Member Info for Banburyboy

26p spike was based on sentiment leak of highly conditional offer the BOD dismiised and news of Roger de Hanns involvement. When terms were revealed it shot back down. I was on a cycling holiday at the time and logged onto this site having a huge number of postings

RH
A simplistic viewpoint and i would concur there is a floor.
Some me incuded would be sadly dissapointed by a £5 floor.
Theres the more philisophical point around morality fairness, equity human nature motivation .Not somthing that fits in a list. Some have RDH as a saint the saviour of Folkstone. Is he in fact a wolf in sheeps clothing.
I have quite a lot of faith in human nature and he may take it private at a price that is fair and we can all vote on in an open and transparant way. Or he may alternatively exercise the dark arts of a single tender equity raise of which he is the sole partipant .
I was really reaching out for a considered wider debate on RDH as we have similerly had on Euen and Lance . They may not be with you but others more familer with RDH and what motivates him as a person.

RH nice bit of peace making today. Reminded me slightly of when you arrived all bushy tailed full of ideas asking us make a list ! I thoght hes a bit forward and look at you now a revered saga member.
As an avid reader of my saga critique you will see the dofus ' private argument" is top of my worry list around us not multi bagging. From anyone but Winchmore i would have dismissed it but he clearly knows the company.
In terms of how we lose out my fear is a further capital raise linked to equity open to our major investor only.
Thats why im fixated on cash. £9m burn in 5 months feels good to me. Thats why im anxious for ship repayments £45m nect year to be resheduled others see that as a weakness i see it as protection. Thats why im ever mindfull of the £250M bond that matures in May 24. The market valuing it at 92% suggests they think it will be repaid but by who is the sudden higher price a dood thing or bad thing ? Who needs qanon when Banburys around :)
Had Dofus not raised this i would have sat on my hands to £8 which i think is very fair value (£900m insurance for all usual reasons)
Dofus musing on private has scared this devil out of hell and i think i could bail at £5.50.
Not oftern im negative here but Winchmore has brought the worry beads out and im developing my own new conspiracy thoery :)

Ndn - FJ is a great poster used to work at Saga. Before you arrived on the board he actually asked us long termers if we found the updates usefull which we did.
A lesson learnt when you post is many stick to a single company board and here are probably 20 or so pure Sagerites.
Its a great board and great banter and probably a little sensative to newcomers coming in feet first.
You could redeem yourself by sharing some considered research ?

Sounds good Rogue. Villa been doing very well lately. My football gambling very modest but worse than my shares. Had Southampton last night at 6.1 before i realised they had loads out ..
I have a few staff who are Mackams and went to Southampton and lost 9 nil as well. The players clubbed together and paid my guys coach and gate fee back. I was thinking will Southampton do similer then realised there are no fans or cruises !
My team is the Millers Rotherham and hoping we beat Derby tonight !

Sounds good Rogue. Villa been doing very well lately. My football gambling very modest but worse than my shares. Had Southampton last night at 6.1 before i realised they had loads out ..
I have a few staff who are Mackams and went to Southampton and lost 9 nil as well. The players clubbed together and paid my guys coach and gate fee back. I was thinking will Southampton do similer then realised there are no fans or cruises !
My team is the Millers Rotherham and hoping we beat Derby tonight !

Thanks kaneandson.
To be honest i love the board and some great characters with diverse knowledge on here. FJ and Dofus used to work at Saga so great insight.
My personal bug bare is when individuals who have a little financial acuman on their personal finance rubbish sharp practices. They miss the point that where they you and i would shop around most older people love the security of paying the same for three years even if its more than the comparison sites. I did not rate Batcholer as a CEO but three year insurance fix was genius and 600k sold has not only stabalised insurance for now but guarateed the next three years in a very competative market.

