25
(12.2)
58.6%
(29.5)
Trading EBITDA
25
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
25
38.2
146.5%
15.5
Group Chief Financial Officer’s Review
continued
Strategic Report
Saga plc
Annual Report and Accounts 2024
30
28 Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
29 The prior year has been restated to reflect the adoption of IFRS 17 ‘Insurance Contracts’
30 Ocean Cruise Trading EBITDA includes Ocean Cruise overheads
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
28
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
28
.
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.
Statement of financial position
Adjusted Trading EBITDA
28
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
29
)
Trading EBITDA
28
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
28,30
(74.8)
(91.8%)
(39.0)
Adjusted Trading EBITDA
28
43.4
(22.9%)
56.3
Ocean Cruise Trading EBITDA
28,30
reconciles to Ocean Cruise Trading EBITDA (Excluding Overheads)
28
as follows:
£m
12m to
Jan 2024
Change
12m to
Jan 2023
Ocean Cruise Trading EBITDA
28,30
74.8
91.8%
39.0
Ocean Cruise overheads
15.1
(41.1%)
10.7
Ocean Cruise Trading EBITDA (Excluding Overheads)
28
89.9
80.9%
49.7
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
31
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.
Group Chief Financial Officer’s Review
continued
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
£m
AA
£m
A
£m
BBB
£m
Unrated
£m
Total
£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
£m
AA
£m
A
£m
BBB
£m
Unrated
£m
Total
£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
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’
Strategic Report
Saga plc
Annual Report and Accounts 2024
32
32 Refer to the Alternative Performance Measures Glossary on pages 187-188 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 25 of the financial statements for information as to how this reconciles to a statutory measure of cash
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.
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:
£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
32
637.2
711.7
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
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.
Net Debt
32
£
637.2
m
2023 – £711.7m
Total leverage ratio
5.4
x
2023 – 7.5x
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
33
Group Chief Financial Officer’s Review
continued
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 gross 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.
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)
Strategic Report
Saga plc
Annual Report and Accounts 2024
34
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.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
35
Dividends and financial
priorities for 2024/25
Dividends
Given the Group’s priority of reducing
Net Debt
35
, 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
35
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
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 30, 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.
Group Chief Financial Officer’s Review
continued
35 Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Strategic Report
Saga plc
Annual Report and Accounts 2024
36
Our ESG framework
In early 2023, we launched Saga’s first ESG
strategy, including a focus on championing
positive ageing, acting on climate change
and biodiversity and strengthening our
exceptional culture. Our strategy ensures
that the business, and its stakeholders,
are clear on our priority areas of focus and
where we can improve performance in the
coming years. Following the launch of our
strategy, we published supporting key
performance indicators (
KPIs
) and
targets, against which we will track and
report on our progress going forward.
Our highlights during the year included
calculation of our Scope 3 (supply chain)
emissions footprint, the launch of a diversity
review across our colleague base, and the
delivery of the second part of our training
on the experience of ageing to all colleagues.
We also signed the Science Based Targets
initiative (
SBTi
) commitment letter,
signalling our intent to work towards
setting a science-based target to achieve
net zero by 2050.
The important themes captured under the
banner of ESG are priority areas for Saga,
which we see as essential to ensuring the
future success of our brand. There is much
more to do, and we hope our ongoing
efforts will drive positive change.
Purpose
Governance
Strategic
pillars
KPIs
Saga exists to deliver exceptional experiences every day to serve the needs of older people.
A governance framework that ensures how we work is as important as what we do and why we do it.
Related
Sustainable
Development
Goals
Refer to our 2024 ESG Report for further
information on ESG performance and
progress against our KPIs during the year
Strategic
objectives
At Saga, we recognise the importance of Environmental, Social and Governance (
ESG
) matters
and, over the past year, we have made significant progress in our ESG performance and
direction of travel.
Continuing our ESG journey
Customer transactional
net promoter score.
Proportion of customers
determining that it is
‘extremely easy’ to deal
with Saga.
Trustpilot score.
Proportion of colleagues
completing training on the
experience of ageing.
The ambition to enhance the lives
of older people is at the heart of
everything we do.
Championing
positive ageing
Calculation of carbon baseline,
including Scope 3 emissions.
Development of net zero
pathway.
Cruise ship environmental
ratings.
Proportion of cruise ship fleet
with shore power connection.
Partnerships on oceans and
biodiversity.
As we provide opportunities
for older people, we must
ensure that we protect
our environment.
Acting on
climate change
and biodiversity
Female representation in
leadership positions.
Female Board representation.
Ethnic minority Board
representation.
Completion of colleague
diversity review.
An engaged, inclusive and diverse
culture encourages our colleagues
to thrive.
Strengthening our
exceptional culture
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
37
Environmental, Social and Governance
“The important themes
captured under the banner of
ESG are priority areas for Saga,
which we see as essential to
ensuring the future success
of our brand.”
Mike Hazell
Group Chief Executive Officer
Our climate-related
financial disclosures
We support and recognise the importance
of the Task Force on Climate-Related
Financial Disclosures (
TCFD
) in providing
a framework for transparent reporting
around climate-related risks and
opportunities. In this context, and in line
with our obligation under Financial
Conduct Authority (
FCA
) Listing Rule (
LR
)
9.8.6(8), the following pages set out our
disclosures consistent with the TCFD
recommendations and recommended
disclosures, including the TCFD guidance
for all sectors.
During the year, we focused on undertaking
climate change scenario analysis and risk
assessments across the Saga Group.
We are actively building improved
integration of climate risk into financial
planning and will consider this disclosure
for future years’ reporting.
The Board oversees climate-related risk
exposure within its risk management
framework. The Board is informed of
climate-related issues on a regular basis
through management reporting and
escalation through its committees.
The Board has overall accountability for
risks associated with climate change and
commits to including climate-related risk
formally on the Board agenda, including
the oversight of emissions performance
and embedding climate resilience into risk
management, as part of the wider ESG
strategy. Our ESG Champion provides
Board-level advocacy for ESG, including
factors related to climate change.
The Risk Committee examines
climate-related risk as part of
its consideration of principal risks and
uncertainties (
PRUs
). The Risk Committee
also meets to discuss the Group’s overall
risk tolerance, strategy and ability to
detect new risks, including those related
to climate change. The Committee Chair
reports their recommendations to the
Board, outlining the PRUs, how they are
identified and any mitigating actions.
The Audit Committee monitors the
integrity of the Group’s financial
statements and works with the Risk
Committee to oversee the effectiveness
of internal control systems.
1
Governance
4
Metrics and targets
Find out more on pages 42-43
1
Governance
Find out more to the right
2
Strategy
Find out more on pages 39-41
3
Risk management
Find out more on page 42
The Operating Board is tasked with ESG
delivery, including climate-related risk
assessment, and ensuring that action and
performance management on climate issues
are delivered throughout the organisation.
It also holds responsibility for overseeing
major capital expenditure, acquisitions and
divestitures. The Operating Board reports
to the Board through the Group Chief
Executive Officer (
CEO
).
Find out more in division of
responsibilities on page 62
In 2023, we developed our ESG strategy,
which includes a focus on acting on climate
change. Both the Operating Board and
plc Board were engaged in the strategy
development process and approval.
Senior management incentives during
the year were aligned with progress on
climate-related goals, including a
requirement to complete climate change
scenario analysis. Management incentives
are tied to achievement of the ESG targets
described within our 2024 ESG Report.
We have established an ESG Steering
Committee, with representation from
senior managers within each of our
business units and key Group functions.
This Committee is chaired by the Chief
People Officer and has responsibility for
implementing ESG initiatives, including
measures relating to climate change.
Task Force on Climate-Related Financial Disclosures Report
Board and Committee responsibilities
Risk Committee
Oversees risk
management
framework, including
climate-related
risk management.
Discussed as part
of PRUs review.
Remuneration
Committee
Sets performance-
linked pay schemes,
including
implementation
of ESG-related
incentives.
Operating Board
Implements ESG
strategy and ensures
integration of
climate-related
actions within
strategies, budgets
and operating plans.
Discussed quarterly.
Audit Committee
Oversees
framework of
internal controls,
including those on
climate-related risk.
Discussed annually
as part of year-end
reporting.
ESG Steering
Committee
Supports and
monitors delivery
of ESG priorities and
targets, and drives
ESG accountability
across the business
unit and Group
functions.
Board
Overall accountability for management of climate-related
risks and opportunities. Discussed bi-annually, and as
needed, following escalation from its committees.
Strategic Report
Saga plc
Annual Report and Accounts 2024
38
Environmental, Social and Governance
continued
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
39
2
Strategy
Risks
Our ESG strategy includes a commitment
to act on climate change and biodiversity,
supported by targets focused on
calculating Scope 3 emissions, setting a
net zero target approved by the SBTi and
introducing low-carbon technologies to
our ship fleet.
Following a commitment to do so within
our 2023 Annual Report and Accounts,
we completed scenario analysis to assess
the resilience of the Group against
potential future climate change impacts.
Our analysis involved engagement with
each of our business units, facilitated by
key central functions and supported by
external advisers.
We assessed climate-related risks across
our business units and within our key
operating regions. The timeframes used
in our scenario analysis were chosen
for their relevance, both to our own
operations, including the lifespan of our
assets, as well as to international pledges
on emissions reductions.
Risks and opportunities were evaluated
on a sectoral and geographical basis in
alignment with the climate-related risk
and opportunity categories described
within tables A.1.1 and A.1.2 of the TCFD
Implementation Guidance.
Our most significant risks and opportunities
are described in the table below.
Acute physical
Chronic physical
1
2
Description
Increasingly severe rain, drought, heat and
storm events cause supply chain disruption,
leading to reduced customer experience and
increased business costs. Incidents of severe
weather affect Cruise and Travel itineraries and
availability of supplies across business activities.
Increased Insurance claims for property
damage (motor and home lines), and risks to
health (private medical and travel lines) affect
claims frequency, profitability and reinsurance
costs. Damage to customers’ assets may also
lead to withdrawals from savings accounts.
Description
Sea level rise and altered weather patterns
result in increased coastal erosion and
flooding. Port operations (Cruise), beach front
destinations (Travel), property (Insurance)
and general supply chains (including Publishing)
are disrupted. Consequent flooding and
infrastructure damage leads to general
disruption and complaints.
Mitigation
Cruise and Travel itineraries are continually
reviewed and updated in response to
incidents, including those related to weather.
Insurance control measures are largely
dependent on third-party underwriters,
although we have greater control over our
in-house underwritten book. The ongoing
transition of the Saga Magazine from paper
to digital media will reduce reliance on supply
chain factors, including paper supplies.
Mitigation
The Cruise and Travel business models
allow flexibility in the sites visited and
accommodation used, enabling adaptability
to changing weather patterns. Insurance
control measures are largely dependent on
third-party underwriters, although we
have greater control over our in-house
underwritten book. Communication with
customers around delays to the magazine
delivery may mitigate reputational impact.
Category
P
Physical
Business units
Cruise, Travel,
Insurance, Money
and Publishing
Time horizon
Category
P
Physical
Business units
Cruise, Travel,
Insurance and
Publishing
Short term
(2023–2030)
Medium term
(2030–2040)
Long term
(2040–2050)
Time horizon
Short term
(2023–2030)
Medium term
(2030–2040)
Long term
(2040–2050)
2
Strategy
continued
Strategic Report
Saga plc
Annual Report and Accounts 2024
40
Environmental, Social and Governance
continued
Opportunities
Task Force on Climate-Related Financial Disclosures
continued
Policy and legal
3
Description
Growing exposure to regulatory requirements,
including emissions taxation, carbon pricing and
reporting burden, increases costs across all
business units. Potential reputational damage
and litigation arise due to incidents of
non-compliance with more rigorous regulation.
Mitigation
Saga has tracked emissions for a number
of years, building an understanding of
emissions sources. Our Cruise fleet is
relatively new and less polluting than industry
counterparts. Saga is positioned to establish
decarbonisation plans towards 2050,
while existing practices, including sulphur
scrubbing, enhanced hull cleaning and shore
power connectivity, are reducing emissions
over time.
Category
T
Transition
Business units
Cruise, Travel,
Insurance, Money
and Publishing
Market and technology
4
Description
Adaptation to lower-carbon practices including
retro-fit of ships (Cruise), use of sustainable
aviation fuels (Travel), incentives for
low-emissions home improvements (Insurance)
and digital media products (Publishing) drive
increasing costs and product pricing. Failure
to adapt could lead to reputational damage
and competitive disadvantage.
Mitigation
Saga can promote sustainable travel
options and will proactively implement
strategic initiatives including net zero
planning focused on maintaining
competitiveness. The ongoing transition
to digital media products, alongside
media content focused on environmental
protection, aligns with an increasingly
climate-conscious customer base.
Category
T
Transition
Business units
Cruise, Travel,
Insurance and
Publishing
Energy and resource efficiency
1
Description
Collaboration with supply chains, including
ship technology providers and fuel suppliers,
will enable introduction of energy savings to
Cruise activities.
Increased use of low-emission drop-in fuels,
improved ship specifications on new vessels,
and retro-fit of technology to existing vessels
can improve asset efficiency, extending asset life
and ensuring Cruise products remain relevant
into the future.
The ongoing shift to digital media products
from traditional paper products will reduce
operational costs and improve climate
resilience by simplifying supply chains.
Products and services
2
Description
The physical impacts of climate change may
open new geographies for travelling and
incentivise innovative travel offerings at differing
times of the year.
Customer involvement in sustainability-focused
holidays, media products focused on
sustainability themes, and other avenues,
provide a growing method of engagement with
our customer base.
ESG themes can increasingly feature in product
portfolios, including within insurance and
investment products.
Market resilience
3
Description
Group-wide net zero planning provides an
opportunity to improve resilience through
understanding decarbonisation routes and
opportunities to engage with, and strengthen,
supply chains.
Climate-conscious financial products can
be tailored to reward customers for
sustainable behaviours.
Time horizon
Time horizon
Short term
(2023–2030)
Medium term
(2030–2040)
Long term
(2040–2050)
Short term
(2023–2030)
Medium term
(2030–2040)
Long term
(2040–2050)
Scenario analysis
During the year, we undertook scenario
analysis aligned to the recommendations
of the TCFD, utilising a range of scenarios
across both normative and exploratory
pathways. We intend to refresh this
analysis on a regular basis going forward.
Climate scenarios
Our scenario analysis examined three
Shared Socioeconomic Pathway (
SSP
)
scenarios from the Intergovernmental
Panel on Climate Change (
IPCC
) and three
transition scenarios from the International
Energy Agency (
IEA
). We also considered
sector-specific transition guidance from
the International Maritime Organization
(
IMO
) and UMAS. These scenarios were
selected as the most current projections
of future climate change relevant to Saga’s
business activities.
Geographic regions
We selected four key global regions, as
defined by the IPCC, as the focus of our
scenario analysis, based on their significance
to the operations of our business units.
These were:
United Kingdom (
UK
);
Mediterranean;
Europe; and
Eastern North America.
The UK region is significant as the base
for the majority of our operations, and as
the location of the majority of our assets,
customers, and insured properties and
vehicles. The other global regions selected
collectively contribute the majority
of revenue for our Cruise and Travel
business units as destination locations.
Time horizons
We considered the following time horizons:
Short term (2023–2030)
Medium term (2030–2040)
Long term (2040–2050)
Time horizons up to 2050 were assessed due
to the significance of this date for transition
scenarios in alignment with international
pledges on emissions reductions, and the
expected manifestation of significant
physical climate impacts by this date.
Methodology
We conducted an initial desktop study
to identify Saga’s resilience to potential
climate impacts based on our selected
climate scenarios, across our chosen
regions and time horizons.
We then conducted workshops with
risk, finance and operational subject
matter experts within each of our
business units and key Group functions.
Summary of scenarios analysed
Scenario models utilised
Scenario summary
Low-emission
(best-case)
scenario
Physical climatic impacts are minimised and are
less severe than in the medium- and high-emission
scenarios. Advancements in technical and operational
efficiency temper growth in energy demand across
sectors, and alternative fuels contribute the
majority of supply to the shipping sector.
Physical: IPCC SSP1-2.6: projected global
temperature increases of 1.3°C–2.4°C
by 2100.
Transition: IEA Net Zero Emissions
Scenario – 1.5°C; UMAS – 1.5°C;
IMO – 1.5°C to below 2°C.
Medium-emission
(most likely)
scenario
Physical climatic impacts are more severe than in
the low-emission scenario but less severe than in
the high-emission scenario. Significant emission
reductions occur within electricity generation,
despite a doubling of demand driven by increased
electrification. Transport and industry see a
less-marked fall in emissions, with increased
energy demand in regions without net zero pledges
partially offsetting emissions reduction efforts in
other regions.
Physical: IPCC SSP2-4.5: projected global
temperature increase of 2.1°C–3.5°C
by 2100.
Transition: IEA Announced Pledges
Scenario – 1.7°C.
High-emission
(worst-case)
scenario
Physical climatic impacts are more severe than in
the medium-emissions scenario. The energy mix
of fossil fuels falls slightly, although overall energy
demand is increased, driven by growing populations,
higher incomes and rising temperatures increasing
demand for space cooling (e.g. air conditioning).
Physical: IPCC SSP5-8.5: projected global
temperature increase of 3.3°C–5.7°C
by 2100.
Transition: IEA Stated Policies Scenario
– 3.5°C.
Based on the outputs of these workshops,
risks were assessed for their impact
and likelihood and aligned to Saga’s
risk management framework and
scoring mechanism.
Summary of findings
Our findings highlighted the shorter-term
adaptation to a low-carbon economy and
increasing exposure to regulatory
requirements, including emissions
taxation and carbon pricing, as well as a
growing reporting expectation, as key
transition risks to the Group. In the longer
term, we found that the increasingly severe
acute and chronic impacts of climate
change could disrupt supply chains, leading
to negative impacts on customer
experience, higher insurance premiums,
and supply chain issues.
Our findings identified that our strategy
remains appropriate based on the risks
and opportunities identified within each
scenario, although we recognise the need
to continue to develop our climate
resilience going forward.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
41
3
Risk management
4
Metrics and targets
Task Force on Climate-Related Financial Disclosures
continued
Process for identifying and
scoring risks
Climate risk considerations are built into
the Group risk management framework
which is applied across our business units.
Risks are identified and assessed against
the Group risk assessment matrix which
scores frequency and probability of risks
against their impact. An ESG category is
included within the risk assessment matrix
used across the Group, ensuring ESG
considerations (including climate-related
impacts) are captured. Climate-related risks
are scored based on the significance of their
financial, operational and regulatory impact,
consistent with other categories of risk.
The Board sets risk appetite and
associated metrics. Where risks are
considered out of appetite, or where
mitigation measures are insufficient,
actions are assigned to resolve this.
Risk appetite status and action plans to
resolve out-of-appetite risks are reported
to the Risk Committee on a regular basis.
Accountability for management of
climate-related risks is held by the relevant
business unit leadership team and, at the
Group level, by the Group CEO.
Find out more in risk management
on pages 44-45
During the year, we published a set of
ESG targets with a focus on the key
themes of our ESG strategy, including
acting on climate change. Our executive
remuneration plans are partially tied to
performance against these ESG targets,
which include the following:
Identify material Scope 3 greenhouse
gas (
GHG
) categories and calculate and
report against these by December 2024.
Develop a net zero pathway and net zero
target, approved by the SBTi.
Maintain an A-rating on our owned ships in
the Energy Efficiency Existing Ship Index
(
EEXI
) and Carbon Intensity Indicator (
CII
)
ratings up to December 2026, and
investigate ways to improve EEXI and CII
scores beyond December 2026.
Climate-related risks are documented
alongside key controls used to mitigate risk.
Process to manage
climate-related risks
Climate-related risks are considered
at a business unit level by management
and reported to the relevant boards
and risk committees. Risks are escalated
as required. ESG and climate change
are treated as one of Saga’s PRUs,
which are considered by the Risk
Committee, comprising three
Non-Executive Directors.
Introduce shore power capability on
100% of river and ocean cruise vessels
by December 2025.
Saga uses a cross-industry GHG
emissions metric, and we continue to
develop our capability in understanding
our emissions performance and areas
for improvement.
We have made progress in identifying and
calculating material Scope 3 emissions to
inform our carbon baseline for net zero
planning, further details of which are
included in our Streamlined Energy and
Carbon Report below. Our carbon
accounting methodology is aligned to the
GHG Protocol and UK Government
conversion factors for company reporting.
We have also signed the SBTi commitment
letter, confirming our intent to set a net zero
target by the end of 2025. Meanwhile,
we will continue to maintain the strong
performance of our cruise fleet in line
with the EEXI and CII ratings, while
retro-fitting carbon-efficient technologies
to our vessels.
Find out more about our ESG KPIs and
targets, including GHG emissions, in our
2024 ESG Report.
Find out more in our Annual Report
on Remuneration on pages 77-91
Saga plc reports all emissions sources
within its operational boundary pursuant
to the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 which
implement the Government’s policy on
Streamlined Energy and Carbon
Reporting (
SECR
).
Further reporting on Scope 3 emissions
and energy efficiency are available in our
2024 ESG Report.
Greenhouse gas emissions in tonnes of carbon dioxide equivalent (
tCO
2
e
)
Emissions scope
2023/24
emissions
2022/23
emissions
Scope 1
1
108,188
105,939
Scope 2 (location-based)
1,061
1,296
Scope 3 (business travel)
101
65
2
Total Scope 1, 2 (location-based) and 3 (business travel)
109,350
107,300
Scope 1 ,2 and 3 emissions intensity per £m Trading EBITDA
3
939
1,160
2
Energy and carbon statement
1
Including fugitive refrigerant emissions of 73 tCO
2
e (2023/24) and 14 tCO
2
e (2022/23), outside of the required scope of SECR reporting requirements reported
on a voluntary basis
2
2022/23 Scope 3 emissions have been restated from the 2023 Annual Report and Accounts due to a removal of out-of-scope travel modes. For further details
of Scope 3 emissions, please refer to our 2024 ESG Report
3
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Methodology
Emissions calculations were based on
the UK Government’s Environmental
Reporting Guidance (2013), the GHG
Protocol (2004:2015) and the UK
Government’s GHG Conversion Factors
for Company Reporting (2023 and 2022).
In limited instances where primary data
for purchased energy was not available,
assumptions were made based on
averages for surrounding months within
the same site to account for energy
performance and seasonal variation.
Strategic Report
Saga plc
Annual Report and Accounts 2024
42
Environmental, Social and Governance
continued
Emissions summary and rationale
Saga plc’s 2023/24 SECR-aligned
emissions footprint (covering fuel
combusted in company controlled and
owned vehicles and sites, purchased
electricity and business travel related to
rented vehicles) was 109,350 tCO
2
e, with
an intensity of 939 tCO
2
e per £m Trading
EBITDA
4
. Our combined Scope 1 and 2
footprint was 109,249 tCO
2
e. Total energy
consumption was 427,855 megawatt hours.
Between 2023 and 2024, the emissions
intensity of UK grid electricity increased
by 7% due to increased natural gas usage,
and the average temperature across
the reporting period increased by 0.9
o
C.
During the year, we trialled use of a
fatty acid methyl ester (
FAME
) 5%
biofuel mix across 490 tonnes of fuel in
our cruise vessel, Spirit of Adventure.
Per tonne of fuel, this trial reduced
emissions by 7% compared with marine
gas oil and 4% when compared with
marine fuel oil.
The International Energy Agency and
International Renewable Energy Agency
predict that FAME will become a more
viable fuel alternative as production and
yield improve towards 2030.
Noting the targets set out in LR 9.8.6R(9),
the Board is committed to improving its
diversity in the coming years. As at
31 January 2024, female Board
representation was 22%, below the 40%
recommendation of the FTSE Women
Leaders Review, while the Board met the
Parker Review recommendation that one
non-executive director identify as being
from an ethnically diverse background.
We do not yet meet the recommendation
that at least one of the CEO, Chief Financial
Officer (
CFO
), Senior Independent Director
(
SID
) or Chair roles be held by a woman.
Colleague diversity reporting on gender identity or sex
Number of
colleagues
5
Percentage of
colleagues
Number of
senior managers
6
Percentage of
senior managers
6
Men
2,035
55%
26
58%
Women
1,647
45%
19
42%
Not specified/prefer not to say
–
–
–
–
Board and executive reporting on gender identity or sex
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board (CEO,
CFO, SID, Chair)
Number in
executive
management
7
Percentage of
executive
management
7
Men
7
78%
4
8
80%
Women
2
22%
8
–
2
20%
Not specified/prefer not to say
–
–
–
–
–
Board and executive reporting on ethnic background
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board (CEO,
CFO, SID, Chair)
Number in
executive
management
7
Percentage of
executive
management
7
White British or other White
(including minority-white groups)
7
78%
4
10
100%
Mixed/Multiple Ethnic Groups
–
–
–
–
–
Asian/Asian British
1
11%
–
–
–
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group, including Arab
–
–
–
–
–
Not specified/prefer not to say
1
11%
–
–
–
Diversity, equity and inclusion (
DE&I
)
4
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
5
Includes all colleagues, senior management, executive management and Board
6
While Provision 23 of the UK Corporate Governance Code defines ‘senior management’ as the layer below the Board and the Company Secretary and their direct
reports, we think that it is more appropriate to disclose the gender balance of our Operating Board and Senior Leadership Team
7
Defined as the Operating Board members and Company Secretary in accordance with LR 9.8.6R(10)
8
Eva Eisenschimmel stepped down as a Director on 31 December 2023, reducing the proportion of female Directors on the Board from 30% to 22%
We have set externally published targets
to develop female representation on the
Board to at least 40% by 2027, and to
maintain at least one director from an
ethnically diverse background by the
same date.
In accordance with the Listing Rules, the
tables below detail the diversity profile
of the Board and executive management.
This data was collated from our colleague
database, populated using information
provided by each individual at recruitment,
or during our diversity data collection
exercise. Our colleagues are asked to
select their relevant characteristics on
both sex/gender and ethnicity.
The Nomination Committee Report on
pages 64-66 sets out further detail on
our approach to Board diversity.
Gender pay report
We support the UK Government’s ambition
to address the gender pay gap. Our
report detailing our gender pay gap and
commitments can be found on our website
(www.saga.co.uk/gender-pay-review).
We have set a target to increase female
representation across leadership
positions to 50% by 2027.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
43
Effective risk management and control is achieved through application of the ‘three lines of defence’ model as follows:
Governing body
Accountability to stakeholders for Group oversight
Management
Actions (including managing risk) to
achieve organisational objectives
EXTERNAL ASSURANCE PROVIDERS
1
st
line roles
Provision of
products/services to
customers and managing risk
2
nd
line roles
Expertise, support,
monitoring and challenge
on risk-related matters
Internal Audit and
Assurance (
IAA
)
Independent assurance
2
nd
and 3
rd
line roles
1
Independent and objective assurance
and advice on all matters related to
the achievement of objectives
Expertise, support, monitoring and
challenge on risk-related matters
Governing body roles:
integrity, leadership and transparency
Board assessment of
risk management and
internal control
Our Board has ultimate responsibility
for the Company’s risk management,
internal control and risk culture. It is also
responsible for regularly reviewing the
effectiveness of risk management and
control systems, ensuring that there is an
ongoing systematic process for identifying,
evaluating and managing the emerging
and principal risks faced by Saga.
This system accords with the Financial
Reporting Council’s guidance on risk
management, internal control and related
financial and business reporting, and was
in place for the year under review and up to
the date of approval of this Annual Report
and Accounts.
Risk maturity is measured, and all business
units are seeking to continuously improve
their maturity over time, in line with the
targets set. Risk objectives are set for all
members of the Operating Board, with
an end-of-year assessment against the
achievement of these objectives.
Risk management
Effectively managing our risks
Our governance framework
Risk framework
Saga has developed its risk management
framework to best suit the diversity of its
business units, regulatory requirements
and industry standards. This ensures
the required levels of risk maturity are
maintained in our financial services
businesses, while enabling our Cruise and
Travel businesses to put more focus on
the risk framework elements which are
appropriate for them.
Our risk management framework is made
up of the following:
Risk strategy and plan
Risk governance
Risk appetite
Incident management
Risk and control registers
Risk maturity against each element of the
risk framework is assessed for each business
unit and Group function, with plans in place
to ensure continual improvement.
Risk strategy and plan
Our risk strategy and plan, which are
aligned with our overarching strategy,
are considered and approved annually.
Risk governance –
The main consideration
within risk governance is the Board
management of risk and subsequent
delegation to risk committees and other
governance forums. This ensures that risk
is managed effectively and that there is
appropriate oversight through reporting
and accountability defined within each
committee’s terms of reference and, where
applicable, through the application of the
Senior Managers and Certification Regime.
Additionally, the suite of Saga risk policies,
including, but not limited to, conduct risk,
incident management and internal
control, define our risk management
framework and high-level expectations
of the 1
st
and 2
nd
line in respect of risk
management activity.
Incident management –
The 1
st
line
business areas are responsible for raising
risk incidents identified in a timely manner,
conducting appropriate root cause
analysis to prevent recurrence, and
resolving incidents promptly. The 2
nd
line
oversees this activity to ensure fair
customer outcomes, and that the process
is managed in line with policy.
Risk and control registers –
Each
business unit and Group function is
responsible for identifying and managing
its risks and associated key controls, which
are captured on risk and control registers
and scored using a risk matrix that rates
risk against both likelihood and severity.
1
2
nd
and 3
rd
line roles for AICL, SSL and SPF are separated in line with professional and best practice standards
Strategic Report
Saga plc
Annual Report and Accounts 2024
44
Key controls are subject to design and
operational effectiveness testing by
the business and validated through
periodic 2
nd
line assurance reviews,
with action taken where controls are
found to be ineffective.
Our risk registers help to identify the top
risks facing the various business units,
which in turn, inform our principal risks and
uncertainties.
Risk appetites –
Saga has developed its
risk appetite statements throughout the
year to reflect the areas where it is seeking
to take more risk versus areas where risk
taking is restricted. The Board-approved
appetite statements focus on the most
key areas of risk for Saga, providing the
Board with visibility and oversight of our
exposure to these risks compared to
appetite. In particular, the Board
oversight ensures that we promptly, and
appropriately, respond to any risks which
are out of appetite, or which are moving
towards becoming out of appetite. Our risk
appetites are designed to support the
achievement of our strategy, and to be
used in key decision-making.
Risk maturity –
Each business unit is
assessed periodically against our risk
maturity matrix across both the 1
st
and
2
nd
lines of defence, with actions agreed
and tracked through to closure for any
areas where there is a desire to increase
risk maturity.
Process feedback
Outputs from the risk management cycle
are fed back to our risk committees and
boards by exception to ensure that the risk
framework remains effective and supports
our strategy, business model and
decision-making processes.
Independent process
assurance
Saga’s IAA function is positioned centrally
within the Group, operating independently
of the business units. It is, therefore, able
to provide independent assurance of the
effectiveness of the risk management
procedures.
The objective of IAA is to help protect the
assets, reputation and sustainability of
the organisation by providing independent,
reliable, valued and timely assurance to the
Board and Operating Board. To preserve
the independence of the function, the
IAA Director’s primary reporting line is
to the Chair of the Audit Committee,
and the Internal Audit team is prohibited
from performing operational duties for
the business. For risk management
responsibilities, the IAA Director also
has an independent reporting line into
the Chair of the Risk Committee.
All activities of the Company fall within
the remit of the IAA team, and there are
no restrictions on their work. IAA fulfils
its role and responsibilities by delivering
the annual risk-based audit plan. Each
audit provides an opinion on the control
environment and details of any issues
found. IAA works with the business units
to agree the remedial actions necessary
to improve the control environment
and these are tracked to completion.
The relevant Head of IAA submits reports
to, and/or attends, board and audit
committee meetings for the business
units, with the IAA Director reporting
to the Audit and Risk Committees.
Statement of review
As a result of its consideration and
contribution to risk management and
internal control activities, the Board is
satisfied that there is an appropriate
framework for identifying, evaluating and
managing the Group’s risks and internal
controls and, up to the date of the approval
of this Annual Report and Accounts, it is
regularly reviewed. The Board’s statement
of review of the effectiveness of Saga’s risk
management and internal control system
is set out on page 53.
Our risk management framework and
systems are designed to manage, rather
than eliminate risk, and operate to
facilitate the achievement of our business
objectives within our stated risk appetites.
There has been regular reporting to the
Audit and Risk Committees throughout
the year on the status and evolution of
Saga’s risk framework.
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
45
Principal risks and uncertainties
Mitigating each risk
The matrix shows the principal
risks and uncertainties (
PRUs
)
facing the Company, including
those that would threaten
its business model, future
performance, solvency or liquidity.
The table on the following pages also
includes the mitigating actions being taken
to manage these risks. The risk exposure
outlook 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. While
each risk category is not represented in
our PRUs, there are risks relating to these
in our underlying risk registers.
Remote
Within 50 years
Unlikely
Within 10 years
Possible
Within 5 years
Probable
Within 2 years
Frequent
More than
1 per year or
in the next year
Probability/time frame
Minor
Moderate
Serious
Severe
Fundamental
Risk reward/impact
2
1
12
11
10
7
9
8
3
4
5
A
Strategic
B
Operational
C
Insurance
D
Liquidity
E
Reputational
Our risk categories
Our risks
1
Liquidity risk / debt refinancing
D
2
Cyber
B
E
3
Breach of Data Protection
Act (
DPA
)/General Data
Protection Regulation (
GDPR
)
B
E
4
Third-party suppliers
B
5
Regulatory action
B
E
6
Delivery and execution
B
7
Insurance pricing
modelling risk
B
C
8
Organisational resilience
B
9
Environmental, Social
and Governance
(
ESG
)/climate change
A
B
E
10
Capability capacity
A
B
11
Fraud and financial crime
B
12
Pandemic
B
13
Culture
B
E
14
Saga brand and relevance
A
E
6
14
13
“The Committee considered
the rationale behind the
selection of the Group’s PRUs.
PRUs were reviewed at each
meeting and refreshed regularly
during the year, ensuring that
new and emerging risks and
opportunities were captured
and remained at the forefront of
the Group’s strategic planning.”
Julie Hopes
Chair, Risk Committee
Strategic Report
Saga plc
Annual Report and Accounts 2024
46
Liquidity risk/debt refinancing
1
Description
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.
Mitigation
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
1
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.
Risk trend
2
Link to strategy
2
Risk category
D
Risk owner
Group Chief Financial
Officer (
CFO
)
Breach of DPA/GDPR
3
Description
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.
Mitigation
Refreshed Data Management Committee,
which maintains oversight of the management
of our most key data risks, ensuring alignment
across all business units.
Risk trend
2
Link to strategy
1
3
Risk category
B
Risk owner
Chief Data and Strategy
Officer (
CDSO
)
Cyber
2
Description
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.
Mitigation
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.
Risk trend
2
Link to strategy
1
Risk category
B
Risk owner
Chief Information
Officer
1
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
2
Risk trend represents the current trend and not necessarily the trend relative to the last published Annual Report and Accounts
3
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
E
E
Key
1
Threat to
business model
Maximising our
core businesses
3
Reducing debt through
capital-light growth
3
2
Growing our customer base and
deepening our customer relationships
3
3
Improving
Stable
Worsening
Third-party suppliers
4
Description
There is a risk of business interruption, financial
loss and reputational damage arising from loss
of key third parties.
Mitigation
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.
Risk trend
2
Link to strategy
1
3
Risk category
B
Risk owner
Group and business
unit (
BU
) CEOs
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
47
Principal risks and uncertainties
continued
Delivery and execution
6
Description
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.
Mitigation
Review and delivery of our revised operating
model to ensure we are set up to achieve any
operational changes planned.
Risk trend
4
Link to strategy
1
2
Risk category
B
Risk owner
Group and BU CEOs
Regulatory action
5
Description
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.
Mitigation
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.
Risk trend
4
Link to strategy
1
Risk category
B
E
Risk owner
Group and BU CEOs
Key
1
Threat to
business model
Maximising our
core businesses
5
Reducing debt through
capital-light growth
5
2
Growing our customer base and
deepening our customer relationships
5
3
Improving
Stable
Worsening
ESG/climate change
9
Description
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.
Mitigation
ESG strategy and governance has been defined
and implemented, with ESG embedded into the
risk management framework.
Risk trend
4
Link to strategy
1
3
Risk category
A
B
E
Risk owner
Group CFO
Organisational resilience
8
Description
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.
Mitigation
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.
Risk trend
4
Link to strategy
1
2
3
Risk category
B
Risk owner
CFO and BU CEOs
4
Risk trend represents the current trend and not necessarily the trend relative to the last published Annual Report and Accounts
5
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
Insurance pricing modelling risk
7
Description
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.
Mitigation
Product and pricing governance is in place
and we regularly monitor pricing information
against expectation.
Risk trend
4
Link to strategy
1
Risk category
B
Risk owner
CEO of Insurance
C
Strategic Report
Saga plc
Annual Report and Accounts 2024
48
Culture
13
Description
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.
Mitigation
Ongoing measurement and monitoring of
culture using colleague surveys, ensuring
we take on board, and act on, feedback to
continually improve it.
Risk trend
6
Link to strategy
1
3
Risk category
B
E
Risk owner
Group CEO and Chief
People Officer
Saga brand and relevance
14
Description
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.
Mitigation
Ongoing monitoring of customer transactional
net promoter score, and engagement with
customers via the Experienced Voices panel
to understand customer sentiment towards
the brand.
Risk trend
6
Link to strategy
3
Risk category
A
E
Risk owner
CDSO and BU CEOs
Fraud and financial crime
11
Description
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.
Mitigation
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.
Risk trend
6
Link to strategy
1
Risk category
B
Risk owner
Group CFO and BU
CEOs
Pandemic
12
Description
Risk to the Cruise and Travel businesses and
financial resilience of Saga in the event of new
and/or significant pandemic.
Mitigation
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.
Risk trend
6
Link to strategy
1
2
3
Risk category
B
Risk owner
CFO and BU CEOs
6
Risk trend represents the current trend and not necessarily the trend relative to the last published Annual Report and Accounts
Capability and capacity
10
Description
There is a risk that the capability and capacity
of colleagues does not align to significant
organisational change needed to deliver
strategic objectives.
Mitigation
Focus on retention of key colleagues,
alongside review and optimisation of
our operating model, ensuring it supports
the planned organisational changes.
Risk trend
6
Link to strategy
2
Risk category
A
B
Risk owner
Group and BU Chief
Executive Officers
(
CEOs
)
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
49
The Directors have considered the
viability of the Group over the five years
to January 2029. This period has been
selected as the most appropriate as
this timeframe:
is consistent with the planning horizon
over which the Directors normally
consider the future performance,
capital and solvency requirements
of the business;
includes the maturity of both
unsecured bonds in 2024 and 2026
as well as the maturities, in 2025,
of the currently undrawn £50.0m
Revolving Credit Facility and
the £85.0m loan facility with
Roger De Haan; and
includes fuller consideration of a
range of other potential threats,
including a rapidly shifting risk and
pricing landscape in Insurance, and
demand risk across our businesses.
Although the outlook for the Cruise
and Travel businesses is healthy,
the conditions in Insurance remain
challenging. The Directors and
Operating Board are focused on
effectively balancing the protection and,
ultimately, growth of insurance policy
sales with the delivery of sustainable
profitability. This reshaping will take
place over time as the market challenges
begin to wane, but the required changes
are expected to impact profitability in
the short term. 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. Further information
is included in the Chief Financial Officer’s
report on page 36.
In making this statement, 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.
The Directors have considered each
of the Group’s principal risks and
uncertainties detailed on pages 46-49
to determine which might threaten
the Group’s ongoing viability. Severe
but plausible outcomes for each have
been identified, with an estimate of
the potential financial impact quantified.
Assessments of the potential financial
impact were derived from both internal
calculations and examples of similar
incidents in the public domain. These
have been modelled individually, as a
probability-weighted average of all
possible scenarios, and as a combination
of the top three risks identified.
The three largest sensitivities, in terms
of financial impact, were identified as
the following:
1. Delivery and execution risk, being
the 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.
2. An inability to refinance debt and
financing facilities on maturity,
resulting in financial uncertainty.
3. Relevance of the Saga brand, being
the risk that the Saga brand and
products do not appeal sufficiently
to our target market such that
competitors gain market share.
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
for our Ocean Cruise and Insurance
businesses 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. The Directors
further recognise that uncertainty
increases over time and, therefore,
future outcomes cannot be guaranteed.
Viability Statement
Strategic Report
Saga plc
Annual Report and Accounts 2024
50
An overview of our approach to environmental, colleague, social, human rights, anti-corruption and anti-bribery matters, including where
additional information can be found elsewhere in this report, or in our policies, can be found in the table below.
Details of our business model can be found on pages 14-15, and our principal risks and uncertainties are on pages 46-49. Our first
standalone Environmental, Social and Governance (
ESG
) Report, alongside key policies and further reading, can be found on our
corporate website (www.corporate.saga.co.uk/about-us/environmental-social-and-governance/).
Reporting
requirement
Our approach, key policies and outcomes
More information
Environmental
matters
Our ESG strategy defines our approach to environmental matters, including a focus on carbon
emissions, oceans and biodiversity. Our ESG strategy is informed by a double materiality
assessment and includes key performance indicators and targets to drive progress.
We appointed an ESG Champion to our Board and established an ESG Steering Committee,
tasked with supporting delivery of the ESG strategy.
Outcome
Completed environmental initiatives, including donating, re-using and recycling furniture, following
the closure of our Enbrook Park site, saving the equivalent of 242 tonnes of CO
2
compared with
conventional disposal.
Successfully conducted a cruise ship biofuel trial, which confirmed compatibility of our ocean
ships with lower emissions biofuels. ESG matters are considered an important part of all
strategic discussions.
Environmental,
Social and Governance
on pages 37-43
2024 ESG Report
Climate-related
financial
disclosures
Our Taskforce on Climate-Related Financial Disclosures (
TCFD
) report provides details of our
climate-related governance arrangements, risks and opportunities, and targets.
Completed TCFD-aligned climate change scenario analysis and risk assessment.
Outcome
TCFD targets set and monitored closely, ensuring compliance with regulation.
Environmental,
Social and Governance
on pages 38-42
Colleagues
Our Diversity Equity and Inclusion Equal Opportunities Policy commits us to create a truly
inclusive culture where all colleagues can bring their authentic selves to work.
We remain a committed member of the UK Disability Confident Scheme and support the
advancement of employment for disabled persons in the UK.
Our Health and Safety Policy contains a clear set of principles and commitments which apply
to all colleagues, contractors and members of the public.
We are inclusive of age through our Grandparents’ Leave and Menopause policies.
Outcome
Participation rate in our most recent colleague engagement survey was 93%.
Made progress towards our aim of being ‘Champions of Age’ at work in the UK, with 85% of
colleagues now trained on the experience of ageing.
An inclusive culture which benefits from diversity of thought. Colleagues understand our purpose
and feel comfortable to voice their opinions.
Environmental,
Social and Governance
on pages 37-43
2024 ESG Report
Diversity, Equity
and Inclusion Equal
Opportunities Policy
Social matters
We seek to understand and carefully consider our impact within our communities. We ensure open
dialogue with the community so they are aware of our strategy, as well as any impact to them.
We promote colleague involvement in the community through our Public Duties Policy, Reservist
Policy and through giving all colleagues paid time off to volunteer within the community.
Outcome
Over £91k charitable donations made during the year.
237 colleagues used their volunteer day, equivalent to 1,754 hours.
Saga takes the needs of the communities in which it operates into account and enables colleagues
to contribute.
Environmental,
Social and Governance
on pages 37-43
2024 ESG Report
Respect for
human rights
We support the rights of all people as set out in the Universal Declaration of Human Rights.
Our Labour Standards Policy sets out the human rights principles adopted across the Group,
alongside our commitments to working responsibly and with integrity.
Our Modern Slavery Statement provides detail on our approach to risk, due diligence, policies,
training and audit in this area.
Our Supplier Code of Conduct establishes the types of behaviour Saga expects from any entity
that supplies products or services to the Saga Group.
Outcome
No incidents of human rights violations or modern slavery were identified in 2023/24.
Our colleagues, suppliers and their employees are protected and our stakeholders are reassured
by our high standards.
Labour Standards and
Human Rights Policy
Modern Slavery
Statement
Supplier Code of Conduct
Anti-bribery and
anti-corruption
Our zero-tolerance approach to bribery and corruption is set out in our Anti-Bribery and
Corruption Policy, laying out clear guidance for the assessment of risk of bribery and corruption
across our business.
All colleagues receive mandatory training on anti-bribery and anti-corruption.
Our Supplier Code of Conduct establishes the types of behaviour Saga expects from any entity
that supplies products or services to the Saga Group.
Outcome
There were no fines, penalties or settlements for corruption reported in 2023/24.
Our stakeholders can be assured that we operate a zero tolerance approach.
Anti-Bribery and
Corruption Policy
Supplier Code of Conduct
Key disclosure statements
Non-financial and sustainability
information statement
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
51
This Strategic Report is presented to inform members of the Company and help them assess how the Directors have performed
their duty under S172(1). It has been approved by the Board and signed on its behalf by
Mike Hazell
Group Chief Executive Officer
16 April 2023
Duty to promote the success of the Company
The Directors have had regard for the matters set out in Section 172(1)(a)–(f) of the Companies Act 2006 (
S172(1)
) when performing
their duty under Section 172. The Directors consider that they have acted in good faith in the way that would be most likely to promote
the success of the Company for the benefit of its members as a whole, while also having regard to the S172(1) matters referred to below.
A description of how the Board engages with its key stakeholders can be found on pages 16-17 and the principal decisions made by the
Board during 2023/24, how stakeholders were considered and the likely consequences of these decisions over the longer term are
set out on pages 58-60. Further information on how S172(1) has been applied by the Board can be found in the table below.
S172(1) matter
Further information incorporated into this statement by reference
Likely consequences of any
decision in the long term
Group Chief Executive Officer’s Strategic Review
Pages 5-9
Environmental, Social and Governance
Pages 37-43
Principal risks and uncertainties
Pages 46-49
Chairman’s introduction to governance
Pages 54-55
Board activities
Pages 58-60
Nomination Committee Report
Pages 64-66
Audit Committee Report
Pages 67-70
Risk Committee Report
Pages 71-73
Directors’ Remuneration Report
Pages 74-91
The interests of the
Company’s employees
Group Chief Executive Officer’s Strategic Review
Pages 5-9
Market review
Pages 12-13
Engaging with stakeholders
Pages 16-17
Environmental, Social and Governance
Pages 37-43
Chairman’s introduction to governance
Pages 54-55
Board activities
Pages 58-60
Division of responsibilities
Page 62
Nomination Committee Report
Pages 64-66
Audit Committee Report
Pages 67-70
Directors’ Remuneration Report
Pages 74-91
The need to foster the
Company’s business
relationships with suppliers,
customers and others
Chairman’s Statement
Page 4
Group Chief Executive Officer’s Strategic Review
Pages 5-9
Purpose and business model
Pages 14-15
Engaging with stakeholders
Pages 16-17
Environmental, Social and Governance
Pages 37-43
Board activities
Pages 58-60
Impact of the Company’s
operations on the community
and environment
Engaging with stakeholders
Pages 16-17
Environmental, Social and Governance
Pages 37-43
Board activities
Pages 58-60
The Company’s reputation
for high standards of
business conduct
Group Chief Executive Officer’s Strategic Review
Pages 5-9
Environmental, Social and Governance
Pages 37-43
Risk management
Pages 44-45
Board activities
Pages 58-60
Risk Committee Report
Pages 71-73
The need to act fairly as
between members of
the Company
Engaging with stakeholders
Pages 16-17
Chairman’s introduction to governance
Pages 54-55
Board leadership and company purpose
Page 61
Section 172(1) statement
Strategic Report
Saga plc
Annual Report and Accounts 2024
52
Corporate Governance Statement
54
Chairman’s introduction to governance
56
Board of Directors
58
Board activities
61
Board leadership and Company purpose
62
Division of responsibilities
63
Composition, succession and evaluation
64
Nomination Committee Report
67
Audit Committee Report
71
Risk Committee Report
Directors’ Remuneration Report
74
Annual Statement
77
Annual Report on Remuneration
92
Directors’ Report
95
Statements of responsibilities
96
Independent Auditor’s Report to the
Members of Saga plc
Compliance Statement
The Board is committed to high
standards of corporate governance and manages Saga’s
operations in accordance with the UK Corporate Governance
Code 2018 (the
Code
). A full version of the Code can be found
on the Financial Reporting Council’s website (www.frc.org.uk).
Saga publishes an annual UK Corporate Governance Code
Statement, providing further detail on the application of
the Code. This is available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
Viability Statement
The Viability Statement can be found
in the Strategic Report on page 50.
Going concern
The going concern basis of preparation can
be found in Note 2.1 of the financial statements on page 110.
Fair, balanced and understandable
In accordance with the
Code, the Board has established arrangements to evaluate
whether the information presented in the Annual Report and
Accounts is fair, balanced and understandable. Having taken
advice from the Audit Committee, the Board considers that
the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
Assessment of risk
Through the risk management process
detailed on pages 44-45, the Board can confirm that it has
carried out a robust assessment of the emerging and principal
risks facing the Company, including those which would
threaten our business model, future performance, solvency
or liquidity and reputation.
Statement of review
The risk management process detailed
on pages 44-45 was in place for the year under review and up
to the date of approval of this report. The Board recognises
the importance of appropriate systems of internal control
and risk management. The Group operates a ‘three lines
of defence’ risk management framework overseen and
monitored by the Risk Committee (see pages 71-73) and Audit
Committee (see pages 67-70). Work conducted by 2
nd
and 3
rd
lines, while identifying some areas for improvement, provided
reasonable assurance that the systems of risk management
and internal control were broadly effective.
Section 172(1)
The Section 172(1) statement can be found
in the Strategic Report on page 52.
Key statements
Application of the UK Corporate
Governance Code
The Company seeks to comply with the Principles set out in
the Code, promoting good corporate governance to support
the long-term sustainable success of the Group.
Page
Board leadership and Company purpose
A.
Board effectiveness
63
B.
Purpose, values, strategy and culture
1-17, 37-43 and 61
C.
Board decision-making
54-55 and 58-60
D.
Engagement with stakeholders
16-17, 52 and 58-60
E.
Oversight of workplace policies and practices
38, 51, 61-62,
66 and 69
Division of responsibilities
F.
Role of the Chair
61 and 63
G.
Independence and division of responsibilities
61-62
H.
External commitments and conflicts of interest
56-57
I.
Board resources
58 and 62-63
Composition, succession and evaluation
J.
Appointments to the Board and succession planning
54-55 and
64-66
K.
Board composition and length of tenure
56-57 and 63
L.
Board and individual evaluation
63 and 66
Audit, risk and internal control
M.
Financial reporting
External audit and internal audit
– independence and effectiveness
67-70
N.
Fair, balanced and understandable assessment
53 and 69
O.
Risk management and internal controls
39-42, 44-49, 53 and
71-73
Remuneration
P.
Remuneration philosophy
74-91
Q.
Directors’ Remuneration Policy
88-89
R.
Annual Report on Remuneration
77-91
The Board believes that, during the reporting period,
the Company was in full compliance with all applicable
Principles and Provisions of the Code, save that:
Provision 3:
While the Non-Executive Chairman did meet
with some shareholders during the year on request, as he
is a significant shareholder, it was determined that it would
be more appropriate for the Group CEO and Group CFO
to regularly engage with major shareholders.
Provision 9:
Due to his shareholding in the Company, the
Non-Executive Chairman was not considered independent
on appointment. Taking into account Roger De Haan’s history
with the Saga brand and business, his proposed time
commitment, the terms of the Relationship Agreement
between him and the Company and his letter of appointment,
the appointment was deemed to be in the best interests of
the Company.
Provision 23:
While the Code defines ‘senior management’
as the layer below the Board and the Company Secretary
and their direct reports, we think that it is more appropriate
to disclose the gender balance of the Operating Board and
Senior Leadership Team.
Provision 34:
Roger De Haan has waived his fee since
becoming Non-Executive Chairman in 2020.
Provision 38:
Pension contributions/payments in lieu for
Executive Directors are aligned with those of the majority
of colleagues (6% of salary). However, colleagues can opt
to increase their contribution to a maximum of 10%,
which the Company will match. This does not apply to
Executive Directors.
Saga plc
Annual Report and Accounts 2024
53
Strategic Report
Financial statements
Additional information
Governance
Governance
Chairman’s introduction to governance
Dear shareholder,
During our 2023/24 financial year, we made key decisions to
ensure that we focused on maximising our core businesses while
reducing debt. It is clear that there is a significant opportunity
to drive long-term sustainable growth for all our stakeholders
by doing so.
