Saga Plc · LSE:SAGA
Saga — H1 2018 Earnings Presentation
30 slides from Saga's earnings presentation, September 2017
Slide 1: Results presentation
Results presentation Interim results for the 6 months ended 31 July 2017 SAGA keep doing
Slide 2: Batchelor
Batchelor
Slide 3: Another set of strong results
Another set of strong results vs. HY 2016 Retail insurance . . broking 4h Retail broking and travel PBT +10.4% Travel a Retail insurance broking PBT +4.7% Underwriting = Travel PBT +63.0% Reserve releases NY, Underlying PBT +5.5% Finance eee costs NY Interim dividend 3.0p 111% Underlying “”N Profits
Slide 4: Profit up and debt down since IPO
£190.7 Profit up and debt down since IPO
Slide 5: Saga Possibilities
posgieities Member offers Member community Member events R a Advice, news and guides from | inspiring celebrities and UK experts Events, ballots, tickets and Exclusive offers from exclusive experiences carefully chosen partners
Slide 6: Saga Possibilities and new brand identity driving evolution
Saga Possibilities and new brand identity driving evolution C >) ue " More efficient acquisition Smarter Acquisition ————- q * Lower CPAs Ne f- . = Retain more of our target customers Increased retention ———— = Increase engagement L y, (- > . " Increase in average number of Increased cross-sell | ——
Slide 7: Announcing Spirit of Adventure
Announcing Spirit of Adventure * Decision to renew our shipping capacity with the second new ship, Spirit of Adventure, for early delivery in August 2020 ° Spirit of Discovery — Ontrack for delivery in June 2019, construction to start Feb 2018 — Booked 6,449 passengers by 18 September — First cruise
Slide 8: Consistent strategy
Consistent strategy * Become increasingly customer centric * Grow earnings from core insurance and travel businesses ° Maintain our efficient operating model * Invest for future growth = Confidence in continued financial performance and progressive dividends Saga plc Interim Results for the 6 months
Slide 9: Ian Hill
an Hill
Slide 10: Strong group results
Strong group results HY 2016 HY 2017 Customer £595.8m £617.1m spend Revenue £437.2m £435.4m Underlying £104.5m £110.2m PBT Profit before £109.9m £103.0m tax Dividend 2.7p 3.0p (1) Profit before tax excluding derivatives and debt write off costs. +3.6% (0.4%) +5.5% (6.3%) +111% Strong cash flows have
Slide 11: Solid performance from retail insurance and travel businesses
Solid performance from retail insurance and travel businesses Underlying PBT HY 2016 HY 2017 Motor broking £22.1m £25.5m Home broking £29.7m £28.6m Other broking £15.9m £16.8m Underwriting £49.1m £46.8m Travel £7.3m £11.9m Retail broking and travel PBT growth +15.4% +10.4% (3.7%) +5.7% (4.7%) +63.0%
Slide 12: Retail broking — continued PBT growth
Retail broking — continued PBT growth Other , HY2017 Motor broking f§ Home broking insurance oles. broking 9 Revenue £62.7m £42.5m £39.7m £144.9m PBT £25.5m £28.6m £16.8m £70.9m Profit per core policy £38.6 £475 £92.8 £49.1 Core policies sold 661k 602k 181k 1444k ES SS Revenue £65.1m £43.9m £42.5m £
Slide 13: Retail broking — Motor broking
Retail broking — Motor broking Motor broking HY 2016 [ff HY 2017 Revenue £65.1m £62.7m (3.7%) PBT £22.1m £25.5m 15.4% Profit per core policy £314 £38.6 22.9% Core policies sold 703K 661k (6.0%) * Saga core motor policies consistent year on year (excluding discontinued Direct Choice brand) * Strong w
Slide 14: Retail broking — Home broking
Retail broking — Home broking Home broking HY 2016 [ff HY 2017 Revenue £43.9m £42.5m (3.2%) PBT £29.7m £28.6m (3.7%) Profit per core policy £46.9 £475 13% Core policies sold 633k 602k (4.9%) * Continued competitive market * Prioritised returns over volume Saga plc Interim Results for the 6 months en
Slide 15: Retail broking — Other insurance broking
Retail broking — Other insurance broking Home broking HY 2016 [ff HY 2017 Revenue £42.5m £39.7m (6.6%) PBT £15.9m £16.8m 5.7% Profit per core policy £69.1 £92.8 34.3% Core policies sold 230k 181k (21.3%) ° PBT uplift supported by increased efficiencies ° Initial competitive disadvantage from FX impa
Slide 16: Insurance underwriting
• • £111.3m £108.9m £49.1m £46.8m • Underlying revenue Underlying PBT • 98.8% 103.3% 97.1% UK Market* 61.8% 61.2% Saga (HY 2016) Saga (HY 2017) Pure COR COR *EY prediction for UK Market in 2017
Slide 17: Solvency capital
£57.8m 169% 143% £142.1m £84.3m 31 Jan 2017 31 Jul 2017 SCR SCR Solvency coverage Surplus SolvencyIIIIcapital Solvency capital • •
Slide 18: Travel — continued growth
Travel — continued growth Tour Operating HY 2016 HY 2017 * FX movements drove Revenue £208.0m £228.2m +9.7% Increased revenue Gross profit £41.6m £47.8m +14.9% * Continued shift in mix towards - 5 higher value products Profit before £7.3m £11.9m +63.0% tax Cruise No. of holiday 95k 96k +11% ; passen
Slide 19: Emerging business and central costs
Emerging business and central costs HY 2016 HY 2017 Emerging businesses Revenue £14.3m £14.4m +0.7% * Continue to develop PBIT® (£10.2m) (£10.5m) +2.9% * Moved to profit in the IAS19R pension (£0.7m) (£2.6m) period charge Finance costs (£8.7m) (£6.3m) Central overheads Underlying loss (£19.6m) (£19.
