RNS26 Jan 2021 07:06
Saga plc ("Saga" or "the Group"), the UK's specialist in products and services for people over 50, provides the following update on trading covering the period from 1 August 2020 to 25 January 2021.
Highlights
· Group to report full-year underlying profit before tax, despite COVID-19 challenges.
· Secure financial position as a result of actions taken over the last 12 months:
o Net debt to EBITDA (excluding Cruise) of 3.0x as at 31 December 2020, within the current covenant in short-term bank debt of 4.75x;
o Liquidity position remains strong with total available cash of £51m at 31 December 2020.
· Insurance business performance continues to be resilient in highly competitive market:
o Motor and Home policy sales 1% ahead of prior year; customer retention of 80%, an increase of 5 percentage points; underlying margins in line with expectations.
o 596,000 three-year fixed price policies sold, representing over 60% of direct new business sales.
o Direct customers account for 59% of new business, 2 percentage points ahead of the prior year.
o Reduced claims frequency expected to have positive impact of at least 5ppts on current year loss ratio.
· Travel business well positioned to resume operations, focused on customer retention and controlling costs:
o Retention rates remain high, at 69% in Cruise and 41% in Tour Operations.
o Cash burn rate for second half towards lower end of previous guidance of £6-8m per month.
o Introduction of requirement for Saga travellers to be vaccinated, based on customer feedback; restart dates pushed back to reflect vaccine roll out timings.
o First cruise operator awarded Lloyds Register Shield+ new COVID safety accreditation.
· Key priority through the year has been the health and wellbeing of colleagues and enhancing customer care across both Insurance and Travel.
· Good progress against all five pillars of the strategic objectives outlined in September.
Euan Sutherland, Group Chief Executive Officer, commented:
"We have made good progress in delivering our new strategy and have accelerated the pace of change at Saga, against the backdrop of the challenges that the COVID-19 pandemic has brought to our business. Insurance remains resilient, while within Travel we are focusing on ensuring the safest possible environment for our guests when cruise and holidays resume, whilst appropriately controlling costs until that time.
"We are confident in our strategy, the strength of our brand and the loyalty and economic resilience of our customers. We know they are ready to travel in great numbers and live their lives to the full as
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