The Board spent a significant amount of time discussing how
we can grow the number of customers we serve and deepen
our relationship with them.
Changes to Board and Committee
structure/composition
This year saw a change in our Group Chief Financial Officer (
CFO
)
and Group Chief Executive Officer (
CEO
) as a result of James
Quin, and later in the year, Euan Sutherland, advising the Board
of their intention to step down.
The Nomination Committee were mindful of the leadership needs
of the organisation, ensuring the continued ability of the Company
to compete effectively in the marketplace.
The Board approved their recommendation that Mike Hazell
should be appointed as Group CFO and agreed that his
multi-sector experience in a variety of senior finance roles
would support delivery of the Group strategy to maximise
the performance of core businesses and reduce debt.
The subsequent search for a Group CEO was focused on finding
an individual who would further develop the vision and implement
the strategy for future growth. The Board agreed that Mike’s
experience and performance to date in his role as Group CFO
demonstrated that he had the skills needed to take Saga into the
next phase of its development. He was appointed as Group CEO
on 28 November 2023.
At the same time, we appointed Mark Watkins as our Group CFO.
The Board agreed with the Nomination Committee’s view that
Mark’s previous experience of working at Saga and his financial,
strategic and investor relations experience would complement
Mike’s fresh perspective.
Eva Eisenschimmel took the decision to step down from the
Board to focus on her increasingly busy executive role with effect
from 31 December 2023. Julie Hopes assumed the position of
our Remuneration Committee Chair.
My re-appointment as Non-Executive Chairman was also
approved following the expiry of my initial three-year term in post.
I would like to thank James, Euan and Eva for their contributions
over the years.
Following the changes to the Board, the Nomination Committee
reviewed membership of the other Board committees. The Board
agreed with the Committee’s proposal that Anand Aithal, Gemma
Godfrey and Gareth Hoskin should become members of the
Nomination Committee.
Find out more in our Nomination Committee Report on
pages 64-66
Board focus and decisions
Over the year, the Board’s focus was on how Saga’s strategy
could ensure our customers continue to receive an exceptional
experience and, at the same time, take into account our other
stakeholders’ needs and create value for our shareholders
and investors.
It is so important that we understand the needs of our customers
and deepen our relationship with them. A considerable amount
of time at Board meetings was spent discussing how we could
improve the quality of our interactions with customers through
our brand and data insight strategy. Saga Publishing continues
to provide ways of delivering insightful and relevant content to
our unique customer demographic which is key to our success.
We made the decision to focus on our core businesses, to exit
some of our smaller, loss-making activities and reduce our central
operating costs. We decided to explore opportunities to grow
our Ocean Cruise business, which is close to reaching optimum
capacity, by considering potential partnership arrangements.
Significant time was spent over the year discussing how we could
stabilise our Insurance business in a challenging environment,
by balancing the need to protect and grow policy volumes with
the need to deliver a sustainable return.
While terms of a sale for the Insurance Underwriting operations
were established, the Board concluded that greater value could be
generated once conditions within the insurance market improved,
and the sale was paused.
“The Board spent a significant amount
of time discussing how we can grow the
number of customers we serve and
deepen our relationship with them.”
Sir Roger De Haan
Non-Executive Chairman
Governance to support the significant
opportunity for growth
Saga plc
Annual Report and Accounts 2024
54
Corporate Governance Statement
Saga Money considerably broadened its range of services by
launching a number of new products, all through partnerships,
and our River Cruise and Travel businesses continued to focus on
growth by increasing the number of customers travelling with us.
The Board also spent time considering how to reduce debt and
increase liquidity ahead of the maturity of our £150.0m bond in
May 2024 and how to retain financial flexibility post the maturity
of that bond. It considered various options the Group had to
address the 2026 bond maturity. These were carefully reviewed
and a plan was agreed which included a combination of sensible
trading decisions and seeking capital-light partnership
opportunities that would both support growth and considerably
reduce our debt. I also increased the value of my loan facility
to £85.0m and extended its maturity to December 2025.
Subsequent to the financial year end, a further extension to
the maturity date of the facility was agreed, to 30 April 2026.
Find out more in Board activities on pages 58-60
Risk management
Our financial reporting processes, internal controls and overall
risk strategy continued to be overseen by our Audit and Risk
Committees, with matters escalated to the Board for further
discussion as appropriate.
Areas of focus for the Risk Committee included how the redesign
of the risk framework during the previous year had been
implemented and embedded to support the fulfilment of fiduciary
duties, promote good governance and ensure business objectives
were delivered, while enhancing risk maturity within the business.
The Audit Committee retained focus on maintaining the financial
flexibility of the Group by improving liquidity and reducing our
level of debt.
Find out more in:
Audit Committee Report on pages 67-70
Risk Committee Report on pages 71-73
People and remuneration
Eva Eisenschimmel, our previous Remuneration Committee Chair,
attended People Committee meetings periodically throughout
the year. Julie Hopes has assumed the role of People Champion
and will continue to represent colleagues at Board meetings.
The Board continued to monitor the Company culture, and the
Group’s values, and were pleased that the Remuneration
Committee had focused on ensuring that the wider workforce
was fairly represented at the Board.
Find out more in:
How the Board monitors culture on page 58
Directors’ Remuneration Report on pages 74-76
Environmental, Social and Governance (
ESG
)
Our new ESG strategy was launched in 2023, with focus on
championing positive ageing, acting on climate change and
biodiversity, and strengthening our Company culture. Key
performance indicators and targets, against which the Company
tracks its progress, were approved by the Board and published
on our corporate website (www.corporate.saga.co.uk/about-us/
environmental-social-and-governance/).
Find out more in Environmental, Social and Governance
on pages 37-43
Board and Committee evaluation
During the year, Peter Bazalgette, our Senior Independent
Director, led an evaluation of the Board and its Committees,
with support from our Group Company Secretary. It concluded
that the Board had demonstrated resilience in challenging
circumstances, was focused on the right priorities and had the
right skills and experience to steer the organisation through the
challenges and opportunities ahead. Going forward, the Board
culture and composition will need to support a growth orientated
mindset focused on our customers and the Saga brand to
underpin the long-term success of the Group.
Find out more about Board composition, succession and
evaluation on page 63
Shareholder engagement and our 2024
Annual General Meeting (
AGM
)
Our 2023 AGM was our first in London and I was delighted to be
able to meet some of our shareholders in person.
This year, our AGM will be held on 25 June 2024, at the offices of
Numis Securities Limited, 45 Gresham Street, London EC2V 7BF.
Full details will be set out in the Notice of AGM in due course. I am
looking forward to seeing shareholders there.
Sir Roger De Haan
Non-Executive Chairman
16 April 2024
Saga plc
Annual Report and Accounts 2024
55
Strategic Report
Financial statements
Additional information
Governance
Peter Bazalgette
Senior Independent Director
Appointed
1 September 2022
Key strengths and experience
Wealth of experience from the media
and wider creative industries.
Multi-industry knowledge in
broadcasting, television, advertising,
digital media and venture capital.
Previous roles include: Chairman of
ITV plc; Chairman of Endemol UK;
Chair of the Arts Council for England;
Non-Executive Director of YouGov; and
Non-Executive Director of Channel Four.
Other roles
Chair of LoveCrafts Group Limited
(appointed April 2018).
Roger De Haan
Non-Executive Chairman
Appointed
5 October 2020
Key strengths and experience
Experienced business leader and board
director with extensive experience in
travel and financial services industries.
Significant history with Saga having
worked in the business for 40 years,
including over 20 years as Chairman
and Chief Executive.
Instrumental in transforming Saga, from
a specialist tour operator to one that
offered its own cruises, and expanding
the business to cover publishing,
insurance and financial services,
creating the Saga brand.
Knighted in the 2014 New Year Honours
List for services to education and to
charity in Kent and overseas.
Other roles
Director of Folkestone Harbour companies,
and the two charities: Creative Folkestone
and Friends of Folkestone Academy;
and Trustee of the Roger De Haan
Charitable Trust.
Board of Directors
IE
N
N
R
IE
Mike Hazell
Group Chief Executive Officer
Appointed
9 October 2023 (as Group
Chief Financial Officer). Group Chief
Executive Officer from 28 November 2023
Key strengths and experience
Over 25 years of multi-sector experience
in a variety of executive roles.
Substantial experience of strategy
development and implementation
at pace.
Deep understanding of corporate
turnarounds and financing.
Significant experience working within
diversified groups.
Previous senior roles include: Interim
Chief Financial Officer at The Co-op
Group; Group Chief Financial Officer
and, ultimately, Chief Executive Officer
of Debenhams; and various management
roles at BSkyB, Fonterra and Pfizer.
Mark Watkins
Group Chief Financial Officer
Appointed
28 November 2023
Key strengths and experience
Fellow of the Institute of Chartered
Accountants in England and Wales.
Extensive knowledge of Saga with over
seven years of experience within the
business, including time as Chief
Corporate Development Officer, Finance
Director, and Director of Investor
Relations and Corporate Finance.
Experience in delivering corporate
strategy, investor communications and
internal/external analysis and reporting.
Considerable strategic, investor and
operational finance experience across
multiple sectors.
Previous senior roles include: Chief
Financial Officer Europe and Central
Asia at Intertek; Finance Director of
the Processing, Recovery and Disposal
Division at Secure Energy Services;
and Group Financial Controller at
Bovis Homes.
Anand Aithal
Independent Non-Executive Director
Appointed
1 September 2022
Key strengths and experience
Extensive non-executive experience
in fintech, insurance broking, asset
management and accountancy.
Entrepreneurial perspective, having
co-founded his own data analytics
business.
Previous roles include: Managing
Director at Goldman Sachs.
Other roles
Lead Non-Executive Board Member of
Cabinet Office (appointed February 2019);
Non-Executive Appointee to Council Board
of Association of Certified Chartered
Accountants (appointed December 2019);
and Non-Executive Director and member of
Audit and Risk committee of Polar Capital
Holdings plc (appointed January 2022).
Diversity, balance and experience
Steve Kingshott
Chief Executive Officer of Saga Insurance
Appointed
3 January 2023
Key strengths and experience
Highly experienced insurance executive
with over 30 years of experience in the
UK insurance market.
Previous senior roles include: Chief
Executive Officer of Tesco Bank’s
Insurance business; and Chief Insurance
Officer for Tesco Bank.
OB
OB
OB
A
N
IE
Saga plc
Annual Report and Accounts 2024
56
Corporate Governance Statement
Board experience
Number of
Directors
Insurance
4
Travel
1
Personal finance
3
Board experience and
corporate governance
9
Strategy and innovation
9
Consumer-facing businesses
5
Brand management
3
Stakeholder management
and culture
9
Finance and audit
4
Digital and media
3
Risk management
3
Board composition
Number of
Directors
Non-Executive Directors
5
Executive Directors
3
Non-Executive Chairman
1
Board tenure
Number of
Directors
Under 1 year
2
1 to 3 years
4
Over 3 years
3
Key
Committee Chair
A
Audit Committee
OB
Operating Board
IE
Innovation and Enterprise Committee
N
Nomination Committee
R
Remuneration Committee
RI
Risk Committee
Board age
Number of
Directors
Under 50
2
50–59
4
60–69
2
70 and over
1
A
IE
RI
N
Gareth Hoskin
Independent Non-Executive Director,
Speak Up Champion, and Chair of Acromas
Insurance Company Limited
Appointed
11 March 2019
Key strengths and experience
Over 20 years of experience in
insurance, in a variety of roles.
Chartered Accountant with recent
and relevant financial experience and
competence in accounting (Institute
of Chartered Accountants in England
and Wales).
Previous roles include: main Board
Director and Chief Executive Officer
International, and finance, retail
marketing and HR roles in Legal &
General; accountant at PwC; and
Trustee, Non-Executive Director and
Chair of the Audit and Risk Committee
at Diabetes UK.
Other roles
Audit Chair, member of the Risk,
Nomination and Remuneration
Committees (appointed November 2015),
Vice Chair and Senior Independent
Director at Leeds Building Society
(appointed January 2019).
Gemma Godfrey
Independent Non-Executive Director,
Environmental, Social and
Governance Champion, and Chair of
Saga Personal Finance Limited
Appointed
1 September 2022
Key strengths and experience
Founder of two successful digital
businesses.
Specialist in digital transformation,
innovation and de-risking the delivery
of new services.
Previous roles include: Boardroom
adviser on the Apprentice USA.
Other roles
Non-Executive Director and
Remuneration Committee Chair of
Eight Capital Partners plc (appointed
January 2023), Kingswood Holdings
Limited (appointed October 2022),
Oberon Investments Group plc
(appointed September 2021) and
Non-Executive Director (appointed
December 2020) and Nomination
Committee Chair (from September 2022)
of Vivopower International plc; and
business and money expert on ITV
and Sky News.
N
IE
RI
R
Julie Hopes
Independent Non-Executive Director,
People Champion, and Chair of
Saga Services Limited
Appointed
1 October 2018
Key strengths and experience
Associate with the Chartered Institute
of Bankers.
Wealth of insurance experience coupled
with over 30 years in a variety of roles,
specialising in general insurance and
predominantly in personal lines.
Highly customer-focused, with a breadth
of functional, membership and affinity
experience and a track record of
driving growth.
Previous roles include: Chair of Police
Mutual and its Remuneration Committee;
Non-Executive Director and Chair of the
Risk Committee of Co-operative Insurance;
a variety of roles at RSA and Tesco Bank;
and Chief Executive Officer of The
Conservation Volunteers, a UK
community volunteering charity.
Other roles
Deputy Chair, Senior Independent
Director (appointed April 2016) and
Remuneration Committee Chair (from
September 2018) of West Bromwich
Building Society; and Non-Executive
Director (appointed August 2021) and
Risk Committee Chair (from December
2021) of MS Amlin Underwriting Limited.
A
R
RI
Saga plc
Annual Report and Accounts 2024
57
Strategic Report
Financial statements
Additional information
Governance
The Board considered progress against long-term strategy at each Board meeting, with a focus on how to drive
long-term sustainable growth for all our stakeholders. Board meeting agendas are carefully structured and
include an update by the Chair of each committee, including any matters for escalation.
Focused on long-term growth
The Board regularly reviews a range of information to actively monitor culture. The table below shows the key sources of data the Board
tracks, with a view to take action where adjustments or remedial action are needed. During the year, the Board was satisfied that the
culture was aligned with the company’s purpose, values and strategy.
Cultural identifier
Cultural priorities
Promoting
integrity and
openness
Valuing
DE&I
Being
responsive to
the views of
stakeholders
Culture aligned
to purpose,
values and
strategy
Colleague surveys
People Champion Non-Executive Director
attendance at People Committee
Speak Up reports
Progress on diversity, equity and inclusion (
DE&I
)
Environmental targets
Health and safety performance
Internal audit reports and findings
How the Board monitors culture
This section contains some examples of principal decisions that
were taken during the year and how stakeholder views were taken
into account, and impacted, the outcomes of those decisions.
Find out more about stakeholder engagement on
pages 16-17
People and culture
Maximising our core businesses
1
Reducing debt through capital-light growth
1
Growing our customer base and deepening
our customer relationships
1
Oversight of risk management
c.10%
c.35%
c.35%
c.5%
c.5%
c.10%
Environmental, Social and Governance (
ESG
)
Board allocation of time during the year
“Over the year, the Board’s
focus was on how Saga’s
strategy could ensure our
customers continue to receive
an exceptional experience
and, at the same time, take
into account our other
stakeholders’ needs and
create value for our
shareholders and investors.”
Roger De Haan
Non-Executive Chairman
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
During the year, the Board held five scheduled meetings and
nine ad hoc meetings. The additional meetings were necessary due
to the need to regularly discuss the strategic growth and direction
of the Group.
The Board recognises the importance of considering the needs of,
and impact on, all stakeholder groups. As always, there was a need
to ensure that the consequences of decisions would promote the
long-term success of the Company, as well as maintain Saga’s
reputation for high standards of business conduct.
Saga plc
Annual Report and Accounts 2024
58
Corporate Governance Statement
Board activities
Key Board decision
Focus on core businesses and exit some of our smaller, loss-making activities, alongside reduction of central
costs including:
exploring opportunities to optimise the Cruise business by considering potential partnership arrangements;
stabilising the Insurance business in a challenging environment; and
launching additional Saga Money products through partnerships.
Connection to
strategic pillars
1
2
3
How the Board reached its
decision and considered
matters set out in
Section 172(1) (
S172(1)
) of
the Companies Act 2006
(the
Act
)
Considered how to drive long-term sustainable growth while continuing to reduce the level of debt.
Chief Executive Officers (
CEOs
) of each business unit attended several Board meetings to discuss current trading,
strategy, opportunities and risks, with business unit update reports reviewed at every meeting.
Significant discussion on how to optimise the Ocean Cruise business, which was close to reaching optimum capacity,
while still providing exceptional experiences to our customers.
Discussed and considered actions to balance the Insurance business effectively between protecting and growing
policy volumes and delivering sustainable returns in a challenging market and how to mitigate the impact of the
market-wide inflationary headwinds.
Discussed the value of new product propositions in Saga Money and expansion into other territories for Travel,
developed and recommended based on customer insight and feedback.
Stakeholder management
The Board discussed how to continue to deliver exceptional experiences to its
customers
while also creating value
for its
shareholders
.
The impact to
colleagues
and
customers
was considered when discussing options, particularly when the decision
was made to exit some of our smaller, loss-making activities so that the growth of core businesses could be prioritised.
Supplier
relationships were key to delivery of the strategy, so the impact to them was considered, alongside
opportunities to develop
partnerships
to strengthen the products and services Saga offers.
Challenges faced
Geopolitical factors requiring amendments to travel itineraries or destinations.
Impact of the current level of debt on the Company’s ability to scale Ocean Cruise to reach more customers,
in a capital-light way.
Financial, regulatory and physical impacts associated with climate change, for example, increasingly severe rain, drought,
heat and storm events causing supply chain disruption, leading to reduced customer experience and increased business
costs and incidents of severe weather affecting Cruise and Travel itineraries and availability of supplies.
Potential for cost of living increases to reduce levels of discretionary spending from our customer group and affect
attitudes towards premium products, increasing the number of customers who shop around for their insurance.
Inflationary increases on the cost of settling insurance claims causing pressure on earnings.
Risk of interest rate fluctuations causing market uncertainty and lower demand for our products.
Implementation of, and management of customer impacts arising from, regulatory changes.
Outcome and impact
of the decision
Refocused on Saga’s core businesses of Cruise, Travel, Insurance and Money, underpinned by Saga’s data and brand
strategy, having exited some of our smaller, loss-making activities, being Saga Exceptional, Insight and Spaces.
Actions underway to balance the protection and, ultimately, growth of policy sales with the delivery of sustainable
profitability, noting that the reshaping will take place over time as the market challenges begin to wane.
Exploring opportunities to optimise Saga’s operational and strategic position in Cruise, including a potential
partnership arrangement for Ocean Cruise which would be consistent with Group strategy to move to a capital-light
business model to support further growth, crystallise value, reduce debt and enhance long-term returns for
shareholders.
Launch of new Saga Money products designed to support Saga customers with a broader range of their financial needs.
Key to our strategic pillars
2
Key Board decision
Management of debt – loan facility with Roger De Haan, Revolving Credit Facility (
RCF
) amendment, property
strategy and bond arrangements.
Connection to
strategic pillars
1
2
How the Board reached its
decision and considered
matters set out in S172(1)
of the Act
Significant discussion regarding how to reduce debt and increase liquidity ahead of the maturity of our £150.0m bond
in May 2024 and retain financial flexibility post the maturity of the bond.
Discussed and monitored the testing required and any modification to the RCF to ensure the Group had sufficient
headroom and adequately monitored other key financial arrangements.
Considered the sale of the Insurance Underwriting operations in line with the Group’s ambition to have a more
capital-light model and discussed the proposed terms of sale put forward and the value they provided.
Decision made to exit some of our smaller, loss-making activities, being Saga Exceptional, Insight and Spaces,
refocusing on our core businesses of Cruise, Travel, Insurance and Money, underpinned by the Group’s data and
brand strategy.
Continuously reviewed the property strategy in light of the current market.
Agreed actions to reduce the central cost base and move towards a leaner centralised operating model.
As part of budget and five-year plan approval process, management of debt was considered and discussed at every
Board meeting.
The Audit Committee and Board members considered and discussed in detail the going concern and viability statements.
2
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
1
Maximising our
core businesses
Reducing debt through
capital-light growth
2
Growing our customer base and
deepening our customer relationships
3
Saga plc
Annual Report and Accounts 2024
59
Strategic Report
Financial statements
Additional information
Governance
Key Board decision
Brand and data – increasing the frequency and quality of interaction with customers through data-driven insight.
Connection to
strategic pillars
1
3
How the Board reached its
decision and considered
matters set out in S172(1)
of the Act
Considered how to utilise Saga Spaces, Saga Exceptional and digital newsletters to engage with customers.
The Chief Data Officer, CEO of Insight and Brand Development and CEO of Saga Exceptional attended Board
meetings to present their strategies and share customer feedback.
Considered the plan to deliver the brand and data strategy, focused on making improvements across the customer
lifecycle by engaging customers regularly, building a deeper insight into their needs and preferences and delivering
more tailored products and services, allowing Saga to continue to provide exceptional experiences.
Discussed how the valuable customer engagement and insight gained through Saga Spaces, Saga Exceptional and digital
newsletters could be retained and maintained following the decision to exit some of our smaller, loss-making activities.
Following approval of the ESG strategy, discussed the key performance indicators and targets that should be
implemented to assess progress, including championing positive ageing.
Focused on cyber risk and considered how Saga protects customer data, through its risk appetite and the controls
in place, as escalated by the Risk Committee, that deemed cyber risk to be a matter of significant importance.
Stakeholder management
The Board discussed how to further enhance its ability to provide exceptional experiences to its
customers
through
receipt of data-driven insight and the monitoring of transactional net promoter scores.
The impact of data and cyber risks were considered by the Board and the Risk Committee in the context of
customers
,
partners
,
suppliers
and
regulators
.
Challenges faced
The impact of regulatory changes on the number of customers the Group is able to communicate with.
The pace of change in relation to the wants and needs of its customers.
Converting exceptional levels of consideration for the Saga brand into customers who believe that Saga is for them.
Outcome and impact
of the decision
Saga’s digital newsletter distributed to more than 1.2m readers a week and the Saga Magazine distributed to 120k
subscribers per month.
Upon the decision to exit some of our smaller, loss-making activities, Saga retained customer focus groups, the
Experienced Voices panel and the digital newsletter, which was possible through a coordinated restructure of the
brand and data teams, with the Chief Data Officer assuming responsibility for brand.
The global consent programme went live for all new customers, with the completion of reconsent of existing customers
and the successful trial of a new customer cross-sell journey. The lifetime value model was built and became operational,
making it easier for individuals to sign up for email updates on our products and services through Saga’s website.
The ESG strategy was developed further, with focus on championing positive ageing, acting on climate change and
biodiversity and strengthening Company culture. Key performance indicators and targets against which the
Company tracks its progress were approved and published on our corporate website
(www.corporate.saga.co.uk/about-us/environmental-social-and-governance/).
Stakeholder management
The impact on all stakeholders was considered including
colleagues
,
customers
,
communities
,
partners
and
suppliers
,
shareholders
and
investors
.
Saga Pension Scheme Trustees
were consulted and kept informed.
Colleagues
were impacted by the reduction in cost base, as well as the decision to exit some of our smaller,
loss-making activities, and their needs were considered at each step.
Regulators
were kept informed of the changes to the cost base and were updated on how Saga would still continue
to deliver good outcomes and exceptional experiences for
customers
.
Challenges faced
Balancing the level of investment required to scale operations with maximising cash generation and accelerating
debt reduction.
Outcome and impact
of the decision
Going concern and viability statements made.
While terms of sale for the Insurance Underwriting operations were established, the Board concluded that greater
value could be generated once conditions within the insurance market improved, and the sale was paused.
An extension of £35.0m to the loan facility with Roger De Haan was agreed, taking the total to £85.0m and the
maturity was extended to 31 December 2025, providing additional financial flexibility ahead of the 2024 bond
maturity. Subsequent to the financial year end, a further extension to the maturity date of the facility was agreed,
to 30 April 2026.
Agreement to a series of amendments to the Group’s RCF, providing further financial flexibility.
Reduced operating expenses as a result of exiting some of our smaller, loss-making activities and reducing the central
cost base.
Made capital repayments of £62.2m on Saga’s two Ocean Cruise ship facilities.
Key to our strategic pillars
3
3
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
1
Maximising our
core businesses
Reducing debt through
capital-light growth
2
Growing our customer base and
deepening our customer relationships
3
Saga plc
Annual Report and Accounts 2024
60
Corporate Governance Statement
Board activities
continued
The Board comprises nine Directors with a broad set of complementary skills, industry expertise and each bringing a
different perspective.
On 1 February 2024, the Board reviewed and approved a document detailing the division of responsibilities and roles of the Chairman,
Group CEO, Senior Independent Director, all Committee Chairs and the Non-Executive Directors nominated ESG Champion, Speak Up
Champion and People Champion. This is available on our corporate website (www.corporate.saga.co.uk/about-us/governance).
Member
Role
Max. possible
meetings
Attendance
Roger De Haan
Non-Executive Chairman (leadership, Board governance, sets the agenda and
facilitates open Board discussions, performance and shareholder engagement)
14
14
Mike Hazell
1
Group CEO (Group performance and develops strategy for Board approval)
3
3
Euan Sutherland
2
Former Group CEO
11
10
Mark Watkins
3
Group CFO (Group financial performance, including creation of the budget and
five-year plans for recommendation to the Board)
2
2
James Quin
4
Former Group CFO
10
10
Steve Kingshott
CEO of Insurance (Insurance strategy, optimising sales, delivering excellent
customer service and broadening the range of new products)
14
14
Independent Non-Executive Directors
Role
Max. possible
meetings
Attendance
Peter Bazalgette
(Senior Independent Director)
Participate in, assess, challenge and monitor Executive Directors’ delivery
of the strategy (within risk and governance structures); financial controls and
integrity of financial statements; and Board diversity. Evaluate and appraise
the performance of the Non-Executive Chairman, Executive Directors and
senior management.
14
14
Anand Aithal
14
14
Gemma Godfrey (ESG Champion)
14
14
Julie Hopes (People Champion)
14
14
Gareth Hoskin (Speak Up Champion)
14
14
Eva Eisenschimmel
5
14
11
Board roles
1
Appointed as Group Chief Financial Officer on 9 October 2023 and as Group Chief Executive Officer on 28 November 2023
2
Resigned as a Director on 28 November 2023
3
Appointed as a Director on 28 November 2023
4
Resigned as a Director on 9 October 2023
5
Resigned as a Director on 31 December 2023
Our Board
A document summarising the matters which are reserved for
the Board was last considered on 1 February 2024. These include
the following:
Strategy and management
Setting the Group’s purpose, values, strategy and standards
ensuring these, and our culture, are aligned.
Approving objectives, budgets, forecasts and strategic direction,
as well as their successful implementation.
Overseeing our operations, including regulatory, financial and
operational policies.
Any decision which may have a material impact on the Group.
For example, new business activity, significant expansion or
diversification/cessation of existing businesses.
Structure and capital
Approving changes relating to our capital, corporate,
management or control structures and borrowings; and
guarantees, other than in the normal course of business.
Financial items, risk management and internal controls
Approving the interim and preliminary results and annual
report and accounts, alongside material capital or operating
expenditure outside pre-determined tolerances or beyond
agreed delegated authorities.
Ensuring maintenance of a sound system of internal controls,
including risk appetite and policies.
Contracts and business transactions
Approving capital projects which are material strategically, are
not in the usual course of business or are outside of financial
limits in place.
Conducting post-investment reviews which were not considered
in detail by the Audit or Risk Committees or where the Board
decides a full review is required.
Joint ventures, material arrangements with customers or
suppliers and major investments.
Communication and engagement with stakeholders
Considering the balance of interests between stakeholders
including shareholders, customers, colleagues and the
communities in which we operate.
Ensuring that independent channels are available for colleagues
to engage and raise any matters of concern.
See pages 16-17 for details of the Board’s role in stakeholder
engagement, which supports Directors’ duties under Section 172(1)
of the Companies Act 2006.
Shareholder engagement
The Board seeks feedback from our shareholders on the
Company’s performance against strategy and actively monitors
their views. Full details of how we engage with our shareholders
can be found in the Strategic Report on page 17. In addition,
an Investor Relations report is tabled at each Board meeting.
We recognise that we have a significant number of retail
shareholders, a number of which are also our customers.
We engage with this group through arranging presentations
via the Investor Meet Company platform, which provides an
opportunity for our Group Chief Executive Officer (
CEO
) and
Group Chief Financial Officer (
CFO
) to answer any questions
they may have. Shareholders also had the opportunity to meet
the Directors at the 2023 Annual General Meeting (
AGM
) held
at the offices of Numis Securities Limited.
AGM
The AGM will be held on 25 June 2024 at 11.00am at the offices
of Numis Securities Limited, 45 Gresham Street, London EC2V 7BF.
Full details, and an explanation of business to be considered at
the meeting, will be provided in the Notice of AGM. A copy will be
available on Saga’s corporate website in due course
(www.corporate.saga.co.uk).
Saga plc
Annual Report and Accounts 2024
61
Strategic Report
Financial statements
Additional information
Governance
Board leadership and Company purpose
Audit Committee
Purpose:
To work
closely with the
Risk Committee to
monitor the integrity
of the financial
statements and
the effectiveness
of the systems of
internal control
and to monitor
the effectiveness,
performance and
objectivity of the
internal and
external auditors.
Find out more
in our Audit
Committee
Report on
page 67-70
Risk Committee
Purpose:
To assist
the Board with
articulating and
developing its risk
management
strategy, to provide
oversight of risk
across the Group,
including the
identification of new
and emerging risks,
and to deal with any
material breaches.
Find out more
in our Risk
Committee
Report on
pages 71-73
Nomination
Committee
Purpose:
To review
and monitor the
leadership needs
of the Board and
senior management
and support the
Company’s
continued ability to
recruit and develop
the level and balance
of skills, experience
and knowledge
required to ensure
its long-term
success.
Find out more in
our Nomination
Committee
Report on
pages 64-66
Remuneration
Committee
Purpose:
To
determine the
policy and terms
and conditions
of employment;
remuneration/
compensation and
benefits of senior
executives and to
review workforce
remuneration
and incentive
programmes to
ensure alignment
with culture and
strategy and
determine
share-based
arrangements.
Find out more
in our Directors’
Remuneration
Report on
pages 74-91
Our governance framework
The governance framework was reviewed to ensure it continued to allow business units to operate autonomously within a Group
framework. The Executive Leadership Team Committee was rebranded as Saga’s Operating Board, to support the Group CEO in
executing Group strategy, and new delegated authorities were put in place. The Data Management Committee continues to consider
and support our data strategy. The Chair of the Remuneration Committee is the nominated People Champion and attends colleague
forums and the People Committee. The Audit Committee Chair serves as the Speak Up Champion. During the year, a Non-Executive
Director was appointed as the ESG Champion and regularly meets with the Head of ESG, who attends Operating and plc Board meetings
to discuss ESG strategy and targets. The ESG Steering Committee meets regularly and reports to the Operating Board. For more
information on the governance put in place to monitor ESG strategy, see page 38.
Operating Board
Purpose:
To support the Group CEO in
the performance of duties in relation to
the management and day-to-day running
of the Group.
Duties:
Implement the Group’s strategy.
Act as guardians of the brand, customer
and data strategy.
Cultural leadership and people strategy.
ESG strategy and review/monitoring
of targets. Oversee ESG Steering
Committee.
Review principal risks and uncertainties
across the Group.
Ensure effective implementation of
Group risk policy and internal controls
framework in a consistent manner
across all business areas.
Monitor performance of business units
against targets, objectives and key
performance indicators set by the Board.
Review and discuss talent management
and succession planning throughout
the Group.
Review and monitor culture, DE&I and
colleague engagement metrics.
Manage risk and conduct, review
Group risk and internal audit and
assurance plans, and report potential,
or actual, breaches of regulation or
policy to the Board.
Oversee Data Management Committee.
Innovation and Enterprise Committee
Purpose:
To assist the Board in assessing whether proposals to expand the range of products and
services offered are aligned with the Company’s purpose and that the recommended action plan
is in the best interests of the Group.
This committee reviews proposals to:
set up, or purchase, new businesses or commence new business activity;
purchase stakes in other businesses, or form partnerships or collaborations; and
create new legal entities or other structures outside of agreed strategy, sell businesses
or significant assets or cease to operate any material part, of the Group’s business.
Data
Management
Committee
Purpose:
To
ensure that Saga’s
data is actively
managed,
controlled and
monitored and
oversee the
associated risks.
This Committee
is responsible for
implementing and
embedding the
data governance
framework and
associated
processes
and policies.
ESG
Steering
Committee
Purpose:
Supports delivery
of ESG targets
and drives ESG
accountability
across the
business units and
Group functions.
The Committee
is responsible for
the delivery of
projects with an
ESG focus and
members act as
ESG ambassadors
for their respective
functions.
Board
Approve strategic direction and ensure its successful implementation.
Leadership and management of the Group, including setting the Group’s values and standards
and aligning these with culture.
Encourage innovation and consider the views, interests and needs of key stakeholders, including
colleagues, customers and shareholders.
Ensure that independent channels are available for colleagues to engage and raise matters of
concern and discuss an annual report presented by the Non-Executive Director who acts as
Speak Up Champion.
Ensure compliance with statutory and regulatory obligations.
Ensure a sound system of internal controls and risk management is maintained.
Assess potential impact of decisions.
Oversee ESG strategy in all business units.
Saga plc
Annual Report and Accounts 2024
62
Corporate Governance Statement
Division of responsibilities
The members of the Board
The Board considers the overall size and composition of the
Board to be appropriate, taking into account the independence
of character, integrity, differences of approach and experience
of all the Directors.
Our Directors have a range of skills and experience in a variety
of markets and sectors, particularly in the areas of insurance,
financial services, cruise and travel, customer service, media,
digital, brand management, strategy and asset and risk
management, all of which are invaluable to Saga and fundamental
to the pursuit of our objectives.
Our Non-Executive Directors met regularly during the year
without Executive Directors present and provided objective,
rigorous and constructive challenge to management.
The Senior Independent Director acts as a sounding board for the
Non-Executive Chairman.
Independent Non-Executive Directors and
Board composition
We continue to comply with the Code recommendation that at
least half of our Board, excluding the Chairman, are Non-Executive
Directors whom the Board considers to be independent.
The Board considers Anand Aithal, Peter Bazalgette,
Gemma Godfrey, Julie Hopes and Gareth Hoskin to be
independent Non-Executive Directors, free from any business
or other relationships that could materially interfere with the
exercise of their independent judgement or objective challenge
of management.
Annual re-election
All Directors are required to stand for annual re-election at the
Company’s AGM. The Board’s view is that each of the Directors
standing for re-election (or election in the case of Mike Hazell
and Mark Watkins) should be re-appointed.
We believe that they have the skills required for the Board
to discharge its responsibilities, as outlined in each of their
biographies set out on pages 56-57.
The details of the specific reasons why each Director’s contribution
continues to be important to the Company’s long-term
sustainable success will be included in our Notice of AGM.
DE&I
The Group has a Dignity and Diversity Policy and, during the year,
forums were held on topics relating to DE&I which provided
valuable insight on how colleagues felt about matters such as age,
ethnicity and gender. The Board recognises that it is important to
consider the need to have an inclusive approach for all colleagues.
Gender diversity of the Board and
senior management
Total
Male %
(n)
Female %
(n)
Board
1
9
78%
7
22%
2
Senior management
2
45
58%
26
42%
19
Find out more in:
Environmental, Social and Governance on pages 37-43
Nomination Committee Report on pages 64-66
The Board effectiveness and developmental review consisted of interviews with all Directors, conducted by our Senior Independent Director, with
support from the Group Company Secretary. Areas of focus included how the Board operated over the year and how it ensured that there was sufficient
focus on the strategic priorities for the Group and had the right culture to underpin the Company’s purpose and long-term success.
We also used the interviews to seek views on the effectiveness of the Board Committees and the performance of the Non-Executive Chairman.
The Senior Independent Director and the other Non-Executive Directors also appraised the Non-Executive Chairman’s performance and the
Non-Executive Directors had regular meetings with the Non-Executive Chairman at which their performance was discussed.
Action taken as a result of the 2022/23 evaluation
The review concluded that there was an open and transparent Board
culture with a collaborative and solutions-based approach, an improved
approach to risk management, and customer and colleagues were at the
heart of Board decisions.
Actions taken included:
more discussion centred on data insight to improve the
understanding of customer needs; and
a fresh approach to agenda setting to ensure that the focus of Board
meetings was strategy.
Conclusions from 2023/24 evaluation
Operation of the Board:
The Board had demonstrated resilience in
challenging circumstances, was focused on the right priorities and had the
right skills and experience to steer the organisation through the challenges
and opportunities ahead. Directors had worked hard to strengthen the
flow of dialogue between management and Non-Executive Directors.
Culture:
Going forward, the Board culture and composition will need
to support a growth orientated mindset focused on our customers and
the Saga brand to underpin the long-term success of the Group.
Strategic priorities:
Feedback indicated that there was a greater
emphasis on strategic discussions at Board meetings. As the Group
was made up of different business units, each with its own regulations,
the governance needed to balance the need for autonomous subsidiary
boards with an appropriate level of Group oversight. It was important
that the framework supported delivery of the strategy and ensured
that Saga’s brand, and the impact on all stakeholders, was at the centre
of all decisions. This had been strengthened during the year.
Data and insight:
The Board had spent considerable time discussing
available insight and data relating to our customers’ needs and wants
and there needed to be continued focus on how this would lead to the
continuation and creation of exceptional experiences for them.
Risk management:
The Board was comfortable that they were made
aware, through the Risk Committee Chair and Group CEO, of principal
risks and uncertainties. The detailed discussions around cyber and data
risks were appreciated.
Areas of focus for 2024/25
Saga brand and strategy:
There will be even more discussion around
what the Saga brand represents and how the data and insight we
continue to gather and develop will drive strategy and allow us to grow
the number of customers served and deepen our relationship with them.
Culture required to underpin the Company’s purpose and
long-term success:
The Board will ensure that Saga’s values continue
to have customers at their core and the Board composition, and
ways of working, results in open discussions and good outcomes for
all stakeholders.
ESG matters:
These would be considered in all strategic discussions
and the Board will play its part in monitoring performance against
agreed targets.
Risk management:
The Board will continually discuss how it should
continue to support Executive Directors and how the various skills
of the Non-Executive Directors should be utilised.
Evaluation of the Board, Committees and Directors
1
Eva Eisenschimmel stepped down as a Director on 31 December 2023, reducing the proportion of female Directors on the Board from 30% to 22%
2
Senior management is defined as the Operating Board and Senior Leadership Team
Saga plc
Annual Report and Accounts 2024
63
Strategic Report
Financial statements
Additional information
Governance
Composition, succession and evaluation
“The Committee was mindful that it was
important to keep under review the executive
and non-executive leadership needs of the
organisation, with the aim of ensuring the
continued ability of the Company to compete
effectively in the marketplace.”
Sir Peter Bazalgette
Chair, Nomination Committee
The Committee’s responsibilities
Review the structure, size and composition of the Board
needed to ensure the right balance of skills, experience and
knowledge are in place.
Consider how to develop a diverse pipeline in succession
planning and talent development of Executive Directors and
senior executives.
Evaluate the independence, experience, diversity and
knowledge of the Board.
Identify and nominate candidates to fill Board and
Committee vacancies.
Review Board performance evaluation results in relation
to Board composition.
The Committee’s Terms of Reference were reviewed
during the year (approved by the Board on 1 February 2024)
and are available on our corporate website
(www.corporate.saga.co.uk/about-us/ governance).
Committee evaluation
An evaluation of the Committee’s effectiveness took place
during the year, as part of the Board effectiveness review (for
details see page 63).
The evaluation indicated that the Committee had successfully
overseen the processes to find successors for the Group Chief
Executive Officer (
CEO
) and Group Chief Financial Officer (
CFO
)
roles and Committee members were pleased with the steps
taken to gather data relating to ethnicity.
Focus for 2024/25 will be on talent development within the
Group, succession planning for executive roles and how the
Group will meet its targets relating to DE&I.
Committee composition and attendance
Time spent on matters
What we did during the year
Board composition
Succession planning and
talent management
Diversity, equity and
inclusion (
DE&I
)
Board evaluation
c.75%
c.10%
c.10%
c.5%
Members
(majority are independent
Non-Executive Directors)
Member
since
Max.
possible
meetings
Attendance
Peter Bazalgette (Chair)
30 Sep 2022
4
4
Anand Aithal
1
31 Dec 2023
–
–
Roger De Haan
5 Oct 2020
4
4
Eva Eisenschimmel
2
4 Apr 2019
4
4
Gemma Godfrey
1
31 Dec 2023
–
–
Gareth Hoskin
1
31 Dec 2023
–
–
1
Anand Aithal, Gemma Godfrey and Gareth Hoskin became members of the Committee on 31 December 2023
2
Eva Eisenschimmel ceased to be a member of the Committee on 31 December 2023
Saga plc
Annual Report and Accounts 2024
64
Corporate Governance Statement
Nomination Committee Report
Dear shareholder,
This year, the Committee’s primary focus was to ensure that
the Board, and its committees, had the right balance of skills,
experience and diversity in a changing company.
The Committee played a vital role in the succession planning and
selection process for the roles of the Group CEO and Group CFO.
I am pleased that this resulted in the appointments of Mike Hazell
as Group CEO and Mark Watkins as Group CFO. I look forward to
working with them and thank their predecessors, Euan Sutherland
and James Quin for their valued contribution.
Board composition
The Committee was mindful that it was important to keep under
review the executive and non-executive leadership needs of the
organisation, with the aim of ensuring the continued ability of the
Company to compete effectively in the marketplace.
Our Terms of Reference set out how we recruit and appoint
Directors to the Board. They stipulate that we will use open
advertising, or the services of external advisers, to facilitate
a search for the best possible candidates.
Following James Quin advising the Board of his intention to step
down and pursue a portfolio career, we began a search for his
successor as our Group CFO. A job specification was carefully
crafted to reflect the requirements for the role, including the skills
and experience required.
Teneo People Advisory (
Teneo
) was appointed as an independent
search agency to conduct a thorough search. Teneo has no other
connection with the Company.
A shortlist was considered for the role and a series of interviews
with members of the Committee, Non-Executive Directors, the
Chairman and the Group CEO followed for preferred candidates
and references were obtained.
The Committee recommended the appointment of Mike Hazell
to the role and this was subsequently approved by the Board
who agreed that his multi-sector experience in a variety of senior
finance roles would support delivery of the Group’s strategy to
maximise the performance of our core businesses and reduce debt.
Mike assumed the position of Group CFO on 9 October 2023.
The same process was followed when Euan Sutherland informed
the Board of his intention to step down as Group CEO after four
years with the business.
Committee members agreed that the CEO role specification
should highlight the need for a CEO who would further develop
the vision and implement the strategy for future growth and that
this should be a broad-based business leader who would work to
address the evolution of customer needs and harness the
advantages that technology and data offer.
Teneo put forward internal and external candidates who matched
the criteria set out in the role specification and who they felt
would work with all stakeholder groups to improve Company
performance and value creation, deleverage the Group and
optimise the consumer brand. Selected candidates were
interviewed by the Chairman, Remuneration Committee Chair
and myself.
During the search, Mike Hazell was considered for the role and
the Committee felt that his performance to date, and experience
in a variety of executive roles, would provide the right skills and
experience to take Saga to the next phase of its development.
Mike became Group CEO on 28 November 2023.
This meant that the role of the Group CFO needed to be filled and
the Board agreed with the Committee’s recommendation that
Mark Watkins, an internal candidate and chartered accountant
who has held a series of senior roles across finance, strategy
and investor relations in a 20-year career, be appointed. The
Committee felt that Mark’s previous experience of Saga would
complement Mike’s fresh perspective. Mark was appointed to
the role of Group CFO on 28 November 2023.
For all searches, candidates were assessed against their strategic
skill set, experience, personality and fit and, during the process,
care was taken to ensure that the pool of candidates offered
diversity of perspective, gender, social and ethnic backgrounds.
The Committee also considered the challenges and opportunities
facing the Group and the skills and expertise that would be needed
on the Board in the future.
Subsequently, Eva Eisenschimmel took the decision to step down
from the Board to focus on her executive role with effect from
31 December 2023.
Following the changes to the Board, Committee members
discussed how to streamline membership of the committees while
remaining compliant with the UK Corporate Governance Code
(the
Code
). The Board agreed with the Committee’s proposal
that Anand Aithal, Gemma Godfrey and Gareth Hoskin should
become members of the Committee, and that Julie Hopes should
assume the position of Remuneration Committee Chair. This
ensured that Non-Executive Directors’ skills were carefully
matched to Committee membership and that no individual
was overloaded.
Independence and election of Directors
The Committee was pleased to note that the Board had approved
the re-appointment of Roger De Haan as Chairman after serving
his initial three-year term.
After the year end, but prior to publication of this Annual Report
and Accounts, the Committee considered the profiles of the
Directors, each Director’s independence, contribution and
time commitment necessary to perform their duties and
recommended to the Board that all should be put forward for
re-election (or election in the case of the Group CEO and Group
CFO) at the 2024 Annual General Meeting.
The Code requires that at least half of the Board, excluding the
Chairman, are considered to be independent Non-Executive
Directors. At 31 January 2024, five of the nine (56%) Board
members were independent Non-Executive Directors, with
other members being the Non-Executive Chairman and three
Executive Directors.
Saga plc
Annual Report and Accounts 2024
65
Strategic Report
Financial statements
Additional information
Governance
DE&I, talent and succession planning
The Committee considered the approach to evaluate
performance, talent and succession and how a diverse and
high-quality pipeline would be created.
Committee members heard about the Group’s plans to continue
to embrace diversity and further develop an equitable culture
which promotes inclusion and aims to lead the conversation on
age diversity in the workforce. It was recognised that diversity
is wider than gender and ethnicity and encompasses many
cultural differences.
The Company has a Diversity, Equity and Inclusion Equal
Opportunities Policy in place, which highlights how everyone
is responsible for treating others with dignity, without unfair
discrimination, and promoting equality and diversity in all
matters, including gender and ethnicity. This policy applies to the
Group, including the Board, and is linked to Company strategy.
All colleagues must report any breaches, whether actual or
perceived, to their line manager or to the People team. There
is also the option to report on an anonymous basis via the
Company’s Speak Up process.
While the policy does not currently set specific targets, the
Board agreed data-driven targets as part of the Company’s
Environmental, Social and Governance strategy. For more
information, see page 37. It was agreed that these targets would
be a clear driver of improvements in diverse and equitable
representation across the Group.
Diversity is considered as part of the appointment process, with
reference to diversity of perspective, including gender, social and
ethnic backgrounds.
The Committee considered the requirement to report on the
gender identity or sex and ethnic background of those on the
Board and in senior or executive management. Since the year end,
the Company has conducted a colleague diversity review for
senior leaders and above, led by the Chief People Officer, to collect
this data by way of a survey, which explained the importance of
collecting this data. This also included data on neurodiversity.
As a result of Eva Eisenschimmel leaving the Board in December
2023, the Board now has a 22% gender balance of women and
there is 42% in the Operating Board and senior layers of
management below Board level. Details of gender balance of those
in senior management, and their direct reports, can be found on
page 63. One member of the Board is from a minority ethnic
background and the intention is to, at least, maintain this position.
The Committee recognises that this does not meet the targets
set out in the Listing Rules on board diversity and this is something
the Board is committed to improving in the coming years. Targets
have now been set and disclosed on our corporate website
(www.corporate.saga.co.uk/about-us/environmental-social-and-
governance/). The intention is to increase female representation
in the senior management team to 50%, and 40% on the Board,
by 2027.
Board evaluation
It was decided that the best way to stimulate the Board’s thinking,
on how they can carry out their role and focus on continually
improving their effectiveness, was for me to conduct interviews
with each of the Directors, with the support of the Group
Company Secretary.
The interviews were based around how the Board and
Committees have operated over the past year, how sufficient
focus can be achieved on this year’s key priorities and what skills,
experience and strengths are required to steer the Board through
the challenges and opportunities ahead. We also discussed how
culture can, and should, underpin the Company’s purpose and
long-term success.
The evaluation report was discussed by the Board and this
confirmed that the Board had demonstrated resilience in
challenging circumstances, was focused on the right priorities and
had the right skills and experience to steer the organisation
through the challenges and opportunities ahead. More details can
be found on page 63.
Sir Peter Bazalgette
Chair, Nomination Committee
Saga plc
Annual Report and Accounts 2024
66
Corporate Governance Statement
Nomination Committee Report
continued
“The Committee retained focus on the Group
improving its liquidity and reducing the level of
debt. It played a vital role as steps were taken
to increase the Group’s financial flexibility.”
Gareth Hoskin
Chair, Audit Committee
The Committee’s responsibilities
Consider the integrity of the financial statements.
Review the adequacy and effectiveness of the Company’s
internal financial controls and other internal control systems.
Monitor the effectiveness of the Company’s Internal Audit
and Assurance (
IAA
) and Finance functions; and the
external auditor.
Review the IAA work plan.
Review the Group’s interim and preliminary financial
statements and accounting policies.
Review and approve key judgements and estimates used
as a basis for preparing the Group’s financial statements.
Approve the remuneration and terms of engagement,
and determine the independence, of the external auditor.
Monitor the scope of the annual audit and the extent of
non-audit work undertaken by the external auditor.
Provide recommendations on the fair, balanced and
understandable assessment, going concern basis of
preparation and viability statements.
Ensure that Speak Up and anti-fraud systems are in place
and monitored.
The Committee’s Terms of Reference were reviewed during
the year (approved by the Board on 1 February 2024) and
are available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
Committee evaluation
An effectiveness evaluation of the Committee took place during
the year, as part of the Board effectiveness review (for details,
see page 63).
The review concluded that the Committee was chaired well with
an appropriate level of review and challenge and acknowledged
that steps were being taken to strengthen financial systems
and processes.
The focus for 2024/25 will be oversight of the implications of
transitioning to a capital light model.
Committee composition and attendance
Time spent on matters
What we did during the year
Financial statements (including
key judgements and estimates)
Internal financial controls
Internal audit
External audit
Whistleblowing (
Speak Up
)
c.30%
c.10%
c.20%
c.30%
c.10%
Members
(all are independent
Non-Executive Directors)
Member
since
Max.
possible
meetings
Attendance
Gareth Hoskin (Chair)
4 Apr 19
8
8
Anand Aithal
17 Nov 22
8
7
Julie Hopes
31 Dec 20
8
8
The Board is satisfied that Gareth Hoskin has recent and
relevant financial experience and competency in accounting,
reflected by his professional qualification as a chartered
accountant and relevant experience throughout his career.
The Board is also satisfied that the Committee members
possess an appropriate level of independence and offer a
depth of financial and commercial experience across various
industries, including the sectors in which the Company operates.
The Board of Directors’ biographies on pages 56-57 contain
details of Committee members’ skills and experience.
Saga plc
Annual Report and Accounts 2024
67
Strategic Report
Financial statements
Additional information
Governance
Audit Committee Report
Dear shareholder,
The Committee continued to support the Board and provide
independent scrutiny of the Group’s financial reporting and
internal controls.
The Committee retained focus on the Group improving its liquidity and
reducing the level of debt. It played a vital role as steps were taken to
increase the Group’s financial flexibility. This included the delivery
of central cost savings following the move towards a leaner operating
model; an increase to the loan facility with Roger De Haan, to £85.0m,
alongside an extension of the maturity; and the exit of some of our
smaller, loss-making activities to prioritise growth within our core
businesses. During the year, the Committee approved and oversaw
audits in areas such as financial key controls; Consumer Duty
implementation; application fraud; and data; and monitored
assurance work on an audit of customers in vulnerable situations.
We also continued to work closely with the Risk Committee. For
more detail on how the risk to our business strategy was assessed,
see the Risk Committee report on pages 71-73.
Reporting
Interim and preliminary results
The interim and preliminary results were reviewed and challenged,
together with the appropriateness, and application, of key accounting
policies and areas of significant judgement and how these were made.
KPMG LLP (
KPMG
) provided reports throughout the year,
focused on areas identified as having significant audit risk.