Slide 20: Strong cash generation
Strong cash generation £2.4m (£5.0m) 77) (£1.2m) (€3.9m) a “7m OE 20 £89.6m £97.3m HY 2016 (1) Trading Dividend Working Capex HY 2017 (1) EBITDA(2) — from AICL capital (1) Net cash flow from operating activities after capital expenditure but before tax and interest paid and non-trading items. (2) Tr
Slide 21: Net debt to EBITDA
• • 3.1 2.4 2.2 • 1.9 1.8 May-14 HY 14 HY 15 HY 16 HY 17 •
Slide 22: Outlook and guidance
Outlook and guidance * Confidence in performance supported supported by: — current trading environment for insurance; — anticipated increase in travel profits, offset by; — expected lower level of reserve releases ¢ Underlying PBT to grow in line with expectations, benefiting from lower finance cost
Slide 23: Q&A
Slide 24: Appendix
Slide 25: Reserve releases
Reserve releases HY 2017 Total Group Reserve ° Reserves have reduced by £2.2m year-on-yearto£ . . . £6.6m * No deterioration in reserve margin £3.5m 2008/09 2011/2 and prior £8.0m £6.7m 2012/3 2013/4 £5.8m 2014/5 Releases by Accident Year (£m) £8.4m 2015/6 2016/7 2017/8 Saga plc Interim Results for
Slide 26: Saga Plc consolidated income statement
Saga Plc consolidated income statement £m 6m to % 6m to July 2017 Growth July 2016 Revenue £435.4m (O4%) £437.2m Trading Profit © £123.8m 49% £118.0m Non-trading items (£2.2m) (£0.6m) Amortisation of acquired intangibles (£2.5m) (£3.5m) Pension charge IAS19R (£2.6m) (£0.7m) Net finance costs @ (£6.3
Slide 27: Insurance underwriting income statement
Insurance underwriting income statement 6m to Quota Underlying Growth 6m to July 2017 Share July 2016 Revenue £47.9m (£61.0m) £108.9m (2.2%) 13m Claims costs B (£36.8m) £55.5m (£92.3m) (S4%) (£97.6m) Reserve releases ie} £39.0m - £39.0m (6.3%) £412m Other cost of sales D (£4.9m) £6.2m (£11.1m) 88% (
Slide 28: Travel income statement
Travel income statement 6m to July 2017 6m to July 2016 Tour Cruising Total Growth Tour Cruising Total Operating Travel Operating Travel Revenue £183.4m £44.8m £228.2m 97% £170.5m £37.5m £208.0m Gross profit £35.7m £121m £47.8m 14.9% £367m £4.9m £41.6m Operating expenses (£28.4m) (£7.6m) (£36.0m) 47
Slide 29: Emerging Businesses and Central Costs income statement
Emerging Businesses and Central Costs income statement 6m to July 2017 6m to July 2016 Emerging Central Total Growth Emerging Central Total Businesses Costs Businesses Costs Revenue £13.4m £10m £14.4m 07% £12.8m £15m £14.3m Profit before interest, tax and the IAS19R pension charge £0.5m (£11.0m) (£1
Slide 30: Cash flow and liquidity
Cash flow and liquidity . 6m to 6m to Available Cash Flow July 2017 Growth July 2016 Trading EBITDA £140.6m 5.1% £133.8m Less Trading EBITDA relating to restricted businesses (£68.7m) 68% (£64.3m) Intra-group dividends paid by restricted businesses £45.0m (10.0%) £50.0m Working capital and non-cash