No worries Castle.
AGM is June
Just looked at the bond the intetest is 3.375% and it matures on 12th May 2024. Large spread but mid point is £92 against a coupon og £100. Im sure somone posted on here the price was as low as £50. Presumably RDH injection increased the price so that (excuse the pun) ship has sailed
On the one hand not an agm question but on the other if it was as low as £50 a great reflection on future prospects.
Im not a big investor but lost 70k or so over the years i am absolutly all in here on a diminshed pot and need £6 to walk away even.
I can afford the loss but its very personal and as others know have researched this one to death. Lets hope i dont jinx it !!!

Castle would be guess work for May but higher than now.
If cruise breaks even and insurance has stabalised we should see a minimum of £100m after tax profit. Pay out half is 36p a share.
The company has a bond maturing in 2024 which is for a coupon value of £250m. Someone used to post its trading value which was far lower. I dont know about the legality of it but i would rather we brought and cancelled our own bonds whilst they are so low by using surplus cash (when cruising starts) rather than pay dividend.
One of my agm questions !

The case for buying into Saga pivots around:

1. Will they need any cash calls in 2021? Based on TU and cash outflow in five months to 31st December 20 (adjusted for no recurring disposals) of £9m. The answer is No particularly if ship repayments of £45m in 2021 can be deferred

2. Has the recent decline in insurance profitability (ignoring lower COVID claims) been addressed? The answer appears yes with Insurance PBT expected to stabilise at £140m in Jan 21 accounts the same as Jan 20. Margins static at £71 a policy supported by direct customers increasing 51% 2019 59% now. Customer retention rates of 80% and nearly 600k of three year policies. £140m PBT based on auditor stress tests translates into a minimum value of £900m for the insurance business.

3. Will they realise £20m of transformation savings from headcount reductions working at home etc ? Well on track.

4. When will cruise start? The big unknown. When cruises start will they be profitable? The company needs 85% capacity and £235 per pppd ticket sales to make £20m PBT per ship. Covid has reduced capacity to 80% and the companies own sensitivities mean £20m now becomes £15m. To recoup that £5m they need circa £20 pppd on ticket prices so £255pppd. My analysis on TU updates show ticket prices closing in on £300 pppd, supported by others research on the website.

They key point is incrementally any level of cruise income should be able to offset the current £6m per month cash burn and is good news.

So what’s the downside?
- Cruising delayed for all of 21 and some of 22. Unlikely but survivable if we can defer repayment of ships.
- Insurance industry review – I think three year products fixing premiums mitigates any costly recommendations
- Taken private at below my valuation? I would not see this as a risk but it is raised repeatedly by Dofus one of the top posters on here and an ex senior manager of the business so it worries me. My main fear is we can’t defer ship repayments / cant cruise for a year + and need a cash call. RDH meets that call but in exchange for the issue of shares at the current low valuation diluting all of us. I think it unlikely but really respect Dofus’s opinion.
- Insurance has not turned the corner and is in terminal decline? Not my view on latest numbers and I think the case is strong it has turned.

I’m sticking on my investment . I see this as very low risk (since injection of cash by RDH) and very high reward. It’s just a matter of time

Banbury

Thanks value still trying to tease out if insurance has turned the corner. TU and accounts suggest yes. Specific observations :

1. 5 basis points on loss ratio in one way its going back to the customer and in another way its supporting margins. Looks like they are opting to reduce premiums rather than give back £25 to each policy holder. I see that as a great retention strategy.
2. You talk a lot about price comparison sites and harder to sell direct. They have said direct sales are up from 71% a year ago to 80% now. So bucking the trend and all through an ingenious 3 year fix that others have knocked and i think is a game changer.
So on the evidence insurance has stabalised and should get £140m pbt this year. Is it worth less than a few years ago ? Yes
Is a stabalised insurance worth at least £900m Yes.
I refer to
1. Management and auditor valuation of goodwill which is "stress tested" to death and led to huge write offs in the last few years
2. Sale of Bennets at a higher premium than goodwill based on the same calculation as Saga.
3. Extreme end but Hastings sold for £1.66bn and in it last accounts it PBT was the same as Saga,s
I see value way above market price in insurance and think all evidence supports a £900m valuation as prudent.