Significant issues
Impacts of high inflation and uncertain economic conditions
on liquidity, going concern and viability
As set out in detail later in this report, the Committee reviewed
and challenged the assessments that management made,
including the appropriateness of the underlying forecast
assumptions used in the modelling for going concern and viability.
During the year, the Committee discussed the effect of high costs
and inflation in a competitive environment and, in particular,
the decision to reduce central operating expenses and review
investment in the Group’s newer, smaller, loss-making businesses.
Committee members also considered the impact of an increase
to the value, and extension to the repayment date, of the existing
loan facility with Roger De Haan.
Find out more in:
Note 2.1 of the financial statements on page 110
Viability Statement on page 50
Independent Auditor’s Report to the Members of Saga plc
on pages 96-104
Valuation of insurance contract liabilities
Following the adoption of International Financial Reporting Standard
(
IFRS
) 17 ‘Insurance Contracts’, the valuation of insurance contract
liabilities continued to be based on significant estimates and the
application of an appropriate discount rate to liabilities incurred for
claims. The Committee reviewed and challenged the key judgements
relating to the estimate of the core actuarial best estimate liability,
which is based on historical loss data. It also reviewed the adjustment
to the actuarial best estimate in respect of events not in data, and the
distribution of ultimate claim costs around the best estimate,
including and specifically ultimate claim costs at the 85% confidence
level which drives the IFRS 17 risk adjustment.
Find out more in:
Note 28 of the financial statements on pages 166-169
Independent Auditor’s Report to the Members of Saga plc
on pages 96-104
Valuation of goodwill
The Committee reviewed the impairment assessments of the
Insurance goodwill balance, as at 31 July 2023 and 31 January 2024,
and considered the assumptions made by management in relation
to the calculation of the discount and terminal growth rates.
The Committee challenged the robustness of the underlying
cash flow forecasts and the stresses considered in determining
the impairment of £68.1m recognised in July, and the further
impairment of £36.8m, taking the total impairment charge for
the year to £104.9m at 31 January 2024.
Find out more in:
Note 16 of the financial statements on pages 143-144
Independent Auditor’s Report to the Members of Saga plc
on pages 96-104
Valuation of the parent company’s investment in subsidiaries
The Committee evaluated the recoverability of the carrying value
of the investment in subsidiaries held on the balance sheet of the
Company. It considered the cash flow forecasts, discount rates,
valuation methodology and stresses in determining that no further
impairment would be recognised during the year.
Find out more in:
Note 2 of the Company financial statements on pages 185-186
Independent Auditor’s Report to the Members of Saga plc
on pages 96-104
Valuation of ocean cruise ships
The Committee reviewed indicators of impairment for the Group’s
ocean cruise ships at 31 July 2023 and at 31 January 2024.
At both dates, these reviews failed to identify any new indicators
of impairment and, therefore, no impairment assessments were
conducted. The key items considered were changes in the trading
outlook for the Ocean Cruise division, and changes in the useful
economic lives and residual values of the assets due to
technological obsolescence or changes in climate change
regulations and the discount rate.
Find out more in Note 17 of the financial statements on
pages 145-146
Carrying value of other material assets
The Committee reviewed indicators of impairment, and resultant
impairment reviews, of the Group’s other items of property,
plant and equipment, river cruise ships and software intangibles.
For land and buildings, the Committee considered whether any
buildings recognised as held for sale at the balance sheet date still
met the necessary criteria as per IFRS 5 ‘Non-current Assets Held
for Sale and Discontinued Operations’ and, for those that did,
challenged the basis of the updated valuations obtained.
Defined benefit pension scheme
The Master Trust defined contribution scheme, operated by
Aviva, that was set up in October 2021 provided a fair scheme for
all colleagues and mitigated the risk of future deficits developing
in previous schemes that were closed to future accruals when
the Master Trust was launched. The Group continued to make
the agreed payments of £5.8m (2023: £5.8m) to the defined
benefit pension fund as part of the deficit recovery plan.
The Committee noted the assumptions made by the Group’s
pension scheme advisers in determining the valuation of the
scheme in accordance with International Accounting Standard 19
‘Employee Benefits’ at 31 July 2023 and 31 January 2024.
Find out more in Note 27 of the financial statements on
pages 162-165
Saga plc
Annual Report and Accounts 2024
68
Corporate Governance Statement
Audit Committee Report
continued
Internal control observations of the
external auditor
The Committee considered the internal control observations
identified by the Group’s external auditor, as part of the audit,
and management attended Committee meetings to provide
context and assurance regarding appropriate actions.
Accounting policies
The Committee was satisfied that the key accounting policy
choices and judgements were appropriate and provided a true
and fair view of the Company’s financial performance and position.
This included the application of the new reporting standard,
IFRS 17, and the judgements and decisions made in the application
thereof. The Committee also satisfied themselves that the
appropriate controls over new processes, established to
implement the new accounting standard, were robust.
Fair, balanced and understandable
We advised the Board that we supported the statement on
page 53 that this Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy. This was following
consideration of whether:
the report was clear and presented a balanced view of
successes, challenges, opportunities and risks;
key messages were prominent and an appropriate level of
key performance indicators (
KPIs
) were disclosed;
business segments, significant issues and key judgements
reporting was consistent with disclosures in the financial
statements; and
definitions provided were explained and Alternative
Performance Measures were reconciled with the closest
IFRS measure in the financial statements.
Going concern and viability
The going concern basis of preparation disclosure note is set out
on page 110, and the Viability Statement, and the methodology
for assessing the Group’s ongoing viability, are set out on page 50.
Our review took account of the Group’s current position, the
principal risks and uncertainties (as reviewed and refreshed by
the Risk Committee and detailed on pages 46-49) and the
methodology used to provide an assessment of ongoing viability
over the five-year period of review. We considered the relevant
assessment time horizon; severe but plausible potential
outcomes; and the appropriateness of the higher and lower case
trading scenarios modelled.
In particular, we considered the ongoing challenging market for
Insurance, in an environment of heightened global economic
uncertainty, and how this could affect both the viability of the
Group and the going concern basis of preparation that
underpins the Group’s financial statements. We also considered
management actions that may be taken to manage the solvency
of the Group in the event of lower case trading scenarios and other
risks materialising, including a drawdown of the £85.0m loan
facility with Roger De Haan. Based on this review, we confirmed
to the Board that we considered that it was reasonable for the
Directors to continue to prepare the financial statements on
a going concern basis and to make the Viability Statement
on page 50.
Audit and control
Internal controls
The Committee reviewed the outcome of the audits of key financial
controls. The Group Financial Controller provided an update on
accounting issues and key aspects of financial controls at each
meeting. The Committee continued to receive updates on the
implications of IFRS 17, regulatory developments and the progress
made with the Group’s preparatory work on its adoption and
application in this financial year. Throughout the year, management
updated the Committee on plans to replace the Group’s core
general ledger accounting system to simplify and improve the
efficiency of processes, strengthen security and improve the
financial control environment through automation of manual
processes. The Risk Committee also considered the impact
and acceptable level of risk for this project.
Find out more in our Risk Committee Report on
pages 71-73
Financial crime and Speak Up reporting
During the year, policies covering financial crime (including
anti-bribery; anti-corruption; anti-fraud; anti-money laundering
and treasury sanctions; and asset freezing) were reviewed and
approved. Existing Speak Up processes and policy were
reviewed against best practice to ensure continued integrity
and effectiveness and to encourage colleague engagement.
The Committee recommended the Speak Up policy for Board
approval which was granted on 28 March 2023. It is my
responsibility to ensure the integrity, independence and
effectiveness of the Company’s Speak Up Policy and procedures.
The Committee reviewed all reported cases and concluded that
these had been handled in accordance with the policy or, where
applicable, exceptions noted accordingly. An independent review
by management, identified enhancements to the process, which
the Committee agreed with.
IAA
The combination of Internal Audit and Risk functions in the
non-financial services businesses last year, allows for greater
alignment between these areas to improve risk maturity within
the Group and to support delivery of the strategy. Insurance
continues to maintain its own Risk function. The framework
enables the Company to attract subject matter experts,
combined under one leadership structure, to support synergies
and combined assurance, while maintaining operational
independence of the 2
nd
and 3
rd
lines.
We approved the Internal Audit work plan and considered the
internal audits conducted throughout the year. The audit plan was
refreshed on a quarterly basis, with progress being appropriately
reported by the IAA Director and amendments to the audit plan
being approved by the Committee. We were satisfied that the
IAA function, a team of 12 people with a broad range of skills,
when combined with the use of external resource for specialised
audits, had appropriate resources. The IAA Director attended
Committee meetings and provided regular reports on the
progress of the Internal Audit plan. Two private meetings were
also held with the IAA Director throughout the year.
The Committee monitored whether the Internal Audit function
was independent of management, and so able to exercise
independent judgement throughout the year and was satisfied
that this was the case.
Saga plc
Annual Report and Accounts 2024
69
Strategic Report
Financial statements
Additional information
Governance
A quality assurance and improvement programme, as required
by the Chartered Institute of Internal Auditors (
CIIA
), was
considered. The Committee concluded that the Internal Audit
function complied with the CIIA’s definition of internal auditing,
the core principles of the Professional Practice of Internal Auditing
and the Code of Ethics.
The Committee (in cooperation with the Risk Committee)
monitored the work of the Risk, Compliance and Internal Audit
functions to ensure that their activities complemented each
other appropriately. KPIs included the timeliness of issuing
reports and completing issues assurance. We approved the
Internal Audit Charter, which is available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
Work conducted over the year was risk-based and covered both
financial and non-financial controls. A selection is shown below:
Financial key controls (Group-wide):
Review of the application
of key finance controls, including those related to fraud.
Consumer Duty (Insurance):
Review of the implementation
of Consumer Duty.
Application fraud (Insurance):
Audit scope included an
end-to-end review of key controls to detect and prevent
application fraud, including use of tools and data.
Data (Group-wide):
Scope included the identification, and
categorisation of systems that maintain, process or store
personally identifiable information; and review of incident
response, root cause analysis, corrective actions, data quality,
ownership and access.
Where improvements were identified, including the oversight
and prioritisation of change and the optimisation of the operating
model, available resources and financial controls, an action plan
was agreed with management and appropriately tracked.
Internal Audit also presented their annual year-end review of the
effectiveness of the risk management and controls framework.
They found it reasonable for the Committee to conclude that,
while areas for improvement were identified, the internal risk
and control environment is broadly effective.
Find out more in:
Risk management on pages 44-45
Risk Committee Report on pages 71-73
Subsidiary audit committees
The Non-Executive Directors, who chair the Saga Services
Limited, Saga Personal Finance Limited, Acromas Insurance
Company Limited and Saga Cruise audit, risk and compliance
committees, ensure that there is an adequate level of oversight
and that matters are escalated to the Committee as appropriate.
External audit
KPMG was appointed as the Company’s external auditor for the
financial year ended 31 January 2018 (following a competitive
tender process in 2016/17) and has been re-appointed annually
since then. Timothy Butchart has been the audit partner from
the start of the 2022/23 audit.
Audit planning
KPMG presented an audit plan for the financial year, together
with an outline of its risk assessments, materiality thresholds and
planned approach. The key aspects of the plan are set out in the
Independent Auditor’s Report to the Members of Saga plc on
pages 96-104.
The Committee considered the audit scope, materiality and coverage,
areas of audit focus and KPMG’s planned response to identified
significant audit risks, taking size, complexity and susceptibility to
fraud and error into account. We also considered, and approved,
KPMG’s engagement terms and fee proposal for 2023/24.
Auditor independence and non-audit services
During the year, the Committee met twice with the external
auditor without members of management being present.
The challenge, independence and objectivity of KPMG was
monitored continuously by the Committee and independence was
confirmed by the auditor throughout the year in letters addressed
to the Committee.
In accordance with the Revised Ethical Standard issued by the
Financial Reporting Council in 2019, the Committee has a robust
Auditor Independence Policy on non-audit fees and employment
of former employees of the external auditor. The policy includes
a list of non-audit services which we are satisfied that the external
auditor can carry out without affecting its independence as
external auditor. There are clear approval levels where the
Committee Chair, or the whole Committee, is required to
authorise assignments. The Auditor Independence Policy was
reviewed on 25 September 2023.
The audit fees payable to KPMG in respect of the year ended
31 January 2024 were £2.2m (2023: £1.9m) and non-audit service
fees incurred were £0.3m (2023: £0.2m), the latter being
incurred for work to review the Group’s interim results and
essential reporting to our banks and travel and insurance industry
regulators. This equates to a non-audit to audit fee ratio of 0.1
(2023: 0.1). A summary of fees paid to the external auditor is set
out in Note 4 to the consolidated financial statements on page 134.
Audit quality and effectiveness of external auditor
The following were considered when assessing the effectiveness
of KPMG:
Our perception of KPMG’s understanding and insight into the
Group’s business model.
How key areas of judgement were approached by KPMG, the
extent of challenge and the quality of reporting.
The content of, and management’s responsiveness to, KPMG’s
management letter.
Feedback from management following completion of an
evaluation survey on the audit process (including audit scope,
audit communication, independence and objectivity).
The evaluation concluded that the external auditor had run the
audit process well, retained a high level of independence and had
thoroughly, and fairly, challenged the key accounting judgements
and estimates. The conclusion was that the audit was judged to
be good quality.
The Committee is satisfied that the audit continues to be
effective and provides independent and objective challenge to
management. A recommendation was made to the Board for
the re-appointment of KPMG as the Company’s auditor at the
forthcoming Annual General Meeting.
Gareth Hoskin
Chair, Audit Committee
Audit Committee Report
continued
Saga plc
Annual Report and Accounts 2024
70
Corporate Governance Statement
“We held robust discussions on the
macroeconomic landscape and how our
internal control environment should operate,
to address the increased cybercrime risk, and
ensure that our data was effectively protected.”
Julie Hopes
Chair, Risk Committee
The Committee’s responsibilities
Review and advise the Board on the Group’s overall risk
appetite, tolerance, strategy and risk assessment processes.
Oversee and advise the Board on current risk exposure and
future risk strategy.
Monitor the effectiveness of the Group’s risk management
and internal control systems and conduct risk management
procedures.
Monitor principal risks and uncertainties (
PRUs
).
Consider the Group’s capability to identify, and manage,
new and emerging risk.
Provide qualitative and quantitative advice to the
Remuneration Committee on risk weightings.
Review material breaches of risk limits and adequacy of action.
The Committee’s Terms of Reference were reviewed during
the year (approved by the Board on 1 February 2024) and
are available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
Committee evaluation
An evaluation of the Committee’s effectiveness took place
during the year, as part of the Board effectiveness review
(for details, see page 63).
The review indicated that the meetings were well chaired,
focused on the right areas and that the Board were made
aware of, and discussed, matters of importance, such as
cyber and data risks.
The focus for 2024/25 will be on how the Board can continue
to form a common view of the key risks to the business, agree
appropriate risk appetites and support Executive Directors
and management accordingly.
Committee composition and attendance
Time spent on matters
What we did during the year
Management and reporting
Risk strategy, policy
and appetites
Compliance
Data risk control
c.45%
c.30%
c.10%
c.15%
Members
(all are independent
Non-Executive Directors)
Member since
Max.
possible
meetings
Attendance
Julie Hopes (Chair)
4 Apr 2019
6
6
Gemma Godfrey
17 Nov 2022
6
5
Gareth Hoskin
4 Apr 2019
6
6
Saga plc
Annual Report and Accounts 2024
71
Strategic Report
Financial statements
Additional information
Governance
Risk Committee Report
Dear shareholder,
During the year, the Risk Committee considered how the
redesign of the risk framework during the previous year had been
implemented, and embedded, to support the fulfilment of fiduciary
duties, promote good governance and ensure business objectives
were delivered, while enhancing risk maturity within the business.
We revised the Risk Policy during the year to make it clearer and
quantified risk appetite statements which recognised a reduction
in the level of contagion risk as a result of the revised model.
We held robust discussions on the macroeconomic landscape
and how our internal control environment should operate, to
address the increased cybercrime risk, and ensure that our
data was effectively protected. We also considered the actions
being taken as part of the Group’s Environmental, Social and
Governance (
ESG
) strategy, with a focus on climate change and
carbon emissions.
Management and reporting
The Committee considered the rationale behind the selection
of the Group’s PRUs. PRUs were reviewed at each meeting and
refreshed regularly during the year, ensuring that new and
emerging risks and opportunities were captured and remained
at the forefront of the Group’s strategic planning.
Due to significant organisational change, the risk of capability
and capacity of colleagues was heightened. 2
nd
line carried out a
review and confirmed adequate plans were in place to manage risk
during this time of change, as the operating model was redesigned.
The Committee considered it appropriate to consider the risk
associated with the Company’s ability to refinance debt and take
into account facility maturities. This was captured in the PRU
relating to liquidity/debt refinancing and mitigating actions were
robustly discussed. This included an extension to the value, and
repayment date, of the existing loan facility with Roger De Haan,
together with cost reductions carried out in the third quarter.
For more information on the Group’s PRUs see pages 46-49.
The Committee reviewed the risks relating to the performance
of each business and those arising from incidents in relation
to control failures or weaknesses. Material risk matters were
escalated, from subsidiaries to the Committee, where
appropriate. We discussed these incidents in the context of the
risk framework to identify the impact of causes, and necessary
actions and monitoring requirements.
Risk management, compliance and
internal controls
In coordination with the Audit Committee, we discussed the
effectiveness of the Group risk management framework and
internal control systems, including reference to all material
financial, operational and compliance controls. The Committee
concluded that the internal risk and control environment was
broadly effective, with appropriate controls to mitigate key risks.
The Group will continue to take action to enhance the customer
experience, strengthen supplier risk management processes
and embed management actions and risk maturity across
its businesses.
We recommended to the Board that the appropriate statements
could be made, confirming that a robust assessment of emerging
and principal risks facing the Group and a review of the
effectiveness of the risk management process had been carried
out (see pages 44-45).
Risk strategy, policy and appetite
Changes and additions to the PRUs were scrutinised, in line with
the agreed strategy and business model, and the results of this
review are shown in the Strategic Report on pages 46-49.
These formed the basis of the scenario testing used to produce
the Viability Statement (see page 50).
Our risk management processes are described on pages 44-45.
These are designed to manage, rather than eliminate, the risk
of failure to achieve business objectives and can only provide
reasonable, and not absolute, assurance against material
misstatement or loss.
We reviewed the Group risk appetites and risk framework during
the year. Since the year end, the Committee reviewed the
effectiveness of the risk function and considered the risk target
operating model and future roadmap. We benchmarked progress
in risk maturity against the principles set by industry best practice.
We reviewed and recommended a Risk Policy for Board approval
during the year, setting out the purpose, authority and
responsibility of the risk management and control function and
its role within the Group. The Board approved the Risk Policy
on 28 March 2023.
Data risk control framework
The Committee heard how management had significantly
progressed a control framework to ensure that data was
protected within the Group. This included enhanced processes
on subject access requests, retention of data and new software to
assist with the workflow of data protection impact assessments.
Cyber risk
The Chief Information Officer and Head of Information Security
attended Committee meetings so that a full discussion regarding
the steps being taken to protect Saga against the increased threat
of a cyber attack could take place. The Committee noted that this
was due to a more active threat environment as a result of the
macroeconomic environment and geopolitical uncertainty.
Consumer Duty
Following the introduction of the Consumer Duty rules that came
into force on 31 July 2023, the Committee supported the
implementation of the Group Consumer Duty plan.
General ledger accounting system change
At the request of the Audit Committee, the Committee discussed
the risks associated with the proposed replacement of the
general ledger accounting system. The Committee agreed with
management’s proposal to postpone implementation to the
second half of the year to reduce project risks. Due to the
importance of this project and the impact on the financial control
environment, the Committee members agreed to maintain
oversight of the project risks, receiving regular updates from
management and the business unit risk and audit committees.
Economic climate
Cost inflation continued to be discussed as a significant
short-term impact to the Group. The Committee considered how
inflation had exacerbated the cost of living crisis affecting the UK,
and continued to influence behavioural habits of our customers
and colleagues.
Saga plc
Annual Report and Accounts 2024
72
Corporate Governance Statement
Risk Committee Report
continued
Climate change
The Committee reviewed the risks relating to climate change,
including both physical risks associated with the direct
impacts of climate change and the transition risks arising
from the adjustment to a low-carbon, sustainable economy.
We considered the high level of uncertainty around climate
change risk, and the associated impacts to operations, business
sustainability and reputation.
The regulatory requirements around climate risk management
faced by Saga were discussed, including compliance with the
recommendations of the Task Force on Climate-Related
Financial Disclosures and the embedding of climate-related risk
management across the Group going forward. This is set out in
our separate ESG Report, which can be found on our corporate
website (www.corporate.saga/about-us/environmental-social-
and-governance).
Julie Hopes
Chair, Risk Committee
Saga plc
Annual Report and Accounts 2024
73
Strategic Report
Financial statements
Additional information
Governance
“We continue to be as focused on our
colleagues as we are on our customers.
The Committee’s aim is to ensure that our
approach to rewarding colleagues at all levels
is aligned to our business strategy, which
places customer service and colleague
engagement at its core.”
Julie Hopes
Chair, Remuneration Committee
The Committee’s responsibilities
Set and monitor the Remuneration Policy (the
Policy
)
for senior executives, considering legal and regulatory
requirements and all relevant factors to ensure alignment
with delivery of value over the long term.
Determine and monitor remuneration packages for
Executive Directors, the Chairman and senior management.
Review workforce remuneration and incentive programmes
to encourage desirable culture, behaviour and responsible
risk taking.
Determine all aspects of share-based incentive arrangements.
Review and administer colleague share schemes.
Set key performance indicators (
KPIs
) for the Annual Bonus
Plan and long-term incentives.
Prepare a Directors’ Remuneration Report annually.
The Remuneration Committee’s Terms of Reference were
reviewed during the year (approved by the Board on
1 February 2024) and are available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
Committee evaluation
An evaluation of the Committee’s effectiveness took place
during the year, as part of the Board effectiveness review.
For details, see page 63.
It was acknowledged that the Remuneration Committee
had navigated some difficult decisions and had applied and
monitored the Policy well, with clear direction from the
Committee Chairs balanced by helpful advice from
external advisers.
The Committee’s focus for 2024/25 will be to continue to
balance discussions to ensure that the wider workforce is fairly
represented and decisions are made taking the impact on all
stakeholders into account.
Members (all are independent
Non-Executive Directors)
Member
since
Max.
possible
meetings
Attendance
Julie Hopes (Chair)
1
4 Apr 2019
10
10
Eva Eisenschimmel
2
4 Apr 2019
10
9
Gemma Godfrey
17 Nov 2022
10
9
Peter Bazalgette
17 Nov 2022
10
10
Committee composition and attendance
Time spent on matters
What we did during the year
Remuneration Policy
c.10%
Regulatory developments
c.10%
Senior management
remuneration
c.40%
Share schemes
c.20%
Colleague compensation
and benefits structure
c.20%
1
Julie Hopes became Chair of the Committee on 31 December 2023
2
Eva Eisenschimmel ceased to be a member and Chair of the Committee on 31 December 2023
Saga plc
Annual Report and Accounts 2024
74
Directors’ Remuneration Report
Annual Statement
Dear shareholder,
I am pleased to present to you the Directors’ Remuneration Report
for the year ended 31 January 2024 which has been approved by
both the Remuneration Committee (the
Committee
) and the Board.
As the new Chair of the Committee since 31 December 2023,
I would firstly like to take the opportunity to thank my predecessor,
Eva Eisenschimmel, for her excellent leadership of the Committee
and her advice and support as I transitioned into the role.
Rising to the challenges
Inflation, and the cost of living, continued to provide a challenging
landscape throughout 2023, particularly in motor insurance.
Despite these ongoing pressures, I am pleased to highlight that
Underlying Profit Before Tax
3
more than doubled when compared
with the prior year, demonstrating the growth of our Cruise and
Travel businesses.
The demand for our cruises has been very positive across both
Ocean and River Cruise, with increased occupancy year-on-year
and, at April 2024, we had exceptionally strong bookings for
2024/25. Passengers in our Travel business also increased in
the year. Through the determination of our leadership team,
we anticipate that these numbers will continue to grow.
Motor insurance has been a challenge, despite adapting to greater
competition and a number of regulatory changes. Going forward,
we believe the market will improve and we are prioritising the
redevelopment of these operations and channelling our efforts
into stabilising policies while balancing long-term returns.
Within Saga Money, we have faced challenges due to increased
interest rates, particularly within equity release. However, the team
has continued to move forward, with the expansion of our range of
products and the introduction of our new website to further cater
to our customers’ financial needs.
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 was not drawn during the
year but is expected to be drawn down as part of the May 2024
bond repayment.
In summary, this year has not been without challenges, however,
with our strategy and dedicated leadership team, we look to
overcome them and continue to grow and develop the business.
Company performance for the 2023/24
financial year
The implementation of our strategy (as outlined on pages 5-9)
has been measured against the KPIs set out below:
Underlying Profit Before Tax
3
increased by £22.7m
4
to £38.2m.
Net Debt
3
, at 31 January 2024, of £637.2m, £74.5m lower than
31 January 2023.
Customer transactional net promoter score of 59, a two point
reduction when compared with the prior year, reflecting
market-wide increases to Insurance pricing, alongside resultant
call centre pressure.
Colleague engagement reduced, when compared with the prior
year, as we went through a significant change programme.
Customer consent attempt rate increased to 89% for 2023/24,
from 78%, reflecting enhanced system configuration and
colleague awareness.
Changes to the Board
On 9 October 2023, after almost five years with Saga, James Quin
stepped down from his role as Group Chief Financial Officer (
CFO
).
Following an extensive search for a suitable replacement,
Mike Hazell was appointed to the role.
After four years with Saga and leading the Company through an
immensely challenging period, Euan Sutherland informed the
Board that he believed that it was the right time for a new Group
Chief Executive Officer (
CEO
) to take Saga onto the next phase
of its development. Euan stepped down as Group CEO on
28 November 2023. During his tenure, despite the pressures
caused by the pandemic, Euan stabilised the business, launched a
new strategy, strengthened the leadership team, oversaw detailed
work to strengthen the brand and identified new income streams.
The Board was pleased to announce that, following a thorough
internal and external process, Mike Hazell would move from
Group CFO to Group CEO and that, in turn, Mike would be
succeeded by Mark Watkins, previously Group Chief Corporate
Development Officer.
As part of this transition, the Committee carefully considered the
salary that should be offered to both Mike and Mark in their new
roles and agreed that these should reflect the current size of the
business, while taking into account the need to appoint individuals
with the necessary skills and experience for these key roles,
alongside the competitive landscape for other similar roles. Taking
the above into consideration, the new salaries for the CEO and
CFO were positioned lower than their predecessors, at £600,000
and £375,000 respectively. Other remuneration arrangements
for both Mike and Mark are in line with the current Policy.
The Board, and management team, are grateful for the
contributions both Euan and James have made to Saga and wish
them both every success in the future.
The treatment of the remuneration arrangements for Euan and James
are set out in the Section 430 (2B) announcement available on our
corporate website (www.corporate.saga.co.uk/about-us/governance)
and repeated on page 83.
Salary increases for 2023/24
During 2023/24, Euan Sutherland, James Quin and Steve Kingshott
each received salary increases of 3%. This is lower than the 5%
awarded to the wider workforce in December 2022, brought
forward as part of the cost of living support provided to colleagues.
2023/24 bonus
The assessment of annual performance for the Executive Directors
is 70% based on business performance against a scorecard
of financial targets, and the remaining 30% is based on their
achievement of personal objectives, which are central to delivery
of the strategy and operating model. The specific targets set are
shown on page 79, together with the degree of achievement of each.
Performance under the financial measures resulted in a formulaic
outcome of 41.9% out of the maximum 70% for the Group CEO
and CFO and 17.5% of the maximum for Steve Kingshott.
The Board reviewed each Executive Director’s individual
performance for the period worked during the year, against a
number of bespoke objectives, and determined that the outcomes
for Mike Hazell, Mark Watkins, Steve Kingshott, Euan Sutherland
and James Quin would be 30.0%, 30.0%, 18.5%, 19.0% and
20.0% out of the maximum 30.0% respectively. Further details
of each Executive Director’s individual contribution to the
business can be found on page 80.
3
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
4
The prior year has been restated to reflect the adoption of International Financial Reporting Standard 17 ‘Insurance Contracts’
Saga plc
Annual Report and Accounts 2024
75
Strategic Report
Financial statements
Additional information
Governance
Page 78 sets out the calculation for the 2023/24 bonus, which
paid out between 36% and 72% of maximum for the Executive
Directors. The Committee carefully considered the level of
bonuses achieved in respect of the targets set for 2023/24
and determined that no discretion would be applied to bonus
outcomes. The conclusion was reached after taking into account
matters such as the overall performance of the business and the
shareholder and employee experience across the year. Underlying
Profit Before Tax
5
more than doubled when compared with the
prior year, while Net Debt
5
reduced by £74.5m over the same
period, leaving the business in a stronger position. Additionally,
while an extension of the loan facility with Roger De Haan was
agreed in the year, funds were not drawn against this facility.
Taking the above points into consideration, the Committee
believes that the formulaic outcomes were appropriate.
The bonus for both Mike Hazell and Mark Watkins reflects the
proportion of the year worked since joining the Board.
Mike Hazell will receive a bonus of £197,805 to reflect the four
months of the financial year since he was appointed to the Board.
Mark Watkins will receive a bonus of £56,195 to reflect the two
months of the financial year since he was appointed to the Board.
Steve Kingshott will receive a bonus of £185,403. Euan Sutherland
will receive a bonus of £566,900. James Quin will receive a bonus
of £242,395.
In line with our approved Policy, all Executive bonus awards are
paid one-third in deferred shares and two-thirds in cash.
2020 Restricted Share Plan (
RSP
) vesting
The first RSP awards were made in 2020 to the former Group
CEO and CFO.
While the maximum award under the Policy was 100% of salary
for the Group CEO, and 85% of salary for the Group CFO, awards
were granted at a reduced level of 70% of salary for the CEO and
65% of salary for the CFO, representing a reduction of 30%. At the
time of grant, the Committee was conscious of the volatility and
the fall in the share price of the Company, due to the impact of the
COVID-19 pandemic on its Cruise and Travel businesses, among
other factors, and reduced the 2020 RSP award levels accordingly.
On vesting, the Committee carried out an assessment of the RSP
to determine whether the underpin test had been met and whether
the awards would result in a windfall gain on vesting. The Committee
concluded that the terms of the underpin had been met and that
there were no windfall gains over the vesting period, the Committee
nevertheless deemed it appropriate to exercise its discretion to apply
a further 10% reduction to the award at the point of vesting. In making
this decision, the Committee considered the 30% reduction which
had been applied at the date of award, but also the broader
stakeholder experience during the three-year vesting period.
The 2020 RSP, therefore, vested at 90% of the maximum.
Where time was allocated during the year
– matters discussed, decisions made and
actions taken
Approved Executive Director and Operating Board salary
increases for 2023/24.
Approved the business and personal metrics for the 2023/24
annual bonus. Details of the personal objectives for the
Executive Directors can be found on pages 79-80.
Made grants under the RSP for the Operating Board and
Senior Leadership Team.
Recommended that the Board approve the award of Free
Shares to all eligible colleagues.
Agreed remuneration for outgoing Executive Directors,
Group CEO, Euan Sutherland and Group CFO, James Quin.
Reviewed and agreed the compensation package for new
Executive Directors, the Group CEO, Mike Hazell, and
Group CFO, Mark Watkins.
Reviewed progress against the actions to reduce our gender
pay gap.
Noted the voting results on our Remuneration Report at the
2023 Annual General Meeting (
AGM
) and continued our
constructive dialogue with shareholders.
Determined the level of bonus awards for 2023/24.
Determined the level of vesting under the 2020 RSP.
Discussed how the Committee would review wider workforce
pay and ensure alignment of incentives throughout the
Company with its culture and strategy.
Reviewed the dilution levels against the relevant share scheme
dilution limits.
Wider workforce considerations
In making decisions on executive pay, the Committee considers wider
workforce remuneration and conditions, as outlined on pages 84-85.
We continue to be as focused on our colleagues as we are on our
customers. The Committee’s aim is to ensure that our approach
to rewarding colleagues at all levels is aligned to our business
strategy, which places customer service and colleague
engagement at its core.
We continue to engage with colleagues on executive reward
matters through our People Committee, which my predecessor
attended regularly, and which I intend to continue. Further details
of our People Committee can be found in our 2024 Environmental,
Social and Governance Report.
As part of our commitment to fairness, this report contains details
of the pay and conditions of our wider workforce, the cascade of
incentives throughout our business and our Group CEO to
colleague pay ratio. Details of Saga’s gender pay report can be
found on our website (www.saga.co.uk/gender-pay-review).
Shareholder consultation and looking ahead
The Committee continues to maintain an open and constructive
dialogue with shareholders. In 2023, we consulted with major
shareholders on the decisions made in respect of the financial
year. At the 2023 AGM, we received majority support from
shareholders on the Directors’ Remuneration Report with a voting
outcome of 81.75%. It is pleasing to see that the majority of
shareholders supported the resolution to approve the Directors’
Remuneration Report, however, we will continue to engage with
shareholders and seek to incorporate feedback within our future
remuneration decisions.
Conclusion
I hope you find the information contained in this report helpful,
thoughtful and clear.
I am always happy to hear from our shareholders, and you can
contact me at any time at julie.hopes@saga.co.uk if you have any
questions or comments on this report.
Julie Hopes
Chair, Remuneration Committee
5
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Saga plc
Annual Report and Accounts 2024
76
Directors’ Remuneration Report
Annual Statement
continued
2023/24 Actual performance and remuneration outcomes
Single total figure of remuneration for Executive Directors for the 2023/24 financial year (audited)
The table below sets out the single total figure of remuneration and breakdown for each Director in respect of the 2023/24 financial year.
Comparative figures for the 2022/23 financial year have also been provided. Figures provided have been calculated in accordance with
Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended in 2013.
Period
Salary
(£)
Taxable
benefits
(£)
Pension
(£)
Other
(£)
Total
fixed
(£)
Bonus
1
(£)
Restricted
Share
Plan
(
RSP
)
2
(£)
Total
variable
(£)
Single
figure
(£)
Mike Hazell
3
(Group Chief Executive
Officer (
CEO
))
2023/24
180,308
4,267
10,846
–
195,421
197,805
367,200
565,005
760,426
2022/23
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Euan Sutherland
4
(Former Group CEO)
2023/24
620,283
11,122
37,217
–
668,622
566,900
600,088
1,166,988
1,835,610
2022/23
728,262
12,938
43,696
–
784,896
385,587
582,610
968,197
1,753,093
Mark Watkins
5
(Group Chief Financial
Officer (
CFO
))
2023/24
62,500
2,285
3,857
–
68,642
56,195
n/a
56,195
124,837
2022/23
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
James Quin
6
(Former Group CFO)
2023/24
313,124
10,809
18,787
–
342,720
242,395
308,701
551,096
893,816
2022/23
440,750
13,192
26,445
–
480,387
200,045
299,710
499,755
980,142
Steve Kingshott
7
(CEO of Insurance)
2023/24
412,000
13,125
24,720
–
449,845
185,403
247,200
432,603
882,448
2022/23
33,333
1,090
2,000
–
36,423
13,937
–
13,937
50,360
Roger De Haan
(Non-Executive Chairman)
2023/24
Nil
–
–
–
Nil
–
–
Nil
Nil
2022/23
Nil
–
–
–
Nil
–
–
Nil
Nil
Eva Eisenschimmel
8
(Former Non-Executive
Director and Remuneration
Committee Chair)
2023/24
69,209
–
–
–
69,209
–
–
–
69,209
2022/23
73,672
–
–
–
73,672
–
–
–
73,672
Julie Hopes
9,10
(Non-Executive Director,
Remuneration Committee
Chair, Risk Committee Chair
and Chair of Saga Services
Limited)
2023/24
141,834
–
–
–
141,834
–
–
–
141,834
2022/23
175,088
–
–
–
175,088
–
–
–
175,088
Gareth Hoskin
(Non-Executive Director,
Audit Committee Chair and
Chair of Acromas Insurance
Company Limited)
2023/24
141,000
–
–
–
141,000
–
–
–
141,000
2022/23
137,344
–
–
–
137,344
–
–
–
137,344
Gemma Godfrey
11
(Non-Executive Director
and Chair of Saga Personal
Finance (
SPF
) Limited)
2023/24
131,000
–
–
–
131,000
–
–
–
131,000
2022/23
43,948
–
–
–
43,948
–
–
–
43,948
Peter Bazalgette
11
(Senior Independent Director
and Nomination Committee
Chair)
2023/24
115,500
–
–
–
115,500
–
–
–
115,500
2022/23
43,389
–
–
–
43,389
–
–
–
43,389
Anand Aithal
11
(Non-Executive Director and
Innovation and Enterprise
Committee Chair)
2023/24
75,500
–
–
–
75,500
–
–
–
75,500
2022/23
29,030
–
–
–
29,030
–
–
–
29,030
1
A third of the bonus award is deferred into shares vesting after three years
2
The face value on grant of the RSP awards is shown in the table above as there are no performance conditions other than underpins tested on vesting. The RSP
awards vests after three years
3
Mike Hazell became a Director on 9 October 2023 in the role of Group CFO and was appointed as the Group CEO on 28 November 2023
4
Euan Sutherland stepped down as a Director on 28 November 2023
5
Mark Watkins became a Director on 28 November 2023
6
James Quin stepped down as a Director on 9 October 2023
7
Steve Kingshott became a Director on 3 January 2023
8
Eva Eisenschimmel stepped down as a Director on 31 December 2023
9
Julie Hopes held the position of Chair of SPF until 10 January 2023
10
Julie Hopes became the Chair of the Remuneration Committee on 31 December 2023
11
Gemma Godfrey, Peter Bazalgette and Anand Aithal became Directors on 1 September 2022
Saga plc
Annual Report and Accounts 2024
77
Strategic Report
Financial statements
Additional information
Governance
Annual Report on Remuneration
How we performed in 2023/24
Bonus (audited in conjunction with details on pages 135-136)
The details of the performance conditions and outcomes against the targets for the annual bonus in respect of the 2023/24 financial year
are shown in the table below. No discretion was applied to the formulaic outcome.
Saga plc bonus scorecard
Weighting
(based on
100% max)
Threshold
performance
required
(£m)
50% Target
performance
required
(£m)
Maximum
performance
required
(£m)
Actual
performance
(£m)
Annual bonus
value for
threshold
and maximum
performance
(% of max)
Percentage
of maximum
performance
achieved
Actual annual bonus achieved (% of salary)
12
Performance condition
Mike
Hazell
13
Euan
Sutherland
Mark
Watkins
14
James
Quin
Underlying Profit
55%
33.0
39.4
50.0
40.2
16
20%
54%
13.7%
37.0%
6.2%
25.7%
Before Tax
15
100%
Net Debt
15
15%
675.0
656.3
625.0
637.2
20%
80%
5.5%
15.0%
2.5%
10.4%
100%
Personal objectives
30%
0%
13.8%
23.6%
6.3%
17.2%
100%
Total
100%
33.0%
75.6%
15.0%
53.4%
Total calculated
£197,805
£566,900
£56,194
£242,394
Total payable
£197,805 £566,900
£56,194
£242,394
Insurance bonus scorecard
Performance condition
Weighting
(based on
100% max)
Threshold
performance
required
(£m)
50% Target
performance
required
(£m)
Maximum
performance
required
(£m)
Actual
performance
(£m)
Annual bonus
value for
threshold and
maximum
performance
(% of max)
Percentage
of maximum
performance
achieved
Actual annual bonus achieved (% of salary)
12
Steve
Kingshott
Underlying Profit
10%
33.0
39.4
50.0
40.2
16
20%
54%
6.8%
Before Tax
15
100%
Insurance Underlying
45%
52.0
55.0
60.0
44.9
17
20%
–
–
Profit Before Tax
15
100%
Net Debt
15
15%
675.0
656.3
625.0
637.2
20%
80%
15.1%
100%
Personal objectives
30%
0%
23.1%
100%
Total
100%
45.0%
Total calculated
£185,403
Total payable
£185,403
12
The annual bonus percentage achieved for each Executive Director is based on their maximum bonus potential and shown as a percentage of annual salary
13
Mike Hazell became a Director on 9 October 2023 and, therefore, the bonus shown is pro-rated for four months, two months as Group CFO (max 125% bonus
opportunity for role) and two months as Group CEO (max 150% bonus opportunity for role)
14
Mark Watkins became a Director on 28 November 2023 and, therefore, the bonus shown is pro-rated for two months
15
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
16
Underlying Profit Before Tax, for bonus purposes, is based on the previous International Financial Reporting Standard (
IFRS
) 4 and also includes the losses
incurred in the Saga Exceptional, Insight and Spaces businesses, which have been classified below Underlying Profit Before Tax in externally reported numbers
17
Insurance Underlying Profit Before Tax is based on the previous IFRS 4 accounting standard
Saga plc
Annual Report and Accounts 2024
78
Directors’ Remuneration Report
Annual Report on Remuneration
continued
Individual performance assessment
The Remuneration Committee (the
Committee
) assessed Executive Directors on their individual performance in the year against four
universal key objectives including culture and colleagues; Environmental, Social and Governance (
ESG
); customer consent; data and
insight; and one personal growth project objective.
Details of the universal strategic objectives for each of the individuals are noted below:
Weighting
(based on
100% max)
20%
Threshold
performance
required
60%
Target
performance
required
100%
Maximum
performance
required
Actual
performance
Percentage
of maximum
performance
achieved
Actual annual bonus achieved (% of salary)
18
Mike
Hazell
19,20
Euan
Sutherland
Mark
Watkins
19,21
James
Quin
Steve
Kingshott
Culture and colleagues
Objective
Maintain high levels of colleague
engagement in Saga, despite
headwinds in Insurance and the
reduction of central costs. Measured
by engagement score from the
colleague survey.
Outcome
Colleague engagement reduced,
when compared with previous years,
as a result of a significant change
programme that streamlined our
central operating model.
5%
Saga plc
7.3
7.4
7.6
6.6
–
n/a
–
n/a
–
–
Insurance
7.1
7.3
7.5
6.5
–
–
–
–
–
–
Data
Objective
Delivery of global digital consent as
part of our Group-wide customer
consent programme.
Outcome
Customer consent attempt rate for
the Group significantly improved
year on year, reflecting increases in
both Insurance and Cruise as a result
of enhanced system configuration
and colleague awareness.
5%
Saga plc
72%
79%
83%
89%
100%
n/a
7.5%
n/a
6.3%
–
Insurance
75%
83%
85%
88%
100%
–
–
–
–
6.3%
Data and insights
Objective
Increasing the strength of the
Saga brand using the Saga Voice
of The Customer to improve
customer experience. Measured
by customer tNPS.
Outcome
Customer tNPS experienced a two
point reduction, when compared with
the prior year, reflecting market-wide
increases to Insurance pricing,
alongside some resultant call
centre pressure.
5%
Saga plc
58
59
60
59
60%
n/a
4.5%
n/a
3.8%
–
Insurance
59
60
61
58
–
–
–
–
–
–
ESG
Objective
Under the Task Force on
Climate-Related Financial
Disclosures, each business will
evaluate the financial impact
that climate change will have
on its future performance.
Outcome
In 2023, we completed scenario
analysis to assess the resilience of
the Group against potential future
climate change impacts. We have
also developed our ESG strategy,
which includes a focus on acting
on climate change.
5%
Saga plc
n/a
7.5%
n/a
6.3%
–
Insurance
–
–
–
–
6.3%
Personal growth project
Outcome
Details of the individual objectives
under personal growth projects, and
their assessment, are noted overleaf.
10%
13.8%
9.8%
6.3%
8.8%
10.6%
Overall
30%
13.8%
29.3%
6.3%
25%
23.1%
18
The annual bonus percentage achieved for each Executive Director is based on their maximum bonus potential and shown as a percentage of annual salary
19
Due to the short time in their Board roles, both Mike Hazell and Mark Watkins’ individual performance is based on the personal growth project only
20 Mike Hazell became a Director on 9 October 2023 and, therefore, the achievement for his individual performance is shown as pro-rated for four months,
two months as Group CFO (max 125% bonus opportunity for role) and two months as Group CEO (max 150% bonus opportunity for role)
21
Mark Watkins became a Director on 28 November 2023 and, therefore, the bonus shown is pro-rated for two months
Saga plc
Annual Report and Accounts 2024
79
Strategic Report
Financial statements
Additional information
Governance
Details of the individuals’ achievements are set out in the tables below.
Personal growth project overview
Committee assessment and basis of achievement for 2023/24
Mike Hazell
– Maximum: 10.0% of overall bonus. Achievement: 10.0% of overall bonus
Introduction to Saga,
governance and responsibilities
Delivery of 2023/24 financial
reporting
Positive engagement with the business, Board and former Group CEO ensuring a full
understanding of Saga’s:
–
strategy;
–
governance and risk appetite, including the responsibilities at the Group and regulated
entities level;
–
brand, customer and colleague experience;
–
values, culture and how these are embedded in the Company; and
–
financial health moving into 2024/25.
Euan Sutherland
– Maximum: 10.0% of overall bonus. Achievement: 6.0% of overall bonus
Ensure financial health of
the Group
Hand over to new Group CEO
Relaunch of Saga Money, including two new products and new website within the year.
Launch of Saga Spaces.
Deliver global digital consent programme.
Implement property disposal strategy.
Successful hand over to new Group CEO.
Mark Watkins
– Maximum: 10.0% of overall bonus. Achievement: 10.0% of overall bonus
Introduction to Saga,
governance and responsibilities
Positive engagement with the business, Board and former Group CFO ensuring a full
understanding of Saga’s:
–
strategy;
–
governance and risk appetite, including the responsibilities at the Group and regulated
entities level;
–
brand, customer and customer experience; and
–
financial health moving into 2024/25.
Delivered the end of year financials for 2023/24.
James Quin
– Maximum: 10.0% of overall bonus. Achievement: 7.0% of overall bonus
Ensure financial health of
the Group
Hand over to new Group CFO
Communicated with investors and stakeholders to provide confidence that the Group will
emerge from pressures within the year.
Maintained a disciplined approach to our cost base, identifying efficiencies and working towards
a leaner central operating model.
Successful hand over to new Group CFO and supported the senior Finance Team through the
change in leadership.
Steve Kingshott
– Maximum 10.0% of overall bonus. Achievement: 8.5% of overall bonus
Ensure progress of Insurance
transformation programme
Management of restructure and resulting impacts across Insurance.
Strengthened the Insurance Leadership Team with the recruitment of a Chief Executive Officer
of Acromas Insurance Company Limited and CHMC Claims Director.
Stabilised Insurance Broking trading performance, including delivery of cost efficiency targets
and navigation of ongoing motor inflation.
Consumer Duty implementation managed successfully.
Saga plc
Annual Report and Accounts 2024
80
Directors’ Remuneration Report
Annual Report on Remuneration
continued
RSP Scheme interests vesting during the financial year
The following table details the 2020 RSP that vested on 24 June 2023. As set out on page 76 in the Chair’s Annual Statement,
the Committee applied its discretion to discount the RSP by a further 10% on vesting.
Director
Face value
of award
(% of salary)
Shares
awarded
Value of
award at
grant
(£)
End of
performance
period
Date of vesting
Proportion of
award vesting
as percentage
of maximum
Number of
shares vesting
Value of
award vesting
(£)
Former Group CEO
Euan Sutherland
70%
198,831
490,000
24 June 2023
24 June 2023
90%
178,947
217,600
Former Group CFO
James Quin
65%
97,589
240,500
24 June 2023
24 June 2023
90%
87,830
106,801
RSP Scheme interests awarded during the financial year (audited)
On 12 June 2023, the fourth RSP award was granted to the former Group CEO, former Group CFO and CEO of Insurance. Following
Mike Hazell’s appointment as Group CFO, he was awarded an RSP on 1 November 2023. Details of the awards are set out below.
Director
Award type
Basis of award
Date of grant
Date of vesting
Number of
shares granted
Face value
per share
22
Total face
value of award
(£)
Group CEO
Mike Hazell
Nil-cost options
68% of salary
1 November 2023
1 November 2026
210,068
174.8
367,200
Former Group CEO
Euan Sutherland
Nil-cost options
80% of salary
12 June 2023
12 June 2026
343,299
174.8
600,088
Former Group CFO
James Quin
Nil-cost options
68% of salary
12 June 2023
12 June 2026
176,602
174.8
308,701
CEO of Insurance
Steve Kingshott
Nil-cost options
60% of salary
12 June 2023
12 June 2026
141,418
174.8
247,200
Deferred Bonus Plan (
DBP
)
On 26 May 2023, the deferred element of the executive annual bonus award was granted to the Group CEO and Group CFO. Details
of the award are set out below.
Director
Award type
Award
(% of salary)
Number of
shares granted
Face value
per share
22
Total face
value of award
(£)
End of
deferral period
Former Group CEO
Euan Sutherland
Deferred shares
33.30%
115,792
111.0
128,529
28 April 2026
Former Group CFO
James Quin
Deferred shares
33.30%
60,073
111.0
66,681
28 April 2026
CEO of Insurance
Steve Kingshott
Deferred shares
33.30%
41,015
111.0
45,527
28 April 2026
Saga Transformation Plan (
STP
)
The table below sets out the percentage of the STP Pool that both the new Group CEO and Group CFO are entitled to; the entitlement
of remaining Directors was disclosed in the 2023 report. For the full terms of the STP, refer to the Notice of the 2022 Annual General
Meeting (
AGM
), which can be found on our corporate website (www.corporate.saga.co.uk/media/1573/saga-plc-agm_notice_of_meeting.pdf).
Name
Award type
Share of
STP Pool
Date of grant
Performance
period
Value of
award at
grant
(£)
Minimum level of performance
Group CEO
Mike Hazell
Conditional
17.5%
21 December 2023
Five years
–
For performance in line with the Hurdle
(i.e. threshold performance), no value will
be shared with participants, i.e. participants
will only share in the value created where
performance exceeds the STP Hurdle
Group CFO
Mark Watkins
Conditional
10.5%
21 December 2023
Five years
–
22 Represents the share price on the day prior to grant
Saga plc
Annual Report and Accounts 2024
81
Strategic Report
Financial statements
Additional information
Governance
Directors’ share interests (audited)
Executive Directors are required to build up their shareholdings over a reasonable amount of time, which would normally be five years,
and then subsequently hold a shareholding equivalent to a percentage of base salary. The following table sets out the equity interests held
by the Executive and Non-Executive Directors (including those of their connected persons). If there are any changes to equity interests
between the end of the reporting year and the Notice of AGM (
Notice
) (if the Notice is sent more than a month after the year end), we will
include an updated position in our Notice.
Unvested nil-cost options held
Director
Shareholding
requirement
(% salary)
23
Current
shareholding
(% salary)
Shares
counting
towards
shareholder
requirements
24
Beneficially
owned
RSP nil-cost
options not
subject to
continued
service
Deferred
bonus
nil-cost options
subject to
continued
service
Other
awards
Vested but
unexercised
nil-cost options
held
Unvested SIP
shares not
subject to
performance
conditions
Shareholding
requirement
met?
Executive Directors
Mike Hazell
250%
25%
111,336
–
210,068
–
–
–
–
No
Euan Sutherland
25
250%
103%
563,710
77,598
402,305
318,998
–
195,265
331
No
Mark Watkins
200%
6%
16,679
443
30,205
–
–
–
227
No
James Quin
25
200%
87%
288,375
–
243,860
165,197
–
134,422
331
No
Steve Kingshott
200%
66%
197,552
–
278,717
93,595
–
–
227
No
Non-Executive Directors
26
Roger De Haan
27
–
–
–
37,217,720
–
–
–
–
–
n/a
Eva Eisenschimmel
28
–
–
–
4,288
–
–
–
–
–
n/a
Julie Hopes
–
–
–
4,419
–
–
–
–
–
n/a
Gareth Hoskin
–
–
–
19,018
–
–
–
–
–
n/a
Gemma Godfrey
–
–
–
12,438
–
–
–
–
–
n/a
Peter Bazalgette
–
–
–
212,249
–
–
–
–
–
n/a
Anand Aithal
–
–
–
24,500
–
–
–
–
–
n/a
Taxable benefits
The taxable benefits for all Executive Directors are in line with our wider workforce policies. Mike Hazell, Euan Sutherland, Mark Watkins,
James Quin and Steve Kingshott receive private medical insurance and a company car.
Pension entitlements
Pension contributions for all Executive Directors are aligned with those of the majority of colleagues (6% of salary). No Executive Director
receives an entitlement under a defined benefit plan.
