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Banbury - a few points:

1. Note 26b merely analyses the claims figures already reported on p 38 – it does not add to those figures.

2. You have used claims figures before reinsurance. A reduction in claims where there is reinsurance will benefit the reinsurer, not Saga. So you need the figures net of reinsurance.

3. Your top-down comparison gives a ceiling to the claims benefit of £88m to £132m in respect of Saga policies. The problem is, with a large proportion of Saga policies, Saga merely acts as broker to a panel of insurers. In that case, it’s the insurers that will benefit, not Saga. There is also the reinsurance point, as already mentioned.

Bottom line: I still think the relevant claims figure is £57m, which is the one I have used to get to a potential £20m benefit from reduced claims this year: a useful contribution, but not earth-shattering (if it were, it could not have been ignored at the half year).

As someone with a decent holding, I’d love to be proved wrong, but we’ll have to wait till the TU at end Jan to find out (when they should give an indication of underlying PBT, for which I’m looking for £50m+). I’m still hopeful that the TU will support a rerating to at least £3.50 - £4.00.

One of the defining characteristics of governments is their pessimism.

100% of governments are intransigent.

Banbury - interesting and thought-provoking posts re the benefit of reduced insurance claims this year. My take is as follows:

Although, as you note, claims in 19/20 were £177m, that is before reinsurance: the net cost of claims to Saga was £57m.

(You also note that “Retail business claims costs including accident repairs in Note 28 look like £210m” – but I can’t see that anywhere. However, retail business is where Saga acts as broker, hence there are no claims costs on these policies anyway?)

So assuming £57m last year, then if the saving from reduced claims this year is, say, 30%, that’s about £20m.

This is less than your estimate, but still well worth having, as the following back-of-envelope calculations show:

H1 underlying PBT was £15.9m, tax charge £1.6m, so underlying earnings were £14.3m.
(I’m excluding a £10.3m profit on disposal of businesses in H1 because this is a one-off).

For 20/21, we could be talking 2 x £14.3 + £20m = c£49m underlying earnings (recurring).

Underlying EPS = £49m / 140m shares = c35p.

Applying my guesstimated P/E of 10 gives an SP of £3.50.

But this is at the nadir of the company’s fortunes (hopefully!) - forward underlying EPS will be more.

This is a necessarily crude analysis, but enough to convince me that an SP rerating from the January update to at least £4 looks entirely feasible, even without cruising restarting at Easter.

Imagine what would happen WITH a definite cruising restart date...

Thanks for the link magmanus. Charting is not my forte, but anything that generates interest in Coral is very welcome.

Long wait till Tuesday....

I've also been thinking 5p per share dividend, around the middle of 2021.

That's about £4m in total, which is comfortably within the pro-forma retained earnings figure of £6m (which I assume equates to the distributable profits).

I wouldn't expect a revised bid from the US company, but the deal may spark some interest from other plastics companies.

Whatever happens, the SP definitely hasn't yet caught up with developments, actual or potential, so it's worth continuing to hold for a relatively low-risk upside.

If any other company has been running its ruler over Coral, now would be the time to come out of the woodwork. An equivalent offer, but for the whole shooting match, would be more likely to receive shareholder approval than the current deal.

yes magmanus - amazing to see CRU at the top of the leader board at +63%.

All that stopped it rising further today is the market's reluctance to mark up any share by too much in one day.

There'll be a few more days of double digit increases I'm sure.

Grimmond won't let this one slip through his fingers that easily.

threeputt - The deal certainly does "reduce net debt" - but so much so that it creates net cash, as the balance sheets show.

So they are actually underselling the deal. They should have said "eliminates net debt, and gives the group net cash".

What matters is not their (loose) words, but the actual, hard figures per the balance sheets.

"ignore those rampers stating cash in bank as nett debt was £7m at half year results so this sale just reduces that" (threeputt)

This is incorrect. If you look at the pro forma balance sheets, the deal takes us from net debt of £6m to net cash of £6m (roughly), so a dramatic turnaround.

I wonder if they will return any of that cash to shareholders in due course.

Looks like Peter Gyllenhammar got it right this time (he loaded up recently at 4p).

I agree, that's why I said "initially". 16p is a sighting shot while the market slowly digests the detail.

The deal leaves the group with a much smaller business (turnover £5m vs £22m) but a much stronger balance sheet, with net assets of £13.6m of which £9m is hard cash and £1m is Haydock freehold (net of loan).

Net assets per share will be £13.6m / 83m shares = 16p per share.

This is roughly where the SP initially should be heading.

I think it'll open above the "28.60 close" (depending on the wider market of course).

"Negative goodwill" is a new one on me. Aren't we just talking about "goodwill write-offs"?

Merry Xmas to all Trak mates! I'm sure 2021 will be transformational (in a good way!).

The only hope of something better than 35p is if someone else is interested in bidding. If not, the stark choice is between 35p now, and a drop to 15p with an uncertain future (given that the lame duck BOD has thrown in the towel on refinancing).

Thanks Banbury, let's see if Doofus has anything to add.

The recent TV documentary mentioned that only 70% of a cruise ship's revenue comes from the price charged for the cabin, 30% comes from "extras". It would be good if this applied to Saga - as a bonus, this element would not be subject to agent's commission - but the 70/30 split might not apply to Saga, because I imagine they include more "extras" in the cabin price than with the more run-of-the-mill cruise companies. Perhaps someone in the know could throw some light on this.

Carnival UK Chairman:

"Our maritime minister [Robert Courts] is working hard to get the obstacles [to restarting cruising] shifted, but they are proving hard to shift.

“I can’t help worrying about the speed at which the government is working.”

He's not alone....

Now being dragged down with the rest of the market, but like with the first lockdown when the market overreacted and turned it into a 3-bagger, Halfords as an essential retailer should be a net beneficiary, which should offer yet another opportunity to make a great return.