Hi Value - your posts are measured but always a slightly cautious tilt.
FCF has undoubtedly declined as the business has changed and insurance income in particular has declined and is worth less than a few years back .
You and I have debated the value of insurance today (now) a number of times. I am firmly of the view that based on management estimates and auditor verification of future cash flows insurance on its own is worth £900m which makes the market valuation as extremely low. That will be confirmed in the final accouts.
I believe we have stabilized what have been sharp declines so Underwriting average PBT £80m three years up to Jan 18. Jan 20 only £41.7m. Retail same three years to Jan 18 average £130m . Jan 20 only £98m.

Interims July 20 had stabalisiation with profit for period identical to 2019
Trading update - marginally increased insurance sales / more three year deals / lots more branded products.
5 basis points one off for lockdown claims bonus.
You are pretty knowledge on insurance and I had previously asked you view on this on trading update day .
Terminal decline or Stabilization.
I know Dofus who clearly knows senior people who works there was upbeat on the three year. I think its a game changer and stabilizes insurance. The client group don't want to switch every year and they don't mind paying a bit extra for the priviledge. I previously posted the terms and they post no risk to the company.
I also think costs will fall in insurance as working from home becomes the norm and we enjoy the advantages that others have had for a while.
Really interested what the 5 basis points means in terms of £ against Saga's insurance book and you were my last hope.
Greta to know your views
Banbury

Peterbed my holding is a much more modest 20k of shares (not£) and like Orient i have been spanked on AIm.
Not as a strategy but rather by a strange set of circumstances i have ended up all in here. Need about £6 to break even on shares. Dont really need the money but massively important to me at a personal level.
I have researched this one to death and i think the upside is huge and downside limited.
Its a great board with some great posters so welcome both !

Hi Jo Ninety
You can only value an investment through cash and an underlying Investment appraisal
The cash cost of discovery was £245m interest 4.4% Adventure is £295m and 3.3%
Saga have a lovely presentation date 4th November 2019 Spirit of discover site tour.
Slide 18 answers your question contribution of Adventure is £2m per annum for the first 12 years and discovery £7m (total £9m). On the face of it not great so why the attraction ?
1 - Repayments and Financing end in twelve years but the ships have a life of twenty five with some refurbishment. From year 12 the bottom line contribution goes up to £27m per ship (£54m in total)
2 - Cruising is high risk reward on slide 19 you can see the sensativities of the assumption of customer cash flow. They are based on 85% occupancy and ticket price per person per day of £235. Move occupancy by 1% up or down and the ANNUAL contribution per ship moves by £1m. move ticket price by £1 up or down and the ANNUAL contribution moves by 300k.

To demonstrate how sensitive this is - assume 90% occupancy and £265 ticket price .
Each ship will gain £5m in occupancy and £3m in price so £16m (two ships). £9m contribution becomes £25m for first twelve years and £70m after.

Alternatively occupancy is 80% and price £205.
We now lose £16m so we have a negative contribution of £7m first twelve years positive of £38m after that
I hasten to add whatever the risk far better than our current £6-8m a month cash burn and easily supported by Insurance.

The presentation is great and goes into some detail on why the Board have made this decision. The real benefits to the bottom line are some way off but they will be transformational and from year 12 afford finance payments on a couple of sister ships if the model is shown to work.
Saga will also cite large cross selling advantages to insurance particularly travel.

Banbury

Should read relax 80% restriction to 85% too much haste
I should add a poster called horsearse worked his way methodically through the booking a few months ago and came up with £300.