Saga plc
Annual Report and Accounts 2024
82
Directors’ Remuneration Report
Annual Report on Remuneration
continued
23 Shareholding requirements are those that were in existence throughout the course of the year and at 31 January 2024
24
The number of shares counting towards the shareholding requirement is calculated by summing beneficially owned shares with unvested nil-cost options, which are
not subject to performance conditions, on a net of tax basis, as well as any vested but unexercised options on a net of tax basis. The mid-market quotation (
MMQ
)
share price of 137.2p at 31 January 2024 has been used for the purpose of calculating the current shareholding (i.e. value of beneficially owned shares and value
of/gain on interests over shares) as a percentage of salary. Unvested Long-term Incentive Plan (
LTIP
) shares and options do not count towards satisfaction of the
shareholding guidelines
25 Under the Post Cessation Shareholding Requirements (
PCSR
), both Euan Sutherland and James Quin are required, for a period of 24 months from their respective
leave dates, to maintain their shareholding requirements. For discretionary awards that are in flight during this period, retained shares must be held in the Saga
Nominee account until the end of the 24-month period if the PCSR has not been reached, or until the PCSR has been reached
26 Values have not been calculated for Non-Executive Directors as they are not subject to shareholding requirements
27
The connected persons of Roger De Haan include Allison De Haan who holds 20,750 shares
28 Eva Eisenschimmel stepped down as a Director on 31 December 2023
Payments for loss of office/Payments to past directors (audited)
On 27 September 2023 and 28 November 2023, we announced James Quin and Euan Sutherland would both be stepping down from the
Board of Directors from their roles as the Group CFO and Group CEO. The Committee determined that both would be treated as a good
leaver under the Policy approved by shareholders at the AGM on 5 July 2022. The full details of the remuneration arrangements for both
are outlined below.
Euan Sutherland
Euan remained a colleague, and received salary, benefits and his pension allowance in line with the Policy until cessation of employment
on 31 January 2024 (the
Termination Date
), worth £808,597. £668,622 of this amount is in relation to the 2023/24 financial year.
From the Termination Date, Euan commenced receipt of monthly payments in lieu of notice comprising salary, pension and benefits for
the remainder of his notice period, which commenced on 27 November 2023. The level of salary from 1 May 2024 will be reduced to
reflect the salary for his new executive role.
Subject to the satisfaction of performance measures, and being employed until the Termination Date, a full year bonus award for
2023/24 was awarded. The bonus will be satisfied two thirds cash and one third in deferred shares pursuant to the DBP in line with the
Policy as determined by the Committee.
Awards made to Euan under the DBP on 28 May 2020, under the LTIP on 6 January 2020 and awards under the RSP on 24 June 2020
vested prior to the Termination Date and may be exercised within six months of the Termination Date and will lapse after six months
from the Termination Date to the extent not exercised by that time.
Awards made to Euan under the DBP on 29 April 2021, 28 April 2022, 26 May 2023, and any potential award in 2024, will vest at
the normal vesting date and remain subject to the plan rules, including malus and clawback provisions. Awards will be exercisable for
six months after vesting.
Awards made to Euan under the RSP granted on 9 April 2021, 13 July 2022 and 12 June 2023 will be pro-rated to reflect the period
from award date to the Termination Date and vest at the normal vesting date subject to the plan rules, including malus and clawback
provisions. Awards will be exercisable for six months after vesting and these will be automatically exercised by the Company if they are
not exercised by the individual.
No further RSP awards will be granted to Euan.
Awards granted under the STP lapsed in full on the Termination Date.
Under the PCSR, Euan is required for a period of 24 months from his Termination Date, to maintain his shareholding requirement of 250%.
For discretionary awards in flight during this period, retained shares must be held in the Saga nominee account until the end of the 24-month
period if the PCSR has not been reached, or until the PCSR has been reached as appropriate. As at his Termination Date, Euan had an
estimated effective shareholding of c.103% of salary (based on a closing price of £1.372 as at 31 January 2024).
James Quin
James remains a colleague and receives a salary, benefits and his pension allowance in line with the Policy until cessation of employment
on 30 April 2024 (the
Termination Date
) worth £497,697. £342,720 of this amount is in relation to the 2023/24 financial year.
From the Termination Date, James will commence receipt of monthly payments in lieu of notice comprising salary, pension and benefits
for the remainder of his notice period, which commenced on 27 September 2023.
Subject to the satisfaction of performance measures, and being employed until the Termination Date, a full year bonus award for
2023/24 and a pro rata bonus for 2024/25 will be awarded. These will be subject to approval by the Committee. The bonus (if any) will
be satisfied two thirds cash and one third in deferred shares pursuant to the DBP in line with the Policy as determined by the Committee.
Awards made to James under the DBP on 11 July 2019, 28 May 2020 and 29 April 2021, under the LTIP on 12 August 2019 and awards
under the RSP on 24 June 2020 and 9 April 2021 vested prior to the Termination Date and may be exercised within six months of the
Termination Date, if not already exercised prior to the Termination Date, and will lapse after six months from the Termination Date to
the extent not exercised by that time.
Awards made to James under the DBP on 28 April 2022, 26 May 2023, and any potential award in 2024 and 2025, will vest at the
normal vesting date and remain subject to the plan rules, including malus and clawback provisions. Awards will be exercisable for
six months after vesting.
Awards made to James under the RSP granted on 13 July 2022 and 12 June 2023 will be pro-rated to reflect the period from award
date to the Termination Date and vest at the normal vesting date subject to the plan rules, including malus and clawback provisions.
Awards will be exercisable for six months after vesting and these will be automatically exercised by the Company if they are not
exercised by the individual.
No further RSP awards will be granted to James.
Awards granted under the STP will lapse in full on the Termination Date.
Under the PCSR, James is required for a period of 24 months from his Termination Date to maintain his shareholding requirement of 200%.
For discretionary awards in flight during this period, retained shares must be held in the Saga nominee account until the end of the 24-month
period if the PCSR has not been reached, or until the PCSR has been reached as appropriate. As at his Termination Date, James had
an estimated effective shareholding of c.92% of salary (based on a closing price of £1.372 as at 31 January 2024).
Saga plc
Annual Report and Accounts 2024
83
Strategic Report
Financial statements
Additional information
Governance
Pro-ration of RSP awards
Award
Euan Sutherland
James Quin
Face value
Pro-rated amount
Face value
Pro-rated amount
Number of
shares
Value at date
of grant
(£)
Share
price
Number of
shares
Value on
date
Director
stepped
down
(£)
Share
price
Number
of shares
Value at date
of grant
(£)
Share
price
Number
of shares
Value on
date
Director
stepped
down
(£)
Share
price
2021 RSP
184,258
710,500
£3.856
168,903
199,305
£1.18
94,787
365,500
£3.856
n/a
29
n/a
29
n/a
29
2022 RSP
333,000
582,610
£1.748
166,650
196,647
£1.18
171,458
299,710
£1.748
100,017
116,619
£1.166
2023 RSP
343,299
600,088
£1.748
66,752
78,767
£1.18
176,602
308,701
£1.748
49,056
57,199
£1.166
Fees retained for external non-executive directorships
Executive Directors may hold positions in other companies as non-executive directors and retain the fees.
Euan Sutherland was a non-executive director of Britvic plc until 18 December 2023 for which he received a fee of £54,879 in 2023/24.
James Quin became a non-executive director of Thomas Miller Holdings Limited on 1 January 2024 for which he received a fee of £5,000
in 2023/24. Mike Hazell, Mark Watkins and Steve Kingshott do not hold any external directorships.
Governance of remuneration
Wider workforce
For the Committee to review the wider workforce pay, policies and incentives, reports are regularly considered at Committee meetings,
setting out key details of remuneration throughout the Company. Alongside its review of the wider workforce remuneration, the
Committee considers the approach applied to the Executive Directors and senior management. In particular, the Committee is focused
on ensuring the approach to the remuneration of the Executive Directors and senior management is consistent with that applied to the
wider workforce.
The table below summarises some of the key workforce reward elements that are regularly discussed by the Committee:
Bonus
Bonus schemes contain both financial and personal measures. A financial scorecard is used for all colleagues at Saga,
linked to their business unit, including Executive Directors. Malus and clawback are in place for the colleagues in our
Senior Leadership Team (
SLT
).
Other incentive
schemes
Incentive arrangements that are paid more frequently are also operated in our contact centres. These incentive
schemes are reviewed regularly to ensure best practice and market alignment. The method of calculation and
frequency of payment varies, depending on business area and product.
Base pay
The SLT and Operating Board received an increase of 3% of base pay in February 2023. All colleagues below SLT
received an increase of 5% in December 2022, which was brought forward from February 2023, to support colleagues
with the rising cost of living.
National living
wage
Saga continues to be committed to paying above national living wage for all UK colleagues and, in 2023, tracked above
this at the voluntary real living wage.
RSP
RSP awards are granted across senior leadership at Saga. Eligible colleagues received an RSP grant in 2023, ranging
from 20% to 50% of salary.
Share Incentive
Plan (
SIP
)
We continue to promote our SIP, so that all colleagues can invest in the Company’s success. The plan enables colleagues
to purchase shares through payroll.
Pension
Saga operates a single defined contribution Master Trust arrangement with Aviva following the closure of both the
defined benefit scheme and the previous defined contribution scheme on 31 October 2021. At 31 January 2024,
there were 2,279 colleagues in this scheme.
The Committee Chair engages regularly with the People Committee, gaining regular feedback and outlining executive remuneration.
Feedback from this engagement is then shared with the Committee. Find out more in our 2024 Environmental, Social and
Governance Report.
29 The 2021 RSP award for James Quin vested prior to the Termination Date
Saga plc
Annual Report and Accounts 2024
84
Directors’ Remuneration Report
Annual Report on Remuneration
continued
Competitive pay and cascades of incentives
Organisational level
Number of
colleagues
30
Range
of bonus
(% of salary)
Maximum
proportion of
bonus payable
in cash
Minimum
proportion of
bonus deferrable
in shares
Range of
RSP award
(% of salary)
SIP
Group CEO
1
150%
67%
33%
80%
Yes
Group CFO
1
125%
67%
33%
68%
Yes
CEO of Insurance
1
125%
67%
33%
60%
Yes
Operating Board
6
100%
67%
33%
40%
Yes
Senior Leadership Team
39
40–80%
100%
–
31
20–40%
Yes
Senior Management Team
177
10–40%
100%
–
n/a
Yes
Other bonused colleagues
1,516
2.5–7.5%
100%
–
n/a
Yes
Other non-bonused colleagues
1,941
n/a
n/a
n/a
n/a
Yes
Pay comparisons
Group CEO ratio
Our Group CEO to average colleague pay ratio for 2023/24 is 63:1. To give context to this ratio, we have included a chart below which
tracks the CEO to average colleague pay ratio since 2014/15 alongside Saga’s total shareholder return (
TSR
) performance since the
Company was listed in 2014. We also show this against the performance of the FTSE 250 and FTSE SmallCap (
SMC
) during the same
time span.
Jan-14
TSR rebased to 100 on Initial Public Offering (
IPO
)
Jan-15
Jan-16
258:1
78:1
116:1
40:1
48:1
41:1
76:1
76:1
56:1
63:1
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
200
250
300
Saga TSR
150
100
50
0
FTSE 250
FTSE SMC
CEO pay ratio
The chart shows the value of £100 invested in the Company’s shares since listing compared to both the FTSE 250 and FTSE SMC indices.
These indices were chosen as they reflect an index to which the Group has been a constituent since the IPO in 2014. The graph shows the
TSR generated by both the movement in share value and the reinvestment over the same period of dividend income. This graph has been
calculated in accordance with the Financial Conduct Authority Listing Rules.
It should be noted that the Company listed on 23 May 2014 and, therefore, only has a listed share price for the period of 23 May 2014 to
31 January 2024.
In summary, there has been significant volatility in Group CEO pay, and we believe that this is caused by the factors set out below.
Our Group CEO’s pay is made up of a higher proportion of incentive pay than that of our colleagues, in line with the expectations of our
shareholders and accepted market practice for senior executive roles. This introduces a higher degree of variability in pay each year,
which in turn, affects the ratio.
The value of long-term incentives, which measure performance over three years, is disclosed in the year they vest, which increases the
Group CEO’s pay in that year, again impacting the ratio.
Long-term incentives are provided in shares, and, therefore, any movement in share price over the three years magnifies the impact
of a long-term incentive award vesting.
We recognise that the ratio is driven by the different structure of pay for our Group CEO versus that of our colleagues, as well as the
make-up of our workforce. This ratio varies between businesses in the same sector. What is important from our perspective is that this
ratio is influenced only by the differences in structure, and not by divergence in fixed pay between the Group CEO and wider workforce.
Where the structure of remuneration is similar, as for the Operating Board and the Group CEO, the ratio is much more stable over time.
30 Colleagues as at 31 January 2024
31
Colleagues in the SLT within Insurance also receive one-third of their bonus in deferrable shares
Saga plc
Annual Report and Accounts 2024
85
Strategic Report
Financial statements
Additional information
Governance
Colleague and CEO ratios
The table below sets out the total remuneration received by the Group CEO using the methodology applied to the single total figure
of remuneration.
Group CEO
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23
2023/24
Total single figure (£)
Lance
Batchelor
1,600,287
2,490,617
1,025,146
32
1,191,743
946,353
–
–
–
–
Euan
Sutherland
–
–
–
–
116,535
2,118,471
2,401,273
33
1,753,093
1,835,610
34
Mike Hazell
–
–
–
–
–
–
–
–
223,363
34
Annual bonus
payment level
achieved (percentage
of maximum
opportunity)
Lance
Batchelor
78.6%
67.5%
–
35.1%
18.2%
–
–
–
–
Euan
Sutherland
–
–
–
–
66.8%
83.1%
85.4%
35.3%
61.4%
Mike Hazell
–
–
–
–
–
–
–
–
71.9%
LTIP vesting level
achieved (percentage
of maximum
opportunity)
35
Lance
Batchelor
n/a
36
65.6%
26.0%
–
–
–
–
–
–
Euan
Sutherland
–
–
–
–
–
n/a
36
10.0%
n/a
36
90.0%
37
Mike Hazell
–
–
–
–
–
–
–
–
n/a
Ratio of Group CEO
single total
remuneration figure
to all colleagues
38,39
Option
used
Option B
38
Option B
38
Option B
38
Option B
38
Option B
38
Option B
38
Option B
38
25
th
percentile
n/a
n/a
8:1
59:1
46:1
97:1
104:1
66:1
71:1
Median
78:1
116:1
40:1
40
48.1
41
41:1
42
76:1
43
76:1
44
56:1
45
63:1
46
75
th
percentile
n/a
n/a
33:1
36.1
29:1
55:1
55:1
42:1
41:1
Ratio of single total
remuneration figure
shown to executive
members
2:1
4:1
3:1
3:1
2:1
4:1
3:1
3:1
3:1
The colleague pay figures used to calculate the ratio are as follows:
25
th
percentile
(£)
Median
(£)
75
th
percentile
(£)
2023/24
Salary
23,625
30,000
44,100
Total pay
28,909
32,829
49,706
32 For 2017/18, the final value of the 2015 LTIP award at vesting date is shown and has been restated from the 2017/18 Annual Report and Accounts. The share price
at the vesting date of 30 June 2018 was 125.6p
33 The final value of the 2019 LTIP award had not been confirmed at the time the 2022 Annual Report and Accounts was drafted and, therefore, was not included
in the 2021/22 single figure. The final vesting of the 2019 LTIP was confirmed as 10% of maximum and, therefore, the 2021/22 single figure has been restated
34 Mike Hazell was appointed as the Group CEO on 28 November 2023. Euan Sutherland’s payments reflect the period until he stepped down as Group CEO on
28 November 2023
35 As disclosed in the 2021 Annual Report and Accounts, in 2020, the LTIP was replaced with an RSP and, therefore, 2023/24 was the first year the RSP vested
36 No LTIP awards were eligible to vest for the Group CEO in post during 2015/16, 2020/21 and 2022/23
37
As noted in the Annual Statement, the 2020 RSP award vesting in June 2023 vested at 90% of maximum with a discretionary 10% reduction applied by the Committee
38 For the colleague ratio, Saga has chosen to use Option B, identifying colleagues using our gender pay gap data. This was the preferred option due to the availability
of data for our many UK-based, overseas and part-time colleagues for whom single total figure data is difficult to calculate. Figures have been completed for
2017/18 to 2023/24 using the April gender pay gap data for that year. In order to mitigate any anomalies, 11 individuals have been identified at each percentile point
from the gender pay gap data, and the median of pay in the year up to 31 January 2018 to 2024 for these colleagues calculated in line with the single total figure
methodology
39 The median ratios shown for 2015/16 and 2016/17 have been recalculated to allow a comparison with the 2017/18 to 2023/24 figures which have been calculated
in line with the methodology prescribed by the regulations
40 The fall in ratio in 2017/18 is due to the forfeiture of bonus by the Group CEO and the relatively low payout on the LTIP. This reflects the fact that shareholders want
executives to have a higher proportion of pay at risk and this is reflected in the volatility in the chart. The percentage change in Group CEO remuneration set out in
the table on page 87 shows that year on year, when the volatility of payouts from equity-based awards is excluded, the changes in remuneration for the Group CEO
and average colleague are broadly in line. This demonstrates that the underlying compensation ratio is not increasing year on year
41
The increase in ratio for 2018/19 is due to the Group CEO receiving a bonus in 2018/19. This increase has remained low due to a relatively low bonus and LTIP payout
42
The fall in ratio for 2019/20 is due to the rebalancing of base pay and commission in our contact centres
43 The increase in ratio in 2020/21 is due to the relatively high bonus payout in 2020/21 and RSP award granted to the Group CEO in 2020/21
44 No change in ratio in 2021/22 due to similar payout in bonus
45 The fall in ratio in 2022/23 was due to the lower bonus payout
46 The increase in ratio in 2023/24 is due to the relatively high bonus payout
Saga plc
Annual Report and Accounts 2024
86
Directors’ Remuneration Report
Annual Report on Remuneration
continued
Annual percentage change in remuneration of Directors and other colleagues
The following table sets out the change in the remuneration paid to each Director from 2019/20 to 2023/24, compared with the average
percentage change for other colleagues.
The percentage change for each Director’s remuneration in the table below is based on the figures in the single total figure table on
page 77. Average colleague pay has been calculated using the following elements:
Annual salary:
base salary and standard monthly allowances.
Taxable benefits:
car allowance and private medical insurance premiums.
Annual bonus:
Company bonus, management bonus, commission and incentive payments.
% increase/(decrease) in
remuneration in 2020/21
compared with previous year
(2019/20)
% increase/(decrease) in
remuneration in 2021/22
compared with previous year
(2020/21)
% increase/(decrease) in
remuneration in 2022/23
compared with previous year
(2021/22)
% increase/(decrease) in
remuneration in 2023/24
compared with previous year
(2022/23)
Salary/
fees
Taxable
benefits
Annual
bonus
Salary/
fees
Taxable
benefits
Annual
bonus
Salary/
fees
Taxable
Annual
bonus
Salary/
fees
Taxable
Annual
bonus
Mike Hazell
47
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Euan Sutherland
–
9.3%
25.2%
1.5%
(5.5%)
48
4.3%
2.5%
0.4%
(52.2%)
3.0%
4.0%
73.4%
Mark Watkins
49
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
James Quin
1.2% (48.9%)
50
48.7%
14.8%
4.7%
1.4%
2.5%
0.4%
(57.0%)
3.0%
25.0%
50
75.7%
Steve Kingshott
51
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
3.0%
0.3%
10.9%
Roger De Haan
52
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Eva Eisenschimmel
15.7%
53
n/a
n/a
–
n/a
n/a
–
n/a
n/a
2.5%
n/a
n/a
Julie Hopes
41.7%
54
n/a
n/a
(1.0%)
54
n/a
n/a
(0.8%)
54
n/a
n/a
(19.0%)
54
n/a
n/a
Gareth Hoskin
9.3%
55
n/a
n/a
2.9%
55
n/a
n/a
–
n/a
n/a
2.7%
n/a
n/a
Gemma Godfrey
56
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
24.2%
57
n/a
n/a
Peter Bazalgette
56
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
10.9%
58
n/a
n/a
Anand Aithal
56
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
8.4%
59
n/a
n/a
Average per colleague
3.2%
60
2.7%
67.8%
4.1%
60
6.6%
5.4%
13.3%
60
3.6%
(49.9%)
4.6%
60
2.5%
58.2%
Relative importance of the spend on pay
The table below sets out the relative importance of spend on pay in the 2023/24 and 2022/23 financial years, compared with other
disbursements. All figures provided are taken from the relevant Company accounts.
Disbursements from
profit in 2023/24
financial year
(£m)
Disbursements from
profit in 2022/23
financial year
(£m)
Percentage change
Profit distributed by way of dividend
–
–
–
Total tax contributions
61
24.1
26.6
(9.4%)
Overall spend on pay, including Executive Directors
161.6
132.0
22.4%
47
No comparison for Mike Hazell due to him becoming a Director on 9 October 2023
48 The decrease in taxable benefits for Euan Sutherland in 2021/22 was due to his move to a reduced cost electric vehicle for which he also paid a capital contribution
49 No comparison for Mark Watkins due to him becoming a Director on 28 November 2023
50 The decrease in taxable benefits for James Quin in 2020/21 was due to his move to a reduced cost electric vehicle. The increase in taxable benefits in 2023/24 is
due to a move to a new company car
51
Steve Kingshott became a Director on 3 January 2023
52 Roger De Haan has waived his fee since becoming Chairman in 2020
53 The increase in fees for Eva Eisenschimmel in 2020/21 was due to her becoming Chair of the Remuneration Committee on 1 February 2020
54
The increase in fees for Julie Hopes in 2020/21 was due to her becoming Chair of the SPF Board on 1 February 2020 and assuming the position of Risk Committee
Chair on 31 December 2020. The decrease in fees in 2021/22 was due to the reduction in the fee for the Chair of SPF role on 1 January 2021 following a review of the
role. The decrease in fees in 2022/23 and 2023/24 is due to her stepping down from the role as Chair of SPF on 10 January 2023. She also assumed the position of
Remuneration Chair on 31 December 2023
55 The increase in fees for Gareth Hoskin in 2020/21 and 2021/22 was due to him becoming Chair of the Audit Committee on 22 June 2020
56 No comparison for Gemma Godfrey, Peter Bazalgette and Anand Aithal prior to 2022/23 due to them joining in September 2022
57
The increase in fees for Gemma Godfrey in 2023/24 is due to her becoming Chair of SPF on 10 January 2023
58 The increase in fees for Peter Bazalgette in 2023/24 is due to him becoming Senior Independent Director and Chair of the Nomination Committee on
30 September 2022
59 The increase in fees for Anand Aithal in 2023/24 is due to him becoming Chair of the Innovation and Enterprise Committee on 1 November 2022
60 The average salary per colleague increased in 2020/21 and 2021/22 due to a combination of the annual salary increase, Company restructuring, which altered our
colleague base, and the impacts of the COVID-19 pandemic. The increase in salary 2022/23 was due to a combination of two pay increases for the wider workforce
and further investment in base pay. The increase in salary in 2023/24 is a result of Company restructuring, which altered our colleague base, and an uplift in the
entry salary within our contact centres
61
Total tax contributions include corporation tax, national insurance contributions, VAT and air passenger duty
Saga plc
Annual Report and Accounts 2024
87
Strategic Report
Financial statements
Additional information
Governance
The Policy and its implementation
The current Policy was approved by shareholders at the AGM held on 5 July 2022 and is available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
The below table sets out a summary of the key elements of the Policy along with their operation in 2023/24 and proposed operation
in 2024/25. Note that the Policy operated as intended in 2023/24.
Policy element
Summary of the Policy
Operation in 2023/24
Proposed operation in 2024/25
Base salary
Provides a base level of
remuneration to support
recruitment and retention
of Executive Directors with
the necessary experience
and expertise to deliver the
Group’s strategy.
Salaries are set on appointment
and reviewed annually. When
determining an appropriate
level of salary, the Committee
considers:
pay increases to other
colleagues;
remuneration practices
within the Group;
any change in scope, role or
responsibilities;
the general performance of
the Group and each individual;
the experience of the relevant
Director; and
the economic environment.
Executive Directors received
a 3.0% increase in salary
in February 2023, a lower
increase than the 5.0%
awarded to the wider workforce,
which was brought forward to
December 2022 as part of the
cost of living support.
As a result, the salaries for the
Executive Directors were:
Euan Sutherland: £750,110
James Quin: £453,973
Steve Kingshott: £412,000
Both Mike Hazell and Mark
Watkins joined after this date,
with salaries set as below:
Mike Hazell: £600,000
Mark Watkins £375,000
Executive Directors did not
receive any increase in salary
in February 2024. The average
increase awarded to the broader
colleague group was 4.0%.
As a result, the salaries for the
Executive Directors are:
Mike Hazell: £600,000
Mark Watkins: £375,000
Steve Kingshott: £412,000
Benefits
Provides a market-standard
level of benefits.
Benefits may include family
private health cover, death in
service life assurance, a car
allowance, subsistence expenses
and discounts in line with other
colleagues.
Standard benefits provided.
No change.
Pension
Provides a fair level of pension
provision for all colleagues.
Pension contributions/payments
in lieu for Executive Directors
are aligned with those of the
majority of colleagues (6% of
salary). However, colleagues
can opt to increase their
contribution to a maximum of
10%, which the Company will
match. This does not apply to
Executive Directors.
All Executive Directors received
6% of salary.
No change.
Saga plc
Annual Report and Accounts 2024
88
Directors’ Remuneration Report
Annual Report on Remuneration
continued
Policy element
Summary of the Policy
Operation in 2023/24
Proposed operation in 2024/25
Bonus
The Annual Bonus Plan provides
a significant incentive to the
Executive Directors, linked
to achievement in delivering
goals that are closely aligned
with the Company’s strategy
and the creation of value
for shareholders.
In particular, the Annual Bonus
Plan supports the Company’s
objectives, allowing the setting
of annual targets based on the
business’ strategic objectives at
that time, meaning that a wider
range of performance metrics
can be used that are relevant.
Awards are granted annually
with performance measured
over one financial year.
The Committee will determine
the maximum participation in
the Annual Bonus Plan for each
year, which will not exceed 150%
of salary.
70% of awards will be linked
to financial measures. Specific
measures, targets and
weightings may vary from
year to year.
At least one-third of the bonus
will be deferred into shares
vesting after three years.
Payout range is as follows
(% of maximum payout):
Threshold: up to 20%
Target: 50%
Maximum: 100%
Malus and clawback
arrangements apply.
Good/bad leaver provisions apply.
Maximum bonus opportunities
were:
Mike Hazell: 150% of salary
Euan Sutherland: 150% of salary
Mark Watkins: 125% of salary
James Quin: 125% of salary
Steve Kingshott: 125% of salary
Performance measures and
weightings for the bonus for
Mike, Euan, Mark and James
were as follows:
Underlying Profit Before
Tax
62
: 55%
Net Debt
62
: 15%
Personal objectives: 30%
Performance measures and
weightings for the bonus for
Steve were as follows:
Underlying Profit Before
Tax
62
: 10%
Net Debt
62
: 15%
Insurance Underlying Profit
Before Tax
62
: 45%
Personal objectives: 30%
The maximum opportunities
for Executive Directors are
unchanged and are as follows:
Mike Hazell: 150% of salary
Mark Watkins: 125% of salary
Steve Kingshott: 125% of salary
The current intention is to set
performance measures and
weightings for the 2024/25
bonus as follows:
Underlying Profit Before Tax
62
:
55% (for Steve Kingshott
this will be split as 27.5%
Underlying Profit Before Tax
62
and 27.5% Insurance
Underlying Profit Before Tax
62
)
Net Debt
62
: 15%
Personal objectives: 30%
The Committee is of the view that
targets for the 2024/25 annual
bonus are currently commercially
sensitive and these targets will
be disclosed retrospectively
in the 2025 Directors’
Remuneration Report.
RSP
Awards are designed to
incentivise the Executive
Directors over the longer term
to successfully implement the
Company’s strategy.
Awards of nil-cost options
are granted annually up to a
maximum of 100% of salary.
RSP awards do not have any
performance conditions but
are subject to an underpin
on vesting.
Awards vest after three years
and are subject to a further
two-year holding period, during
which time shares may not be
sold other than for tax.
The RSP awards were made
at reduced levels following the
announcement of the STP:
Mike Hazell: 68% of salary
(awarded for Group CFO role)
Euan Sutherland: 80% of salary
James Quin: 68% of salary
Steve Kingshott: 60% of salary
No award for Mark Watkins who
was appointed as Group CFO
after the 2023/24 RSP awards.
The Committee will review share
price performance on vesting to
determine whether any windfall
gains were made.
To remain at reduced levels
during the STP. Awards set at:
Mike Hazell: 80% of salary
Mark Watkins: 68% of salary
Steve Kingshott: 60% of salary
Shareholding requirement
To ensure Executive Directors’
interests are aligned with
shareholders over the long term.
The Committee sets formal
shareholding guidelines that
will encourage the Executive
Directors to build up over a
five-year period, and then
subsequently hold, a
shareholding equivalent to
a percentage of salary.
Mike Hazell: 250% of salary
Euan Sutherland: 250%
of salary
Mark Watkins: 200% of salary
James Quin: 200% of salary
Steve Kingshott: 200%
of salary
No change.
All-colleague share plan
The Company operates an
HM Revenue and Customs SIP.
Shares that are kept in the plan
for five years will be exempt
from income tax and National
Insurance on their value.
Saga continued to operate the
SIP for all colleagues in 2023/24.
No change.
Chairman and Non-Executive
Director fees
Monetary incentives for the
Chairman and Non-Executive
Directors
The fees for Non-Executive
Directors are set at broadly
the median of the comparator
group. In general, the level of fee
increase for the Non-Executive
Directors will be set, taking
account of any change in
responsibility and considering
the general rise in salaries
across the UK workforce.
Fees for 2023/24 were as
follows (Roger De Haan waived
his fee for 2023):
Roger De Haan: Nil
Board member fee: £65,500
Committee Chair fee: £10,000
Senior Independent Director
fee: £40,000
No change.
62 Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Saga plc
Annual Report and Accounts 2024
89
Strategic Report
Financial statements
Additional information
Governance
Advisers to the Committee
Following a selection process carried out by the Board prior to the IPO of the Company, the Committee engaged the services of
PricewaterhouseCoopers (
PwC
) as independent remuneration advisers.
During the financial year, PwC advised the Committee on all aspects of the Policy for Executive Directors and members of the
Operating Board.
PwC is a member of the Remuneration Consultants Group and the voluntary code of conduct of that body is designed to ensure objective
and independent advice is given to remuneration committees. Other PwC teams provide certain non-audit services to the Company in
areas of tax and consulting. The Committee is satisfied that no conflicts of interest exist in the provision of these services and that the
advice provided is independent and objective. Fees of £99,173 (2022/23: £112,316) were provided to PwC during the year in respect of
remuneration advice received.
The Committee receives support from the Chief People Officer (
CPO
) and Group Company Secretary.
Shareholder voting
The current Policy was approved by shareholders at the AGM held on 5 July 2022. Outlined below are the voting outcomes for this,
and in respect of, approving the Directors’ Remuneration Report at the AGM on 22 July 2023.
Resolution
AGM date
Votes for
% of
votes cast
Votes against
% of
votes cast
Votes cast
% of
issued share
capital voted
Votes
withheld
To approve the Directors’
Remuneration Report
20 June 2023
57,255,601
81.75%
12,782,808
18.25%
70,232,539
50.04%
194,130
To approve the Directors’
Remuneration Policy
5 July 2022
58,132,761
79.74%
14,770,336
20.26%
72,982,813
52.01%
79,686
Service contracts and letters of appointment
The Committee’s policy for setting notice periods is that normally they will be a maximum of 12 months. The Committee may, in
exceptional circumstances arising on recruitment, allow a longer period, which would in any event reduce to 12 months following the
first year of employment. The Non-Executive Directors of the Company do not have service contracts and are appointed by letters
of appointment. Each independent Non-Executive Director’s term of office runs for a three-year period.
The Company follows the UK Corporate Governance Code 2018 (the
Code
) recommendation that all Directors be subject to annual
re-appointment by shareholders.
Executive Director
Notice periods
Name
Date appointed
Nature of contract
From Company
From Director
Compensation provisions
for early termination
Mike Hazell
9 October 2023
Rolling
12 months
12 months
None
Mark Watkins
28 November 2023
Rolling
12 months
12 months
None
Steve Kingshott
3 January 2023
Rolling
12 months
12 months
None
Non-Executive Director
Name
Original appointment
Appointment of
current term
Arrangement
Notice period/
unexpired term at AGM
Julie Hopes
1 October 2018
1 October 2021
Letter of appointment
3 months/ 3 months
Gareth Hoskin
11 March 2019
11 March 2022
Letter of appointment
3 months/ 8 months
Gemma Godfrey
1 September 2022
1 September 2022
Letter of appointment
3 months/ 14 months
Peter Bazalgette
1 September 2022
1 September 2022
Letter of appointment
3 months/ 14 months
Anand Aithal
1 September 2022
1 September 2022
Letter of appointment
3 months/ 14 months
Executive Directors may accept appropriate outside non-executive director appointments or other significant appointments, subject
to approval by the Board, provided the aggregate commitment is compatible with their duties as Executive Directors. The Executive
Directors concerned may retain fees paid for these services.
Saga plc
Annual Report and Accounts 2024
90
Directors’ Remuneration Report
Annual Report on Remuneration
continued
Consideration of employment conditions elsewhere in the Group
Each year, prior to reviewing the remuneration of the Executive Directors and the members of the Operating Board, the Committee
considers a report prepared by the CPO, detailing base pay and share scheme practices across the Company. The report provides an
overview of how colleague pay compares with the market, alongside any material changes during the year, and includes detailed analysis
of basic pay and variable pay changes within the UK.
While the Company does not directly consult with colleagues as part of the process of reviewing executive pay and formulating the Policy,
the Company engages with colleagues via its People Committee, where the approach to Executive remuneration is also discussed.
The Chair of the Remuneration Committee is the Non-Executive Director nominated as People Champion. In addition, the Committee
receives an update and feedback from the broader colleague population on an annual basis using an engagement survey which includes
a number of questions relating to remuneration. The Company does not use remuneration comparison measurements.
The Group aims to provide a remuneration package for all colleagues that is market competitive and operates the same core structure
as for the Executive Directors. The Group operates colleague share and variable pay plans, with pension provisions provided for all
Executive Directors and colleagues. In addition, a proportion of the STP Pool is also reserved for all colleagues. Any salary increases
for Executive Directors are expected to be generally in line with those for UK-based colleagues.
Consideration of shareholder views
The Committee takes the views of the shareholders seriously and these are taken into account in shaping remuneration policy and
practice. Shareholder views are considered when evaluating and setting remuneration strategy and the Committee welcomes an
open dialogue with its shareholders on all aspects of remuneration. The Committee consulted its major shareholders and the main
shareholder representative bodies prior to proposing the Policy. The Committee is grateful for the time taken to consider the
Committee proposals and provide feedback. At the end of the consultation, the majority of shareholders consulted indicated they
were supportive of the Policy.
Compliance with the Code
The following table sets out how the Policy aligns with the Code whose objective is to ensure the remuneration operated by the Company
is aligned with all stakeholder interests, including those of shareholders:
Key remuneration element of the Code
Alignment with the Policy
Five-year period between the date of grant
and realisation for equity incentives
The RSP and STP meet this requirement through the implementation of the three-year
vesting and two-year holding period for the RSP and five-year vesting period for the STP.
Phased release of equity awards
The RSP meets this requirement as awards are made in an annual cycle. The STP has a
phased release in years five, six and seven.
Discretion to override formulaic outcomes
Included in the terms and conditions of the Annual Bonus Plan, the RSP and the STP.
Post-cessation shareholding requirement
The full in-employment requirement for two years following cessation of employment.
Pension alignment
The pension contribution for all Executive Directors is aligned with the majority of
colleagues, at 6%. However, colleagues can opt to increase their contribution to a maximum
of 10%, which the Company will match. This does not apply to Executive Directors.
Extended malus and clawback
The malus and clawback provisions align with the Financial Reporting Council’s Board
Effectiveness Guidance.
As part of its review of the proposed Policy and remuneration practices, the Committee has considered the factors set out in Provision 40
of the Code. In the Committee’s view, the Policy addresses those factors.
Julie Hopes
Chair, Remuneration Committee
16 April 2024
This report has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 as amended in 2013, 2018 and 2019, the Provisions of the current Code and the Listing Rules.
Saga plc
Annual Report and Accounts 2024
91
Strategic Report
Financial statements
Additional information
Governance
Saga plc
Annual Report and Accounts 2024
92
Directors’ Report
Management Report
The Directors’ Report, together with the Strategic Report set out on pages 1-52, form the Management Report for the purposes of
Disclosure Guidance and Transparency Rule (
DTR
) 4.1.5 R (the
Management Report
).
Statutory information contained elsewhere in the Annual Report
Information required to be part of this Directors’ Report can be found elsewhere in the Annual Report and Accounts as indicated in the
table below and is incorporated into this report by reference.
Information
Location in Annual Report and Accounts
Likely future developments in the business of the Company or its subsidiaries
Pages 1-52
Environmental, Social and Governance, including Task Force on Climate-Related Financial Disclosures
Pages 37-43
Greenhouse gas emissions
Pages 42-43
Suppliers, customers and others in a business relationship engagement
Pages 16-17
Colleagues (employment of disabled persons, workforce engagement and policies)
Pages 43, 51
Corporate Governance Statement
Pages 53-73
Directors’ details (including changes made during the year)
Pages 54, 56-57 and 63-66
Related-party transactions
Not applicable
Diversity
Pages 43, 63 and 66
Board and executive diversity targets
Pages 43, 63 and 66
Share capital
Note 33 on page 174
Employee share schemes (including long-term incentive schemes)
Note 36 on pages 175-177
Financial instruments: information on the Group’s financial instruments and risk management
objectives and policies, including our policy for hedging
Notes 2, 3, 7, 8, 19 and 20 on
pages 110-134, 135 and 148-159
Statements of responsibilities
Page 95
Additional information
Pages 187-192
Disclosure table pursuant to Listing Rule (
LR
) 9.8.4C
The following table provides references to where the information required by LR 9.8.4C R is disclosed:
Listing Rule
Listing Rule requirement
Disclosure
9.8.4(1)
Interest capitalised by the Group and any related tax relief
Note 17 on pages 145-146
9.8.4(2)
Unaudited financial information (LR 9.2.18 R)
Group Chief Financial Officer’s Review, pages 18-36
9.8.4(4)
Long-term incentive schemes (LR 9.4.3 R)
Directors’ Remuneration Report, pages 74-91
9.8.4(5)
Directors’ waivers of emoluments
Directors’ Remuneration Report, pages 74-91
9.8.4(6)
Directors’ waivers of future emoluments
Directors’ Remuneration Report, pages 74-91
9.8.4(7)
Non-pre-emptive issues of equity for cash
Directors’ Report on page 94
9.8.4(8)
Non-pre-emptive issues of equity for cash by any unlisted
major subsidiary undertaking
Not applicable
9.8.4(9)
Parent company participation in a placing by a listed subsidiary
Not applicable
9.8.4(10)
Contract of significance in which a Director is, or was,
materially interested
Directors’ Report on page 93 and Note 2.1 on page 110
9.8.4(11)
Contract of significance between the Company
(or one of its subsidiaries) and a controlling shareholder
Not applicable
9.8.4(12)
Waiver of dividends by a shareholder
Directors’ Report on page 94
(under paragraph ‘Rights attaching to shares’)
9.8.4(13)
Waiver of future dividends by a shareholder
Directors’ Report on page 94
(under paragraph ‘Rights attaching to shares’)
9.8.4(14)
Board statement in respect of relationship agreement with
a controlling shareholder
Not applicable. See Directors’ Report on page 93
(under ‘Relationship agreement with Director shareholder’)
Results and dividends
The Group made a loss after taxation of £113.0m for the financial
year ended 31 January 2024. The Board did not pay an interim
dividend. The Board of Directors is not in a position to recommend
the payment of a final dividend for the 2023/24 financial year.
The Directors intend to resume dividend payments in the future,
when further progress has been made with deleveraging and
when current limitations, particularly in relation to ship debt,
have been removed.
Any decision to declare and pay dividends is made at the discretion
of the Directors and depends on, among other things, applicable
law, regulation, restrictions, the Group’s financial position,
regulatory capital requirements, working capital requirements,
finance costs, general economic conditions and other factors the
Directors deem significant from time to time.
Political donations
No political donations were made during the year.
Saga plc
Annual Report and Accounts 2024
93
Strategic Report
Financial statements
Additional information
Governance
Directors’ interests
A list of the Directors, their interests in the long-term
performance share plan, contracts and ordinary share capital
of the Company are given in the Directors’ Remuneration Report
on pages 74-91.
Agreements with Director shareholder
The Board confirms that, in accordance with the Listing Rules,
there are no controlling shareholders in the Company. However,
the Company entered into a relationship agreement with Roger
De Haan on 10 September 2020 (the
Relationship Agreement
)
as Roger De Haan directly holds 37,196,970 shares of 15p each
1
(constituting 26.2% of issued share capital as of 31 January 2024).
The Relationship Agreement regulates the relationship between
the Company and Roger De Haan and contains undertakings
that transactions and arrangements will be conducted on an
arm’s-length basis and on normal commercial terms. It also
provides that dilutions caused by new issuances of shares shall be
disregarded when determining investor rights under its terms.
The Group entered into an unsecured loan facility with
Roger De Haan on 3 April 2023 and an amendment was agreed
on 26 September 2023. This was provided on an arm’s length
basis and on normal commercial terms. On 8 February 2024,
Roger De Haan and the Company agreed to amend the
terms of the facility to remove the prohibition on lease and hire
purchase agreements. Subsequent to the financial year end,
a further extension to the maturity date of the facility was agreed,
to 30 April 2026.
Rules on appointment and replacement
of Directors
A Director may be appointed by ordinary resolution of the
shareholders in a general meeting following nomination by the
Board or a member (or members) entitled to vote at such a
meeting. In addition, the Directors may appoint a Director to fill a
vacancy, or as an additional Director, provided that the individual
retires at the next Annual General Meeting (
AGM
). A Director may
be removed by the Company in certain circumstances set out in
the Company’s Articles of Association or by an ordinary resolution
of the Company. The Relationship Agreement between the
Company and Roger De Haan provides for the nomination for
appointment (and removal or re-nomination) to the Board of one
Non-Executive Director for as long as he holds at least the higher of:
10% or more of the issued ordinary share capital of the
Company; and
the percentage of the issued ordinary share capital of the
Company, represented by 60% of the investor’s holding
of ordinary shares immediately following the capital raise,
which took place in October 2020.
All Directors will seek re-election (or election) at the AGM in
accordance with the Company’s Articles of Association and the
recommendations of the UK Corporate Governance Code 2018.
Directors’ indemnities
At the date of this report, indemnities are in force, under
which the Company has agreed to indemnify the Directors,
to the extent permitted by law and the Company’s Articles of
Association, in respect of all losses arising out of, or in connection
with, the execution of their powers, duties and responsibilities,
as Directors of the Company or any of its subsidiaries.
No amount was paid under any of these indemnities during the
year. Directors’ and officers’ liability insurance is in place at the
date of this report, at an amount which the Board considers
adequate. This is subject to annual review.
Change of control – significant agreements
There are some arrangements which give rights to third parties
to terminate agreements upon a change of control of the
Company, including following a takeover; for example, commercial
contracts and insurance distribution agreements. Details of
such arrangements are captured as part of the contractual
governance process.
The Group’s corporate debt is unsecured and in place for general
purposes. It consists of a £150.0m seven-year public listed bond at
3.375%, due to expire in May 2024, and a £250.0m five-year public
listed bond at 5.50%, due to expire in July 2026. The Group also
has two liquidity facilities, being a £50.0m Revolving Credit Facility,
expiring in May 2025, and an £85.0m loan facility with Roger De Haan,
expiring in April 2026.
Export Credit Agency-backed funding is in place over 12 years
to finance 80% of the cost of the Group’s two ocean cruise ships
at a fixed interest rate. The first of these facilities was drawn on
completion of the build of Spirit of Discovery and is secured by
way of a charge over the asset. The second facility was drawn on
completion of the build of Spirit of Adventure and is also secured
by way of a charge over the asset. The Company has provided a
guarantee for this ship debt.
In the event of a change of control, the facilities would either
require repayment or renegotiation. If the ship financing is
terminated, significant break fees may be incurred. Further details
on banking facilities are shown in Note 30 to the consolidated
financial statements on pages 170-172.
The rules of the Company’s colleague share plans generally
provide for the accelerated vesting and/or release of share awards
in the event of a change of control of the Company.
The Company does not have any agreements with colleagues,
including Directors, which would pay compensation in the event
of a change of control.
Conflict of interest
Each Director is obliged to disclose any potential, or actual, conflict
of interest in accordance with the Company’s Conflict of Interest
Policy. The policy is subject to review and declarations are made on
an annual basis. Directors are also required to update any changes
to declarations as they occur. Internal controls are in place to
ensure that any related-party transactions are conducted on an
arm’s-length basis. Roger De Haan did not participate in
discussions in relation to his loan facility agreement.
Share capital and interests in voting rights
The Company’s share capital, including movements during the
year, is set out on page 174. At the date of this report, the
Company’s issued share capital comprised a single class of
share capital which is divided into ordinary shares of 15p each.
At 31 January 2024, 141,795,822 ordinary shares of 15p each
had been issued, fully paid up and quoted on the London Stock
Exchange (
LSE
).
In accordance with DTR 5.1, the Company must disclose where
it has been notified of the interests in the Company’s total voting
rights. The obligation to notify sits with the shareholder, and the
Company must report on the notifications received, between the
end of the reporting year and a date not more than one month
prior to the date of the notice of AGM. If the date of signing of the
Annual Report and Accounts is prior to this, we will include an
updated position in our AGM Notice (
Notice
).
Since the date of disclosure to the Company, the interest of any
person may have increased or decreased. There is no requirement
to notify the Company of any increase or decrease unless the
holding passes a notifiable threshold in accordance with DTR 5.1.
1
This shareholding represents shares directly held by Roger De Haan. His shareholding including that of his connected persons, is set on page 82 of the Directors’
Remuneration Report
Saga plc
Annual Report and Accounts 2024
94
Directors’ Report
continued
Information regarding other interests in voting rights provided to
the Company, pursuant to the Financial Conduct Authority DTRs,
is published on the Company’s corporate website and via a
Regulatory Information Service.
The Company has not been notified of any interests in the
Company’s total voting rights between 31 January 2024 and the
date of signing the Annual Report and Accounts. During the year,
the following notifications were received:
Name
Ordinary
shares of
15p each
Percentage
of capital as
disclosed to
the Company
Nature of holding
Eldose Babu
2
10,000,001
7.05%
Direct
Norges Bank
3,865,037
2.75%
Direct (1.08%)
Indirect (1.68%)
Authority to allot/purchase own shares
A shareholders’ resolution was passed at the AGM on 20 June 2023,
authorising the Company to make market purchases within the
meaning of Section 693(4) of the Companies Act 2006 (the
Act
)
(up to £2,105,059, representing 10% of the aggregate nominal
share capital of the Company following admission). This is subject
to a minimum price of 15p and a maximum price of the higher of
105% of the average mid-market quotations for five business days
prior to purchase or the price of the last individual trade and highest
current individual bid as derived from the LSE trading system.
The Company did not exercise this authority during the year,
and it will expire at the forthcoming AGM. A special resolution to
authorise the Company to make market purchases representing
10% of current nominal share capital will be proposed at the
2024 AGM.
The Directors of the Company were also granted authority at
the 2023 AGM to allot relevant securities up to a nominal amount
of £7,009,847. This authority was not exercised during the year.
This authority will apply until the conclusion of the 2024 AGM,
at which shareholders will be asked to grant the Directors
authority (for the purposes of Section 551 of the Act) to allot
relevant securities:
up to an aggregate nominal amount of 33.3% of the Company’s
issued ordinary share capital; and
comprising equity securities (as defined in the Act) up to an
aggregate nominal amount of 66.6% of the Company’s issued
ordinary share capital (after deducting from such limit any
relevant securities issued under (i) in connection with a
rights issue).
These amounts will apply until the conclusion of the 2024 AGM,
or, if earlier, 31 July 2024.
Special resolutions will also be proposed to give the Directors
authority to make non-pre-emptive issues wholly for cash in
connection with rights issues and otherwise up to an aggregate
nominal amount of 10% of the Company’s issued ordinary share
capital and to make non-pre-emptive issues wholly for cash in
connection with acquisitions or specified capital investments up
to an aggregate amount of 10% of the Company’s issued ordinary
share capital. This is consistent with the Pre-Emption Group’s
published Statement of Principles.
Rights attaching to shares
The Company has a single class of ordinary shares in issue.
The rights attached to the shares are governed by
applicable law and the Company’s Articles of Association,
which are available on our corporate website
(www.corporate.saga.co.uk/about-us/governance).
Ordinary shareholders have the right to receive notice, attend and
vote at general meetings; and to receive a copy of the Company’s
Annual Report and Accounts and a dividend when approved and
paid. On a show of hands, each shareholder present in person, or by
proxy (or an authorised representative of a corporate shareholder),
shall have one vote. In the event of a poll, one vote is attached to
each share held. No shareholder owns shares with special rights
as to control. The Notice will state the deadlines for exercising
voting rights and for appointing a proxy or proxies.
The Saga Employee Benefit Trust (the
Trust
) is an Employee
Benefit Trust which holds property (the
Trust Fund
) including
inter-alia money, and ordinary shares in the Company, in trust
in favour or for the benefit of colleagues of the Saga Group.
The Trustee of the Trust has the power to exercise the rights and
powers incidental to, and to act in relation to, the Trust Fund in
such manner as the Trustee, in its absolute discretion, thinks fit.
The Trustee has waived its rights to dividends on ordinary shares
held by the Trust. Details of employee share schemes are set out
in Note 36 to the consolidated financial statements.
Restrictions on the transfer of shares
The Company is not aware of any agreement that would result
in a restriction on the transfer of shares or voting rights.
Articles of Association
Any amendment to the Company’s Articles of Association may
only be made by passing a special resolution of the shareholders
of the Company. The Company last approved its Articles of
Association by special resolution at the AGM held on 14 June 2021.
Research and development
The Group does not undertake any material activities in the field
of research and development.
Branches outside the UK
The Company does not have any branches outside the UK.
Post-balance sheet events
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 30 and 40 on pages 170-172 and 180, and agreed a reduction
in the notice period to support liquidity needs to 10 business days.
Auditor
KPMG LLP has confirmed its willingness to continue in office as
auditor of the Company and resolutions for its re-appointment,
and for the Audit Committee to determine its remuneration,
will be proposed at the forthcoming AGM.
Annual General Meeting
The AGM will be held on 25 June at 11.00am at the offices of
Numis Securities Limited, 45 Gresham Street, London EC2V 7BF.
The Notice will be available on our corporate website
(www.corporate.saga.co.uk) in due course.
By order of the Board
Victoria Haynes
Group Company Secretary
16 April 2024
Saga plc (Company no. 08804263)
2
This disclosure relating to Eldose Babu is the latest disclosure announced on 15 January 2024. Additional disclosures were announced on 21 December 2023,
8 December 2023, 20 November 2023 and 17 October 2023
Saga plc
Annual Report and Accounts 2024
95
Strategic Report
Financial statements
Additional information
Governance
Statements of responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and Accounts, and the Group and parent company financial
statements, in accordance with applicable laws and regulations.
Company law requires the Directors to prepare Group and parent
company financial statements for each financial year. Under that
law, they are required to prepare the Group financial statements
in accordance with UK-adopted international accounting
standards and in conformity with the requirements of the
Companies Act 2006 (the
Act
) and have elected to prepare
the parent company financial statements in accordance with
UK accounting standards, including Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group, and parent company, and
of their profit or loss for that period (see Governance statements
on page 53). In preparing each of the Group and parent company
financial statements, the Directors are required to:
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable, relevant,
reliable and prudent;
for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards;
for the parent company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the parent
company financial statements;
assess the Group, and parent company’s, ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern; and
use the going concern basis of accounting unless they either
intend to liquidate the Group, or the parent company, or to
cease operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show, and explain, the parent
company’s transactions and disclose, with reasonable accuracy,
at any time, the financial position of the parent company and
enable them to ensure that its financial statements comply with
the Act. They are also responsible for such internal controls as
they determine are necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that comply with that law and those regulations.
Disclosure of information to the auditor
Having made the requisite enquiries, so far as each of the
Directors is aware, there is no relevant audit information
(as defined by Section 418(3) of the Act) of which the Company’s
auditor is unaware and the Directors have taken all the steps they
ought to have taken as Directors to make themselves aware of
any relevant audit information and to ensure that the Company’s
auditor is aware of that information.
Maintenance of website and single
electronic reporting
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency
Rule 4.1.14R, the financial statements will form part of the annual
financial report prepared using the single electronic reporting
format under the Transparency Directive European Single
Electronic Format (
ESEF
) regulation. The auditor’s report
on these financial statements provides no assurance over the
ESEF format.
Directors’ responsibility statement
Each of the Directors who were in office at the date of this report,
whose names and responsibilities are listed on pages 56-57,
confirm that, to the best of their knowledge:
the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation
taken as a whole; and
the Management Report includes a fair review of the
development and performance of the business and the position
of the issuer, and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face.
The Directors consider the Annual Report and Accounts, taken
as a whole, to be fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
By order of the Board
Victoria Haynes
Group Company Secretary
16 April 2024
Saga plc (Company no. 08804263)
Saga plc
Annual Report and Accounts 2024
96
Independent Auditor’s Report to the Members of Saga plc
1 Our opinion is unmodified
We have audited the financial statements of Saga plc
(“the Company”) for the year ended 31 January 2024 which
comprise the Consolidated income statement, Consolidated
statement of comprehensive income, Consolidated statement
of financial position, Consolidated statement of changes in equity
and Consolidated statement of cash flows, the Company Balance
sheet, Company Statement of changes in Equity, and the related
notes, including the accounting policies in note 2 to the financial
statements and note 1 to the Company financial statements.
In our opinion:
The financial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
31 January 2024 and of the Group’s loss for the year then ended;
The Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
The parent Company financial statements have been properly
prepared in accordance with UK accounting standards,
including FRS 101
Reduced Disclosure Framework
; and
The financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our
audit opinion is consistent with our report to the Audit Committee.
We were first appointed as auditor by the shareholders on
22 June 2017. The period of total uninterrupted engagement
is for the seven financial years ended 31 January 2024.
We have fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to
listed public interest entities. No non-audit services prohibited
by that standard were provided.
Overview
Materiality:
Group
financial statements
as a whole
£5.6m (2023: £4.8m)
0.76% of 2024 revenue
(2023: 0.85% of revenue)
Coverage
97% (2023: 96%) of total revenues
Key audit matter
vs 2023
Recurring risks
Going concern
Recoverability of goodwill
Valuation of the liability and
reinsurance for incurred claims
Recoverability of the parent
Company’s investment in subsidiaries
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. Going concern is a key audit matter and is described in section 2 of our report. We summarise below the key audit
matters (unchanged from 2023 other than the exclusion of ‘recoverability of the carrying value of cruise ships’ and key audit matter
‘Valuation of the liability and reinsurance for incurred claims’ which was previously ‘Valuation of claims outstanding – IBNR (gross and net)’
has been updated this year to reflect the impact from the adoption of IFRS 17), in decreasing order of audit significance, in arriving at our
audit opinion above, together with our key audit procedures to address those matters and our findings from those procedures in order
that the Company’s members, as a body, may better understand the process by which we arrived at our audit opinion. These matters
were addressed, and our findings are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the
financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide
a separate opinion on these matters.
Area
The risk
Our response
Going concern
See note 2.1 to the
Group financial
statements
Refer to pages 67 - 70
(Audit Committee
Report)
Disclosure quality
The financial statements explain how the
Board has formed a judgement that it is
appropriate to adopt the going concern
basis of preparation for the Group and
parent Company.
That judgement is based on an evaluation
of the inherent risks to the Group’s and
Company’s business model and how those
risks might affect the Group’s and
Company’s financial resources or ability
to continue operations over a period of at
least 15 months from the date of approval
of the financial statements.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period
by assessing the directors’ sensitivities over the level of available
financial resources and covenant thresholds indicated by the
Group’s and Company’s financial forecasts, taking account of
severe, but plausible, adverse effects that could arise from these
risks individually and collectively.
Our procedures also included:
Funding assessment:
We agreed the Group’s and Company’s committed level of
financing, the availability of facilities and related covenant
requirements to signed agreements including covenant waivers;
We critically evaluated management’s assessment of
compliance with debt covenants and sources of funding for
repayment of the bonds. We assessed the ability of the Group
and Company to meet the terms including repayment timelines
and financial covenants within severe but plausible downside
scenarios; and
Saga plc
Annual Report and Accounts 2024
97
Strategic Report
Financial statements
Additional information
Governance
Area
The risk
Our response
The risks most likely to adversely affect the
Group’s and Company’s available financial
resources and metrics relevant to debt
covenants over this period were:
The ability of the Group to refinance debt
and facilities after maturity of £150 million
bonds (‘bonds’) in May 2024 and the expiry
of an existing revolving credit facility in
May 2025;
Further unexpected downturn in
performance of the Insurance Broking
business due to worsening competitive
market pressures;
High costs and claims inflation having
an adverse impact on Insurance
Underwriting margins;
The inability to achieve load factors
for Ocean Cruise, lower demand for
River Cruise and slower growth in the
Travel business; and
Key business change initiatives fail to be
delivered effectively and are unable to
achieve the identified discretionary costs
savings due to factors such as resource
capability or capacity constraints,
unexpected business risk issues, new
regulation, or the timing of, and extent
to which management are able to achieve
the identified discretionary cost savings.
There are also less predictable but realistic
second order impacts, such as adverse
changes in UK Government policy and
the economic environment, which could
result in a rapid reduction of available
financial resources.
The risk for our audit was whether or not
those risks were such that they amounted
to a material uncertainty that may have cast
significant doubt about the ability to continue
as a going concern. Had they been such,
then that fact would have been required
to have been disclosed.
Through inquiry and inspection of correspondence, we
considered the likelihood of the Group’s financial services
and travel regulators (Financial Conduct Authority (‘FCA’),
the Gibraltar Financial Services Commission (‘GFSC’) and the
Civil Aviation Authority (‘CAA’)), imposing additional financial
or operational constraints on the Group and how such risks
had been factored into the stress testing performed.
Historical comparisons:
We evaluated the appropriateness of management’s cashflow
forecasting process by comparing historic forecasts and the
related underlying assumptions considered in the prior period
with the actual and forecasted cashflows.
Key dependency assessment:
We gained an understanding of and assessed the Group’s and
Company’s plans and progress to maintain the continued
operation of the business in the face of the recent economic
challenges, and the assessment of both the likely impact of
regulatory change in the insurance industry and a strategic
pivot away from broking insurance business for short term
profit towards sustaining longer term growth on its business
plan; and
We challenged and evaluated the degree to which reasonably
foreseeable downside scenarios that would impact the Group’s
and Company’s business were factored into the financial
resilience modelling that the Group has performed.
Sensitivity analysis:
We considered sensitivities over the level of available financial
resources indicated by the Group’s and Company’s financial
forecasts taking account of plausible (but not unrealistic)
adverse effects that could arise from these risks individually
and collectively.
Benchmarking assumptions and our sector experience:
We evaluated and challenged the assumptions used in the
Directors’ base and reasonably foreseeable downside scenarios
utilising external data points where available alongside our
knowledge of the business and our cruise, travel and insurance
sector experience, and assessed the potential risk of
management bias.
Evaluating directors’ intent:
We evaluated the achievability of the actions the directors
consider they would take to improve the position should the
risks materialise. This included drawing down on the £85m
unsecured loan facility provided by the Group’s Chairman and
reductions in discretionary spend and capital expenditure,
taking into account the extent to which the directors can
control the timing and outcome of these actions.
Assessing transparency:
Considering whether the going concern disclosure in note 2.1
to the financial statements gives a full and accurate description
of the directors’ assessment of going concern, including the
identified risks, dependencies, and related sensitivities.
Our findings:
We found the going concern disclosure in note 2.1
without any material uncertainty to be proportionate
(2023 result: proportionate).
Saga plc
Annual Report and Accounts 2024
98
Area
The risk
Our response
Recoverability
of goodwill
Goodwill:
£344.7 million,
(2023: £449.6 million)
Impairment of
goodwill:
£104.9 million
(2023: £269.5 million)
Refer to pages 67 - 70
(Audit Committee
Report), note 2.3h on
page 115 (accounting
policies), and note 16
on pages 143 - 144
(financial disclosures).
Forecast-based valuation
Insurance Broking goodwill in the Group
is significant and at risk of irrecoverability
if forecast business performance were to
fall significantly short of business plans.
The estimated recoverable amount of
goodwill in relation to the insurance broking
business is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows and judgement
is required to assess whether the directors’
overall estimate, taking into account the
below assumptions, falls within an acceptable
range. The assessment of the recoverability
of goodwill involves a high degree of
subjectivity around assumptions due to the
supporting calculations of Value in Use (‘VIU’)
being reliant on expectations of future
performance. Inputs into the VIU calculations,
such as future cash flows, weighted average
cost of capital (‘WACC’) and terminal growth
rates are at risk of manipulation in order
to demonstrate that the value of the
underlying intangible assets is not impaired.
The risk in relation to these assets is
impacted by uncertainty in the economic
outlook and therefore there is a risk of
impairments to insurance broking goodwill;
and particularly if the Group is not able to
deliver at or ahead of plan in 2024/25, and
years to come, recognising that this plan
now assumes delayed longer term growth
in business volumes at the expense of the
slower emergence of profit.
The effect of these matters is that, as part
of our risk assessment, we determined that
the valuation of goodwill has a high degree of
estimation uncertainty, with a potential range
of reasonable outcomes greater than our
materiality for the financial statements as a
whole, and possibly many times that amount.
We performed the tests below rather than seeking to rely on
any of the Group’s controls because the estimation uncertainty
involved in the nature of the balance is such that we would expect
to obtain audit evidence primarily through the detailed
procedures described.
Our procedures included:
Historical comparisons:
We assessed the reasonableness of cash flow projections
against historical performance.
Our sector experience:
We evaluated and challenged the assumptions used in cash flow
forecasts using our sector knowledge and experience.
Benchmarking assumptions:
We compared the Group’s assumptions to externally derived
data in relation to key inputs such as WACC and terminal
growth rates, with the support of our valuation specialists.
Comparing valuations:
We compared the recoverable amount of the insurance
business Cash Generating Unit (‘CGU’) by reference to the
higher of VIU and fair value less cost to sell relative to the
carrying value and evaluated the outcome against comparator
industry multiples.
Assessing transparency:
We assessed whether the Group disclosures about the
sensitivity of the outcome of the impairment assessment
to changes in key assumptions reflects the risks inherent
in the valuation of goodwill.
Our findings:
We found the Group’s estimated recoverable
amount of goodwill and the related impairment charge to
be balanced (2023 finding: balanced), with proportionate
(2023 finding: proportionate) disclosure of the related
assumptions and sensitivities.
Independent Auditor’s Report to the Members of Saga plc
continued
Saga plc
Annual Report and Accounts 2024
99
Strategic Report
Financial statements
Additional information
Governance
Area
The risk
Our response
Valuation of the
liability and
reinsurance for
incurred claims
Liability for incurred
claims: £286.4 million
(2023: £259.2 million)
Reinsurance for
incurred claims:
£141.3 million
(2023: £87.6 million)
Refer to pages 67 - 70
(Audit Committee
Report), note 2.3r on
page 128 (accounting
policies), and note 28
on pages 166 - 169
(financial disclosures).
Subject valuation
The liability for incurred claims represents
a significant liability for the Group and
comprises the discounted unbiased
probability weighted estimate of the
cashflows and a risk adjustment. There is
a significant risk around the valuation of
the liability for incurred claims (and related
reinsurance contract assets) driven by the
risk of inappropriate estimation in respect
of the future cash flows.
Whilst the adoption of IFRS 17 affects the
measurement of the incurred claims, for
example by including a risk adjustment and
requiring discounting, the adoption of IFRS 17
in the period had no effect on the estimation
of incurred but not report claims (‘IBNR’).
Valuation of IBNR is the most subjective
component of the incurred claims liability
and reinsurance contract asset, requiring a
number of assumptions to be made with high
estimation uncertainty. This is heightened
due to the need for adjustments to the
historical claims pattern to reflect
uncertainty driven by the COVID-19
pandemic and by the current inflationary
environment and judgmental allowance
for the effect of events not in the historic
claims data.
There is greater inherent uncertainty in
valuation of those claims which emerge slowly
over time, or where there is greater potential
exposure to large losses due to the effect of
uncertain or unknown incurred events.
This judgement is applied to a number of
key assumptions, such as the frequency and
severity of incurred bodily injury, accidental
damage and third-party property damage
losses, the choice of development pattern,
and the choice of discount rate at which
periodical payment orders are valued.
Additionally, the allowance made for inflation
for future claims development is highly
uncertain and associated with a heightened
estimation risk.
Similar estimates are required in establishing
the reinsurers’ share of incurred claims,
in particular the share of IBNR claims.
The effect of these matters is that, as part
of our risk assessment, we determined that
the valuation of the liability and reinsurance
for incurred claims has a high degree of
estimation uncertainty, with a potential range
of reasonable outcomes greater than our
materiality for the financial statements as a
whole, and possibly many times that amount.
The financial statements disclose the
sensitivity estimated by the Group.
We have used our own actuarial specialists to assist us in
performing our procedures in this area.
We performed the tests below over the valuation rather than
seeking to rely on the Group’s controls because the nature of
the balance is such that we would expect to obtain audit evidence
primarily through the detailed procedures described.
Our procedures included:
Independent re-projection in respect of undiscounted
cash flows:
Using the Company’s own data, we carried out independent
re-projections (net and gross) to form our own view on estimate
of the undiscounted cash flows for IBNR. We have calculated a
claims inflation loading based on our internal inflation tool in
addition to our reprojection work and have challenged the
Company’s assumption with respect to the inflation loading.
Historical experience:
We compared prior year actual versus expected claims
experience by class of business and accident / underwriting
year and the Company’s selected loss ratios in the context
of actual versus expected.
Data reconciliations:
We agreed the relevant financial and non-financial claims
and premiums data recorded in the claims and premiums
administrative systems to the data used in the actuarial
reserving calculations, to assess the integrity of data used
within actuarial reserving processes and then assess that the
output of the actuarial projections reconciled to amounts
recorded in the financial statements.
Assessing transparency:
We considered the adequacy of the Group’s disclosures in
respect of the sensitivity of the valuation of liability for incurred
claims and key assumptions applied to key areas of judgement
and estimation uncertainty.
Our findings:
We found that the resulting estimate of the amount
recognised for liability and reinsurance for incurred claims to be
mildly optimistic (2023 finding: balanced). We found the
disclosures of the sensitivities to changes in key assumptions
and estimates as inputs to the valuation to be proportionate
(2023: proportionate).
Saga plc
Annual Report and Accounts 2024
100
Area
The risk
Our response
Recoverability
of the parent
Company’s
investment in
subsidiaries
Company’s
investment in
subsidiaries:
£167.3 million
(2023: £167.3 million)
Refer to pages 67 - 70
(Audit Committee
Report), note 1.2 on
page 185 (accounting
policies), and note 2
on pages 185 - 186
(financial disclosures).
Forecast-based valuation
The parent Company has a single direct
subsidiary but indirectly owns all
operating entities within the Group.
The carrying amount of the parent
Company’s investment in subsidiaries is
significant and at risk of irrecoverability
if forecast business performance for the
Group’s Insurance, Cruise and Travel
businesses, in particular, were to fall
significantly short of business plans.
The estimated recoverable amount of the
parent Company’s investment in subsidiaries
is subjective due to the inherent uncertainty
involved in forecasting and discounting future
cash flows and judgement is required to
assess whether the directors’ overall
estimate, taking into account the below
assumptions, falls within an acceptable range.
Current economic conditions and the outlook
for geo-political uncertainty and the impact
that this has on the Group’s Travel businesses
can also have a significant impact on
estimation uncertainty.
The assessment of the recoverability of this
asset involves a high degree of subjectivity
around assumptions due to the supporting
calculations of VIU being reliant on
expectations of future performance. Multiple
inputs into the VIU calculations, such as
future cash flows, WACC and terminal growth
rates are at risk of manipulation in order to
demonstrate that the value of the underlying
intangible assets is not impaired.
The risk in relation to these assets
is impacted by uncertainty in the economic
outlook and therefore there is risk of
impairments to investments in subsidiaries
at the parent Company level if the share price
does not recover; and particularly if the
Group is not able to deliver at or ahead of
plan in 2024/25, and years to come.
The effect of these matters is that, as part
of our risk assessment, we determined that
the valuation of the parent Company’s
investment in subsidiaries has a high degree
of estimation uncertainty, with a potential
range of reasonable outcomes greater than
our materiality for the financial statements as
a whole, and possibly many times that amount.
We performed the tests below rather than seeking to rely on
any of the Group’s controls because the estimation uncertainty
involved in the nature of the balance is such that we would expect
to obtain audit evidence primarily through the detailed
procedures described.
Our procedures included:
Historical comparisons:
We assessed the reasonableness of cash flow projections
against historical performance.
Our sector experience:
We evaluated and challenged the assumptions used in cash flow
forecasts using our sector knowledge and experience.
Benchmarking assumptions:
We compared the parent Company’s assumptions to externally
derived data in relation to key inputs such as WACC and terminal
growth rates, with the support of our valuation specialists.
Comparing valuations:
For the parent Company’s investment in subsidiaries, we
compared the sum of the VIUs or fair value less costs to sell
for all of the Group’s CGUs to the carrying value, market
capitalisation and implied multiples of the Group’s businesses;
and evaluated reasons for any significant differences.
Sensitivity analysis:
We used our analytical tools to assess the sensitivity of the
headroom on the parent Company’s investment in subsidiaries
and concluded on the appropriateness of the recoverable
amount of the parent Company’s investment in subsidiaries.
This was performed considering reasonable possible changes
in key assumptions underlying the business plans, including
WACC and terminal growth rates.
Assessing transparency:
We assessed whether the Group disclosures relating to the
sensitivity of the outcome of the impairment assessment to
changes in key assumptions reflects the risks inherent in the
valuation of carrying value of the parent Company’s investment
in subsidiaries.
Our findings: We found the Group’s estimated recoverable
amount of the parent Company’s investment in subsidiaries
to be balanced (2023 finding: balanced), with proportionate
(2023 finding: proportionate) disclosure of the related
assumptions and sensitivities.
We continue to perform procedures over recoverability of the carrying value of cruise ships, however, following strong recovery of the
cruise business since the emergence of the UK economy from COVID-19 pandemic-related restrictions, we have not assessed this as
one of the most significant risks in our current year audit and, therefore, it is not separately identified in our report this year.
Independent Auditor’s Report to the Members of Saga plc
continued
Saga plc
Annual Report and Accounts 2024
101
Strategic Report
Financial statements
Additional information
Governance
3 Our application of materiality and an
overview of the scope of our audit
Materiality for the Group financial statements as a whole was
set at £5.6m (2023: £4.8m), determined with reference to a
benchmark of total revenue, of which it represents 0.76%
(2023: determined with reference to a benchmark of total
revenue under IFRS 4, of which it represented 0.85%).
Total Revenue
£5.6m
Whole financial statements materiality
(2023: £4.8m)
£0.3m
Misstatements reported to the
Audit Committee (2023: £0.2m)
£741.1m
(2023: £581.1m*)
Group Materiality
£5.6m
(2023: £4.8m)
Total Revenue
Group Materiality
Whole financial statements
performance materiality
£3.6m
(2023: £3.1m)
Range of materiality at 5 components
(2023: 6 components) £2.2m-£4.2m
(2023: £0.6m-£4.2m)
* Based on total revenue with gross premiums written determined under IFRS 4
Materiality for the Company financial statements as a whole was
set at £4.4m (2023: £1.5m), which represents 1.6% of net assets
of £270.9m (2023: 0.5% of net assets of £291.8m).
Performance materiality was set at 65% (2023: 65%) and 75%
(2023: 65%) of materiality for the financial statements as a whole
for the Group and the parent company respectively. This equates
to £3.6m (2023: £3.1m) and £3.3m (2023: £1.0m) for the Group
and the parent company respectively. We applied this percentage
in our determination of performance materiality based on impact
of adoption of IFRS 17, the number of control deficiencies identified
during the prior period and changes in key senior management
during the year.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.3m
(2023: £0.2m), in addition to other identified misstatements
that warranted reporting on qualitative grounds.
The scope of the audit work performed was predominately
substantive as we placed limited reliance upon the Group’s internal
control over financial reporting. Of the Group’s 13 (2023: 13)
reporting components, we subjected 4 (2023: 4) to full scope audits
for Group purposes and 1 (2023: 2) to specified risk-focused audit
procedures. The latter was not individually financially significant
enough to require a full scope audit for Group purposes but did
present specific individual risks that needed to be addressed.
For the residual components, we conducted reviews of financial
information (including enquiry) at an aggregated Group level to
re-examine our assessment that there were no significant risks
of material misstatement within these.
The Group audit team instructed component auditors as to the
significant areas to be covered, including the relevant risks detailed
above and the information to be reported back. The Group audit
team approved the component materialities, which ranged from
£2.2m to £4.2m (2023: £0.6m to £4.2m), having regard to the
mix of size and risk profile of the Group across the components.
The work on 2 of the 13 components (2023: 2 of the 6 components)
was performed by component auditors and the rest, including the
audit of the parent Company, was performed by the Group audit
team. During the year, we held a combination of in person, video
and telephone conference meetings with all component auditors.
During these meetings, an assessment was made of audit risk
and strategy, the findings reported to the Group audit team were
discussed in more detail, key working papers were inspected, and any
further work identified by the Group audit team as a result of these
meetings was subsequently performed by the component auditor.
These components within the scope of our work accounted for
the following percentages of the Group’s results:
Group Revenue
97%
(2023: 96%)
96%
97%
Full scope for Group audit
purposes 2024
Specified risk-focused audit
procedures 2024
Full scope for Group audit
purposes 2023
Specified risk-focused audit
procedures 2023
Residual components
Group profits and losses that
made up the Group loss before tax
95%
(2023: 97%)
Group Total Assets
99%
(2023: 99%)
2%
0%
81%
33%
16%
90%
92%
7%
9%
62%
4 Going concern
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for 15 months from the date of
approval of the financial statements (“the going concern period”).
An explanation of how we evaluated management’s assessment of
going concern is set out in the related key audit matter in section 2
of this report.
Our conclusions based on this work:
We consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;
We have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast significant doubt on the Group’s or Company’s ability to
continue as a going concern for the going concern period;
We have nothing material to add or draw attention to in relation to
the directors’ statement in note 2.1 to the financial statements on
the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and
Company’s use of that basis for the going concern period; and
The related statement under the Listing Rules set out on page 53
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
Saga plc
Annual Report and Accounts 2024
102
5 The impact of climate change on our audit
In planning our audit, we performed a risk assessment, including
enquiries of management, to determine how the impact of
commitments made by the Group in respect of reducing carbon
emissions, as well as the physical risks of climate change, and
transition risks faced by the Group’s customer base, could impact
on the financial statements and our audit. We held discussions
with our own climate change professionals to challenge our risk
assessment. Through the procedures we performed, we did not
identify any material impact of climate change on the Group’s
material accounting estimates and there was no significant impact
of this assessment on our key audit matters for the year ended
31 January 2024.
The Insurance business within the Group predominantly brokers
and underwrites motor and home insurance risks. Climate change
may result in an increase in the frequency and severity of climate
related events, leading to higher insurance pay-outs. However,
the short-term nature of the Group’s insurance contracts means
that the impact of losses from such events for the year ended
31 January 2024 is already recorded within the Group’s insurance
contract liabilities at the balance sheet date. The Group considers
this loss experience in evaluating individual risk exposures, and the
setting of insurance premium rates for both new policies and the
periodic renewal of its existing insurance underwriting portfolio.
The Group expects any increase in the frequency and severity of
climate-related events to be reflected in future market premium
rates. Also, in relation to the insurance business, climate risk is
an issue which is expected to evolve further over the medium to
long term, rather than have instant incremental impacts on the
insurance outlook, and therefore we assessed no significant
impact at year-end on insurance goodwill.
The Cruise business within the Group owns cruise ship assets
which meet all current regulatory standards regarding emissions
and climate change targets. While there will likely be technology
advances in years to come that, when developed, will require the
Group to look to incur incremental costs to modify the engines on
these cruise ships to meet lower emissions standards, the cost to
incur such changes would likely extend the operating life of these
vessels. Given this and the fact that this technology is yet to be
developed, we assessed the risk of climate change to the carrying
amount of the cruise ship assets at the balance sheet date to be
not significant. We have also read the disclosures of climate
related information in the front half of the Annual Report and
Accounts as set out on pages 37-43 and considered consistency
with the financial statements and our audit knowledge. We have
not been engaged to provide assurance over the accuracy of
these disclosures.
6 Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive
or pressure to commit fraud or provide an opportunity to
commit fraud.
Our risk assessment procedures included:
enquiring of directors, the Audit Committee and the Internal
Audit and Assurance Director, and inspection of key policies
and papers provided to those charged with governance as to
the Group’s high-level policies and procedures to prevent and
detect fraud, including the Group’s channel for “whistleblowing”
and the process for engaging local management to identify fraud
risks specific to their business units, as well as whether they
have knowledge of any actual, suspected, or alleged fraud;
Independent Auditor’s Report to the Members of Saga plc
continued
reading Board, Audit and Risk Committee minutes and in the
case of Audit Committee meetings for the Group, attendance
of the external audit partner at these meetings;
considering remuneration incentive schemes and performance
targets for directors and senior management;
using analytical procedures to identify any unusual or
unexpected relationships; and
reading broker reports and other public information to identify
third-party expectations and concerns.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit. This included communication from the group to
component audit teams of relevant fraud risks identified at the
Group level and request to component audit teams to report to
the group audit team any instances of fraud that could give rise
to a material misstatement at Group.
As required by auditing standards and taking into account possible
pressures to meet profit targets, we perform procedures to
address the risk of management override of controls, in particular
the risk that Group and component management may be in a
position to make inappropriate accounting entries. On this audit
we do not believe there is a fraud risk related to revenue
recognition because revenue is not complex in nature and there
is no significant management judgement or estimation involved
in recording the revenue transactions.
We also identified fraud risks related to inappropriate assessment
of the recoverability of Group goodwill and the carrying amount of
the parent Company’s investment in subsidiaries and valuation of
the liability and reinsurance for incurred claims, in response to
possible pressures to meet profit targets.
In determining the audit procedures to address the identified
fraud risks, we took into account the results of our evaluation and
testing of the operating effectiveness of the Group-wide fraud
risk management controls. Further detail in respect of the
procedures performed over the recoverability of Group goodwill
and the carrying amount of the parent Company’s investment
in subsidiaries and valuation of the liability and reinsurance for
incurred claims, including how we have used specialists to assist
in our challenge of management is set out in the key audit matter
disclosures in section 2 of this report.
To address the pervasive risk as it relates to management
override, we also performed procedures including:
identifying journal entries to test for all in scope components,
based on risk criteria and comparing the identified entries to
supporting documentation. These included those posted by
senior management, those including specific words based
on our risk criteria, those journals which were unbalanced,
those posted to unusual accounts, those posted at the end
of the period and/or post-closing entries with little or no
description and unusual journal entries posted to either cash
or borrowings; and
assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, and through
discussion with the directors and other management (as required
by auditing standards), and from inspection of the Group’s
regulatory and legal correspondence and discussed with the
directors and other members of management the policies and
procedures regarding compliance with laws and regulations.
Saga plc
Annual Report and Accounts 2024
103
Strategic Report
Financial statements
Additional information
Governance
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout
our team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the
group to full-scope component audit teams of relevant laws and
regulations identified at the Group level, and a request for full
scope component auditors to report to the group team any
instances of non-compliance with laws and regulations that could
give rise to a material misstatement at Group.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies’ legislation), distributable
profits legislation, taxation legislation and pension legislation
and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation or the loss of
the Group’s licence to operate. We identified the following areas
as those most likely to have such an effect: regulatory capital,
regulatory compliance and liquidity, and certain aspects of
company legislation recognising the financial and regulated nature
of the Group’s activities and its legal form, with the Insurance
business regulated primarily by the FCA and the GFSC, with the
Travel business regulated by the CAA. The Travel businesses
are members of the Association of British Travel Agents, the
International Air Transport Association and the Federation of
Tour Operators. These are well-recognised UK trade bodies
with codes of conduct to which members are required to adhere.
All parts of the Group operate procedures to comply with other
key regulations and legislation. Auditing standards limit the
required audit procedures to identify non-compliance with
these laws and regulations to enquiry of the directors and
other management and inspection of regulatory and legal
correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or is evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
7 We have nothing to report on the other
information in the Annual Report
The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent
with the financial statements or our audit knowledge. Based solely
on that work we have not identified material misstatements in the
other information.
Strategic Report and Directors’ Report
Based solely on our work on the other information:
We have not identified material misstatements in the Strategic
Report and the Directors’ Report;
In our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
In our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ Remuneration Report
In our opinion the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Disclosures of emerging and principal risks and
longer-term viability
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ disclosures in
respect of emerging and principal risks and the viability statement,
and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
The directors’ confirmation within the viability statement on
page 50 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity;
The principal risks and uncertainties disclosures describing
these risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
The directors’ explanation in the viability statement of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the viability statement, set out on
page 53 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially
consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements audit.
As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.
Saga plc
Annual Report and Accounts 2024
104
Corporate governance disclosures
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ corporate
governance disclosures and the financial statements and our
audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
The directors’ statement that they consider that the Annual
Report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy;
The section of the Annual Report describing the work of the
Audit Committee, including the significant issues that the Audit
Committee considered in relation to the financial statements,
and how these issues were addressed; and
The section of the Annual Report that describes the review of
the effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing
Rules for our review. We have nothing to report in these respects.
8 We have nothing to report on the other
matters on which we are required to report
by exception
Under the Companies Act 2006, we are required to report to
you if, in our opinion:
Adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us;
The parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns;
Certain disclosures of directors’ remuneration specified by law
are not made; or
We have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
Independent Auditor’s Report to the Members of Saga plc
continued
9 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 95,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and
fair view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements
in an annual financial report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report
provides no assurance over whether the annual financial report
has been prepared in accordance with those requirements.
10 The purpose of our audit work and to
whom we owe our responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006 and the terms of our engagement by the company. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state
to them in an auditor’s report, and the further matters we are
required to state to them in accordance with the terms agreed
with the Company, and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions
we have formed.
Timothy Butchart (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square, London, E14 5GL
16 April 2024
Consolidated income statement
for the year ended 31 January 2024
Saga plc
Annual Report and Accounts 2024
105
Strategic Report
Additional information
Governance
Financial statements
Note
2024
£m
2023
(restated
1
)
£m
Revenue from Cruise and Travel services
3
Revenue from Insurance Broking services
3
Other revenue (non-Insurance Underwriting)
3
Non-insurance revenue
3
Insurance revenue
3
Total revenue
3
Decrease in credit loss allowance
Other cost of sales
(301.1 )
(249.8 )
Cost of sales (non-Insurance Underwriting)
3
(301.1 )
(248.5 )
Gross profit (non-Insurance Underwriting)
Insurance service expenses
28
(249.2 )
(215.8 )
Net income from reinsurance contracts
28
Insurance service result
(31.4 )
Other income
3
Administrative and selling expenses
4
(214.2 )
(181.5 )
Increase in credit loss allowance
(1.1 )
(0.9 )
Impairment of non-financial assets
5
(118.6 )
(271.2 )
Net finance (expense)/income from insurance contracts
28
(3.5 )
Net finance income/(expense) from reinsurance contracts
28
(3.7 )
Net (loss)/profit on disposal of property, plant and equipment and software
15, 17, 18
(0.5 )
Investment income/(loss)
6
(9.7 )
Finance costs
7
(44.4 )
(42.2 )
Finance income
8
Loss before tax
(129.0 )
(272.7 )
Tax credit/(expense)
10
(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
12
(80.8 p)
(195.7 p)
Diluted
12
(80.8 p)
(195.7 p)
The Notes on pages 110-180 form an integral part of these consolidated financial statements.
1
For details of the restatement, please see Notes 2.5, 19a and 28
Saga plc
Annual Report and Accounts 2024
106
Financial statements
Consolidated statement of comprehensive income
for the year ended 31 January 2024
Note
2024
£m
2023
(restated
2
)
£m
Loss for the year
(113.0 )
(273.1 )
Other comprehensive income
Other comprehensive income that may be reclassified to the income statement in
subsequent years
Net losses on hedging instruments during the year
19
(1.3 )
(2.0 )
Recycling of previous losses to income statement on matured hedges
19
Total net losses on cash flow hedges
(0.3 )
(1.7 )
Associated tax effect
(0.8 )
Total other comprehensive income/(losses) with recycling to income statement
(2.5 )
Other comprehensive income that will not be reclassified to the income statement in
subsequent years
Remeasurement losses on defined benefit plan
27
(41.1 )
(19.1 )
Associated tax effect
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 )
The Notes on pages 110-180 form an integral part of these consolidated financial statements.
2
For details of the restatement, please see Notes 2.5, 19a and 28
Saga plc
Annual Report and Accounts 2024
107
Strategic Report
Additional information
Governance
Financial statements
Consolidated statement of financial position
as at 31 January 2024
Note
2024
£m
2023
(restated
3
)
£m
1 Feb 2022
(restated
3
)
£m
Assets
Goodwill
14
Intangible assets
15
Retirement benefit scheme surplus
27
Property, plant and equipment
17
Right-of-use assets
18
Financial assets
19
Current tax assets
Deferred tax assets
10
Reinsurance contract assets
28
Inventories
22
Trade and other receivables
23
Trust and escrow accounts
24
Cash and short-term deposits
25
Assets held for sale
38
Total assets
Liabilities
Retirement benefit scheme liability
27
Insurance contract liabilities
28
Reinsurance contract liabilities
28
Provisions
31
Financial liabilities
19
Deferred tax liabilities
10
Contract liabilities
29
Trade and other payables
26
Total liabilities
Equity
Issued capital
33
Share premium
Own shares held reserve
(1.2 )
Retained deficit
(452.5 )
(309.7 )
(24.7 )
Share-based payment reserve
Hedging reserve
(2.9 )
(3.2 )
(0.7 )
Total equity
Total equity and liabilities
The Notes on pages 110-180 form an integral part of these consolidated financial statements.
M Hazell
M Watkins
Group Chief Executive Officer
3
For details of the restatement, please see Notes 2.5, 19a and 28
Consolidated statement of changes in equity
for the year ended 31 January 2024
Saga plc
Annual Report and Accounts 2024
108
Financial statements
Attributable to the equity holders of the parent
Issued
capital
£m
Share
premium
£m
Own
shares
held
reserve
£m
Retained
(deficit)/
earnings
£m
Share-
based
payment
reserve
£m
Fair value
reserve
£m
Hedging
reserve
£m
Total
£m
At 1 February 2023 (restated
4
)
(309.7 )
(3.2 )
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
Total comprehensive (losses)/income
(143.8 )
(143.5 )
Issue of share capital (Note 33)
Share-based payment charge (Note 36)
Own shares transferred
(1.2 )
(0.8 )
(2.0 )
Transfer upon vesting of share options
(1.8 )
At 31 January 2024
(1.2 )
(452.5 )
(2.9 )
At 1 February 2022 (as reported)
(22.4 )
(0.8 )
(0.7 )
Effect of adoption of IFRS 17
(2.3 )
(1.5 )
At 1 February 2022 (restated
4
)
(24.7 )
(0.7 )
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
Total comprehensive losses
(287.4 )
(2.5 )
(289.9 )
Share-based payment charge (Note 36)
Transfer upon vesting of share options
(2.4 )
At 31 January 2023 (restated
4
)
(309.7 )
(3.2 )
The Notes on pages 110-180 form an integral part of these consolidated financial statements.
4
For details of the restatement, please see Notes 2.5, 19a and 28. The effect of adoption of IFRS 17 disclosed above includes related updates to accounting policies
applied under International Financial Reporting Standard (
IFRS
) 9 ‘Financial Instruments’
Consolidated statement of cash flows
for the year ended 31 January 2024
Saga plc
Annual Report and Accounts 2024
109
Strategic Report
Additional information
Governance
Financial statements
Note
2024
£m
2023
(restated
5
)
£m
Loss before tax
(129.0 )
(272.7 )
Depreciation, impairment and loss on disposal, of property, plant and equipment, and right-of-use assets
Amortisation and impairment of intangible assets and goodwill, and profit or loss on disposal
of software
Impairment of assets held for sale
38
Share-based payment transactions
Net finance expense/(income) from insurance contracts
28
(8.2 )
Net finance (income)/expense from reinsurance contracts
28
(1.9 )
Finance costs
7
Finance income
8
(1.5 )
Interest (income)/expense from investments
(15.4 )
Increase in trust and escrow accounts
(1.7 )
(12.8 )
Movements in other assets and liabilities
(57.8 )
Investment income interest received
Interest paid
(38.2 )
(37.6 )
Income tax received/(paid)
(0.9 )
Net cash flows from/(used in) operating activities
(13.9 )
Investing activities
Proceeds from sale of property, plant and equipment, intangible assets and right-of-use assets
Purchase of, and payments for, the construction of property, plant and equipment and intangible assets
(26.7 )
(20.8 )
Disposal of financial assets
Purchase of financial assets
(11.7 )
(40.2 )
Disposal of subsidiary, net of cash in business disposed of
Acquisition of subsidiary, net of cash in business acquired
13
(0.9 )
Net cash flows from investing activities
Financing activities
Payment of principal portion of lease liabilities
32
(11.6 )
(7.8 )
Repayment of borrowings
32
(62.2 )
(46.4 )
Net cash flows used in financing activities
(73.8 )
(54.2 )
Net increase/(decrease) in cash and cash equivalents
(64.0 )
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
25
The Notes on pages 110-180 form an integral part of these consolidated financial statements.
5
For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
Company
) is a public limited company incorporated
and domiciled in the United Kingdom
Act 2006 (registration number 08804263). The Company
is registered in England and Wales and its registered office
is located at 3 Pancras Square, London, N1C 4AG.
base, which includes package and cruise holidays, general
insurance products, personal finance products and a range
prepared in accordance with UK-adopted international
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.
in pounds sterling, which is also the parent company’s functional
currency, and all values are rounded to the nearest hundred
thousand (£m), except when otherwise indicated. Each company
in the Group determines its own functional currency and items
included in the financial statements of each entity are measured
The preparation of financial statements in compliance with
UK-adopted international accounting standards requires the use
of certain critical accounting estimates. It also requires Group
management to exercise judgement in applying the Group’s
accounting policies. The areas where significant judgements and
estimates have been made in preparing the financial statements
and their effect are disclosed in Note 2.6.
The material accounting policies adopted, which have been applied
consistently, unless otherwise stated, are set out in Note 2.3.
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 30,
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.
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
6
Saga plc
Annual Report and Accounts 2024
110
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
111
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the
Company (its
subsidiaries
) made up to 31 January each year.
Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with an investee entity
and has the ability to affect those returns through its power over
the investee entity.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiary companies are consolidated using the acquisition
method.
The results of subsidiaries acquired, or disposed of, during the
year are included in the consolidated income statement from the
effective date of acquisition (control) or up to the effective date
of disposal (control ceases), as appropriate. Where a subsidiary
which constituted a separate major line of business is disposed of,
it is disclosed as a discontinued operation.
In preparing these consolidated financial statements, any
intra-group receivables, payables, income and expenses arising
from intra-group trading are eliminated. Where accounting
policies used in individual financial statements of a subsidiary
company differ from Group policies, adjustments are made
to bring these policies in line with Group policies.
A change in the ownership interest of a subsidiary, without a loss
of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the
related assets (including goodwill), liabilities, non-controlling
interest and other components of equity while any resultant gain
or loss is recognised in profit or loss. Any investment retained is
Revenue represents amounts receivable from the sale or supply
of goods and services provided to customers in the ordinary
course of business and is recognised to the extent that it is
probable that the future economic benefits will flow to the Group
and the revenue can be reliably measured, regardless of when
payment is received. The recognition policies for the Group’s
various revenue streams by segment are as follows:
i) Cruise and Travel
Revenue from Cruise, in respect of ocean cruise holidays, is
recognised in line with the performance obligations, being the
cruise itself, flights and/or rail journeys (where applicable), travel
insurance and transfers. The standalone selling price of each
performance obligation is estimated as the cost to provide each
obligation plus a profit margin appropriate to the nature of each
service. The price charged to each customer is then apportioned
to each performance obligation based on the relative estimated
standalone selling prices, in line with the requirements of IFRS 15
‘Revenue from Contracts with Customers’. The portion of revenue
allocated to the cruise itself is recognised on a per diem basis over
the duration of the cruise in line with when the performance
obligation is satisfied. The portion of revenue allocated to flights,
and flight upgrades (where applicable), and transfers is recognised
on the date that each trip is fulfilled.
Revenue from travel insurance (which is underwritten by a
third party) for cruising holidays is recognised at the cover start
date of the policy, which is usually at the point the customer makes
a booking.
Revenue from Cruise, relating to chartered river cruise ships,
is also recognised in line with the performance obligations that
are included in a package holiday, namely the provision of flights,
accommodation, transfers and travel insurance. Revenue is
recognised as and when each performance obligation is satisfied,
which is deemed to be when each service to the customer
takes place.
For Travel, revenue in relation to flights and flight upgrades is
recognised on the date of each flight; revenue in relation to
accommodation is recognised over the duration of the holiday;
revenue in relation to transfers is recognised on the date that the
transfers occur before and after each holiday; and revenue in
respect of travel insurance (which is underwritten by a third-party
underwriter) is recognised on the cover start date of the insurance.
This is consistent with the approach adopted by the Cruise business.
An element of revenue which represents the non-refundable
deposit received at the time of booking is recognised in the
income statement immediately in line with the prevailing rate
of cancellations.
Revenue from sales in resort, or on board a cruise ship operated
by the Group, for example for optional excursions, is recognised
as it is earned.
Revenue from Cruise and Travel received in advance of when each
performance obligation is satisfied is included as deferred revenue
within contract liabilities in the statement of financial position.
ii) 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.
2.3 Summary of material accounting
policies
continued
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
112
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
(see also Note 2.3r).
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.
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.
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.
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.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
113
iii) Other Businesses and Central Costs
Saga Money
Revenue from personal finance products is recognised when the
customer contracts with the provider of the relevant personal
finance product where the revenue comprises a one-off payment
by the provider of the product.
Where the personal finance product is one that delivers a
recurring income stream, the present value of the future expected
revenue to be received is recognised when the customer
contracts with the provider of the relevant personal finance
product, and it is highly probable that a significant reversal of
revenue recognised will not occur.
For the Saga savings product, commissions are earned over the
duration of the contract in line with the contractual amount due
to the Group.
For Saga equity release products, commissions are earned
initially and over the lifetime of the product. Additionally, further
commissions, where applicable, are earned at each subsequent
stage of the drawdown if any more of the advance is taken by the
customer. Initial commission relating to new business is recognised
as revenue at the point the performance obligation with the Group’s
contracted business partners is satisfied, and the customer has
taken out the product. Where applicable, and the probability of
further drawdowns is high, trail commission is recognised as the
discounted future cash flows expected to be received over the
estimated life of the product and likewise for further commissions
on additional drawdowns undertaken by the customer.
For Saga legal services, mortgage and investing products, broking
commissions are earned initially, and over the duration of the
contract, in line with the contractual amount due to the Group.
Saga Publishing
Magazine subscription revenue is recognised on a straight-line
basis over the period of the subscription. Revenue generated from
advertising within the magazine is recognised when the magazine
is provided to the customer.
The element of subscriptions and advertising revenue relating
to the period after the reporting date is recognised as
deferred revenue within contract liabilities in the statement
of financial position.
Printing and mailing
Revenue from printing and mailing services is recognised in line
with the performance obligations within customer contracts.
Market research
Revenue from market research services is recognised when a
performance obligation is satisfied. Revenue recognised over time
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. See also Note 2.3r(viii).
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
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. See Note 2.3r(vi)(b) for further details.
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. See Note 2.3r(vii) for further details.
Finance costs comprise interest paid and payable that is
calculated using the effective interest rate (
EIR
) method,
and it is recognised in the income statement as it accrues.
Accrued interest is included within the carrying value of the
interest-bearing financial liability in the statement of financial
position. Finance costs also include debt issue costs that were
initially recognised in the statement of financial position and
amortised over the life of the debt, debt issue costs in respect
of renegotiating existing, or negotiating new, facilities that are
immediately recognised in the income statement and net
All other expenses are recognised in the income statement
Investment income in the form of interest is recognised in the
income statement as it accrues and is calculated using the
EIR method.
Interest income is earned by the Group on assets held at fair value
through profit or loss (
FVTPL
) and amortised cost. Fees and
commissions which are an integral part of the effective yield of
the financial asset or liability are recognised as an adjustment
ii) Dividend income
Income in the form of dividends is recognised when the right
to receive payment is established. For listed securities, this is
the date that the security is listed as ex-dividend.
Realised and unrealised gains and losses on financial investments
are recorded as investment income in the income statement,
and represent net fair value gains and losses arising from changes
iv) Other income
The Group recognises other items in profit or loss as other
income, when the amounts become receivable and its right
Financial statements
Notes to the consolidated financial statements
continued
2.3 Summary of material accounting
policies
continued
Saga plc
Annual Report and Accounts 2024
114
i) Current income tax
Income tax assets and liabilities for the current period are
measured at the amount expected to be recovered from, or paid
to, taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted at the reporting date. Current income tax assets and
liabilities also include adjustments in respect of tax expected to be
payable, or recoverable, in respect of previous periods. Current
income tax relating to items recognised in other comprehensive
income (
OCI
) and directly in equity is recognised in OCI or equity
and not in the income statement.
Deferred tax is provided on temporary differences between the
tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available, against which
the deductible temporary differences and the carry forward of
unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all,
or part of, the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Deferred tax is charged, or credited, in the income statement,
except when it relates to items charged or credited in OCI or
equity, in which case the deferred tax is recognised in OCI or
equity as appropriate.
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred taxes relate to the same
Transactions in foreign currencies are initially recorded by the
Group at their respective functional currency spot rate at the
date that the transaction first qualifies for recognition. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the functional currency spot rate of exchange
Intangible assets acquired are measured on initial recognition at
cost and, subsequent to initial recognition, are carried at cost less
any accumulated amortisation and accumulated impairment losses.
The cost of intangible assets acquired in a business combination
is their fair value at the date of acquisition. Internally generated
intangibles, excluding internally developed software, are not
capitalised and the related expenditure is reflected in the income
statement in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed finite. Computer
software costs recognised as assets are amortised over their
estimated useful economic lives, which varies from asset to asset
within a range of 3-13 years.
Intangible assets are amortised over their useful economic life
on a basis appropriate to the consumption of the asset, and are
assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the
amortisation method for an intangible asset with a finite useful life
are reviewed at least at the end of each reporting period. Changes
in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are considered
to modify the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in the
income statement in the expense category that is consistent with
the function of the intangible assets.
Gains or losses arising from derecognition of an intangible asset
are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date
at fair value, and the amount of any non-controlling interests in
the acquiree. For each business combination, the Group elects
whether to measure the non-controlling interests in the acquiree
at fair value or at the proportionate share of the acquiree’s
When the Group acquires a business, it assesses the financial
and non-financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual
terms, economic circumstances and pertinent conditions as at
the acquisition date.
Any contingent consideration to be transferred by the Group
will be recognised at fair value at the acquisition date. Contingent
consideration classified as an asset or liability that is a financial
instrument within the scope of IFRS 9 ‘Financial Instruments’ is
measured at fair value with the changes in fair value recognised
in the income statement.
Any excess of the cost of acquisition over the fair values of the
identifiable assets and liabilities is recognised as goodwill. If the
cost of acquisition is less than the fair values of the identifiable
assets and liabilities of the acquired business, the difference
is recognised directly in the income statement in the year
of acquisition.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
115
Acquisition-related costs are expensed as incurred and included
in administrative expenses.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is allocated to cash
generating units (
CGUs
) at the point of acquisition and is reviewed
at least annually for impairment.
The useful life of goodwill is assessed as indefinite. Goodwill is not
amortised, but is tested for impairment at least annually, at the
CGU level. Where the carrying value of the asset exceeds the
recoverable amount, an impairment loss is recognised in the
Goodwill is not subject to amortisation and is tested annually
for impairment, or more frequently if events or changes in
circumstances indicate that it might be impaired. If such an
indication exists, the recoverable amount is estimated and
compared with the carrying amount. If the recoverable amount
is less than the carrying amount, the asset is considered impaired
and is written down to its recoverable amount and the impairment
loss is recognised immediately in the income statement.
Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may
not be recoverable. If there is any indication that an asset may be
impaired, a recoverable amount is estimated for the individual
asset. If it is not possible to estimate the recoverable amount
of the individual asset, the recoverable amount is determined
according to the CGU to which the asset belongs.
For impairment testing, assets are grouped together into the
smallest group of assets that generate cash inflows from
continuing use that are largely independent of the cash inflows
of other assets or CGUs. Goodwill arising from a business
combination is allocated to the CGUs, or groups of CGUs that
are expected to benefit from the synergies of the combination.
The recoverable amount is calculated as the higher of fair value
less costs to sell, and value-in-use. In assessing value-in-use, where
appropriate, estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs of
disposal, recent market transactions are taken into account.
If no such transactions can be identified, an appropriate valuation
model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies
or other available fair value indicators. The Group bases its
value-in-use calculations on detailed budgets, plans and long-term
growth assumptions, which are prepared separately for each of
Property, plant and equipment is stated at cost, net of
accumulated depreciation and impairment losses. Where an item
of property, plant and equipment comprises major components
having different useful lives, they are accounted for separately.
position date are classified separately. These assets are
transferred to other asset categories when they become available
basis so as to write off the depreciable amount of property, plant
and equipment over their estimated useful lives. The depreciable
amount is the cost of an asset less its residual value. Land and
Estimated useful lives are as follows:
Buildings, properties and related fixtures:
Buildings | 50 years |
Fixtures and fittings | 3-20 years |
Ocean cruise ships | 30 years |
Computers | 3-6 years |
Plant, vehicles and other equipment | 3-10 years |
Costs relating to ocean cruise ship mandatory dry-dockings are
capitalised and depreciated over the period up to the next
dry-docking, where appropriate. The International Convention
for the Safety of Life at Sea regulations stipulate that ships have
to be dry-docked twice in an interval of five years, with the interval
between consecutive dry-dockings being not less than two years
and not more than three years. All other repairs and maintenance
An item of property, plant and equipment is derecognised upon
disposal, or when no future economic benefits are expected from
its use or disposal. Any gain or loss arising on derecognition of
an asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the
income statement when the asset is derecognised.
Estimated residual values and useful lives are reviewed annually.
In relation to the annual review of estimated residual values and
useful lives of ocean cruise ships, potential environmental
regulatory changes are also considered. 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 (
EEXI
) and Carbon Intensity
Indicator (
CII
) regulations were introduced internationally in 2023
to enable the industry to meet the 2030 target, and the Group’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
The Group classifies non-current assets as held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use. To be classified
as held for sale, an asset must be available for immediate sale in
its present condition, subject only to terms that are usual and
customary for the sale of such assets, and the sale must be highly
probable. A sale is considered to be highly probable when
management is committed to a plan to sell an asset, and an active
programme to locate a buyer and complete the plan has been
initiated at a price that is reasonable in relation to its current fair
value, and there is an expectation that the sale will be completed
within one year from the date of classification. Non-current assets
classified as held for sale are carried on the Group’s statement of
financial position at the lower of their carrying amount and fair
value less costs to sell.
Property, plant and equipment and intangible assets, once
Financial statements
Notes to the consolidated financial statements
continued
2.3 Summary of material accounting policies
continued
Saga plc
Annual Report and Accounts 2024
116
On initial recognition, a financial asset is classified as either amortised cost, fair value through other comprehensive income (
FVOCI
)
or FVTPL. The classification of financial assets is based on the business model in which a financial asset is managed, and its contractual
cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never
separated. Instead, the hybrid financial instrument as a whole is assessed for classification. The Group does not hold any financial assets
classified as FVOCI.