Joe and Value - i'm far too young to be looking at cruise brochure prices.
Could it just be the mix of the cabins ? Superior / basic.
Lets do the maths another way
£140m a given
96% a given
Full target £292m
Say cruises start 1st June that's 20 months - 2 ships.... 1,998 births in total @ 80% capacity @ 608 days = 971,827 cruise days.
£292m divided by 971,827 cruising days = £300 a day
The only flaw I can see is they relax the 80% restriction in the plan to 80% which would knock £10 or so off the per deim.
Works for me

Guys giving some thought to the trading update Para below

“Customer demand has also been very resilient, with £140m of total Cruise bookings as at 23 January, representing 68% and 28% of the latest revenue targets for 2021/22 and 2022/23 respectively. These figures exclude £8m of bookings that have been cancelled and customers have chosen to receive a voucher rather than re-book a specific cruise. As at 31 January 2020, total bookings were £127m, representing 78% and 6% of the revenue targets at that date for 2020/21 and 2021/22”.

The Investor presentation had revenue for each ship as:
£235 ticket per berth per day, 999 berths, 85% capacity 365 days a year = £72.8m per ship per year
Two ships in 22 /23 = £145.6m
Only eight months in 21/22 = £97m
Original planned revenue for £40m PBITD per ship 1st June 2021 to 31st March 23 = £242.6m

Against this backdrop £140m (plus £8m in vouchers) looks excellent at 96% (68% plus 28%) of target this means revised target is £291.6m
Capacity in the original plan was 85% now restricted to 80% bringing comparable plan down from £242.6m to £228m

This means the new per deim ticket target is 28% above the £235 in the plan so around £300. If so that would be good.

Margins on cruise are huge so in the plan of the £235 per day ticket sale £110 finds its way into the £40m contribution per ship.

We all know with sailing this company really takes off and I think these figures really reveal the transformational / incremental impact of cruise on the business.

Olmsey you cant ignore it as its relevent to working out current cash burn. You could be right on the terms i hope so as pleased with £9m

Hi Value

One area to be clear on is the £6-8m a month cash burn. They have said that relates to the travel business only. What you I and everyone else want to establish is how much is mitigated by insurance? What’s the company net burn.

I think the net burn was £9m over the five-month period £1.8m a month based on a very simple statement in the TU below.

“Available cash balances have increased by £22m since 31 July 2020 due to the capital raise (£139m) and disposal proceeds (£12m), partially offset by repayment of the drawn portion of the RCF and half of the term loan (£120m in aggregate), and a net £9m of other trading items.”

I am a little suspicious of the £12m disposal proceeds as the interims had Bennett’s as below.

“On 7 August 2020 the disposal of Bennetts Motorcycling Services Limited ("Bennetts") to Atlanta Investment Holdings C
Limited was completed following the receipt of regulatory approvals, generating net disposal proceeds of £24.2m (note 18).”

If they have pulled a fast one cash burn in five months is now £21m or £4m a month. The final accounts will tell.

Good that you have looked an alternative way:

• Agree your £28.8m July cash in the accounts.
• Your £36m they are saying is £20m (£120m to pay off term and RCF)
• Primae Facie start point = £48.8m
• Add Bennetts sale – their number £12m
• Total cash £60.8m in
• Cash on hand at 31s December 2020 £51m
Burn over 5 months £9m

The nine million definately works which every way you compute this. My worry are they pulling a fast one on the Bennett’s disposal and burn is a lot worse – my AGM question :)

Olmsey
I think its generally a good update. Insurance looks steady and I think they have been very clear on cashflow.
Dissapointed by the market reaction - I thought it was worth +5% and we got -5%.

I think the mention of negotiating on ships debt repayment for next year has led to the fall and as you say some negative press.
I think the renegotiation of ship repayments at this stage is prudent and precautionary but there is no pressing need and no gun to our head. We would only do it if its on the right terms and benefits the business .
Carnival and Royal Caribbean both benefited from the covid corporate financing facility which is at appealingly low rates we chose not to use it as we got deferals from lenders .
There is no chance of a cash call and there is no distress here the market IMO has read something into this that's not there.
Banbury