Initial recognition | Subsequent measurement | |
Amortised | A financial asset is classified as amortised cost (initially | These assets are subsequently measured at amortised |
cost | measured at fair value plus any directly attributable | cost using the EIR method. The amortised cost is reduced |
transaction costs) if it meets both of the following conditions | by any impairment losses (see (ii) below). Interest income, | |
and is not elected to be designated as FVTPL: | foreign exchange gains and losses and impairments | |
It is held within a business model whose objective is to hold | are recognised in profit or loss as they are incurred. | |
assets to collect contractual cash flows. | Any gain or loss on derecognition is recognised in profit | |
or loss immediately. | ||
Its contractual terms give rise, on specified dates, | ||
to cash flows that are solely payments of principal and | ||
interest on the principal amount outstanding. | ||
The Group classifies trade receivables and other | ||
receivables as held at amortised cost. | ||
FVTPL | All financial assets not classified as amortised cost | These assets are subsequently measured at fair value. |
(or FVOCI) as described above are classified as FVTPL and | Net gains and losses, including any interest or dividend | |
held at fair value. This includes all derivative financial assets. | income (separately disclosed), are recognised in profit | |
On initial recognition, the Group may irrevocably elect to | or loss, unless such instrument is designated in a hedging | |
designate a financial asset, that otherwise meets the | relationship (see (vi) overleaf). | |
requirements, to be measured at amortised cost or FVOCI, | ||
as FVTPL if doing so eliminates, or significantly reduces, | ||
an accounting mismatch that would otherwise arise. | ||
This election is made on an individual instrument basis. | ||
This election has been made for the Group’s debt securities. | ||
The Group classifies loan funds, money market funds held | ||
within the Insurance business and foreign exchange forward | ||
contracts not designated in a hedging relationship, as FVTPL. |
A financial asset is derecognised when the rights to receive
cash flows from the asset have expired or when the Group has
transferred substantially all the risks and rewards relating to
The expected credit loss (
ECL
) impairment model applies to
financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to
12-month ECLs, except for the following, which are measured
as lifetime ECLs:
Debt securities that are determined to have high credit risk
at the reporting date.
Other debt securities and bank balances for which credit risk
has increased significantly since initial recognition.
Trade receivables and contract assets that result from
transactions within the scope of IFRS 15.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition, and when
estimating ECLs, the Group considers reasonable and
supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment, including
forward-looking information.
The Group considers a debt security to have low credit risk
when its credit risk rating is equivalent to the definition of
investment grade.
The Group considers this to be BBB- or higher as per credit
rating scales.
Measurement of ECLs
ECLs are measured as a probability-weighted estimate of credit
losses. Credit losses are measured as the probability of default
in conjunction with the present value of the Group’s exposure.
Loss allowances for ECLs on financial assets measured at
amortised cost are deducted from the gross carrying amount of
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
117
Initial recognition and measurement
All financial liabilities are classified as financial liabilities at
amortised cost on initial recognition except for derivatives,
which are classified at FVTPL, the gains or losses for which are
recognised through OCI if the instrument is designated as a
hedging instrument in an effective cash flow hedge.
recognised initially at fair value and, in the case of loans and
borrowings, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables,
loans and borrowings, derivative financial instruments and
lease liabilities.
Subsequent measurement
After initial recognition, interest-bearing loans, borrowings and
other payables are subsequently measured at amortised cost
using the EIR method. Amortised cost is calculated by taking
into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation
A financial liability is derecognised when the obligation under the
liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability
and the recognition of a new liability. The difference in the respective
Derivatives are measured at fair value, both initially and
subsequently to initial recognition. All changes in fair value of
non-designated derivatives are recognised in the income
statement immediately.
Changes in fair value of derivatives designated as cash flow hedges
are initially recognised in OCI until such a point that they are
recycled to profit or loss in the same period as the hedged item
is recognised in profit or loss, or immediately if the hedged item
is no longer expected to occur.
Derivatives are presented as assets when the fair values are
positive, and as liabilities when the fair values are negative.
A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than
12 months and it is not expected to be realised or settled within
The Group measures all financial instruments at fair value at
each reporting date, other than those instruments measured
at amortised cost.
Fair value is the price that would be required to sell an asset or
to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value
measurement is based on the assumption that the transaction
to sell the asset or transfer the liability takes place either in the
principal market accessible by the Group for the asset or liability
or, in the absence of a principal market, in the most advantageous
market accessible by the Group for the asset or liability.
The fair values are quoted market bid prices where there is an
active market, or based on valuation techniques when there
is no active market or the instruments are unlisted. Valuation
techniques include the use of recent arm’s-length market
transactions, discounted cash flow analysis and other commonly
used valuation techniques.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
The Group designates certain derivative financial instruments
as cash flow hedges of certain forecast transactions. These
transactions are highly probable to occur and present an
exposure to variations in cash flows that could ultimately affect
amounts determined in profit or loss.
The Group has elected to adopt the general hedge accounting
model in IFRS 9. This requires the Group to ensure that hedge
accounting relationships are aligned with its risk management
objectives and strategy and to apply a qualitative and
forward-looking approach to assessing hedge effectiveness.
The Group uses forward foreign exchange and commodity swap
contracts to hedge the variability in cash flows arising from
changes in foreign currency rates and oil prices respectively.
For foreign exchange contracts, the Group designates the fair
value change of the full forward price as the hedging instrument
in cash flow hedging relationships. For commodity hedging, the
Group designates the fair value change of the benchmark oil price.
The effective portion of changes in fair value of hedging
instruments is accumulated in a cash flow hedge reserve as a
separate component of equity. Any ineffective portion of the
fair value gain or loss is recognised immediately within the
income statement.
When a hedging instrument no longer meets the criteria for hedge
accounting, through maturity, sale, or other termination, hedge
accounting is discontinued prospectively. If the hedged forecast
transaction is still expected to occur, the associated cumulative
gain or loss remains in the hedging reserve and is recognised in
accordance with the above policy when the hedged forecast
transaction occurs. If the hedged forecast transaction is no longer
expected to occur, the cumulative unrealised gain or loss is
Financial statements
Notes to the consolidated financial statements
continued
2.3 Summary of material accounting
policies
continued
Saga plc
Annual Report and Accounts 2024
118
The Group leases various river cruise ships, buildings,
equipment and vehicles. The contract length of the lease varies
considerably and may include extension or termination options
as described below.
At the inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an
identified asset, the Group assesses whether: the contract
involves the use of an identified asset; the Group has the right to
obtain substantially all of the economic benefits from use of the
asset throughout the period of use; and the Group has the right
to direct the use of the asset.
Leases are initially recognised as a right-of-use asset and a
corresponding lease liability at the date at which the leased asset
is available for use by the Group. The lease liability is initially
measured at the present value of the lease payments that are
not paid at the commencement date. Where it is reasonably
certain that an extension option will be triggered in a contract,
lease payments to be made in respect of the option will be included
in the measurement of the lease liability.
The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be readily determined, which is
generally the case for leases in the Group, the Group’s incremental
borrowing rate is used. This is the rate that the Group would have
to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset, in a similar economic environment,
with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to the income statement over the
lease period using the EIR method and the lease liability is
measured at amortised cost using the EIR method.
Right-of-use assets are initially measured at cost, comprising the
present value of future lease payments plus any initial direct costs
and restoration costs. Right-of-use assets are depreciated over
the lease term on a straight-line basis, except for the Group’s river
cruise ships. The unit of production method is used to depreciate
river cruise ships in order to accurately reflect the usage of the
asset, which is seasonal.
Payments associated with short-term leases of equipment and
all leases of low-value assets are expensed in profit or loss as
incurred, in line with the exemption allowed under paragraph 6
of IFRS 16 ‘Leases’.
Short-term leases are leases with a lease term of 12 months
or less without a purchase option. Low-value assets comprise
IT equipment and small items of office furniture.
Extension and termination options are included in a number of
property and river cruise ship leases across the Group. These are
used to maximise operational flexibility in terms of managing the
assets used in the Group’s operations. The majority of extension
and termination options held are exercisable only by the Group
and not by the respective lessor.
The Group remeasures the lease liability, and makes a
corresponding adjustment to the related right-of-use asset,
whenever:
the lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment
of exercise of a purchase option, in which case the lease liability
is remeasured by discounting the revised lease payments using
a revised discount rate; or
a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability
is remeasured based on the lease term of the modified lease by
discounting the revised lease payments using a revised discount
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalised as part of the cost of the respective asset. All other
borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and fees that an entity incurs
Cash and short-term deposits in the statement of financial
position comprise cash at bank and in hand, short-term deposits
with a maturity of three months or less from their inception date
and money market funds held outside of the Insurance business.
cash and cash equivalents consist of cash and short-term deposits
as defined above, and short-term highly liquid investments
(including money market funds held within the Insurance business)
with original maturities of three months or less that are subject
to an insignificant risk of change in value, net of outstanding
Prior to 28 March 2023, 100% of customer monies were paid into
trust until the Group had fulfilled its obligations and the customer
had returned from their holiday. The trust was administered
and controlled by an independent trustee, PT Trustees Limited.
On this date, the Group moved from a trust arrangement to an
escrow arrangement.
This means that, from 28 March 2023, 70% of customer monies
received in advance in relation to Air Travel Organiser’s Licencing
(
ATOL
) licensable bookings are held in escrow accounts until after
the customer has travelled, when the Group has fulfilled all its
performance obligations with customers.
The escrow arrangement is governed by a deed between the
Group, the Civil Aviation Authority Air Travel Trustees and an
independent Trustee, PT Trustees Limited, which determines
the inflows and outflows from the accounts. The Group utilises
the remaining 30% of customer advance receipts in its Travel
and River Cruise businesses to fund the cost of operating
Trade and other receivables are initially recognised at fair value
and subsequently measured at amortised cost. Loss allowances
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
119
Inventories are stated at the lower of cost and net realisable value.
Costs include all costs incurred in bringing each product to its
present location and condition. Net realisable value is based on
estimated selling price less any further costs expected to be
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.
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:
–
The brokerage of the core insurance contract (where it has
first been subject to the competitive pricing panel that the
Group operates).
–
The brokerage of any add-on cover underwritten by a
third party.
–
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:
–
any distinct service components; and
–
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.
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:
–
the beginning of the coverage period of the group of
reinsurance contracts; or
–
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.
Financial statements
Notes to the consolidated financial statements
continued
2.3 Summary of material accounting
policies
continued
Saga plc
Annual Report and Accounts 2024
120
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.
(a) 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.
(b) 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.
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.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
121
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:
–
a change in the measurement model or the applicable
standard for measuring a component of the contract;
–
a substantially different contract boundary; or
–
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.
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.
(a) 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.
(b) 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.
(c) 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.
(d) Insurance finance income or expense
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 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
policies
continued
The Group provides benefits to employees (including Executive
Directors) in the form of share-based payment transactions,
whereby employees render services as consideration for equity
instruments (
equity-settled transactions
). The cost of
equity-settled transactions is measured by reference to the fair
value on the grant date and is recognised as an expense over the
relevant vesting period, ending on the date on which the employee
becomes fully entitled to the award.
Fair values of share-based payment transactions are calculated
using market price and Monte Carlo modelling techniques.
In valuing equity-settled transactions, assessment is made
of any vesting conditions to categorise these into market
performance conditions, non-market performance conditions
and service conditions.
Where the equity-settled transactions have market performance
conditions (that is, performance which is directly or indirectly
linked to the share price), the fair value of the award is assessed
at the time of grant and is not changed, regardless of the actual
level of vesting achieved, except where the employee ceases to
be employed prior to the vesting date.
For service conditions and non-market performance conditions,
the fair value of the award is assessed at the time of grant and
is reassessed at each reporting date to reflect updated
expectations for the level of vesting. No expense is recognised
for awards that ultimately do not vest.
At each reporting date prior to vesting, the cumulative expense
is calculated, representing the extent to which the vesting period
has expired and, in the case of non-market conditions, the best
estimate of the number of equity instruments that will ultimately
vest or, in the case of instruments subject to market conditions,
the fair value on grant adjusted only for leavers. The movement
in the cumulative expense since the previous reporting date is
recognised in the income statement, with the corresponding
increase being recognised in the share-based payments reserve.
Upon vesting of an equity instrument, the cumulative cost in the
share-based payments reserve is reclassified to retained earnings
in equity.
The dilutive effect of outstanding options is reflected as additional
During the year, the Group operated a defined benefit pension
plan that requires contributions to be made to separately
administered funds. The cost of providing benefits under the
defined benefit plan is determined separately using the projected
unit credit valuation method. The defined plan was closed to future
accrual on 31 October 2021. From 1 November 2021, members
moved from active to deferred status.
Actuarial gains and losses arising in the year are credited/charged
to OCI and comprise the effects of changes in actuarial
assumptions and experience adjustments due to differences
between the previous actuarial assumptions and what has actually
occurred. In particular, the difference between the interest
income and the actual return on plan assets is recognised in OCI.
Other movements in the net surplus or deficit, which include
the current service cost, any past service cost and the effect
of any curtailment or settlements, are recognised in the income
statement. Past service costs are recognised in the income
statement on the earlier of the date of plan curtailment and the
date that the Group recognises restructuring-related costs.
The Group no longer incurs any service costs or curtailment costs
relating to the defined benefit pension plan as the scheme is closed
to future accrual. Interest cost, calculated on the same basis as
interest income recognised in profit or loss on plan assets, is also
charged to the income statement.
The defined benefit schemes are funded, with assets of the
schemes held separately from those of the Group, in separate
Trustee- administered funds. Scheme assets are measured using
market values, and scheme liabilities are measured using the
projected unit actuarial method and are discounted at the current
rate of return on a high-quality corporate bond of equivalent term
and currency to the liability. Full actuarial valuations are obtained,
at least triennially, and are updated at each reporting date. The
resulting defined benefit asset or liability is presented separately
on the face of the statement of financial position. The value of a
pension benefit asset is restricted to the amount that may be
recovered, either through reduced contributions, or agreed
refunds from the scheme.
For defined contribution schemes, the amounts charged to the
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. The expense
relating to any provision is presented in the income statement net
of any reimbursement.
If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects the risks
specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognised as a
finance cost.
A provision is recognised for onerous contracts in which the
unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under it.
The unavoidable costs reflect the least net cost of exiting the
contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it. The costs
of fulfilling a contract comprise both the incremental costs and an
Trade and other payables are initially recognised at fair value
and subsequently measured at amortised cost. They represent
liabilities to pay for goods or services that have been received or
supplied in the normal course of business, invoiced by the supplier
The Group has ordinary shares that are classified as equity.
Incremental external costs that are directly attributable to the
x) Own shares
Own shares represent the shares of the Company that are held by
an Employee Benefit Trust (
EBT
). Own shares are recorded at cost
and deducted from equity. The Directors consider that, under the
terms of the contractual arrangements in place, Saga plc has
control over the EBT. The results and net assets of the EBT have,
Financial statements
Notes to the consolidated financial statements
continued
2.3 Summary of material accounting
Saga plc
Annual Report and Accounts 2024
122
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
123
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 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
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 to 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.
Financial statements
Notes to the consolidated financial statements
continued
2.5 First-time adoption of new standards
and amendments
continued
Saga plc
Annual Report and Accounts 2024
124
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.
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:
–
Revenue from Cruise and Travel services and Insurance
Broking services are shown separately (this is not required
by IFRS 17).
–
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:
–
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;
–
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 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.
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 FVOCI to 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).
Full details of the new accounting policy for insurance and
reinsurance contracts are included in Note 2.3r.
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.
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
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
125
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:
Significant judgements
Acc. policy | Items involving judgement | Critical accounting judgement |
2.3a | Revenue recognition | Management has exercised judgement in identifying separate performance obligations arising from |
– identification of | insurance policies brokered by the Group, namely: | |
| performance | where the insurance contract is also underwritten by the Group, the judgement that the | |
| obligations arising | arrangement of the insurance policy is a service (performance obligation) that is distinct from the | |
| from insurance | insurance underwriting service. The revenue allocated to the arrangement performance obligation | |
| policies brokered | is recognised earlier than the revenue that is allocated to the insurance underwriting service; and | |
| by the Group | 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 performance obligations relating to | ||
revenue recognition. | ||
2.3r | Classification of the | This judgement is now made by applying the principles of IFRS 17 rather than IFRS 4 (the previous |
Group’s risk transfer | international accounting standard for insurance and reinsurance contracts). This has not resulted | |
arrangements as | in any changes to the conclusions reached. | |
| reinsurance | The Group’s excess of loss and funds-withheld quota share reinsurance arrangements, relating to | |
| contracts | 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. | ||
2.3h | Impairment testing | Goodwill |
of goodwill and | The Group determines whether goodwill needs to be impaired at least annually, and twice-yearly | |
other major classes | if indicators of impairment exist at the interim reporting date of 31 July. | |
| of assets | 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 market study ( 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 | ||
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. |
Financial statements
Notes to the consolidated financial statements
continued
2.6 Significant accounting judgements, estimates and assumptions
continued
Saga plc
Annual Report and Accounts 2024
126
Acc. policy | Items involving judgement | Critical accounting judgement |
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 building 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) should be 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. | ||
2.3r | Insurance contract | Eligibility of reinsurance contracts for the PAA |
liabilities (and related | Some of the Group’s groups of reinsurance contracts have a coverage period of more than 12 months, | |
reinsurance | including the motor quota share arrangement, which has a three-year coverage period. Management | |
contract assets) | 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 requirements 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. |
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
127
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.
Acc. policy | Items involving estimation | Sources of estimation uncertainty |
2.3ai | Revenue recognition | The standalone selling price of the option to fix within the Group’s three-year fixed-price insurance |
– three-year fixed- | policies has been estimated using the expected cost plus a margin approach, as set out in | |
price insurance | paragraph 79 (b) of IFRS 15. | |
| policies | 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 and | Useful economic lives | The useful economic lives and residual values of software assets classified as intangible assets |
2.3i | and residual values of | (Note 15) and ocean cruise ship assets classified as property, plant and equipment (Note 17) are |
software, intangible | assessed upon the capitalisation of each asset and, at each reporting date, are based upon the | |
assets and ocean | expected consumption of future economic benefits of the asset. | |
cruise ships | ||
2.3h | Goodwill impairment | The Group determines whether goodwill needs to be impaired on an annual basis, or more frequently |
testing | 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. | ||
2.3h | Impairment of ocean | Following the continued impact of the COVID-19 pandemic on the Group’s operations, management |
and river cruise ships | 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. |
Financial statements
Notes to the consolidated financial statements
continued
2.6 Significant accounting judgements, estimates and assumptions
continued
Saga plc
Annual Report and Accounts 2024
128
Acc. policy | Items involving estimation | Sources of estimation uncertainty | ||||||
2.3r | Valuation of | Estimates of future cash flows to fulfil liabilities for incurred claims | ||||||
insurance contract | For insurance contracts, estimates have to be made for the expected cost of claims known but not yet | |||||||
liabilities (and | settled (case reserves) and for the expected cost of IBNR claims, as at the reporting date. It can take | |||||||
related reinsurance | a significant period of time before the ultimate claims cost can be established with certainty. | |||||||
contract assets) | ||||||||
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. | ||||||||
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 20a(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 | The cost of defined benefit pension plans, and the present value of the pension obligation, are | ||||||
benefit obligation | 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. |
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
129
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:
–
Insurance Broking, consisting of:
•
Motor broking
•
Home broking
•
Other broking
–
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.
7
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Financial statements
Notes to the consolidated financial statements
continued
3 Segmental information
continued
Saga plc
Annual Report and Accounts 2024
130
Insurance | |||||||||
Other | |||||||||
Businesses | |||||||||
Cruise and | Motor | Home | Other | Under- | and Central | ||||
Travel | broking | broking | broking | writing | Total | Costs | Adjustments | Total | |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £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 | (292.5) | (8.7) | – | 7.9 | – | (0.8) | (7.8) | – | (301.1) |
(non-Insurance Underwriting) | |||||||||
Gross profit/(loss) | 117.5 | 23.6 | 55.4 | 48.9 | 4.8 | 132.7 | 17.3 | (5.1) | 262.4 |
(non-Insurance Underwriting) | |||||||||
Insurance service expenses | – | (22.0) | – | – | (227.2) | (249.2) | – | – | (249.2) |
Net income from reinsurance | – | 0.1 | – | – | 40.1 | 40.2 | – | – | 40.2 |
contracts | |||||||||
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 | – | – | – | – | (3.5) | (3.5) | – | – | (3.5) |
insurance contracts | |||||||||
Net finance income from | – | – | – | – | 1.9 | 1.9 | – | – | 1.9 |
reinsurance contracts | |||||||||
Net loss on disposal of property, | – | (0.1) | – | – | – | (0.1) | (0.4) | – | (0.5) |
plant and equipment and software | |||||||||
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 | 1.4 | – | – | – | – | – | – | – | 1.4 |
financial instruments | |||||||||
Impairment of goodwill | – | – | – | – | – | – | – | 104.9 | 104.9 |
Impairment/loss on disposal | – | 1.2 | – | – | 1.9 | 3.1 | 8.8 | – | 11.9 |
of assets | |||||||||
Amortisation of fees and costs | – | – | – | – | – | – | 0.4 | – | 0.4 |
on Roger De Haan loan | |||||||||
Restructuring costs | 3.4 | 3.8 | – | – | 1.4 | 5.2 | 31.7 | – | 40.3 |
Acquisition and disposal costs | – | – | – | – | – | – | – | 0.3 | 0.3 |
relating to the Big Window | |||||||||
Foreign exchange movement on | (0.6) | – | – | – | – | – | – | – | (0.6) |
lease liabilities | |||||||||
Fair value gains on debt securities | – | – | – | – | (3.5) | (3.5) | – | – | (3.5) |
Changes in underwriting discount | – | – | – | – | (1.0) | (1.0) | – | – | (1.0) |
rates on non-PPO liabilities | |||||||||
Onerous contract provision | – | 0.5 | – | – | 11.6 | 12.1 | – | – | 12.1 |
Ocean Cruise discretionary | 1.0 | – | – | – | – | – | – | – | 1.0 |
ticket refunds and associated costs | |||||||||
Underlying Profit/ (Loss) | 40.0 | (4.9) | 19.7 | 25.0 | (1.4) | 38.4 | (40.2) | – | 38.2 |
Before Tax 9 | |||||||||
8
This relates to amounts received by the Group’s Insurance Broking entity, in relation to insurance policies that are underwritten by the Group, that are accounted
for as insurance premiums. This includes the street pricing adjustment
9
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
131
Insurance | |||||||||
Other | |||||||||
Businesses | |||||||||
Cruise and | Motor | Home | Other | Under- | and Central | ||||
Travel | broking | broking | broking | writing | Total | Costs | Adjustments | Total | |
2023 (restated 10 ) | £m | £m | £m | £m | £m | £m | £m | £m | £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 | (242.5) | (4.0) | – | 4.5 | – | 0.5 | (6.5) | – | (248.5) |
(non-Insurance Underwriting) | |||||||||
Gross profit/(loss) | 63.0 | 41.8 | 57.6 | 48.9 | (2.4) | 145.9 | 17.8 | (4.5) | 222.2 |
(non-Insurance Underwriting) | |||||||||
Insurance service expenses | – | (32.5) | – | – | (183.3) | (215.8) | – | – | (215.8) |
Net (expense)/income from | – | (0.1) | – | – | 27.4 | 27.3 | – | – | 27.3 |
reinsurance contracts | |||||||||
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 | – | – | – | – | 8.2 | 8.2 | – | – | 8.2 |
insurance contracts | |||||||||
Net finance expense from | – | – | – | – | (3.7) | (3.7) | – | – | (3.7) |
reinsurance contracts | |||||||||
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 | (1.4) | – | – | – | – | – | – | – | (1.4) |
financial instruments | |||||||||
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 | – | – | – | – | – | – | 0.2 | – | 0.2 |
Big Window | |||||||||
Foreign exchange movement on | 2.0 | – | – | – | – | – | – | – | 2.0 |
lease liabilities | |||||||||
Fair value losses on debt securities | – | – | – | – | 15.0 | 15.0 | – | – | 15.0 |
Changes in underwriting discount | – | – | – | – | (6.3) | (6.3) | – | – | (6.3) |
rates on non-PPO liabilities | |||||||||
Onerous contract provision | – | 0.8 | – | – | 3.0 | 3.8 | – | – | 3.8 |
IFRS 16 lease accounting | 0.6 | – | – | – | – | – | – | – | 0.6 |
adjustment on river | |||||||||
cruise vessels | |||||||||
Underlying (Loss)/Profit | (9.9) | 21.9 | 22.5 | 27.1 | 10.7 | 82.2 | (56.8) | – | 15.5 |
Before Tax 12 | |||||||||
10
For details of the restatement, please see Notes 2.5, 19a and 28
11
This relates to amounts received by the Group’s Insurance Broking entity, in relation to insurance policies that 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 187-188 for definition and explanation
3 Segmental information
continued
Saga plc
Annual Report and Accounts 2024
132
Financial statements
Notes to the consolidated financial statements
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 14) | 344.7 | 449.6 |
Bonds | (400.1) | (399.4) |
(55.4) | 50.2 |
The following table provides a disaggregation of the Group’s revenue by major product line, analysed by its core operating segments.
| 2024 | |||||||
Insurance | |||||||
Other | |||||||
Businesses | |||||||
Cruise and | Other | Total | and Central | ||||
Travel | Underwriting | Broking | revenue | Insurance | Costs | Total | |
Major product lines | £m | £m | £m | £m | £m | £m | £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 13 ) | |||||||
Insurance | |||||||
Other | |||||||
Businesses | |||||||
Cruise and | Other | Total | and Central | ||||
Travel | Underwriting | Broking | Revenue | Insurance | Costs | Total | |
Major product lines | £m | £m | £m | £m | £m | £m | £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 | |
13
13
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
133
b) Contract balances
The following table provides information about contract assets and contract liabilities from contracts with customers as accounted for
under IFRS 15 (the amounts stated here are not insurance acquisition cash flow assets accounted for under IFRS 17):
2024 | 2023 | |
(restated 14 ) | ||
£m | £m | |
Contract cost assets (Note 23) | 3.6 | 2.5 |
Contract liabilities (Note 29) | 159.8 | 126.5 |
The contract cost assets relate to commissions paid to price-comparison websites to acquire new business policies not underwritten
by the Group.
Management expects that incremental commission fees paid to price-comparison websites, as a result of obtaining insurance contracts,
are recoverable. The Group has, therefore, capitalised them as contract assets amounting to £2.8m for the year ended 31 January 2024
(2023: £1.7m). These fees are amortised over the period of the expected renewal cycle. In the year to 31 January 2024, the amount of
amortisation was £1.7m (2023: £1.8m) and there was no impairment loss in relation to the costs capitalised.
Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an
expense when incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.
The contract liabilities relate to the deferral of revenue for performance obligations not satisfied, as at 31 January 2024, and comprise the
advance consideration received from customers for holidays or cruises booked, but not travelled; and insurance premiums street pricing
adjustments received in advance of the cover start date (where the policy is not underwritten by the Group). There was no revenue
recognised in the current reporting year that related to performance obligations that were satisfied in a prior year.
Significant changes in the contract cost assets and the contract liabilities during the year are as follows:
2024 | 2023 | |||
Contract | Contract | Contract | Contract | |
cost assets | liabilities | cost assets | liabilities | |
(restated 14 ) | ||||
£m | £m | £m | £m | |
| Balance as at 1 February (restated ) 14 | 2.5 | 126.5 | 2.6 | 118.1 |
Released to the income statement in the year | (1.7) | (376.1) | (1.8) | (249.1) |
Additional contract balances incurred during the year | 2.8 | 444.9 | 1.7 | 272.2 |
Amounts refunded to customers | – | (35.4) | – | (14.7) |
Disposed of with subsidiary undertaking (Note 13c) | – | (0.1) | – | – |
Balance as at 31 January | 3.6 | 159.8 | 2.5 | 126.5 |
c) Transaction price allocated to the remaining performance obligations
The transaction price allocated to three-year fixed-price insurance policy renewal options, where the remaining performance obligations
are not expected to be satisfied within the next 12 months, is £2.0m (2023: £2.0m (restated
14
)). This is expected to be recognised as
revenue in the subsequent one to three years.
The transaction price allocated to customer contracts within the Cruise and Travel segment, where the remaining performance
obligations are not expected to be satisfied within the next 12 months, is £1.7m (2023: £1.4m). This is expected to be recognised as
revenue in the subsequent one to two years.
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance
obligations that have original expected durations of one year or less.
An amount of £5.0m (2023: nil) was received by the Group from an insurance company as compensation for refunds paid to customers
14
For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
134
2024 | 2023 | |
(restated 15 ) | ||
£m | £m | |
Staff costs (excluding restructuring costs) | 93.3 | 82.7 |
Marketing and fulfilment costs | 39.6 | 41.0 |
Short-term lease rentals | 0.2 | 0.1 |
Auditors’ remuneration | 2.5 | 2.1 |
Other administrative costs | 48.6 | 41.0 |
Depreciation – property, plant and equipment (Note 17) | 1.0 | 1.7 |
Depreciation – right-of-use assets (Note 18) | 2.0 | 1.1 |
Amortisation of intangible assets (Note 15) | 7.5 | 8.1 |
Restructuring costs | 19.5 | 3.7 |
214.2 | 181.5 |
Administrative and selling expenses relate to the non-Insurance Underwriting businesses.
2024 | 2023 | |
£m | £m | |
Audit of the parent company and consolidated financial statements | 1.0 | 0.6 |
Audit of subsidiary financial statements | 1.2 | 1.3 |
Audit-related assurance services | 0.3 | 0.2 |
Total auditors’ remuneration | 2.5 | 2.1 |
a) Impairments during the year ended 31 January 2024
During the year ended 31 January 2024, the Group impaired the carrying value of the goodwill balance allocated to the Insurance
Broking CGU by £104.9m (Note 14).
The Group has impaired software in its Insurance Broking and Central Costs divisions by £1.9m and £1.2m respectively, totalling £3.1m
(Note 15).
Furthermore, the Group concluded that an impairment charge of £0.1m (Note 17) to plant and equipment assets was required in the
Group’s Central Costs division, and that an impairment charge of £0.1m (Note 18) to right-of-use assets was required in the Group’s
Publishing division.
In light of the Group obtaining updated freehold property market valuation reports, management also impaired assets held for sale
by £10.4m (Note 38).
b) Impairments during the year ended 31 January 2023
During the year ended 31 January 2023, the Group impaired the carrying value of the goodwill balance allocated to the Insurance
Broking CGU by £269.0m.
In addition, following the acquisition of the Big Window (Note 13b), the goodwill arising on the transaction of £0.5m was immediately
impaired in full (Note 14).
Following management’s decision to vacate most of its properties, the Group also impaired the carrying value of the property, plant and
15
For details of the restatement, please see Notes 2.5, 19a and 28
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
135
2024 | 2023 (restated 16 ) | |||||
Financial | Financial | |||||
assets held | assets held | |||||
within the | within the | |||||
Insurance | Other | Insurance | Other | |||
Underwriting | financial | Underwriting | financial | |||
business | assets | Total | business | assets | Total | |
£m | £m | £m | £m | £m | £m | |
Interest income recognised using the EIR method on | 5.3 | 6.2 | 11.5 | 4.6 | 1.1 | 5.7 |
FVTPL financial assets | ||||||
Interest income earned on financial assets measured at | – | 0.4 | 0.4 | – | – | – |
amortised cost | ||||||
Losses on financial assets mandatorily measured | – | – | – | (0.3) | – | (0.3) |
at FVTPL | ||||||
Gains/(losses) on financial assets designated as FVTPL | 3.5 | – | 3.5 | (15.1) | – | (15.1) |
8.8 | 6.6 | 15.4 | (10.8) | 1.1 | (9.7) | |
2024 | 2023 | |
£m | £m | |
Interest and charges on debt and borrowings using the EIR method | 40.2 | 41.0 |
Net fair value loss on derivative financial instruments | 1.4 | – |
Net finance costs on retirement benefit schemes | 0.5 | – |
Debt issue costs | 0.4 | – |
Net interest and finance charges payable on lease liabilities | 1.9 | 1.2 |
44.4 | 42.2 |
2024 | 2023 | |
£m | £m | |
Net fair value gain on derivative financial instruments | – | 1.4 |
Net finance income on retirement benefit schemes | – | 0.1 |
– | 1.5 |
Amounts charged to the income statement for the year are as follows:
2024 | 2023 | |
£m | £m | |
Wages and salaries | 136.8 | 112.1 |
Social security costs | 13.2 | 10.0 |
Pension costs (Note 27) | 11.6 | 9.9 |
Total staff costs | 161.6 | 132.0 |
16
)), £112.8m (2023: £86.4m (restated
16
))
and £1.8m (2023: £2.4m (restated
16
)) have been allocated to cost of sales, to administrative and selling expenses, and insurance service
payments can be found in Note 36.
16
For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
9 Directors and employees
continued
Saga plc
Annual Report and Accounts 2024
136
Average monthly number of employees:
2024 | 2023 | |
number | number | |
Cruise and Travel | 2,034 | 2,261 |
Insurance | 1,468 | 1,704 |
Other Businesses and Central Costs | 382 | 554 |
Total employee numbers | 3,884 | 4,519 |
The information required by the Companies Act 2006 and the Listing Rules of the FCA is contained on pages 74-91 in the Directors’
Remuneration Report.
Compensation of key management personnel of the Group
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the
activities of the Group and comprise the Directors of the Company and the Operating Board.
The amounts recognised as an expense during the financial year in respect of key management personnel are as follows:
2024 | 2023 | |
£m | £m | |
Short-term benefits | 7.1 | 6.4 |
Termination costs | 1.9 | 0.1 |
Post-employment benefits | 0.1 | – |
Share-based payments | 1.1 | 1.6 |
10.2 | 8.1 |
The major components of the income tax expense are:
2024 | 2023 | |
| (restated 17 ) | ||
£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 |
17
For details of the restatement, please see Notes 2.5, 19a and 28
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
137
Reconciliation of tax (credit)/expense to loss before tax, multiplied by the UK corporation tax rate:
2024 | 2023 | |
(restated 18 ) | ||
£m | £m | |
Loss before tax | (129.0) | (272.7) |
Tax at rate of 24.0% (2023: 19.0%) | (31.0) | (51.8) |
Adjustments in respect of previous years | (4.5) | 0.8 |
Expenses not deductible for tax purposes: | ||
Effect of Ocean Cruise business being in tonnage tax regime | (8.2) | – |
Impairment of goodwill | 25.2 | 51.2 |
Rate change adjustment on temporary differences | (0.5) | (0.1) |
Other non-deductible expenses/non-taxed income | 3.0 | 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
18
)) representing a tax effective rate of 66.4% before
the impairment of goodwill (2023: negative 12.5% (restated
18
)).
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
18
)), 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.
Consolidated statement | Consolidated income | |||
of financial position | statement | |||
2024 | 2023 | 2024 | 2023 | |
(restated 18 ) | (restated 18 ) | |||
£m | £m | £m | £m | |
Excess of depreciation over capital allowances | 4.1 | 3.2 | (0.9) | 1.2 |
Retirement benefit scheme liabilities | 12.0 | 3.0 | 1.3 | 1.5 |
Short-term temporary differences: | ||||
– Designated hedges recognised through OCI | 0.3 | (0.3) | – | – |
– Share-based payment reserve | 2.3 | 2.0 | (0.3) | (0.4) |
– General bad debt provision | 1.0 | 0.6 | (0.4) | 1.0 |
– Capitalised borrowing costs | (2.5) | (2.6) | (0.1) | (0.2) |
– IFRS 16 transition adjustments | 1.8 | 1.2 | (0.6) | 0.2 |
– IFRS 17 transition adjustments | 4.9 | 5.4 | 0.5 | (4.6) |
– Current year corporation tax losses | 9.7 | – | (9.7) | – |
– Other | 1.2 | (1.0) | (2.2) | 1.0 |
Deferred tax credit | (12.4) | (0.3) | ||
Net deferred tax assets | 34.8 | 11.5 | ||
18
For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
10 Tax
continued
Saga plc
Annual Report and Accounts 2024
138
2024 | 2023 | |
(restated 19 ) | ||
£m | £m | |
Deferred tax assets | 49.4 | 20.8 |
Deferred tax liabilities | (14.6) | (9.3) |
Net deferred tax assets | 34.8 | 11.5 |
Reconciliation of net deferred tax assets
2024 | 2023 | |
(restated 19 ) | ||
£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
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 30).
19
For details of the restatement, please see Notes 2.5, 19a and 28
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
139
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 20 ) | ||
£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
21
:
2024 | 2023 | |
(restated 20 ) | ||
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 13b and 13c) | 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 21 | 30.0p | 12.9p |
20 For details of the restatement, please see Notes 2.5, 19a and 28
21
Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
140
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:
2023 | |
£m | |
Assets | |
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 (Note 16a).
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
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:
2024 | |
£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 | – |
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
141
The carrying amounts of assets and liabilities as at the date of disposal were:
At date of | |
disposal | |
£m | |
Assets | |
Trade and other receivables | 0.1 |
Cash | – |
Total assets | 0.1 |
Liabilities | |
Contract liabilities | 0.1 |
Total liabilities | 0.1 |
Net liabilities disposed | – |
Goodwill | |
£m | |
Cost | |
At 1 February 2022 | 1,471.4 |
Acquisition of a subsidiary (Note 13b) | 0.5 |
At 31 January 2023 | 1,471.9 |
Disposal of a subsidiary (Note 13c) | (0.5) |
Adjustment relating to the disposal of a subsidiary in a prior year | (13.0) |
At 31 January 2024 | 1,458.4 |
Impairment | |
At 1 February 2022 | 752.8 |
Charge for the year (Note 16a) | 269.5 |
At 31 January 2023 | 1,022.3 |
Charge for the year (Note 16a) | 104.9 |
Disposal of a subsidiary (Note 13c) | (0.5) |
Adjustment relating to the disposal of a subsidiary in a prior year | (13.0) |
At 31 January 2024 | 1,113.7 |
Net book value | |
At 31 January 2024 | 344.7 |
At 31 January 2023 | 449.6 |
Goodwill deductible for tax purposes amounts to £nil (2023: £nil).
The adjustment relating to the disposal of a subsidiary in a prior year relates to Destinology Limited, in the year ended 31 January 2021.
At the date of disposal of the company, the net book value of the goodwill asset relating to it was £nil, being the original cost of £13.0m, less
an historic impairment of £13.0m. The impact of this disposal on the Group’s cumulative cost and impairment balances carried forward,
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
142
Software | |
£m | |
Cost | |
At 1 February 2022 | 108.9 |
Additions and internally developed software | 13.4 |
Disposals | (7.3) |
At 31 January 2023 | 115.0 |
Additions and internally developed software | 21.7 |
Disposals | (18.6) |
At 31 January 2024 | 118.1 |
Amortisation and impairment | |
At 1 February 2022 | 61.8 |
Amortisation | 9.2 |
Disposals | (7.3) |
At 31 January 2023 | 63.7 |
Amortisation | 8.9 |
Impairment of assets (Note 16b) | 3.1 |
Disposals | (18.3) |
At 31 January 2024 | 57.4 |
Net book value | |
At 31 January 2024 | 60.7 |
At 31 January 2023 | 51.3 |
The net book value of software at 31 January 2024 includes internally generated software of £26.4m (2023: £26.2m) relating to
Guidewire (the Group’s Insurance Broking, policy administration and billing platform), including additions in the year of £3.5m
(2023: £3.0m). The Guidewire platform has an expected useful economic life of 13 years, with seven years of phase one expenditure
remaining at 31 January 2024. During the year, the useful economic life of the Guidewire platform was extended from 10 years to 13 years,
ending on 30 April 2031, to align with all product elements that are being moved across to the platform. Implementation, and the
commencement, of amortisation of the Guidewire platform is on a phased basis, based on product re-platforming, and began in the year
ended 31 January 2019.
The net book value of software at 31 January 2024 also includes internally generated software of £1.7m (2023: £2.0m) relating to
Tigerbay (the Group’s travel booking reservation system) including additions in the year of £nil (2023: £nil). The Tigerbay platform has
an expected useful economic life of 10 years, with five years of phase one expenditure remaining at 31 January 2024. Implementation,
and the commencement of amortisation of the Tigerbay platform, is on a phased basis, based on product re-platforming, and began
in the year ended 31 January 2020.
2024 | 2023 | |
£m | £m | |
Cost of sales | 1.4 | 1.1 |
Administrative and selling expenses (Note 4) | 7.5 | 8.1 |
8.9 | 9.2 |
During the year, the Group disposed of assets with a net book value of £0.3m (2023: £nil). The loss arising on disposal was £0.3m
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
143
a) 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).
Financial statements
Notes to the consolidated financial statements
continued
16 Impairment of intangible assets
continued
Saga plc
Annual Report and Accounts 2024
144
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 | 31 July | 31 January | 31 January | 31 July | 31 January | 31 January | 31 July | 31 January | |
2024 | 2023 | 2023 | 2024 | 2023 | 2023 | 2024 | 2023 | 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.
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 | -1.0ppt | +1.0ppt | -1.0ppt | +10% | -10% | |
£m | £m | £m | £m | £m | £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 13b).
b) Other intangible assets
Separately identifiable intangible assets are valued, and their appropriate useful lives established, at the time of acquisition. The carrying
values of these assets, and their remaining useful lives, are reviewed annually for indicators of impairment.
Management has assessed the recoverable amount of software assets as at 31 January 2024 and concluded that impairments of £1.9m
and £1.2m respectively, totalling £3.1m (Note 15), were required in the Group’s Insurance Broking and Central Costs divisions.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
145
Long | |||||
Freehold | leasehold | ||||
land and | land and | Ocean | Plant and | ||
buildings | buildings | cruise ships | equipment | Total | |
£m | £m | £m | £m | £m | |
Cost | |||||
At 1 February 2022 | 15.1 | 9.5 | 650.5 | 46.2 | 721.3 |
Additions | – | – | 6.5 | 1.7 | 8.2 |
Disposals | – | – | (0.5) | (9.1) | (9.6) |
Transfer of asset class | – | – | (0.1) | 0.1 | – |
Reclassification to assets held for sale (Note 38) | (14.7) | (4.3) | – | (4.3) | (23.3) |
At 31 January 2023 | 0.4 | 5.2 | 656.4 | 34.6 | 696.6 |
Additions | – | – | 0.7 | 1.4 | 2.1 |
Disposals | – | (0.4) | – | (13.1) | (13.5) |
Reclassification from assets held for sale (Note 38) | – | 4.1 | – | – | 4.1 |
At 31 January 2024 | 0.4 | 8.9 | 657.1 | 22.9 | 689.3 |
Depreciation and impairment | |||||
At 1 February 2022 | 2.4 | 5.9 | 29.2 | 37.3 | 74.8 |
Provided during the year | 0.2 | 0.2 | 20.5 | 2.6 | 23.5 |
Impairment of assets | – | – | – | 0.5 | 0.5 |
Disposals | – | – | (0.3) | (9.1) | (9.4) |
Reclassification to assets held for sale (Note 38) | (2.2) | (0.9) | – | (0.7) | (3.8) |
At 31 January 2023 | 0.4 | 5.2 | 49.4 | 30.6 | 85.6 |
Provided during the year | – | 0.1 | 21.0 | 1.7 | 22.8 |
Impairment of assets | – | – | – | 0.1 | 0.1 |
Disposals | – | (0.4) | – | (12.9) | (13.3) |
Reclassification from assets held for sale (Note 38) | – | 0.7 | – | – | 0.7 |
At 31 January 2024 | 0.4 | 5.6 | 70.4 | 19.5 | 95.9 |
Net book value | |||||
At 31 January 2024 | – | 3.3 | 586.7 | 3.4 | 593.4 |
At 31 January 2023 | – | – | 607.0 | 4.0 | 611.0 |
2024 | 2023 | |
(restated 22 ) | ||
£m | £m | |
Cost of sales | 21.8 | 21.8 |
Administrative and selling expenses (Note 4) | 1.0 | 1.7 |
22.8 | 23.5 |
During the year, the Group disposed of assets with a net book value of £0.2m (2023: £0.2m). The loss arising on disposal was £0.2m
(2023: £nil).
22 For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
17 Property, plant and equipment
continued
Saga plc
Annual Report and Accounts 2024
146
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 EEXI and CII 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 | ||
Lower | ||
trading | ||
Base | stress test | |
scenario | scenario | |
Spirit of Discovery | 169.0 | 146.5 |
Spirit of Adventure | 114.7 | 91.6 |
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 38), 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 38).
equipment since it was no longer being actively marketed for disposal (Note 38). The carrying value of this property as at 31 January 2023
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
147
Long | ||||
leasehold | ||||
land and | River | Plant and | ||
buildings | cruise ships | equipment | Total | |
£m | £m | £m | £m | |
Cost | ||||
At 1 February 2022 | 1.6 | 33.5 | 6.6 | 41.7 |
Additions | 0.5 | 21.5 | 3.6 | 25.6 |
Disposals | – | – | (1.6) | (1.6) |
Effect of reassessment of lease terms | – | (22.5) | – | (22.5) |
At 31 January 2023 | 2.1 | 32.5 | 8.6 | 43.2 |
Additions | 1.9 | 1.5 | 2.5 | 5.9 |
Disposals | – | (11.5) | – | (11.5) |
At 31 January 2024 | 4.0 | 22.5 | 11.1 | 37.6 |
Depreciation and impairment | ||||
At 1 February 2022 | 0.1 | 0.7 | 4.9 | 5.7 |
Provided during the year | 0.4 | 7.4 | 1.1 | 8.9 |
Disposals | – | – | (1.6) | (1.6) |
Effect of reassessment of lease terms | – | (0.5) | – | (0.5) |
At 31 January 2023 | 0.5 | 7.6 | 4.4 | 12.5 |
Provided during the year | 0.8 | 9.2 | 1.9 | 11.9 |
Impairment of assets | 0.1 | – | – | 0.1 |
Disposals | – | (11.5) | – | (11.5) |
At 31 January 2024 | 1.4 | 5.3 | 6.3 | 13.0 |
Net book value | ||||
At 31 January 2024 | 2.6 | 17.2 | 4.8 | 24.6 |
At 31 January 2023 | 1.6 | 24.9 | 4.2 | 30.7 |
2024 | 2023 | |
£m | £m | |
Cost of sales | 9.9 | 7.8 |
Administrative and selling expenses (Note 4) | 2.0 | 1.1 |
11.9 | 8.9 |
During the year, the Group disposed of assets with a net book value of £nil (2023: £nil). The profit arising on disposal was £nil (2023: £nil).
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.
a) 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
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
148
The Group’s principal financial liabilities comprise loans and borrowings, and trade and other payables. The main purpose of the loans
and borrowings financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. The Group’s
principal financial assets include debt securities, money market funds held within the Insurance business, loan funds, trade and other
receivables, and cash and short-term deposits. The Group also enters into derivative transactions such as foreign exchange forward
contracts, and fuel and gas oil swaps to manage its exposure to various risks.
2024 | 2023 | |
(restated 23 ) | ||
£m | £m | |
FVTPL | ||
Foreign exchange forward contracts | – | 0.4 |
Loan funds | – | 5.9 |
Money market funds | 32.8 | 19.6 |
Debt securities 23 | 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 |
2024 | 2023 | |
(restated 24 ) | ||
£m | £m | |
Total financial assets (as above and presented on the face of the statement of financial position) | 252.2 | 282.4 |
Trade receivables (Note 23) | 81.4 | 78.7 |
Other receivables (Note 23) | 12.2 | 23.4 |
Cash and short-term deposits (Note 25) | 188.7 | 176.5 |
Total financial assets (including cash and short-term deposits, trade and other receivables) | 534.5 | 561.0 |
All financial assets that are measured at FVTPL are mandatorily measured at FVTPL, with the exception of debt securities which are
designated as FVTPL.
23
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)
24
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
149
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 | ||
Bonds and ship loans (Note 30) | 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 |
2024 | 2023 | |
(restated 25 ) | ||
£m | £m | |
Total financial liabilities (as above and presented on the face of the statement of financial position) | 828.4 | 896.8 |
Trade payables (Note 26) | 139.3 | 128.9 |
Other payables (Note 26) | 9.0 | 2.9 |
Accruals (Note 26) (restated 26 ) | 40.6 | 41.5 |
Total financial liabilities (including trade and other payables, and accruals) | 1,017.3 | 1,070.1 |
Except for the Group’s bonds and ship loans, the fair values of financial liabilities held at amortised cost are not materially different from
their carrying amounts, since the interest payable on those liabilities is close to current market rates. The fair value of the Group’s bonds
(Note 30) at 31 January 2024 is £356.3m (2023: £334.3m). The fair value of the Group’s ship loans (Note 30) at 31 January 2024 is
£356.1m (2023: £454.6m).
All financial liabilities that are measured at FVTPL, are mandatorily measured at FVTPL unless they are held in a designated hedging
25 For details of the restatement, please see Notes 2.5, 19a and 28
26 As a result of a review by the Group, total financial liabilities (including trade and other payables) have been restated to include accruals
Financial statements
Notes to the consolidated financial statements
continued
19 Financial assets and financial liabilities
continued
Saga plc
Annual Report and Accounts 2024
150
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
Valuation techniques include net present value and discounted cash flow models, and comparison to similar instruments for which market
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange
rates and future oil prices.
The objective of using valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the
reporting date, which would have been determined by market participants acting at arm’s length.
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg.
The use of these depends upon the liquidity of the relevant market.
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
i) Level 1
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
All money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted
active market price.
ii) Level 2
These are valuation techniques for which all significant inputs are taken from observable market data. These include valuation models
used to calculate the present value of expected future cash flows and may be employed either when no active market exists or when there
are quoted prices available for similar instruments in active markets.
The models incorporate various inputs, including the credit quality of counterparties, interest rate curves and forward rate curves of the
underlying instrument.
All the derivative financial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued
using observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the
fair values of these instruments. As at 31 January 2024, the marked-to-market values of derivative assets are net of a credit valuation
adjustment attributable to derivative counterparty default risk.
The fair values are periodically reviewed by the Group’s Treasury Committees.
iii) Level 3
These are valuation techniques for which any significant inputs are not based on observable market data.
The following tables provide the quantitative fair value hierarchy of the Group’s financial assets and financial liabilities that are held at
fair value:
| At 31 January 2024 | 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 | ||||||||
Bonds and ship loans | 356.3 | 356.1 | – | 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 |
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
151
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.
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
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.
i) Forward currency risk
During the year ended 31 January 2024, the Group designated 126 foreign exchange forward currency contracts as hedges of highly
probable foreign currency cash expenses in future periods (2023: 352). These contracts are entered into to minimise the Group’s
exposure to foreign exchange risk and are designated as cash flow hedges.
Designated in the year | At 31 January 2024 | At 31 January 2023 | ||||
Foreign currency cash flow hedging instruments (nominal amounts) | Volume | £m | Volume | £m | Volume | £m |
Euro ( EUR ) | 36 | (1.1) | 46 | (1.2) | 103 | 1.1 |
US dollar ( USD ) | 28 | (0.6) | 65 | (1.3) | 127 | 0.1 |
Other currencies | 62 | (0.2) | 97 | (0.2) | 216 | (0.1) |
Total | 126 | (1.9) | 208 | (2.7) | 446 | 1.1 |
Hedging instruments for other currencies are in respect of Australian dollars, Canadian dollars, Swiss francs, Japanese yen, New Zealand
dollars, Norwegian krone, Thai baht, Chinese yuan, Danish krona and South African rand.
ii) Commodity price risk
The Group uses derivative financial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into fixed
price contracts (swaps) in the management of its fuel price exposures. These contracts are expected to reduce the volatility attributable
to price fluctuations of fuel and are designated as cash flow hedges. Hedging the price volatility of forecast fuel purchases is in accordance
with the risk management strategy outlined by the Board of Directors. During the year ended 31 January 2024, the Group designated 37
fuel oil swaps as hedges of highly probable fuel oil purchases in future periods (2023: 68).
Designated in the year | At 31 January 2024 | At 31 January 2023 | ||||
Commodity cash flow hedging instruments (nominal amounts) | Volume | £m | Volume | £m | Volume | £m |
Hedging instruments | 37 | (0.4) | 65 | (0.5) | 68 | (4.0) |
iii) Hedge maturity profile
The table below summarises the present value of the highly probable forecast cash flows that have been designated in a hedging
relationship as at 31 January 2024. These cash flows are expected to become determined in profit or loss in the same period in which
the cash flows occur.
Total | ||||||
Other | currency | Fuel | ||||
EUR | USD | currencies | hedges | hedges | Total | |
Determination period | £m | £m | £m | £m | £m | £m |
1 February 2024 to 31 July 2024 | 17.9 | 17.5 | 2.4 | 37.8 | 0.2 | 38.0 |
1 August 2024 to 31 January 2025 | 13.9 | 15.9 | 2.7 | 32.5 | (0.3) | 32.2 |
1 February 2025 to 31 July 2025 | 0.1 | – | – | 0.1 | (0.3) | (0.2) |
1 August 2025 to 31 January 2026 | – | – | – | – | (0.1) | (0.1) |
Total | 31.9 | 33.4 | 5.1 | 70.4 | (0.5) | 69.9 |
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
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
152
The Group is exposed to market risk, credit risk, liquidity risk, insurance risk and operational risk. The Group’s senior management
oversees these risks, supported by the Group Treasury function and Treasury Committees within the key areas of the Group that advise
on financial risks and the appropriate financial risk governance framework for the Group. These functions and Committees ensure that
the Group’s financial risks are governed by appropriate policies and procedures and that financial risks are identified, measured and
managed in accordance with the Group’s policies and risk objectives. All derivative activities are for risk management purposes and are
carried out by the Group’s Treasury function. It is the Group’s policy that no trading in derivatives for speculative purposes may be
undertaken.
The Group manages concentration risk on its financial assets through a policy of diversification that is outlined in the Group Treasury
Policy and approved by the Board. The policy defines the exposure limit by asset class and to third-party institutions based on the credit
ratings of the individual counterparties, combined with the views of the Board. On a monthly basis, exposure to each asset class and
counterparty is calculated and reported, and compliance with the policy is monitored.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
The Group’s exposure to insurance and operational risks, and the approach to managing these risks, is explained in more detail in
Notes 20(d) and (e).
Market risk is the risk that the fair value, or future cash flows, of a financial instrument, or the valuation of insurance and reinsurance
contract assets and liabilities fluctuate due to changes in market prices. The Group is exposed to the following market risk factors:
Foreign currency risk
Commodity price risk
Interest rate risk
The Group has policies and limits approved by the Board for managing market risk exposure. These set out the principles that the
business should adhere to for managing market risk and establishing the maximum limits that the Group is willing to accept considering
strategy, risk appetite and capital resources. The Group has the ability to monitor market risk exposure on a daily basis and has
established limits for each component of market risk.
The Group uses derivatives for hedging its exposure to foreign currency and fuel oil price risks. The market risk policy explicitly prohibits
the use of derivatives for speculative purposes. For risk exposures that the Group hedges, and for which the Group applies hedge
accounting, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are
changes in the credit risk of the derivative counterparty. Hedge effectiveness is determined at the inception of the hedge relationship,
and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item
and hedging instrument. The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item
that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of
hedged item.
Foreign currency risk is the risk that the fair value, or future cash flows, of a financial asset or liability will fluctuate due to changes in foreign
exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating
activities (when revenue or expense is denominated in a different currency from the Group’s functional currency). The Group is not
exposed to material foreign currency risk through its Insurance Underwriting activities.
The Group uses foreign exchange forward contracts to manage the majority of its transaction exposures. The foreign exchange forward
contracts, some of which are formally designated as hedging instruments, are entered into for periods consistent with the foreign
currency exposure of the underlying transactions, generally from one to 24 months. The foreign exchange forward contracts vary with
the level of expected foreign currency sales and purchases.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
153
The following table demonstrates the sensitivity of the fair value of forward exchange contracts to a 5% change in USD and EUR exchange
rates, with all other variables held constant. The Group’s exposure to foreign currency changes for all other currencies is not material.
The impact is shown net of tax at the current rate.
Sensitivity of +/– 5% | |||
foreign exchange | |||
rate change in | Effect on equity | Effect on profit after tax | |
2024 | EUR | +/– £1.5m | +/– £0.2m |
USD | +/– £1.6m | +/– £0.2m | |
2023 | EUR | +/– £2.4m | +/– £0.2m |
USD | +/– £2.5m | +/– £0.2m |
To the extent that forward exchange contracts are held as part of effective hedging relationships, any change to the fair value of the
ii) Commodity price risk
The Group is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of fuel and gas oil
to sail its ocean cruise ships and, therefore, require a continuous supply of fuel and gas oil. The volatility in the price of fuel and gas oil has
led to the decision to enter into commodity fuel and gas oil swap contracts. These contracts are expected to reduce the volatility
attributable to price fluctuations of fuel and gas oil. Managing the price volatility of forecast oil purchases is in accordance with the risk
management strategy outlined by the Board of Directors.
The Group manages the purchase price using forward commodity purchase contracts based on future forecast fuel oil requirements.
The following table shows the sensitivity of the fair value of fuel oil swaps to changes in the underlying fuel oil price (USD) with all other
variables held constant. The impact is shown net of tax at the current rate.
Sensitivity of +/– 5% rate | |||
change in | Effect on equity | Effect on profit after tax | |
2024 | USD – Fuel oil price | +/– £0.8m | +/– £0.0m |
2023 | USD – Fuel oil price | +/– £0.8m | +/– £0.0m |
iii) Interest rate risk
Interest rate risk is the risk that the fair value, or future cash flows, of a financial instrument or the valuation of insurance and reinsurance
contract assets and liabilities fluctuate because of changes in market interest rates.
Interest rate risk arises from various sources:
Investments in debt securities with a fixed interest rate, the market value and carrying value of which is affected by movements in
market interest rates.
Investments in debt securities with a floating interest rate, money market funds held within the Insurance business and short-term
deposits. Movements in market interest rates change the amounts earned from these assets but do not materially affect their market
value or carrying value.
Borrowings with a floating interest rate (deferred repayments of ship loans). Movements in market interest rates change the future
cash flows that will arise from these borrowings, but do not materially affect their carrying value.
Insurance and reinsurance contract assets and liabilities. This interest rate risk primarily arises from the discounting of liabilities for
incurred claims and loss components of the liability for remaining coverage, and corresponding assets arising from reinsurance
contracts. The discount rates used are linked to market interest rates, such that changes in market interest rates will affect the
valuation of insurance and reinsurance contract assets and liabilities.
The Group’s loans and borrowings have a fixed interest rate (except the deferred repayments of the ship loans) and are accounted for at
amortised cost. As a result, changes in market interest rates do not affect their accounting measurement or the future cash flows arising
from them and, therefore, they are not considered further in this Note. However, the Group is exposed to a risk of interest rates being
higher if those borrowings are refinanced. More details on these borrowings are included in Note 30.
Financial statements
Notes to the consolidated financial statements
continued
20 Financial and insurance risk management objectives and policies
continued
Saga plc
Annual Report and Accounts 2024
154
The Group’s interest rate exposure is summarised in the following table:
2024 | 2023 | |
£m | £m | |
Investments in debt securities with a fixed interest rate | 205.9 | 241.5 |
Investments in debt securities with a floating interest rate | 13.2 | 12.9 |
Money market funds and short-term deposits | 163.7 | 144.1 |
Borrowings with a floating interest rate (deferred repayments of ship loans) | (43.2) | (61.6) |
Insurance contract liabilities for incurred claims | (326.6) | (294.8) |
Reinsurance assets for incurred claims | 175.0 | 115.0 |
Insurance contract liabilities for remaining coverage (loss component) | (16.1) | (8.4) |
Reinsurance assets for remaining coverage (loss-recovery component) | 1.3 | 2.7 |
The Group manages interest rate risk in various ways. The Group has a policy of holding the majority of investments to maturity by closely
matching asset and liability duration, and also ensures that the investment portfolio has a diversified range of investments such that there
is a combination of fixed and floating rate securities.
The following table shows the sensitivity of debt securities and insurance and reinsurance contract assets and liabilities to a 50bps
parallel increase or decrease in market interest rates at the end of the reporting period, being the change in market interest rates that
was considered reasonably possible at this date. This analysis assumes a corresponding change in the carer wage inflation assumption
within the valuation of PPO liabilities for incurred claims, as management expects these assumptions to move together in the long term.
All other variables are assumed to remain constant. This table does not show any impact on debt securities with a floating interest rate,
money market funds or borrowings, as their carrying values are not materially impacted by movements in market interest rates.
The impacts are shown net of tax at the current rate.
2024 | 2023 | |||
Impact on profit after tax | Impact on profit after tax | |||
and on equity | and on equity | |||
50bps increase | 50bps decrease | 50bps increase | 50bps decrease | |
Discount rate change: | ||||
Insurance and reinsurance contracts: Net liabilities for incurred claims | £0.2m | (£0.2m) | £0.7m | (£0.7m) |
Insurance and reinsurance contracts: Net loss component | £0.3m | (£0.3m) | £0.1m | (£0.1m) |
Interest rate change (impact on debt securities) | (£1.8m) | £1.8m | (£2.5m) | £2.5m |
Net impact | (£1.3m) | £1.3m | (£1.7m) | £1.7m |
The following table shows the impact that a 50bps parallel increase or decrease in market interest rates would have had on profit after
tax in the period arising from floating rate debt securities, money market funds, short-term deposits and borrowings with a floating
interest rate. This analysis assumes that the Group’s relevant risk exposures throughout the period had been the same as they were
at the end of the period.
2024 | 2023 | |||
Impact on profit after tax | Impact on profit after tax | |||
50bps increase | 50bps decrease | 50bps increase | 50bps decrease | |
Investments in debt securities with a floating interest rate | £0.1m | (£0.1m) | £0.1m | (£0.1m) |
Money market funds held within the Insurance business and short-term | £0.6m | (£0.6m) | £0.5m | (£0.5m) |
deposits | ||||
Borrowings with a floating interest rate (deferred repayments of ship loans) | (£0.2m) | £0.2m | (£0.2m) | £0.2m |
Net impact | £0.5m | (£0.5m) | £0.4m | (£0.4m) |
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
155
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument, insurance contract, reinsurance
contract or customer contract, leading to a financial loss. The Group is primarily exposed to credit risk in relation to its financial and
reinsurance assets, outstanding derivatives, trade and other receivables, and cash and cash equivalents. The Group assesses its
counterparty exposure in relation to the investment of surplus cash, fuel oil and foreign currency contracts, and undrawn credit facilities.
The Group primarily uses published credit ratings to assess counterparty strength and, therefore, define the credit limit for each
counterparty in accordance with approved treasury policies.
The credit risk in respect of trade and other receivables is generally limited as payment from customers is generally required before services
are provided. At 31 January 2024, the maximum exposure to credit risk for trade receivables by operating segment was as follows:
2024 | 2023 | |
| (restated 27 ) | ||
£m | £m | |
Cruise and Travel | 1.8 | 1.8 |
Insurance | 31.9 | 30.9 |
Other Businesses and Central Costs | 2.4 | 2.1 |
36.1 | 34.8 |
The variance between the quantum of the maximum exposure to credit risk for trade receivables (above) and total of trade receivables
presented in ‘Trade and other receivables’ (Note 23) primarily relates to debtors arising from insurance policies brokered by the Group
but underwritten by third-party insurers for which corresponding creditors exist in respect of the net premium to be passed on to the
third-party insurers. In the event of payment obligation default by a customer no longer on risk, the impairment of the debtor balance by
the Group would lead to a corresponding reduction in the related creditor with, or refund of net premium from, the third-party insurer.
In the event of payment obligation default by a customer remaining on risk, the impairment of the debtor balance by the Group would not
lead to a corresponding reduction in the related creditor with, or refund of net premium from, the third-party insurer, and the Group
would bear the credit risk relating to the debtor balance.
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large
number of small balances. The loss allowance required for these receivables is calculated in line with the simplified method for trade
receivables per IFRS 9, whereby lifetime ECLs are recognised irrelevant of the credit risk. The loss allowance is based on a combination of:
aged debtor analysis;
historical experience of write-offs for each receivable;
any specific indicators of credit deterioration observed; and
management judgement.
Loss rates are based on the probability of a receivable progressing through successive stages of delinquency to write-off. Financial assets
are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group.
On that basis, the loss allowance as at 31 January 2024 and 31 January 2023 was determined as follows for trade receivables:
31 January 2024 | Current | < 30 days | 30-60 days | 61-90 days | 91-120 days | > 120 days | Total |
Expected loss rate | 0% | 5% | 4% | 18% | 59% | 63% | |
Gross carrying amount – trade receivables | £78.9m | £2.2m | £0.5m | £0.2m | £0.1m | £0.4m | £82.3m |
(Note 23) | |||||||
Loss allowance (Note 23) | £0.4m | £0.1m | £0.0m | £0.0m | £0.1m | £0.3m | £0.9m |
31 January 2023 (restated 27 ) | Current | < 30 days | 30-60 days | 61-90 days | 91-120 days | > 120 days | Total |
Expected loss rate | 1% | 7% | 6% | 34% | 15% | 66% | |
Gross carrying amount – trade receivables | £76.5m | £2.1m | £0.2m | £0.1m | £0.2m | £0.7m | £79.8m |
(Note 23) | |||||||
Loss allowance (Note 23) | £0.5m | £0.1m | £0.0m | £0.0m | £0.0m | £0.5m | £1.1m |
2024 | 2023 | |
£m | £m | |
Opening loss allowance at 1 February | 1.1 | 5.0 |
Increase in loan loss allowance recognised in profit or loss during the year | 1.3 | 1.3 |
Receivables written off during the year as uncollectable | (1.3) | (3.5) |
Unused amount reversed | (0.2) | (1.7) |
Closing loss allowance at 31 January | 0.9 | 1.1 |
27
For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
20 Financial and insurance risk management objectives and policies
continued
Saga plc
Annual Report and Accounts 2024
156
Credit risk in relation to deposits, debt securities and derivative counterparties is managed by the Group’s Treasury function in
accordance with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits
assigned to each counterparty. Counterparty credit limits are reviewed on a regular basis and updated throughout the year, subject
to approval by the Board. The limits are set to minimise the concentration of risks and, therefore, mitigate financial loss through any
potential counterparty failure.
In its Insurance Underwriting business, the Group is exposed to credit risk as follows:
Insurance contracts issued:
At 31 January 2024 the Group expects to receive £43.8m (31 January 2023: £35.4m) of premiums in the
future in relation to insurance contracts that have already been entered into, representing management’s view of the Group’s maximum
exposure to credit risk from insurance contracts issued. However, the majority of these receivables are due in advance of the related
insurance coverage, which the Group would not be liable for if the premiums are not paid. As a result, the credit risk associated with
these receivables is significantly mitigated and they are not recognised on the statement of financial position under the IFRS 17 PAA.
Reinsurance contracts:
The Group is exposed to the risk of default on its reinsurance arrangements when amounts recoverable under
those arrangements become due. Credit risk in respect of reinsurance arrangements is assessed from the time of entering into a
reinsurance contract. The Group’s reinsurance programme is only placed with reinsurers which meet the Group’s financial strength
criteria. At 31 January 2024 the Group had a concentration of counterparty risk arising from reinsurance contracts, driven by a
material recovery arising from the Group’s motor quota share reinsurance arrangement. The highest amount of reinsurance contract
assets recoverable from a single counterparty at 31 January 2024 is £31.2m (31 January 2023: £17.2m). At 31 January 2024 this
reinsurer had an AA credit rating (31 January 2023: AA).
The Group’s maximum exposure to credit risk for the components of the statement of financial position at 31 January 2024 and
31 January 2023 is the gross carrying amount, except for trade receivables and reinsurance contract assets. None of the financial assets
measured at amortised cost, other than trade receivables where a loss allowance has been determined as set out above, were impaired
at the reporting date.
The Group’s financial assets and reinsurance assets are analysed by credit risk rating as follows:
Ratings analysis
31 January 2024 | ||||||
£m | AAA | AA | A | BBB | Unrated | Total |
Debt securities | 23.9 | 59.2 | 70.4 | 65.6 | – | 219.1 |
Money market funds held within the insurance business | 32.8 | – | – | – | – | 32.8 |
Derivative assets | – | – | 0.3 | – | – | 0.3 |
56.7 | 59.2 | 70.7 | 65.6 | – | 252.2 | |
Credit exposed component of reinsurance contract assets | – | 134.1 | 42.2 | – | – | 176.3 |
Total | 56.7 | 193.3 | 112.9 | 65.6 | – | 428.5 |
31 January 2023 | ||||||
£m | AAA | AA | A | BBB | Unrated | Total |
Debt securities | 23.5 | 74.9 | 64.2 | 91.8 | – | 254.4 |
Money market funds held within the insurance business | 19.6 | – | – | – | – | 19.6 |
Derivative assets | – | – | 2.5 | – | – | 2.5 |
Loan funds | – | – | – | – | 5.9 | 5.9 |
43.1 | 74.9 | 66.7 | 91.8 | 5.9 | 282.4 | |
Credit exposed component of reinsurance contract assets | – | 76.0 | 41.7 | – | – | 117.7 |
Total | 43.1 | 150.9 | 108.4 | 91.8 | 5.9 | 400.1 |
Liquidity risk is the risk that the Group, although solvent, either does not have available sufficient financial resources to enable it to meet
its obligations as they fall due, or can secure them only at excessive cost. The Group’s approach to managing liquidity risk is to evaluate
current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash or availability on its RCF. The Group
manages its obligations to pay claims to policyholders as they fall due by matching the maturity of investments to the expected maturity
of claims payments.
The table below analyses the maturity profile of the Group’s financial liabilities and insurance contract liabilities. The analysis of
non-derivative financial liabilities is based on the remaining period at the reporting date to the contractual maturity date. The analysis
of insurance contract liabilities includes only the component of this balance that relates to liabilities for incurred claims arising from
portfolios of insurance contracts that are in a liability position and is based on the estimates of the present value of the future cash flows
expected to be paid out in the periods presented (this excludes the risk adjustment).
31 January 2024 | Less than | Over | ||||||
£m | On demand | 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | 5 years | Total |
Bonds and ship loans | – | 212.2 | 55.7 | 304.2 | 46.5 | 43.8 | 144.6 | 807.0 |
Interest on bonds and ship loans | – | 29.1 | 24.1 | 15.3 | 6.6 | 5.2 | 8.2 | 88.5 |
Bank overdrafts | 1.9 | – | – | – | – | – | – | 1.9 |
Insurance contract liabilities | – | 84.9 | 25.4 | 27.6 | 22.9 | 11.4 | 114.2 | 286.4 |
Derivative liabilities | – | 3.6 | 0.4 | – | – | – | – | 4.0 |
Lease liabilities | – | 5.4 | 4.1 | 3.8 | 2.9 | 3.0 | 7.1 | 26.3 |
Interest on lease liabilities | – | 1.5 | 0.9 | 0.8 | 0.6 | 0.4 | 0.5 | 4.7 |
1.9 | 336.7 | 110.6 | 351.7 | 79.5 | 63.8 | 274.6 | 1,218.8 |
31 January 2023 | Less than | Over | ||||||
| £m (restated 28 ) | On demand | 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | 5 years | Total |
Bonds and ship loans | – | 62.2 | 212.2 | 55.7 | 304.2 | 46.5 | 188.4 | 869.2 |
Interest on bonds and ship loans | – | 33.6 | 28.8 | 24.1 | 15.3 | 6.6 | 13.4 | 121.8 |
Bank overdrafts | 4.4 | – | – | – | – | – | – | 4.4 |
Insurance contract liabilities | – | 81.2 | 31.0 | 20.2 | 18.7 | 13.6 | 94.5 | 259.2 |
Derivative liabilities | – | 4.1 | 1.1 | – | – | – | – | 5.2 |
Lease liabilities | – | 10.2 | 3.2 | 3.1 | 3.1 | 2.8 | 10.2 | 32.6 |
Interest on lease liabilities | – | 1.3 | 1.0 | 1.0 | 0.7 | 0.5 | 0.9 | 5.4 |
4.4 | 192.6 | 277.3 | 104.1 | 342.0 | 70.0 | 307.4 | 1,297.8 |
The table below sets out the remaining contractual maturities of the financial assets supporting the Group’s insurance contract liabilities.
It is presented on an undiscounted basis.
31 January 2024 | Less than | Over | ||||||
£m | 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | 5 years | No maturity | Total |
Debt securities | 47.9 | 76.8 | 53.5 | 34.8 | 9.1 | 21.4 | – | 243.5 |
Money market funds held within | – | – | – | – | – | – | 32.8 | 32.8 |
the Insurance business | ||||||||
47.9 | 76.8 | 53.5 | 34.8 | 9.1 | 21.4 | 32.8 | 276.3 |
31 January 2023 | Less than | Over | ||||||
£m | 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | 5 years | No maturity | Total |
Debt securities | 42.4 | 47.5 | 79.8 | 53.5 | 34.8 | 29.1 | – | 287.1 |
Loan funds | – | – | – | – | – | – | 5.9 | 5.9 |
Money market funds held within | – | – | – | – | – | – | 19.6 | 19.6 |
the Insurance business | ||||||||
42.4 | 47.5 | 79.8 | 53.5 | 34.8 | 29.1 | 25.5 | 312.6 |
28 For details of the restatement, please see Notes 2.5, 19a and 28
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
157
Financial statements
Notes to the consolidated financial statements
continued
20 Financial and insurance risk management objectives and policies
continued
Saga plc
Annual Report and Accounts 2024
158
d) Insurance risk
Insurance risk arises from the inherent uncertainties as to the occurrence, cost and timing of insured events that could lead to significant
individual or aggregated claims in terms of quantity or value. This could be for a number of reasons, including weather-related events,
large individual claims, changes in claimant behaviour patterns such as increased levels of fraudulent activities, the use of PPOs,
prospective or retrospective legislative changes, unresponsive and inaccurate pricing or reserving methodologies and the deterioration
in the Group’s ability to effectively and efficiently handle claims while delivering excellent customer service.
The Group manages insurance risk within its risk management framework as set out by the Board. The key policies and processes
of mitigating these risks have been implemented, which include underwriting partnership arrangements, reinsurance excess of loss
contracts, pricing policies and claims management, and administration policies.
i) Underwriting and pricing risk
The Group primarily underwrites motor insurance for private cars in the UK. The book consists of a large number of individual risks which
are widely spread geographically, which helps to minimise concentration risk. The Group has controls in place to restrict access to its
products to only those risks that it wishes to underwrite.
The Group has management information to allow it to monitor underwriting performance on a continuous basis and the ability to make
pricing and underwriting changes quickly. The Group undertakes detailed statistical analysis of underwriting experience for each rating
factor, and combination of rating factors, to enable it to adjust pricing for emerging trends.
ii) Reserving risk
Reserving risk is the risk that insufficient funds have been set aside to settle claims as they fall due. The Group undertakes regular internal
actuarial reviews and commissions external actuarial reviews at least once a year. These reviews estimate the future liabilities to consider
the adequacy of the provisions.
Claims which are subject to PPOs are a significant source of uncertainty within the Group’s liability for incurred claims. Cash flow
projections are undertaken for PPO claims to estimate the gross and net of reinsurance provisions required.
The Group purchases reinsurance to reduce the impact of individual large losses or accumulations from a single catastrophic event.
During 2018, the Group entered into a funds-withheld quota share reinsurance contract that reinsures 80% of the Group’s motor claims
risks limited by a loss ratio cap of 130%, effective from 1 February 2019. Prior to this, the Group had a funds-withheld quota share
reinsurance contract in place that reinsured 75% of the Group’s motor claims risks limited by a loss ratio cap of 120%. The Group also
purchases individual excess of loss protections for the motor portfolio to limit the impact of a single large claim. Similar protections are
in place for all years for which the Group has underwritten motor business.
Reinsurance recoveries on individual excess of loss protections can take many years to collect, particularly if a claim is subject to a PPO.
This means that the Group has exposure to reinsurance credit risk for many years. Reinsurers are, therefore, required to have strong
credit ratings and their financial health is regularly monitored.
iv) Sensitivities
The following tables demonstrate the impact on profit or loss before tax, and equity, of reasonably possible changes in insurance risk
variables at 31 January 2024 and 31 January 2023. These impacts are shown both gross and net of reinsurance. It is assumed that all
other variables remain constant.
2024 | 2023 | |||
Impact on profit after tax | Impact on profit after tax | |||
and on equity | and on equity | |||
Gross of | Net of | Gross of | Net of | |
£m | reinsurance | reinsurance | reinsurance | reinsurance |
Change in the confidence level of liabilities for incurred claims | ||||
5ppt increase to 90% net confidence level | (9.0) | (1.2) | (8.0) | (1.4) |
5ppt decrease to 80% net confidence level | 6.8 | 0.9 | 6.0 | 1.2 |
Change in the confidence level of the onerous contract provision | ||||
5ppt increase to 90% net confidence level | (3.0) | (2.7) | (1.8) | (1.0) |
5ppt decrease to 80% net confidence level | 3.4 | 2.8 | 1.2 | 0.6 |
Change in non-PPO claim inflation assumption within liabilities for incurred claims | ||||
100bps increase | (4.7) | (1.4) | (4.4) | (2.1) |
100bps decrease | 4.5 | 1.3 | 4.2 | 2.1 |
The impact of any change in the PPO claim inflation (specifically the carer wage inflation assumption) is not shown in the table above as
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
159
e) Operational risk
Effective operational risk management requires the Group to identify, assess, manage, monitor, report and mitigate all areas of exposure.
The Group operates across a range of segments and operational risk is inherent in all the Group’s products and services, arising from the
operation of assets, from external events and dependencies, and from internal processes and systems.
The Group manages its operational risk through the risk management framework agreed by the Board, and through the use of risk
management tools which, together, ensure that operational risks are identified, managed and mitigated to the level accepted, and that
contingency processes and disaster recovery plans are in place. Regular reporting is undertaken to segment boards and includes details
of new and emerging risks, as well as monitoring of existing risks. Testing of contingency processes and disaster recovery plans is
undertaken to ensure the effectiveness of these processes. The resilience of the Group’s disaster recovery plans was demonstrated
during the COVID-19 lockdown. The Group was able to quickly move office-based colleagues to working from home arrangements,
ensuring that it was able to continue to support existing and new customers through the contact centre and support functions.
All of the Group’s operations are dependent on: the proper functioning of its IT and communication systems; its properties and other
infrastructure assets; the need to adequately maintain and protect customer and employee data and other information; and the ability
of the Group to attract and retain colleagues. Specific areas of operational risk by segment include:
i) Cruise and Travel
The Cruise and Travel segment operates two ocean cruise ships, which are the Group’s largest trading assets. Risk to the operation
of these cruise ships arises from the impact of mechanical or other malfunction, non-compliance with regulatory requirements, and
from global weather and socio-economic events. The tour holidays operated by the segment are also affected by global weather and
socio-economic events which impact either the Group directly, or its suppliers. The Cruise and Travel segments transact with multiple
suppliers, which minimises the impact of any socio-economic events affecting its suppliers.
ii) Insurance
The Insurance segment is required to comply with various operational regulatory requirements, primarily in the UK but also within Gibraltar
for its Insurance Underwriting business. To the extent that significant external events could increase the incidence of claims, these would
place additional strain on the claims handling function but any financial impact of such an event is considered to be an insurance risk.
iii) Other Businesses and Central Costs
A structured entity is defined as an entity that has been designed so that voting, or similar, rights are not the dominant factor in deciding who
controls the entity, such as when any voting rights relate to the administrative tasks only and the relevant activities are directed by means
of contractual agreements. The Group has interests in unconsolidated structured entities in the form of investment funds comprising:
bank loan funds; and
money market funds.
The nature and purpose of the bank loan funds are to diversify the investment portfolio and enhance the overall yield, while maintaining
an acceptable level of risk for the portfolio as a whole.
Bank loan funds invest in secured loans to companies rated below investment grade.
The nature and purpose of the money market funds is to provide maximum security and liquidity for the funds invested while also
providing an adequate return. The money market funds used by the Group are all members of the Institutional Money Market Funds
Association. They are thus required to maintain specified liquidity and diversification characteristics of their underlying portfolios,
which comprise investment grade investments in financial institutions.
The Group invests in unconsolidated structured entities as part of its investment activities. The Group does not sponsor any of the
unconsolidated structured entities.
The Group’s total interest in unconsolidated structured entities of £32.8m (2023: £25.5m) are analysed as follows:
Carrying | Interest | Fair value | |
value | income | losses | |
At 31 January 2024 | £m | £m | £m |
Loan funds | – | 0.2 | – |
Money market funds | 32.8 | 0.7 | – |
Carrying | Interest | Fair value | |
value | income | losses | |
At 31 January 2023 | £m | £m | £m |
Loan funds | 5.9 | 0.2 | (0.3) |
Money market funds | 19.6 | 0.5 | – |
These investments are typically managed under credit risk management as described in Note 20. The Group’s maximum exposure
to loss on the interests presented above is the carrying amount of the Group’s investments. No further loss can be made by the Group
in relation to these investments. For this reason, the total assets of the entities are not considered meaningful for the purposes of
2024 | 2023 | |
£m | £m | |
Raw materials | 0.2 | 0.7 |
Technical stocks | 4.2 | 4.4 |
Work in progress | 0.1 | – |
Finished goods | 3.6 | 1.9 |
8.1 | 7.0 |
Technical stocks are spare parts for the Group’s ocean cruise ships. Finished goods primarily relate to ocean cruise ship fuel, food, bar
2024 | 2023 | |
(restated 29 ) | ||
£m | £m | |
Trade receivables (Note 20b) | 82.3 | 79.8 |
Loss allowance (Note 20b) | (0.9) | (1.1) |
81.4 | 78.7 | |
Other receivables | 12.2 | 23.4 |
Prepayments | 24.4 | 25.8 |
Contract cost assets (Note 3b) | 3.6 | 2.5 |
Other taxes and social security costs | 6.1 | 5.6 |
127.7 | 136.0 |
An explanation of how the Group manages and measures the credit risk of trade receivables can be found in Note 20b. The Group
expects trade and other receivables to be normally settled within 12 months. Due to the short-term nature of the current receivables,
The Civil Aviation Authority (
CAA
) regulated the Group’s River Cruise and Travel businesses during the year. To comply with its regulatory
obligations, the Group is required to arrange financial security to protect customer monies and this is currently provided through the
Association of British Travel Agents (
ABTA
). In addition, the Group is required to make ATOL Protection Contributions, which the Group
pays into a ring-fenced account.
Prior to 28 March 2023, 100% of customer monies were paid into trust (
Trust Accounting
) until the Group had fulfilled its obligations
and the customer had returned from their holiday. The trust was administered and controlled by an independent trustee, PT Trustees
Limited. On this date, the Group moved from Trust Accounting to a 70% escrow arrangement (
Escrow Accounting
). This means that,
from 28 March 2023, the Group pays 70% of customer monies received into an escrow arrangement. The remaining 30% is used to
support the required prepayments in advance of operating the customer’s holiday, namely flight costs. Interest arising from the funds
held in escrow belongs to the Group.
Following the initial introduction of Trust Accounting in September 2020 and the subsequent move to Escrow Accounting, the Group is
no longer required to hold financial security bonds in relation to ATOL bookings. In relation to ABTA bookings, a bonding requirement still
29 For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
160
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
161
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 19) | 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 |
subject to contractual or regulatory restrictions (Note 35). 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
30
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.
2024 | 2023 | |
(restated 31 ) | ||
£m | £m | |
Trade payables | 139.3 | 128.9 |
Other payables | 9.0 | 2.9 |
Other taxes and social security costs | 10.8 | 8.7 |
Assets in the course of construction | 1.6 | 4.5 |
Accruals | 40.6 | 41.5 |
201.3 | 186.5 |
All trade and other payables are current in nature. The carrying amounts of trade and other payables are considered to be the same as
30 Refer to the Alternative Performance Measures Glossary on pages 187-188 for definition and explanation
31
For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
162
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.
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
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 scheme is governed by the employment laws of the UK. The level of benefits provided depends on the member’s length of service and
average salary while a member of the scheme. The scheme requires contributions to be made to a separately administered fund which is
governed by a Board of Trustees and consists of an equal number of employer and employee representatives. The Board of Trustees is
responsible for the administration of the plan assets and for the definition of the investment strategy.
The long-term investment objectives of the Trustees and the Group are to limit the risk of the assets failing to meet the liabilities of the
scheme over the long term, and to maximise returns consistent with an acceptable level of risk so as to control the long-term costs of the
scheme. To meet those objectives, the scheme’s assets are invested in different categories of assets, with different maturities designed
to match liabilities as they fall due. The investment strategy will continue to evolve over time and is expected to match the liability profile
increasingly closely. The pension liability is exposed to inflation rate risks and changes in the life expectancy of members. As the plan
assets include investments in quoted equities, the Group is exposed to equity market risk. The Group has provided super security to the
Trustees of the scheme, which ranks before any liabilities under the senior facilities agreement (as detailed in Note 30). The value of the
security is capped at £47.5m.
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.
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.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
163
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.
The following table summarises the components of the net benefit expense recognised in the income statement, OCI and amounts
recognised in the statement of financial position for the scheme for the year ended 31 January 2024:
Defined | |||
Fair value of | Defined | benefit | |
scheme | benefit | scheme | |
assets | obligation | liability | |
£m | £m | £m | |
1 February 2023 | 224.1 | (236.2) | (12.1) |
Pension cost charge to income statement | |||
Net interest | 10.3 | (10.8) | (0.5) |
Included in income statement | 10.3 | (10.8) | (0.5) |
Benefits paid | (6.5) | 6.5 | – |
Return on plan assets (excluding amounts included in net interest expense) | (29.2) | – | (29.2) |
Actuarial changes arising from changes in financial assumptions | – | 15.8 | 15.8 |
Actuarial changes arising from changes in demographic assumptions | – | 13.5 | 13.5 |
Experience adjustments | – | (41.2) | (41.2) |
Sub-total included in OCI | (35.7) | (5.4) | (41.1) |
Total contributions by employer | 5.8 | – | 5.8 |
At 31 January 2024 | 204.5 | (252.4) | (47.9) |
The following table summarises the components of the net benefit expense recognised in the income statement, OCI and amounts
recognised in the statement of financial position for the scheme for the year ended 31 January 2023:
Defined | |||
Fair value of | Defined | benefit | |
scheme | benefit | scheme | |
assets | obligation | liability | |
£m | £m | £m | |
1 February 2022 | 412.0 | (410.9) | 1.1 |
Pension cost charge to income statement | |||
Net interest | 8.9 | (8.8) | 0.1 |
Included in income statement | 8.9 | (8.8) | 0.1 |
Benefits paid | (6.8) | 6.8 | – |
Return on plan assets (excluding amounts included in net interest income) | (195.8) | – | (195.8) |
Actuarial changes arising from changes in financial assumptions | – | 184.3 | 184.3 |
Experience adjustments | – | (7.6) | (7.6) |
Sub-total included in OCI | (202.6) | 183.5 | (19.1) |
Total contributions by employer | 5.8 | – | 5.8 |
At 31 January 2023 | 224.1 | (236.2) | (12.1) |
Financial statements
Notes to the consolidated financial statements
continued
27 Retirement benefit schemes
continued
b) Defined benefit plan
continued
Saga plc
Annual Report and Accounts 2024
164
The major categories of assets in the scheme are as follows:
2024 | 2023 | |
£m | £m | |
Equities | 34.8 | 16.4 |
Bonds | 80.9 | 92.2 |
Property and alternatives | 63.6 | 74.6 |
Hedge funds | 18.0 | 28.7 |
Insured annuities | 3.2 | 3.9 |
Cash and other | 4.0 | 8.3 |
Total | 204.5 | 224.1 |
Equities and bonds are all quoted in active markets, while property and hedge funds are not. Unit prices of approximately 30% of the
assets were not available as at 31 January 2024 and have been based on unit prices prior to the statement of financial position date
(2023: approximately 27%). The impacts of COVID-19 over the past four years, and the Russia-Ukraine conflict, have increased the
level of uncertainty and volatility in global financial markets. While the ultimate extent of the effect of this on the asset portfolio is not
possible to quantify, management has used the latest available fund pricing data to derive the valuations of assets which are not quoted
in active markets. Where assets do not have an observable market price, approximate techniques have been used by the valuer to arrive
at a valuation.
The scheme’s investment strategy is to invest broadly 60% in return seeking assets and 40% in matching assets (mainly government
bonds). This strategy reflects the scheme’s liability profile and the Trustees’ and Group’s attitude to risk. The scheme’s investments
include interest rate and inflation hedging. The Trustees’ investment strategy also includes investing in liability driven investment, the
value of which will increase with decreases in interest rates and will move with inflation expectations. During the year, the scheme hedged
around 75% of interest rate risk and inflation risk of the liabilities.
Included within bonds is a hedging component totalling £75.8m (2023: £85.5m). The property and alternatives category includes illiquid
credit funds totalling £51.1m (2023: 50.2m) held as part of the return-seeking asset portfolio.
The pension scheme has not invested in any of the Group’s own financial instruments.
The principal assumptions used in determining pension benefit obligations for the scheme are shown below:
2024 | 2023 | |
Real rate of increase of pensions in payment | 3.05% | 3.05% |
Real rate of increase of pensions in deferment | 2.90% | 3.00% |
Discount rate – pensioner | 5.00% | 4.65% |
Discount rate – non-pensioner | 5.00% | 4.60% |
Inflation – pensioner | 3.20% | 3.20% |
Inflation – non-pensioner | 3.05% | 3.15% |
Life expectancy of a member retiring in 20 years’ time at age 60 – Male | 26.4 yrs | 27.8 yrs |
Life expectancy of a member retiring in 20 years’ time at age 60 – Female | 28.6 yrs | 29.5 yrs |
Mortality base tables | ||
CMI Standard tables – Male (all amounts) | S3PA | S3PA |
CMI Standard tables – Female (middle amounts) | S3PA | S3PA |
Scheme specific adjustment – Active Male | n/a | 115% |
Scheme specific adjustment – Active Female | n/a | 115% |
Scheme specific adjustment – Deferred Male | 116% | 101% |
Scheme specific adjustment – Deferred Female | 116% | 107% |
Scheme specific adjustment – Pensioner Male | 106% | 102% |
Scheme specific adjustment – Pensioner Female | 111% | 105% |
The discount rate assumption is used to calculate the defined benefit obligation. The rate is derived from high-quality corporate bonds,
generally regarded as those with an AA rating. As in the prior year, management have opted to use the XPS Single Agency curve for
deriving the discount rate assumptions at January 2024.
In addition, the scheme lost some of its inflation hedge during the prior year and, as a result, management made an allowance for inflation
risk premium of 0.2%. The inflation risk premium of 0.2% was retained for the valuation as at 31 January 2024.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
165
Mortality assumptions are set using standard tables based on specific experience, where available, and allow for future mortality
improvements. The scheme assumption is that a member currently aged 60 will live, on average, for a further 24.8 years if they are male
and, on average, for a further 27.0 years if they are female. For the valuation as at 31 January 2024, mortality assumptions have been
based on the latest data released by the Continuous Mortality Investigation (
CMI
), being their CMI_2022 data model. The default
CMI_2022 parameter, which has been applied to the scheme’s valuation, allows for 25% of the effects of the COVID-19 pandemic on
future mortality improvements. This has acted to reduce the value of the liabilities in the scheme.
A quantitative sensitivity analysis for significant assumptions as at 31 January 2024 and their impact on the scheme liabilities is as follows:
Assumptions | Discount rate | Future inflation | Life expectancy | |||
Sensitivity | +/– 0.25% | +/– 0.25% | +/– 1 year | |||
Increase | Decrease | Increase | Decrease | Increase | Decrease | |
Impact £m | (10.6) | 11.1 | 5.6 | (5.8) | 8.3 | (8.3) |
Note: a positive impact represents an increase in the net defined benefit liability.
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the
sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method has been applied as when calculating
the pension liability recognised within the statement of financial position. The methods and types of assumption used in preparing the
sensitivity analysis did not change compared to the prior period.
The expected contribution in respect of the accrual of benefits payable to the scheme for the next financial year is £nil and the average
duration of the defined benefit plan obligation at the end of the reporting period has reduced from 20 to 21 years, down to 18 years.
Formal actuarial valuations take place every three years for the scheme. The assumptions adopted for actuarial valuations are
determined by the Trustees, agreed with the Group, and are normally more prudent than the assumptions adopted for IAS 19 purposes,
which are a best estimate. Where a funding deficit is identified, the Group and the Trustees may agree a deficit recovery plan to pay
additional contributions above those needed to fund the scheme.
guarantor subsidiaries in the Group, have provided super security to the Trustees of the scheme, which ranks before any liabilities under
the Group’s bank facilities. The value of the security is capped at £47.5m under the 2020 triennial valuation. Further to this valuation,
a recovery plan was also put in place for the scheme. Under the agreed recovery plan, the Group made an additional payment of £5.8m
during the year ended 31 January 2024 and will make annual payments of £5.8m totalling a further £23.2m over the next four financial
years, with the last payment being made on 28 February 2027. The total expected contributions in the year ending 31 January 2025 are
£5.8m and entirely relate to the recovery payment.
The Group has also agreed to pay additional amounts into an escrow account should asset returns fall below an agreed level over set
periods of time. Dependent upon the level of return on the scheme’s assets between 31 January 2020 and 31 January 2027, any amount
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
166
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 2.5.
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 | Liabilities for | ||||
remaining coverage | incurred claims | ||||
Estimate of | |||||
Excluding | the present | ||||
loss | Loss | value of future | Risk | ||
component | component | cash flows | adjustment | Total | |
£m | £m | £m | £m | £m | |
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 |
At 31 January 2024 | |||||
Insurance contract liabilities | (56.6) | (16.1) | (286.4) | (40.2) | (399.3) |
Assets for | Amounts recoverable | ||||
remaining coverage | on incurred claims | ||||
Excluding | Estimate of | ||||
loss- | Loss- | the present | |||
recovery | recovery | value of future | Risk | ||
component | component | cash flows | adjustment | Total | |
£m | £m | £m | £m | £m | |
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 | – | – | (0.9) | – | (0.9) |
reinsurance contracts | |||||
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 |
At 31 January 2024 | |||||
Reinsurance contract (liabilities)/assets | (3.1) | 1.3 | 141.3 | 33.7 | 173.2 |
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
167
Liabilities for | Liabilities for | ||||
remaining coverage | incurred claims | ||||
Estimate of | |||||
the present | |||||
Excluding loss | Loss | value of future | Risk | ||
component | component | cash flows | adjustment | Total | |
£m | £m | £m | £m | £m | |
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 expense | – | – | 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 |
At 31 January 2023 (restated) | |||||
Insurance contract liabilities | (44.3) | (8.4) | (259.2) | (35.6) | (347.5) |
Assets for | Amounts recoverable | ||||
remaining coverage | on incurred claims | ||||
Estimate of | |||||
Excluding | Loss- | the present | |||
loss-recovery | recovery | value of future | Risk | ||
component | component | cash flows | adjustment | Total | |
£m | £m | £m | £m | £m | |
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 | – | – | 0.1 | – | 0.1 |
reinsurance contracts | |||||
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 |
At 31 January 2023 (restated) | |||||
Reinsurance contract (liabilities)/assets | (5.5) | 2.7 | 87.6 | 27.4 | 112.2 |
Financial statements
Notes to the consolidated financial statements
continued
28 Insurance and reinsurance contract liabilities and assets
continued
Saga plc
Annual Report and Accounts 2024
168
b) Insurance finance income or expense
The following table provides further detail on insurance finance income or expenses arising from insurance and reinsurance contracts:
| 2024 | 2023 | |||||
Insurance | Insurance | |||||
contracts | Reinsurance | contracts | Reinsurance | |||
(gross) | contracts | Net | (gross) | contracts | Net | |
£m | £m | £m | £m | £m | £m | |
Unwind of discounting of liabilities for incurred claims | (8.2) | 4.7 | (3.5) | (3.5) | 1.6 | (1.9) |
Impact of change in the discount rate on liabilities for | 2.1 | (1.1) | 1.0 | 11.0 | (4.6) | 6.4 |
incurred claims: Non-PPOs | ||||||
Impact of change in the discount rate on liabilities for | 10.6 | (6.4) | 4.2 | 22.1 | (20.8) | 1.3 |
incurred claims: PPOs | ||||||
Impact of change in carer wage inflation assumption | (8.0) | 4.7 | (3.3) | (21.4) | 20.1 | (1.3) |
for PPO liabilities for incurred claims | ||||||
Net finance (expense)/income from insurance and | (3.5) | 1.9 | (1.6) | 8.2 | (3.7) | 4.5 |
reinsurance contracts | ||||||
Insurance finance income or expenses are conceptually comparable to investment income or expenses arising from financial assets held
within the Insurance Underwriting business (see Note 6):
The expense created by the unwind of discounting of liabilities for incurred claims is conceptually similar to interest income derived from
financial assets.
The impact of the change in the discount rate on liabilities for incurred claims is conceptually similar to fair value gains or losses arising
on financial assets, with both significantly impacted by changes in market interest rates.
However, the relevant amounts may differ, including due to the following:
Insurance finance income or expenses arise solely from liabilities for incurred claims and corresponding reinsurance assets, whereas
the financial assets held within the Insurance Underwriting business support the Group’s wider insurance liabilities (including liabilities
for remaining coverage) and capital requirements. This leads to differences between the value and duration characteristics of those
financial assets and those of the liabilities for incurred claims which, in turn, leads to differences between the investment income or
expenses arising from those financial assets and insurance finance income or expense.
Investment income or expenses includes compensation for credit risk associated with the financial assets, with any change in credit risk
being reflected in fair value gains or losses on those securities. Credit risk is explicitly excluded from the IFRS 17 discount rate and,
therefore, there is no corresponding effect on insurance finance income or expense.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
169
c) 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.
Gross claims development
| Amounts as at the end of the financial year ended 31 January | |||||
2020 | 2021 | 2022 | 2023 | 2024 | |
Gross loss occurring in financial 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 | 734.5 | ||||
financial years 2020-2024 | |||||
Claims handling expenses | 6.8 | ||||
Effect of discounting | (455.1) | ||||
Risk adjustment | 40.4 | ||||
Total gross liability for incurred claims | 326.6 | ||||
Net claims development
| Amounts as at the end of the financial year ended 31 January | |||||
2020 | 2021 | 2022 | 2023 | 2024 | |
Net loss occurring in financial 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 | 154.2 | ||||
financial years 2020-2024 | |||||
Claims handling expenses | 6.8 | ||||
Net effect of discounting | (16.0) | ||||
Net risk adjustment | 6.6 | ||||
Total net liability for incurred claims | 151.6 | ||||
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
170
2024 | 2023 | |
(restated 32 ) | ||
£m | £m | |
Deferred revenue (Note 3b) | 159.8 | 126.5 |
159.8 | 126.5 | |
Current | 156.1 | 123.0 |
Non-current | 3.7 | 3.5 |
159.8 | 126.5 |
Deferred revenue comprises amounts received within the Cruise and Travel segment for cruises and holidays with departure dates after
the reporting date, and insurance premiums and sales revenues received in the Insurance segment in respect of insurance policies which
2024 | 2023 | |
£m | £m | |
Bonds | 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 |
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.
32 For details of the restatement, please see Notes 2.5, 19a and 28
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
171
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 £170m.
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).
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.
Financial statements
Notes to the consolidated financial statements
continued
30 Loans and borrowings
continued
Saga plc
Annual Report and Accounts 2024
172
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.
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.
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
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
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
173
Private | ||||
medical | ||||
insurance | Onerous | |||
( PMI ) | contract | Other | Total | |
£m | £m | £m | £m | |
| At 1 February 2022 (restated 33 ) | 0.8 | – | 4.6 | 5.4 |
Utilised during the year | (0.8) | – | (4.2) | (5.0) |
Released unutilised during the year | – | – | (0.6) | (0.6) |
| Charge for the year (restated 33 ) | – | – | 5.4 | 5.4 |
At 31 January 2023 | – | – | 5.2 | 5.2 |
Utilised during the year | – | (4.2) | (13.1) | (17.3) |
Released unutilised during the year | – | – | (1.4) | (1.4) |
Charge for the year | – | 7.3 | 14.2 | 21.5 |
At 31 January 2024 | – | 3.1 | 4.9 | 8.0 |
Onerous | ||||
PMI | contract | Other | Total | |
£m | £m | £m | £m | |
Current | – | 3.1 | 4.7 | 7.8 |
Non-current | – | – | 0.2 | 0.2 |
At 31 January 2024 | – | 3.1 | 4.9 | 8.0 |
Onerous | ||||
PMI | contract | Other | Total | |
£m | £m | £m | £m | |
Current | – | – | 4.4 | 4.4 |
Non-current | – | – | 0.8 | 0.8 |
At 31 January 2023 | – | – | 5.2 | 5.2 |
The COVID-19 pandemic led to a high level of disruption to private medical inpatient appointments over 2020 and 2021, with
appointments and operations initially being delayed and rescheduled. In the year ended 31 January 2021, delayed appointments had
a favourable impact on the underwriting performance of PMI, resulting in a profit share due from the underwriter. Due to the Group’s
public commitment to not profit from the impacts of COVID-19, a provision to offset this profit share was made.
The onerous contract provision relates to the Group’s three-year fixed-price product guarantee in respect of motor insurance policies.
Other provisions primarily comprise:
provisions for the return of insurance commission in respect of policies cancelled mid-term after the reporting date or as a result
of being cancelled during the statutory cooling-off period after the reporting date;
credit hire and repair claims handling and litigation costs on income booked as at the reporting date;
fleet insurance at the estimated cost of settling all outstanding incidents at the reporting date;
customer remediation relating to areas where there is likely to be a requirement to remedy various errors that have had an adverse
impact on customer outcomes; and
an employer liability provision relating to various Group-related, self-funded insurance arrangements.
Provisions are expected to be fully utilised over a period greater than the next 12 months, with the exception of the return of insurance
commission and customer remediation provisions. The timing of fleet insurance costs is uncertain and will depend upon the nature of
each incident. The costs of debt recovery on credit hire and repair claims handling and litigation costs are uncertain and will depend upon
the nature and timing of each claim. The settlement cash outflows from the employer liability provision depend on the timing of the
settlement of claims.
33 For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
174
The following tables analyse the cash and non-cash movements for liabilities arising from financing activities:
| Non-cash changes | |||||
Financing | New leases | ||||
2023 | cash flows | (Note 18) | Other | 2024 | |
£m | £m | £m | £m | £m | |
Lease liabilities (Note 37) | 32.6 | (11.6) | 5.9 | (0.6) | 26.3 |
Ship loans (Note 30) | 469.2 | (62.2) | – | – | 407.0 |
Bonds (Note 30) | 400.0 | – | – | – | 400.0 |
Deferred issue costs (Note 30) | (20.1) | – | – | 4.5 | (15.6) |
| Non-cash changes | |||||
Financing | New leases | ||||
2022 | cash flows | (Note 18) | Other | 2023 | |
£m | £m | £m | £m | £m | |
Lease liabilities (Note 37) | 35.3 | (7.8) | 25.6 | (20.5) | 32.6 |
Ship loans (Note 30) | 515.6 | (46.4) | – | – | 469.2 |
Bonds (Note 30) | 400.0 | – | – | – | 400.0 |
Deferred issue costs (Note 30) | (25.0) | – | – | 4.9 | (20.1) |
Included within ‘Other’ for lease liabilities are amounts relating to foreign exchange movements of £0.6m debit (2023: £2.0m credit) and
lease re-assessments of £nil (2023: £22.5m) (Note 18).
Included within ‘Other’ for deferred issue costs is the amortisation of costs of £4.5m (2023: £4.9m).
Accrued interest payable on the loans and bonds above is disclosed in Note 30. Interest paid during the year is included within operating
| Ordinary shares | |||
Nominal | |||
value | Value | ||
Number | £ | £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 EBT to satisfy
Share-based payment reserve
Prior to vesting, the share-based payment reserve is used to recognise the value of equity-settled share-based payments provided
to employees, including key management personnel, as part of their remuneration. More detail is provided in Note 36.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in
cash flow hedges pending subsequent recognition in profit or loss as the hedged cash flows or items affect profit or loss.
Own shares held reserve
The own shares reserve represents the cost of shares in the Company held by the Group’s EBT to satisfy options under the Group’s
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
175
The Group’s objectives, when managing capital, are to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Group’s capital management, capital comprises total equity of £223.5m (2023: £365.4m (restated
34
)) as shown
on the consolidated statement of financial position. The Group operates in a number of regulated markets and includes subsidiaries
which are required to comply with specific requirements in respect of capital or other resources.
The Group’s financial services businesses are regulated primarily by the Financial Services Commission (
FSC
) in Gibraltar and by the
FCA in the UK; and the cash requirements of its River Cruise and Travel businesses are regulated by the CAA in the UK. It is the Group’s
policy to comply with the requirements of these regulators in respect of capital adequacy, or other similar tests, at all times.
The Group’s regulated Insurance Underwriting business is based in Gibraltar, and regulated by the FSC, and is required to ensure that
it has a sufficient level of capitalisation in accordance with Solvency II.
The Group, and its subsidiaries, have complied with externally-imposed capital requirements during the year. The amounts set out in the
following three paragraphs are provisional and unaudited.
The Group monitored its ability to comply with the requirements of Solvency II throughout the year to 31 January 2024, having previously
received approval from the FSC for the Undertaking of Specific Parameters when applying the standard formula to measure capital
requirements for this business under Solvency II rules. Under Solvency II, Acromas Insurance Company Limited remained well capitalised
and, at 31 January 2024, available capital was £83.4m against a Solvency Capital Requirement of £54.0m, giving 154% coverage. As at
31 January 2023, available capital was £98.4m against a Solvency Capital Requirement of £45.6m, giving 216% coverage.
The Group’s regulated Insurance Broking business is based in the UK and regulated by the FCA. Due to the nature of the business,
the capital requirements are significantly less than for the Insurance Underwriting business, but the Group is required to comply with
the Adequate Resources requirements of Threshold Condition 2.4 of the FCA Handbook. The Group undertakes a rigorous assessment
against the requirements of this Condition on an annual basis and, as a consequence, calculates and holds an appropriate amount of
capital in respect of the Insurance Broking business. The Minimum Regulatory Capital requirement of this business at 31 January 2024
was £4.4m (2023: £5.7m).
The regulated River Cruise and Travel businesses are required to comply with a main test based on liquidity. The CAA liquidity test
is a requirement to hold at least 70% of advanced customer receipts in cash on the last day of each month. The Group monitors its
compliance with this test on a monthly basis, including forward-looking compliance using budgets and forecasts. As at 31 January 2024
and 31 January 2023, the businesses had sufficient coverage against this covenant.
From time to time, the Group purchases its own shares on the market; the timing of these purchases depends on market prices.
The shares are primarily intended to be used for issuing shares under the Group’s share option programmes. Buy and sell decisions
The Group has granted a number of different equity-based awards to employees and customers that it has determined to be
share-based payments:
a) Share options and Free Shares offer granted at the time of the Initial Public Offering (
IPO
)
On 29 May 2014, nil cost options over 13,132,410 shares were granted to certain Directors and employees with no exercise price and
no service or performance vesting conditions. There are no cash settlement alternatives.
Eligible customers and employees who acquired their shares under the Customer or Employee Offers in the Prospectus received
one bonus share for every 20 shares they acquired and held continuously for one year to 29 May 2015. As these were bonus shares,
there was no exercise price and no cash settlement alternative.
b) Saga Transformation Plan (
STP
)
In July 2022, the Board and shareholders approved the issue of an additional new award called the STP. The STP has a five-year vesting
period and participants receive a 12.5% share in shareholder value (share price plus dividends) created above a £6 per share hurdle
over a five-year performance period commencing from the grant date, subject to continuing employment. For Directors and senior
leaders, the STP will be equity-settled. For other employees, the STP will be settled in cash. There is a cap of £88.0m on the value of
awards that may vest, and the awards have a range of grant dates based on the tranche that each participant falls into.
On 5 July 2022, nil cost options were issued under the STP to certain Directors and other senior employees which vest and become
exercisable on the fifth anniversary of the grant date, subject to continuing employment.
c) RSP
The RSP is a discretionary executive share plan under which the Board may grant options over shares in Saga plc.
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. There are no cash
settlement alternatives.
34 For details of the restatement, please see Notes 2.5, 19a and 28
Financial statements
Notes to the consolidated financial statements
continued
36 Share-based payments
continued
Saga plc
Annual Report and Accounts 2024
176
d) Long-term Incentive Plan (
LTIP
)
The LTIP is a legacy discretionary executive share plan, under which the Board may, within certain limits and subject to applicable
performance conditions, grant options over shares in Saga plc. There are no cash settlement alternatives.
Up to 31 January 2017, these options are 50% linked to a non-market vesting condition, earnings per share, and 50% linked to a market
vesting condition, total shareholder return (
TSR
).
From 1 February 2017 to 31 January 2018, these options were 60% linked to non-market vesting conditions (30% linked to basic
earnings per share and 30% linked to organic earnings per share) and 40% linked to a market vesting condition, TSR.
From 1 February 2018, these options were 60% linked to non-market vesting conditions (30% linked to organic earnings per share and
30% linked to return on capital employed (
ROCE
)) and 40% linked to a market vesting condition, TSR.
From 1 February 2019, these options are 75% linked to non-market vesting conditions (50% linked to operational and strategic
measures and 25% linked to ROCE) and 25% linked to a market vesting condition, TSR.
e) DBP
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.
There are no cash settlement alternatives.
f) Employee Free Shares
On 8 August 2023, 595,791 shares were awarded to eligible employees on the ninth anniversary of the IPO and allocated at nil cost;
these shares become beneficially owned over a three-year period from allocation, subject to continuing service. There are no cash
settlement alternatives.
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid, or payable, by the
recipient on receipt of the option. The options carry neither rights to dividends, nor voting rights. Options may be exercised at any time
from the date of vesting to the date of their expiry. With the exception of share options granted at the time of the IPO, if an employee
ceases to be employed by the Group, the option rights will be forfeited, except in limited circumstances that are approved by the Board
on a case-by-case basis.
The table below summarises the movements in the number of share options outstanding for the Group and their weighted average
exercise price:
Employee | |||||||
IPO options | RSP | LTIP | DBP | STP | Free Shares | Total | |
At 1 February 2023 | 7,320 | 3,851,929 | 63,565 | 710,855 | – | 492,048 | 5,125,717 |
Granted | – | 2,269,377 | – | 376,557 | – | 595,791 | 3,241,725 |
Forfeited | – | (1,621,367) | – | (68,410) | – | (95,686) | (1,785,463) |
Exercised | (4,946) | (206,473) | (31,180) | (81,322) | – | (115,054) | (438,975) |
At 31 January 2024 | 2,374 | 4,293,466 | 32,385 | 937,680 | – | 877,099 | 6,143,004 |
Exercise price | £nil | £nil | £nil | £nil | £nil | £nil | £nil |
Exercisable at 31 January 2024 | 2,374 | 408,268 | 32,385 | 42,360 | – | 249,138 | 734,525 |
Average remaining contractual life | – | 1.5 years | – | 1.4 years | 3.4 years | 1.5 years | 1.5 years |
Average fair value at grant | £27.75 | £1.99 | £7.43 | £2.28 | n/a | £3.38 | £2.27 |
The average fair values at grant date have been restated to reflect the impact of the share consolidation on 13 October 2020.
The weighted average share price at the date of exercise for share options exercised during the year ended 31 January 2024 was £1.33
(2023: £1.48).
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
177
The following information is relevant in the determination of the fair value of options granted during the year under the equity-settled
share-based remuneration schemes operated by the Group.
RSP | DBP | |
Expected life of share option | 3 years | 3 years |
Weighted average share price | £1.75 | £1.11 |
As at 31 January 2024, the Group did not hold any liability in relation to cash-settled share-based remuneration that had vested by the
end of the year.
As only limited historical data for the Group’s share price is available, the Group estimated the Company’s share price volatility as
an average of the volatilities of its TSR comparator group over a historical period commensurate with the expected life of the award
immediately prior to the date of the grant for awards under the RSP, DBP and Employee Free Share scheme.
For awards under the STP scheme, approved in July 2022, a volatility assumption of 31% has been employed, calculated based on
volatility in Saga plc’s historical share price in the five years to 31 December 2019. This time period was selected to strip out the impact
of the COVID-19 pandemic, which has had a significant impact on Saga’s business since the beginning of 2020. The impacts on the share
price of profit warnings in December 2019 and April 2019 have also been excluded from the calculation.
The total amount charged to the income statement in the year ended 31 January 2024 is £3.4m (2023: £3.9m). This has been charged
to administrative and selling expenses.
The Group leases various river cruise ships, offices, warehouses, equipment and vehicles. The contract lengths of the leases vary
considerably and may include extension or termination options. Where it is reasonably certain that an extension option will be triggered
in a contract, lease payments to be made in respect of the option are included in the measurement of the lease liability. Future minimum
lease payments under lease contracts, together with the present values of the net minimum lease payments, are as follows:
2024 | 2023 | |
£m | £m | |
Within one year | 6.9 | 11.5 |
Between one and five years | 16.5 | 15.4 |
After five years | 7.6 | 11.1 |
Total minimum lease payments | 31.0 | 38.0 |
Less amounts representing finance charges | (4.7) | (5.4) |
Present value of minimum lease payments | 26.3 | 32.6 |
As at 31 January 2024, the value of lease liabilities contracted for, but not provided for, in the financial statements in respect of
right-of-use assets amounted to £22.3m (2023: £nil). These lease commitments related to the river cruise vessels, Spirit of the Douro
and Spirit of the Moselle, and an office building.
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 have been adjusted in the prior year, reflecting a
prospective change in estimate as required under IAS 8. For Spirit of the Danube, a similar treatment has been applied. Please refer
b) Commitments
As at 31 January 2024, the capital amount contracted for, but not provided for, in the financial statements in respect of property,
The CAA and ABTA regulate the Group’s River Cruise and Travel businesses. ABTA requires the Group to put in place bonds to provide
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
178
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
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
179
The entities listed below are subsidiaries of the Company or Group. The ordinary equity shares of all subsidiary undertakings are 100%
owned. All subsidiary undertakings are included within the consolidated financial statements. The registered office address for all entities
registered in England is 3 Pancras Square, London, N1C 4AG, United Kingdom. The registered office address of Acromas Insurance
Company Limited is 57/63 Line Wall Road, Gibraltar. The registered office address of Saga Cruises GmbH is Industriegebiet Süd, 26871,
Papenburg, Niedersachsen, Germany. The registered office address of Saffron Maritime Limited is Aspire Corporate Services Limited,
PO Box 191, Elizabeth House, Ruettes Brayes, St Peter Port, Guernsey, GY1 4HW.
Company name | Country of registration | Nature of business |
Saga Personal Finance Limited | England | Delivery of regulated investment products |
Saga Services Limited | England | Regulated Insurance broking |
Acromas Insurance Company Limited | Gibraltar | Insurance underwriting |
CHMC Limited 35 | England | Motor accident management |
PEC Services Limited 35 | England | Repairer of automotive vehicles |
ST&H Limited | England | Tour operating |
Saga Travel Group (UK) Limited | England | Tour operating |
Saga Travel Group Limited | England | Tour operating |
Titan Transport Limited | England | Tour operating |
Saga Cruises Limited | England | Cruising |
Saga Cruises V Limited | England | Cruising |
Saga Cruises VI Limited | England | Cruising |
Saga Cruises GmbH | Germany | Cruising |
Saga Crewing Services Limited 35 | England | Cruising |
Saffron Maritime Limited | Guernsey | Cruising |
CustomerKNECT Limited 35 | England | Mailing house |
Saga Mid Co Limited | England | Debt service provider |
Saga Publishing Limited 35 | England | Publishing |
Saga Membership Limited 35 | England | Customer loyalty scheme |
CHMC Holdings Limited | England | Dormant holding company |
ST&H Group Limited | England | Holding company |
Saga Leisure Limited 35 | England | Holding company |
Saga Group Limited | England | Provision of administrative function for central costs |
Confident Services Limited | England | Dormant company |
Saga Radio (North West) Limited | England | Dormant company |
The Big Window Consulting Limited 35 | England | Research and insight analysis |
(Notes 13b and 13c) |
In addition to the above, the directors consider that, under the terms of the contractual arrangements in place, Saga plc has control over
the Saga EBT. The results and net assets of the EBT have, therefore, been included in the Group consolidation. The registered office of the
EBT is 26 New Street, St Helier, Jersey JE2 3RA.
35 These subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006 for the year ended 31 January 2024. As required,
Saga plc, the ultimate parent undertaking and controlling party of the Group, guarantees all outstanding liabilities to which these subsidiary companies are subject
at the end of the financial year, until they are satisfied in full. This is in accordance with Section 479C of the Companies Act 2006. The guarantee is enforceable
Financial statements
Notes to the consolidated financial statements
continued
Saga plc
Annual Report and Accounts 2024
180
As set out in Note 30, 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,
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 30 and 40 above, in addition to a reduction in the notice period
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
181
Balance sheet
2024 | 2023 | ||
Note | £m | £m | |
Fixed assets | |||
Investment in subsidiaries | 2 | 167.3 | 167.3 |
Current assets | |||
Debtors – amounts falling due after more than one year | 3 | 505.4 | 521.3 |
Debtors – amounts falling due within one year | 3 | 2.2 | 3.3 |
507.6 | 524.6 | ||
Creditors – amounts falling due within one year | 4 | (5.8) | (2.9) |
Net current assets | 501.8 | 521.7 | |
Creditors – amounts falling due after more than one year | 5 | (398.2) | (397.2) |
Net assets | 270.9 | 291.8 | |
Capital and reserves | |||
Called up share capital | 6 | 21.3 | 21.1 |
Share premium account | 648.3 | 648.3 | |
Own shares held reserve | (1.2) | – | |
Retained deficit | (407.6) | (386.6) | |
Share-based payment reserve | 10.1 | 9.0 | |
Total shareholders’ funds | 270.9 | 291.8 |
The Company has not presented its own profit and loss account as permitted by Section 408(3) of the Companies Act 2006 (the
Act
).
The loss included in the financial statements of the Company, determined in accordance with the Act, was £22.0m (2023: £407.1m loss).
Company number: 08804263
The Notes on pages 183-186 form an integral part of these financial statements.
Signed for and on behalf of the Board on 16 April 2024 by
M Hazell
M Watkins
Group Chief Executive Officer
Group Chief Financial Officer
Financial statements
Saga plc
Annual Report and Accounts 2024
182
Company financial statements of Saga plc
Statement of changes in equity
Called up | Share | Retained | Share-based | |||
share | premium | Own shares | earnings/ | payment | Total | |
capital | account | held reserve | (deficit) | reserve | equity | |
£m | £m | £m | £m | £m | £m | |
At 1 February 2022 | 21.1 | 648.3 | – | 18.1 | 7.5 | 695.0 |
Loss for the financial year | – | – | – | (407.1) | – | (407.1) |
Share-based payment charge | – | – | – | – | 3.9 | 3.9 |
Transfer upon vesting of share options | – | – | – | 2.4 | (2.4) | – |
At 31 January 2023 | 21.1 | 648.3 | – | (386.6) | 9.0 | 291.8 |
Loss for the financial year | – | – | – | (22.0) | – | (22.0) |
Issue of share capital (Note 6) | 0.2 | – | – | – | – | 0.2 |
Share-based payment charge | – | – | – | – | 2.9 | 2.9 |
Own shares transferred in the year | – | – | (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) | (407.6) | 10.1 | 270.9 |
The Notes on pages 183-186 form an integral part of these financial statements.
Notes to the Company financial statements
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
183
1.1 Accounting policies
a) Accounting convention
These financial statements were prepared in accordance with
Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (
FRS 101
).
In preparing these financial statements, the Company applies
the recognition, measurement and disclosure requirements
of UK-adopted international accounting standards, but makes
amendments where necessary in order to comply with Companies
Act 2006 (the
Act
) and has set out below where advantage of the
FRS 101 disclosure exemptions has been taken.
The financial statements are prepared under the historical cost
convention, as modified by derivative financial assets and financial
liabilities measured at fair value through profit or loss and, in
accordance with the Act, are prepared on a going concern basis
(please refer to Note 2.1 of the Saga plc consolidated accounts
on page 110 for an assessment of the going concern basis for the
Group and the Company).
The Company’s financial statements are presented in sterling
and all values are rounded to the nearest hundred thousand (£m),
except when otherwise indicated.
The accounting policies which follow set out those policies which
apply in preparing the financial statements for the year ended
31 January 2024.
The Company has taken advantage of the following disclosure
exemptions under FRS 101:
The requirements of International Financial Reporting
Standard (
IFRS
) 7 ‘Financial Instruments: Disclosures’.
The requirements of paragraphs 10(d), 10(f), 16, 38A,
38B-D, 40A-D, 111 and 134-136 of International Accounting
Standard (
IAS
) 1 ‘Presentation of Financial Statements’.
The requirements of IAS 7 ‘Statement of Cash Flows’.
The requirements of paragraphs 30 and 31 of IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates and Errors’.
The requirements of paragraphs 17 and 18A of IAS 24 ‘Related
Party Disclosures’.
The requirements in IAS 24 ‘Related Party Disclosures’ to
disclose related party transactions entered into between two
or more members of a group, provided that any subsidiary which
is a party to the transaction is wholly owned by such a member.
The requirements of paragraphs 45(b) and 46-52 of IFRS 2
‘Share-based Payment’.
Investments in subsidiaries are accounted for at cost less a
provision for impairment and are reviewed for impairment when
events or changes in circumstances indicate the carrying value
c) Debtors
Trade and other debtors are initially recognised at fair value and,
where the time value of money is material, subsequently measured
at amortised cost using the effective interest rate (
EIR
) method.
Provision for impairment is made using the simplified approach
set out in IFRS 9, whereby no credit loss allowance is recognised
on initial recognition and then, at each subsequent reporting date,
the loss allowance will be the present value of the expected cash
flow shortfalls over the remaining life of the debtors (i.e. lifetime
expected credit losses (
ECLs
)). Balances are written off when the
probability of recovery is assessed as being remote.
Amounts due from Group undertakings are classified as debtors.
They have no fixed date of payment and are payable on demand.
The amounts due from Group undertakings are disclosed at
amortised cost.
d) Deferred tax
Deferred tax is provided on temporary differences between the
tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available, against which
the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses, can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and is reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have
been enacted, or substantively enacted, at the reporting date.
Deferred tax is charged, or credited, in the income statement,
except when it relates to items charged or credited in other
comprehensive income (
OCI
), in which case the deferred tax is
dealt with in OCI.
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.
e) Share-based payments
The Company provides benefits to employees (including Directors)
of Saga plc and its subsidiary undertakings, in the form of
share-based payment transactions, whereby employees
render services as consideration for equity instruments
(equity-settled transactions).
The cost of equity-settled transactions is measured by reference
to the fair value on the grant date and is recognised as an expense
over the relevant vesting period, ending on the date on which the
employee becomes fully entitled to the award.
Fair values of share-based payment transactions are calculated
using market price and Monte Carlo modelling techniques.
In valuing equity-settled transactions, assessment is made
of any vesting conditions to categorise these into market
performance conditions, non-market performance conditions
and service conditions.
Where the equity-settled transactions have market performance
conditions (that is, performance which is directly or indirectly
linked to the share price), the fair value of the award is assessed
at the time of grant and is not changed, regardless of the actual
level of vesting achieved, except where the employee ceases
to be employed prior to the vesting date.
For service conditions and non-market performance conditions,
the fair value of the award is assessed at the time of grant and
is reassessed at each reporting date to reflect updated
expectations for the level of vesting. No expense is recognised
for awards that ultimately do not vest.
Financial statements
Notes to the Company financial statements
continued
1.1 Accounting policies
continued
Saga plc
Annual Report and Accounts 2024
184
At each reporting date prior to vesting, the cumulative expense
is calculated, representing the extent to which the vesting period
has expired and, in the case of non-market conditions, the best
estimate of the number of equity instruments that will ultimately
vest or, in the case of instruments subject to market conditions,
the fair value on grant adjusted only for leavers. The movement
in the cumulative expense since the previous reporting date is
recognised in the income statement, with the corresponding
increase in share-based payments reserve.
Upon vesting of an equity instrument, the cumulative cost in the
share-based payments reserve is reclassified to reserves.
f) Equity
The Group has ordinary shares that are classified as equity.
Incremental external costs that are directly attributable to the
issue of these shares are recognised in equity, net of tax.
g) Own shares
Own shares represent the shares of the Company that are held by
an Employee Benefit Trust (
EBT
). Own shares are recorded at cost
and deducted from equity. The Directors consider that, under the
terms of the contractual arrangements in place, Saga plc has
control over the EBT. The results and net assets of the EBT have,
therefore, been included in the Group consolidation.
h) Financial instruments
i) Financial assets
On initial recognition, a financial asset is classified as either amortised
cost, fair value through other comprehensive income (
FVOCI
) or
fair value through profit and loss (
FVTPL
). The classification of
financial assets is based on the business model in which a financial
asset is managed, and its contractual cash flow characteristics.
The Company measures all financial assets at fair value at each
reporting date, other than those instruments measured at
amortised cost.
The Company’s financial assets at amortised cost include amounts
due from Group undertakings. The Company does not hold any
financial assets classified as FVOCI or FVTPL.
Financial assets at amortised cost
Initial recognition and measurement
A financial asset is classified at amortised cost if it meets both of the
following conditions and is not elected to be designated as FVTPL:
It is held within a business model whose objective is to hold
assets to collect contractual cash flows.
Its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal
amount outstanding.
Subsequent measurement
These assets are subsequently measured at amortised cost using
the EIR method. The amortised cost is reduced by impairment
losses (see (ii) below). Impairment losses are recognised in profit
or loss as they are incurred. Any gain or loss on derecognition is
recognised in profit or loss immediately.
Derecognition
A financial asset is derecognised when the rights to receive
cash flows from the asset have expired or when the Company
has transferred substantially all the risks and rewards relating
to the asset to a third party.
ii) Impairment of financial assets
The ECL impairment model applies to financial assets measured
at amortised cost and debt investments at FVOCI.
The Company measures loss allowances at an amount equal to
12-month ECLs, except for trade receivables and contract assets
that result from transactions within the scope of IFRS 15.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Company considers reasonable and
supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Company’s
historical experience and informed credit assessment and
including forward-looking information.
Measurement of ECLs
ECLs are measured as a probability-weighted estimate of credit
losses. Credit losses are measured as the probability of default
in conjunction with the present value of the Group’s exposure.
Loss allowances for ECLs on financial assets measured at
amortised cost are deducted from the gross carrying amount of
the assets, with a corresponding charge to the income statement.
iii) Financial liabilities
Initial recognition and measurement
All financial liabilities are classified as financial liabilities at
amortised cost on initial recognition.
All financial liabilities are recognised initially at fair value and,
in the case of loans and borrowings, net of directly attributable
transaction costs.
The Company’s financial liabilities comprise loans and borrowings.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings
and other payables are subsequently measured at amortised cost
using the EIR method. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is
included in finance costs in the income statement.
Derecognition
A financial liability is derecognised when the obligation under the
liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and
the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the income statement.
i) Audit remuneration
Amounts receivable by the Company’s auditor and its associates
in respect of services to the Company and its associates, other
than the audit of the Company’s financial statements, have not
been disclosed as the information is required instead to be disclosed
on a consolidated basis in the consolidated financial statements.
Strategic Report
Governance
Financial statements
Additional information
Saga plc
Annual Report and Accounts 2024
185
1.2 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires the Company to select accounting policies and make estimates and assumptions
that affect items reported in the primary Company financial statements and Notes to the Company financial statements.
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 Company considers susceptible to changes in critical estimates and assumptions together
with the relevant accounting policy.
Acc. policy | Items involving estimation | Sources of estimation uncertainty |
1.1b | Investment in subsidiaries | The Company determines whether investment in subsidiaries needs to be impaired when |
impairment testing | indicators of impairment exist. This requires an estimation of the value-in-use of the subsidiaries | |
owned by the Company. The value-in-use calculation requires the Company to estimate the future | ||
cash flows expected to arise from the subsidiaries, discounted at a suitably risk-adjusted rate in | ||
order to calculate present value. | ||
Sensitivity analysis has been undertaken to determine the effect of changing the discount rate, | ||
the terminal value and earnings before interest, tax, depreciation and amortisation ( EBITDA ) | ||
multiple on the present value calculation, which is shown in Note 2 below. |
2 Investment in subsidiaries
£m | |
Cost | |
At 1 February 2022 | 4,132.7 |
At 31 January 2023 and 31 January 2024 | 4,132.7 |
Impairment | |
At 1 February 2022 | 3,580.4 |
Charge in the year | 385.0 |
At 31 January 2023 and 31 January 2024 | 3,965.4 |
Net book value | |
At 31 January 2024 | 167.3 |
At 31 January 2023 | 167.3 |
See Note 39 to the consolidated financial statements for a list of the Company’s investments.
The net assets of the Company were in excess of its market capitalisation at 31 January 2024, thus constituting an indicator of
impairment. An impairment assessment was, therefore, performed in which the recoverable amount of the investment was compared
to its carrying value.
The recoverable amount of the Company’s investment in subsidiaries has been determined based on a sum-of-the-parts valuation,
by deriving a value-in-use for each of the Group’s businesses, using discounted cash flow projections from the Group’s Board-approved
five-year plan to 2028/29 for certain parts of the business, and EBITDA multiples to estimate the present value of future dividend
streams for other subsidiaries.
For the discounted cash flow projections, 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% (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 relevant
to each of the segments. As at 31 January 2024, the range of pre-tax discount rates used was 13.0% to 15.3% (2023: 13.0% to 14.7%).
As per IAS 36.44, incremental cash flows directly attributable to growth initiatives not yet enacted at the balance sheet date have been
removed for the purpose of the value-in-use calculation.
In the current year, the recoverable amount when compared against the carrying value of the investment in subsidiaries resulted in
headroom of £336.0m in a base scenario. Management, therefore, concluded that it is not necessary to impair the investment in
subsidiaries, nor would it be appropriate to reverse any impairment already recognised in previous years at this point.
In the prior year, the recoverable amount when compared against the carrying value of the investment in subsidiaries resulted in a deficit
of £385.0m, therefore, management considered it necessary to impair the investment in subsidiaries balance to its value-in-use of
£167.3m. An impairment charge of £385.0m was recognised in the year to 31 January 2023.
Financial statements
Notes to the Company financial statements
continued
2 Investment in subsidiaries
continued
Saga plc
Annual Report and Accounts 2024
186
The headroom calculated is most sensitive to the EBITDA multiple, the discount rate, and the terminal growth rate assumed. A quantitative
sensitivity analysis for each of these as at 31 January 2024 and its impact on the headroom/(deficit) against the carrying value of
investment in subsidiaries is as follows:
EBITDA multiple | Pre-tax discount rate | Terminal growth rate | ||||
+1x | –1x | +1.0ppt | –1.0ppt | +1.0ppt | –1.0ppt | |
£m | £m | £m | £m | £m | £m | |
Impact | 98.4 | (98.4) | (32.5) | 38.6 | 32.6 | (27.1) |
3 Debtors
2024 | 2023 | |
£m | £m | |
Amounts falling due after more than one year | ||
Amounts due from Group undertakings | 505.4 | 521.3 |
505.4 | 521.3 |
2024 | 2023 | |
£m | £m | |
Amounts falling due within one year | ||
Deferred tax asset | 2.2 | 2.0 |
Other debtors | – | 1.3 |
2.2 | 3.3 |
For amounts due from Group undertakings, the ECLs are considered to be immaterial.
4 Creditors – amounts falling due in less than one year
2024 | 2023 | |
£m | £m | |
Other creditors | 4.1 | 1.1 |
Accrued interest and fees payable | 1.7 | 1.8 |
5.8 | 2.9 |
5 Creditors – amounts falling due in more than one year
2024 | 2023 | |
£m | £m | |
Bonds | 400.0 | 400.0 |
Unamortised issue costs | (1.8) | (2.8) |
398.2 | 397.2 |
Please refer to Note 30 of the Saga plc consolidated accounts on pages 170-172 for further details relating to the bonds.
6 Called up share capital
| Ordinary shares | |||
Nominal | |||
value | Value | ||
Number | £ | £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 EBT to satisfy
employee incentive arrangements. The newly issued shares rank pari passu with existing Saga shares.
7 Commitments
The Company has provided guarantees for the Group’s bonds, ship debt, Revolving Credit Facility and bank overdraft (please refer
Saga plc
Annual Report and Accounts 2024
187
Strategic Report
Additional information
Governance
Financial statements
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 30.
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 19.
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.
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 30. Underlying Profit Before Tax is
reconciled to statutory loss before tax within the Group Chief
Financial Officer’s Review on page 19.
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 31 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 pages 24-25.
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 pages 24-25.
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
Saga plc
Annual Report and Accounts 2024
188
Additional information
Alternative Performance Measures Glossary
continued
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 12 to the accounts on page 139.
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.
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 25 to the accounts on
page 161.
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 30.
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 33.
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 33.
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
Saga plc
Annual Report and Accounts 2024
189
Strategic Report
Additional information
Governance
Financial statements
ABTA (Association of British Travel Agents)
the trade association
for tour operators and travel agents in the UK, of which the
Group’s Cruise and Travel businesses are members
Act
the UK Companies Act 2006, applicable to Saga, as amended
from time to time
Add-on
an ancillary insurance product that is actively marketed
and sold in addition to a core policy
AGM
(
Annual General Meeting
) to be held at 11.00am on
25 June 2024 at Numis Securities Limited, 45 Gresham Street,
London EC2V 7BF
AICL (Acromas Insurance Company Limited)
the Group’s
Insurance Underwriting business
Annual Bonus Plan
an incentive provided to the Executive
Directors, linked to achievement in delivering goals that are closely
aligned with the Group’s strategy
Annual policy
a 12-month insurance policy, sold by the Group’s
Insurance Broking business, with no option for the customer to
fix the premium at renewal
APMs (Alternative Performance Measures)
a series of measures
which are not required, or commonly reported, under accounting
standards but are used by the Group to help users better
understand the financial performance and position of the business
ATOL (Air Travel Organiser’s Licencing)
government-run
financial protection scheme operated by the Civil Aviation
Authority, the regulators of the Group’s River Cruise and
Travel businesses
Board
Saga plc Board of Directors
CAA (Civil Aviation Authority)
one of the bodies that regulates
the Group’s River Cruise and Travel businesses
CDSO (Chief Data and Strategy Officer)
Michael O’Donohue
for the 2024/24 financial year
CEO (Chief Executive Officer)
Euan Sutherland until
28 November 2023, followed by Mike Hazell for the remainder
of the 2023/24 financial year
CFO (Chief Financial Officer)
James Quin until 9 October 2023,
followed by Mike Hazell until 28 November 2023, and Mark
Watkins for the remainder of the 2023/24 financial year
CGU (cash generating unit)
smallest identifiable group of assets
that generates cash inflows that are largely independent of the
cash inflows from other assets or groups of assets
CII (Carbon Intensity Indicator)
new regulations, applicable to
the Group’s Ocean Cruise business, introduced during 2023/24,
enabling the cruise industry to meet their emission targets
CIIA (Chartered Institute of Internal Auditors)
body
representing internal auditors in the UK
Clawback
a requirement, within the Group’s Remuneration Policy,
for executive directors to return remuneration or benefits to a
company in special circumstances
Code
the UK Corporate Governance Code published by the
UK Financial Reporting Council setting out guidance in the form
of principles and provisions to address the principal aspects of
corporate governance
Company
Saga plc
Contract boundary
the measurement of the Group’s insurance
contracts issued, and reinsurance contracts, which reflects all
future cash flows arising from insurance coverage within the
boundary of each contract
COR (combined operating ratio)
the ratio of the claims costs
and expenses incurred to underwrite insurance (numerator),
to the revenue earned by the Group’s Insurance Underwriting
business (denominator) in a given period. Can otherwise be
calculated as the sum of the loss ratio and expense ratio
CPO (Chief People Officer)
Roisin Mackenzie for the 2023/24
financial year
CustomerKNECT
the Group’s in-house mailing and printing
business, formerly known as MetroMail
DBP (Deferred Bonus Plan)
reward scheme, within the Group’s
Remuneration Policy, used to incentivise colleagues over the
longer term, ensuring alignment with Company goals
DE&I (diversity, equity and inclusion)
the agenda under which
the Group is committed to creating an inclusive culture where
all colleagues can bring their full and authentic selves to work
DPA (Data Protection Act)
a UK law, applicable to the Group,
that regulates the use and protection of personal data
DTRs (Disclosure and Transparency Rules)
rules published
by the UK Financial Conduct Authority relating to the disclosure
of information by a company, such as Saga plc, listed in the UK
Earnings per share
represents underlying shareholder value
generated in a given period
EBITDA
earnings before interest, tax, depreciation and amortisation
of acquired intangibles, non-trading costs and impairments
EBT (Employee Benefit Trust)
a discretionary trust set up by the
Group to hold shares on behalf of employees
ECL (expected credit loss)
probability-weighted estimate of
credit losses over the life of a financial instrument
EEXI (Energy Efficiency eXisting ship Index)
benchmark used to
indicate a ship’s energy efficiency, in which the Group’s ocean ships
achieve an ‘A’ rating
EIR (effective interest rate)
the rate that exactly discounts the
Group’s estimated future cash flows to the gross carrying amount
of a financial asset or amortised cost of a financial liability
ENIDS (events not in data)
provision applied to the Group’s
Insurance Underwriting business under International Financial
Reporting Standard 17 ‘Insurance Contracts’
EQ (Equiniti)
the Group’s share registrar and first point of contact
for shareholding-related enquiries
Equity-settled transactions
instances where services received
from colleagues are settled in the form of shares, or share options,
in the Group
Escrow Accounting
an arrangement with the Civil Aviation
Authority whereby the Group holds 70% of customer monies
received in advance, in relation to ATOL licensable bookings,
until they return from their holiday
ESEF (European Single Electronic Format)
the electronic reporting
format that the Group must use to prepare annual financial reports
ESG (Environmental, Social and Governance)
central factors
in measuring the sustainability and societal impact of the Group
ESG Champion
Non-Executive Director responsible for ensuring
that the Board consider ESG strategy, as part of decision-making,
and promoting ESG principles. Eva Eisenschimmel until
31 December 2023, then Gemma Godfrey for the remainder
of the 2023/24 financial year
Glossary
Saga plc
Annual Report and Accounts 2024
190
Additional information
Glossary
continued
EU ETS (European Union Emissions Trading System)
a
greenhouse gas emission trading scheme intended to measure
emissions within the European Union
Executive Director
of Saga plc (unless otherwise stated)
Expense ratio
the ratio of expenses incurred to underwrite
insurance (numerator) to the revenue earned by the Group’s
Insurance Underwriting business (denominator) in a given period
Experienced Voices
a panel of our customers who participate
in research for the Group
FAME (fatty acid methyl ester)
a biofuel mix which was trialled
in our ocean cruise ship, Spirit of Adventure, with the aim of
reducing emissions
FCA (Financial Conduct Authority)
the independent UK body
that regulates the financial services industry, including the Group’s
Insurance Broking and Money businesses
Free Shares
the gift of shares to colleagues to recognise their
contributions towards the Group’s performance
FRS (Financial Reporting Standard)
accounting standards issued
by the International Financial Reporting Standards Foundation
FSC (Financial Services Commission)
regulator for the non-bank
financial services sector and global business
FTSE Women Leaders Review
an independent framework,
which the Group reports against, that sets recommendations to
improve the representation of women in leadership roles across
the UK’s largest companies
Fulfilment cash flows
probability-weighted estimate of future
cash inflows and outflows that will arise as the Group fulfils an
insurance contract, that includes allowance for discounting and
an explicit adjustment for non-financial risk
FRC (Financial Reporting Council)
an independent body,
responsible for regulating auditors, accountants and actuaries
in the United Kingdom
FVOCI (fair value through other comprehensive income)
one of
three classification categories for the Group’s financial assets under
International Financial Reporting Standard 9 ‘Financial Instruments’
FVTPL (fair value through profit and loss)
one of three
classification categories for the Group’s financial assets under
International Financial Reporting Standard 9 ‘Financial Instruments’
GAAP (Generally Accepted Accounting Principles)
a common
set of accounting principles, standards and procedures issued
by the Financial Accounting Standards Board
GBP (Great British Pounds)
the currency of the Group’s
consolidated financial statements
GDPR (General Data Protection Regulation)
data protection
regulation introduced in 2018 that applies to most UK businesses,
including the Group
GFSC (Gibraltar Financial Services Commission)
independent
Gibraltar body that regulates the Group’s Insurance
Underwriting business
GHG (greenhouse gas)
a type of gas for which Saga provides
annual reporting on its emissions
GIPP (General Insurance Pricing Practices)
a review into pricing
practices within the UK insurance market conducted by the
Financial Conduct Authority
Gross premium
the premium that the Group charges to a
customer in respect of insurance cover
Group
the Saga plc group
Host insurance contract
the total cash flows arising from all
insurance contracts of the Group, considered as a whole
Hurdle
the level at which the Saga Transformation Plan begins to
reward colleagues, currently set at £6.00, including share price
and dividends
IAA (Internal Audit and Assurance)
the Group’s Internal Audit
and Assurance function
IAS (International Accounting Standards)
accounting standards
issued by the International Accounting Standards Committee
IBNR (incurred but not reported)
a claims reserve provided to
meet the estimated cost of claims that have occurred, but have
not yet been reported to the insurer
IEA (International Energy Agency)
global organisation which
provides policy recommendations, analysis and data on the
energy sector
IFRS (International Financial Reporting Standards)
accounting
standards issued by the International Accounting Standards Board
IMO (International Maritime Organization)
a specialised agency
of the United Nations responsible for regulating shipping
Insurance acquisition cash flows
acquisition costs arising from
the selling or renewing of insurance policies underwritten by
the Group
IPCC (Intergovernmental Panel on Climate Change)
the United
Nations body for assessing the science related to climate change
IPO (Initial Public Offering)
the first sale of shares by a previously
unlisted company to investors on a securities exchange
IPT (insurance premium tax)
tax payable on general insurance
premiums in the UK
IR (Investor Relations)
the team responsible for facilitating
communication between the Group and its investors
ISA (individual savings account)
a type of savings account offered
to customers through the Group’s Money business, Saga Personal
Finance Limited
JFSC (Jersey Financial Services Commission)
the regulatory
body for financial services in Jersey which regulates our Insurance
Broking and Underwriting businesses
KPI (key performance indicator)
quantifiable measures that the
Group uses to evaluate performance
KPMG (KPMG LLP)
the Group’s independent auditor, appointed
for the financial year ended 31 January 2018
Leverage ratio
the ratio of Adjusted Net Debt to Adjusted
Trading EBITDA
Liability for incurred claims
the Group’s obligation to investigate
and pay valid claims for insured events that have already occurred,
including events that have occurred but for which claims have not
yet been reported, and other incurred insurance expenses
Liability for remaining coverage
the Group’s obligation to
investigate and pay valid claims under existing insurance contracts
for insured events that have not yet occurred
Load factor
the booked proportion of the total capacity across
the Group’s two ocean ships, calculated by dividing the number
of berths booked by the total berths available
Loss ratio
the ratio of the claims costs (numerator) to the net
earned premium (denominator) in a given period
LR (Listing Rules)
a set of mandatory regulations of the
UK Financial Conduct Authority applicable to a company listed
on the London Stock Exchange
Saga plc
Annual Report and Accounts 2024
191
Strategic Report
Additional information
Governance
Financial statements
LSE (London Stock Exchange)
the stock exchange upon which
Saga plc is listed
LTIP (Long-Term Incentive Plan)
legacy reward scheme used to
incentivise colleagues over the longer term, ensuring alignment
with Company goals
Malus
an arrangement that permits the forfeiture of unvested
remuneration awards in circumstances the Company
considers appropriate
Management Report
the Directors’ Report, together with the
Strategic Report within this document
Master Trust
the Group’s defined contribution pension scheme,
operated by Aviva
MMQ (middle market quotation)
the average of the best buying
and selling prices quoted by market makers taken at the close of
the market each day
MSCI (Morgan Stanley Capital International)
a leading provider
of investment decision-making products with a focus on ESG and
climate analysis tools
NED (Non-Executive Director)
of Saga plc (unless otherwise stated)
Net premium
the component of gross premium that is charged
by the Group’s Insurance Underwriter for each insurance claim
New business
new insurance policies, sold by the Group, to
customers that do not have an existing policy
OCI (other comprehensive income)
revenues, expenses, gains
and losses under International Financial Reporting Standards that
are excluded from the income statement
Operating Board
the first layer of the Group’s management below
Board level
PAA (premium allocation approach)
International Financial
Reporting Standard 17’s simplified accounting approach.
Insurance and reinsurance contracts are eligible if they have
a coverage period of one year or less or, if at initial recognition,
the measurement of the liability for remaining coverage is not
expected to differ materially to that under the general
measurement model
Parker Review
an independent framework of business
professionals who aim to encourage greater diversity of UK
boards by 2024, for which the Group meets the recommendation
PBT (profit before tax)
one of the Group’s primary key
performance indicators
People Champion
Non-Executive Director responsible for
ensuring colleagues’ views and opinions are communicated to
the Board. Eva Eisenschimmel until 31 December 2023, then
Julie Hopes for the remainder of the 2023/24 financial year
People Committee
a monthly forum, chaired by the Chief People
Officer and attended by Lead Colleague Ambassadors from across
the Group, allowing colleagues to share their thoughts and views
Per diem
the total amount of Cruise revenue earned per
passenger per day
PMI (private medical insurance)
one of the products offered
within the Group’s Insurance Broking business
Policies in force
the number of core insurance policies in force
at any given time
Policy
the Saga plc Remuneration Policy, as approved by
shareholders at the 2022 Annual General Meeting
PPO (periodic payment order)
a court order prescribing
settlement of an insurance claim through regular payments
PRUs (principal risks and uncertainties)
the most significant
risks threatening the Group
PwC
PricewaterhouseCoopers International Limited
RCF (Revolving Credit Facility)
the facility that the Group has
in place with its lending banks, allowing drawdown of funds up
to £50.0m
Real living wage
a pay rate that is independently calculated,
based on the cost of living and is typically higher than the national
minimum wage
Reinsurance
contractual arrangements where an insurer
transfers part, or all, of the insurance risk written to another
insurer, in exchange for a share of the customer premium
Relationship Agreement
agreement that regulates the
relationship between the Group and Roger De Haan
Renewals
relates to an insurance policy that has been renewed
by an existing customer
Risk adjustment
one of the components for measuring the liability
for incurred claims under International Financial Reporting
Standard 17, being an explicit margin above the expected future
cash flows that represents the compensation required for bearing
non-financial uncertainty
ROCE (return on capital employed)
a financial ratio used as a
performance condition under the Group’s legacy long-term
incentive plan
RSP (Restricted Share Plan)
share scheme, and corresponding
share awards used to incentivise colleagues over the longer term,
ensuring alignment with Company goals
S172(1)
Section 172(1)(a)-(f) of the Companies Act 2006
Saga Cruise
Saga Cruises Limited, Saga Cruises V Limited,
Saga Cruises VI Limited, Saga Cruises GmbH, Saga Crewing
Services Limited, Saffron Maritime Limited and ST&H Limited
Saga Insurance
Saga Services Limited, Acromas Insurance
Company Limited, CHMC Holdings Limited, CHMC Limited and
PEC Services Limited
Saga Money
Saga Personal Finance Limited
Saga Publishing
Saga Publishing Limited
Saga Travel
Saga Travel Group Limited, Saga Travel Group (UK)
Limited and Titan Transport Limited
SBTi (Science Based Targets initiative)
a global platform that
helps companies set and validate science-based greenhouse gas
emissions reduction targets
Scope 3 emissions
greenhouse gas emissions present in the
value chain which are not directly controlled by the Group
SDGs (Sustainable Development Goals)
a series of goals
adopted by the United Nations as a universal call to action to end
poverty, protect the planet and ensure that, by 2030, all people
enjoy peace and prosperity
Senior Managers and Certification Regime
a financial services
regulation in the UK, designed to impose personal accountability
on senior managers in Finance and Insurance
Shareholder Information
annual reports, notices of shareholder
meetings and other documentation that Saga is required to send
to shareholders
Shareholder Reference
a unique reference number issued to
shareholders of Saga plc
Saga plc
Annual Report and Accounts 2024
192
Additional information
Glossary
continued
Shareview Portfolio
an online portal, accessed via
www.sagashareholder.co.uk that allows shareholders to manage
all aspects of their shareholding in Saga plc
SID (Senior Independent Director)
Peter Bazalgette for the
2023/24 financial year
SIP (Share Incentive Plan)
a plan available to all colleagues,
allowing them to purchase shares in Saga plc through a monthly
payroll deduction
SLT (Senior Leadership Team)
the second layer of the Group’s
management below Board level
Solvency capital/Solvency II
insurance regulations designed
to harmonise European Union insurance regulation. Primarily
this concerns the amount of capital that European insurance
companies must hold under a measure of capital and risk
SONIA (Sterling Overnight Index Average)
a replacement for
the London inter-bank offered rate, introduced in the UK in 2021
Speak Up Champion
the Non-Executive Director, responsible for
the Group’s Speak Up Policy, being Gareth Hoskin for the 2023/24
financial year
SPF (Saga Personal Finance)
the Group’s Personal Finance
Business, known as Saga Money
SSL (Saga Services Limited)
the Group’s Insurance
Broking Business
SSP (Shared Socio-economic Pathway)
climate change
scenarios of projected socio-economic global changes up to
2100 as defined in the IPCC Sixth Assessment Report on
climate change in 2021
STP (Saga Transformation Plan)
a long-term incentive, as part
of the Group’s Remuneration Policy, for participants to receive
a portion of the value created above a stretching hurdle over a
five-year period
STP Hurdle
a minimum threshold of £6.00 of shareholder value
which must be met for colleagues to be eligible for reward under
the Saga Transformation Plan
STP Pool
the maximum number of share awards which may vest
under the Saga Transformation Plan, being 12.5% of the value
created above £6.00 of shareholder value
Street pricing adjustment
any adjustment to the net premium
of an insurance policy that is applied during the broking service
Subsidiaries
entities controlled by the Group, which form Saga
Cruise, Saga Travel, Saga Insurance, Saga Money, Saga Publishing,
Central Costs and CustomerKNECT
Supplier Relationship Management
a systematic approach for
developing and managing relationships with third-party suppliers
Supplier Risk Management
sets out the approach to third-party
risk management including the identification, management and
reporting of risk
Swaps
fixed price contracts used by the Group to manage its
exposure to fuel prices
TCFD (Task Force on Climate-Related Financial Disclosures)
part of the regulatory framework introduced by the Financial
Stability Board to improve, and increase, reporting on
climate-related financial information
tCO
2
e
tonnes of carbon dioxide equivalent
Teneo (Teneo People Advisory)
third-party independent
search agency
Termination Date
the date of cessation of employment for
Executive Directors. For Euan Sutherland, former Group
Chief Financial Officer, 31 January 2024 and for James Quin,
Former Group Chief Financial Officer, 30 April 2024
the Big Window
The Big Window Consulting Limited, a specialist
research and insight business focused on the ageing process
Three-year fixed-price policy
an insurance policy, provided by
the Group, with the option for the customer to fix the premium
for three years
tNPS (transactional net promoter score)
represents the
willingness of customers to recommend the Group’s products
and services to others following a recent transaction
Trust (The Saga Employee Benefit Trust)
trust established to
hold assets to provide benefits for employees
Trust Accounting
a historical arrangement, with the Civil Aviation
Authority, whereby 100% of customer monies received in
advance, in relation to ATOL licensable bookings, were held in
trust until after they returned from their holiday
Trust Fund
property, including, inter-alia money and ordinary
shares of the Company, held in trust in favour or for the benefit
of colleagues of the Saga Group
TSR (total shareholder return)
the theoretical growth in value
of a shareholding over a period, by reference to the beginning and
ending share price, assuming that dividends, including special
dividends, are reinvested to purchase additional units of the equity
UMAS
a university-based commercial energy and environmental
advisory service to the shipping sector
VaR (Value at Risk)
a probability-based estimate of the risk of
loss in relation to the Group’s portfolio of insurance contracts
VIU (value in use)
the expected future cash flows that a given asset
is expected to produce, discounted to present value
WACC (weighted average cost of capital)
the average cost of
capital of a given organisation
Workplace
the Group’s internal communications platform
that keeps colleagues informed and connected via a single,
mobile-first channel
Written to earned adjustment
the Insurance Broking accounting
adjustment, required under International Financial Reporting
Standard 15, that spreads revenue which is underwritten by the
Group over the life of the insurance policy
Saga plc
Annual Report and Accounts 2024
193
Strategic Report
Additional information
Governance
Financial statements
Financial calendar
2024 Annual General Meeting – 25 June 2024
Shareholder information online
The Company will publish annual reports, notices of shareholder
meetings and other documents which we are required to send
to shareholders (
shareholder information
) on our website.
Consenting shareholders will be notified either by post or email,
if preferred, each time the Company publishes shareholder
information. This allows us to increase speed of communication,
reduce our impact on the environment and keep costs to a minimum.
You can change your communication preference via your
Shareview Portfolio which can be accessed on our website
(www.sagashareholder.co.uk) or by contacting Equiniti (
EQ
).
To register, you will require your Shareholder Reference which
can be found on most communications from EQ.
Shareview Portfolio is free, secure, easy to use and allows you
to elect to receive certain shareholder communications
electronically, update your UK bank account details, send your
general meeting voting instructions in advance of meetings,
keep your contact details up to date and buy and sell shares easily.
Shareholder fraud
Shareholders are advised to be wary of any unsolicited advice or
offers, whether over the telephone, through the post or by email.
If any such unsolicited communication is received, please check
that the company or person contacting you is properly authorised
by the Financial Conduct Authority (
FCA
) before engaging.
Fraudsters use persuasive and high-pressure tactics to lure
investors into scams. They may offer to sell shares that turn out to
be worthless or non-existent, or to buy shares at an inflated price
in return for an upfront payment. While high profits are promised,
if you buy or sell shares in this way, you may lose your money.
For more information, or if you are approached by fraudsters,
please visit the FCA website (www.fca.org.uk/consumers/scams),
where you can report and find out more about investment scams.
You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters, you should
contact Action Fraud on 0300 123 2040.
Advisers
Corporate brokers
Numis Securities Limited
45 Gresham Street
London EC2V 7BF
Media relations advisers
Headland Consultancy
Cannon Green
1 Suffolk Lane
London EC4R 0AX
Independent auditors
KPMG LLP
15 Canada Square
Canary Wharf
London E14 5GL
Legal advisers
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London EC2A 2EG
Registrars
Equiniti Group
For shareholder enquiries, please contact:
Equiniti Group
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder helpline: +44 (0) 371 384 2640
Calls to freephone numbers will vary by provider. Calls from
outside the UK will be charged at the applicable international rate.
Lines are open 8.30am to 5.30pm, Monday to Friday, excluding
public holidays in England and Wales.
customer@equiniti.com
Information for shareholders
Information for investors is provided online on the Group’s
corporate website (www.corporate.saga.co.uk/investors).
Registered office
Saga plc
3 Pancras Square
London N1C 4AG
Registered in England and Wales. Company Number: 08804263
Corporate websites
Information made available on the Group’s websites does not, and
is not intended to, form part of this Annual Report and Accounts.
Shareholder information
Saga plc
Annual Report and Accounts 2024
194
Forward-looking statements
This Annual Report and Accounts contains certain forward-looking
statements with respect to Saga’s expectations, including
strategy, management objectives, future developments and
financial position and performance. These statements are subject
to assumptions, risks and uncertainties, many of which relate to
factors that are beyond Saga’s ability to control and which could
cause actual results and performance to differ materially from
those expressed or implied by these forward-looking statements.
Any forward-looking statements made are based upon the
knowledge and information available to Directors on the date
of this Annual Report and Accounts and are subject to change
without notice. Shareholders are cautioned not to place undue
reliance on the forward-looking statements. Nothing in this
Annual Report and Accounts should be construed as a profit
estimate or forecast.
This publication is produced by a
CarbonNeutral® company and the paper
is Carbon Balanced with World Land Trust.
Balancing is delivered by World Land Trust,
an international conservation charity,
who offset carbon emissions through
the purchase and preservation of high
conservation value land.
Through protecting standing forests,
under threat of clearance, carbon is
locked in that would otherwise be released.
These protected forests are then able to
continue absorbing carbon from the
atmosphere, referred to as REDD
(Reduced Emissions from Deforestation
and forest Degradation). This is now
recognised as one of the most
cost-effective and swiftest ways to arrest
the rise in atmospheric CO
2
and global
warming effects. Additional to the carbon
benefits is the flora and fauna this land
preserves, including a number of species
identified at risk of extinction on the
IUCN Red List of Threatened Species.
CBP00019082504183028
Designed and produced by
Friend
www.friendstudio.com
This report has been printed on
Amadeus Silk which is FSC® certified
and made from 100% Elemental
Chlorine Free (ECF) pulp.
The mill and printer are both
certified to ISO 14001 environmental
management system. The report was
printed using vegetable-based inks
by a CarbonNeutral® printer.
SAGA PLC
3 Pancras Square
London
N1C 4AG