Saga Regulatory News (SAGA)

30 September 2015

Saga plc

Interim Results for the six months ended 31 July 2015

On track to meet market expectations for the full year, first interim dividend announced

Saga plc ("Saga" or "the Group"), the UK's leading provider of products and services primarily tailored for the over 50s, announces its interim results for the six months ended 31 July 2015.

Financial highlights - continuing operations1

· Growth in Trading EBITDA of 5.2% in the core Financial Services and Travel businesses, partially offset by the impact of a full six months of plc costs

· Sustained cash generation leading to further deleveraging

o Target range for debt ratio of between 1.5x and 2.0x in the medium term

· Confidence in achieving full year profit expectations and ongoing sustainable profit growth supports the announcement of a maiden interim dividend of 2.2p

1 On 15 January 2015, the Group announced its intention to divest the local authority section of its healthcare business, Allied Healthcare. Accordingly, this has been treated as a discontinued operation and is not included in the analysis.

2Trading profit is Trading EBITDA less depreciation and amortisation, excluding amortisation of acquired intangibles of £2.4m (H1 2014: Nil) in respect of the Group's acquisitions (Destinology and Bennetts), as this amortisation is not related to the underlying trading performance of these businesses. 

Operational Highlights

· Financial Services:

o Core motor insurance policies up by 9.7% to 1,112k (H1 2014: 1,014k)

o Continued strong performance of the motor insurance business, with a Combined Operating Ratio in the core underwritten book of 68.0% (H1 2014: 68.1%)

o Successful launch of the panel in motor insurance with two third party insurers already participating

o Completion of the acquisition of Bennetts, the UK's premier motorbike insurance specialist

o Good progress made in Saga Investment Services with a strong team in place; on track to launch by the end of 2015

· Travel:

o Continued growth in Trading EBITDA

o Decision made to enhance Saga's excellent cruise offering through investment in new cruise capacity.

o Meyer Werft shipyard secured to build a new ship for delivery in 2019. Option for a second to be delivered in 2021

· Other:

o Total number of contactable people on the Saga database increased to 11.0m at 31 July 2015 (31 July 2014: 10.6m)

o The number of active customers was broadly stable in the 12 months to 31 July 2015 at 2.6m (12 months to 31 July 2014: 2.7m), with an average of 2.6 products held by active customers as at 31 July 2015 (31 July 2014: 2.7)

o Sale of Allied Healthcare progressing with completion expected before the end of the financial year

Commenting on the results, Lance Batchelor, Group Chief Executive Officer, said:

"I am pleased to report continued momentum in both our financial performance and in the implementation of the strategic initiatives that we announced earlier this year. In particular, we have successfully launched our motor panel, reached the decision to invest in replacing our shipping capacity and we are on track to launch Saga Investment Services.

"Continued strong cash generation has allowed us to further reduce our debt ratio and the solid performance in our core businesses of financial services and travel has meant positive growth in underlying profitability. This growth was partially offset by the impact of a full six months of costs associated with becoming a listed company, a situation that will not repeat to the same extent in the second half of the year.

"We are confident of delivering on our targets for the full year and of continuing to build sustainable returns for shareholders through profit growth, cash generation and our progressive dividend policy. This confidence supports our decision to pay a maiden interim dividend of 2.2p."

END

A presentation to analysts will be held at 09.30 at the offices of Goldman Sachs, Peterborough Court, 133 Fleet Street, London, EC4A 2BB. There will be a live webcast of the analyst presentation for registered participants. Registration can be completed at http://corporate.saga.co.uk/. The webcast will be also accessible via the Saga website following the presentation.

For further information please contact:

Notes to editors

Saga is a leading provider of products and services primarily tailored for customers over the age of 50 in the UK. The Saga brand has been carefully developed over the past 60 years to become one of the most recognised and trusted brands among UK consumers aged over 50. Saga is synonymous in the UK with the over 50s market and is recognised for its high quality, award winning products and services. These include cruises and holidays, insurance, personal finance, healthcare and the Saga Magazine.

saga.co.uk

Group Chief Executive's Review

Overview

I am pleased to be able to report a very solid first half of the year, with strong performance across all of the Group's continuing operations. We have grown Trading EBITDA in our core businesses of financial services and travel by 5.2%, Trading Profit by 1.0% to £117.5m and generated £139.1m of available operating cash flow, allowing us to reduce further our debt ratio to 2.35x at the period end.

I am also very pleased to be able to announce that we are paying our maiden interim dividend of 2.2p per share, reflecting our confidence in achieving our aims, meeting market expectations for the full year and continuing to deliver sustainable profit growth.

At the heart of the business is a competitive advantage based on our ability to understand our customers better than anyone else through data-driven insight, supported by our proprietary database that now includes 11.0m names. This insight enables us to develop the products and services our customers want and then deliver them with exceptional customer service, either ourselves or in partnership with third party suppliers.

We have made good progress in implementing a number of the key elements of the strategy we outlined at the start of 2015 to deliver sustainable shareholder returns. We will do this by unlocking the growth potential in our core businesses, investing in growth areas for the future and maintaining our capital efficient model by:

· expanding our insurance footprint;

· growing our travel business;

· expanding our personal finance offering;

· optimising the use of our database; and,

· continuing to focus on innovation throughout the business.

Across our insurance businesses, we have continued to balance the delivery of profit with growth in our policy numbers. We have recently launched our motor insurance panel and we already have two third party insurers competing for volume alongside our in-house underwriter, AICL. The motor panel completes our ability to access third party providers of underwriting risk across all of our major product areas and, as it is complementary to AICL, allows us to compete for market share in areas beyond AICL's core area of focus and expertise.

The team has done an exceptional job in establishing the panel within such a short timeframe. We are building relationships with excellent providers and expect to have another three join the panel by the end of 2015, with a further two or three in the first half of 2016. While it is early days we are very pleased with progress to date.

We have completed the acquisition of Bennetts, the UK's premier motorbike insurer. Bennetts' position within the UK motorbike market, gives us access to a growth sector that is being driven by customers within our target demographic. We are encouraged by what we have seen and trading is progressing well with growth in policy numbers and a very solid financial performance.

Within our travel business, we have taken the decision to enhance our excellent cruising business by updating our shipping capacity. After a rigorous selection process, we have chosen the Meyer Werft shipyard in Germany and signed a memorandum of agreement with them for delivery of a new, purpose built ship in 2019 and an option for a second ship to be delivered in 2021. This is a significant decision for the Group but there is a very clear and compelling case for it. Strategically, cruising is a growth market and lies at the heart of the Saga brand, playing a key role in driving our reputation for service. It is therefore a business to which we are committed for the long term. Financially, it is an investment in an area where we have a proven track record, where demand is outstripping supply for our offering and where new ships will be transformative for the operating efficiency and profitability of our cruising business.

At Saga Investment Services, our wealth management joint venture, Nici Audlam-Gardener joined as Managing Director in August and we have filled senior roles in marketing and communications to complete a very strong team. That team is working hard on the customer led proposition and is on track to launch before the end of the year.

We continue to strengthen our team across the business and I am delighted to welcome Matt Atkinson, our new Group Chief Marketing Officer. Most recently Matt was at Tesco plc, where he held a range of senior roles. Matt will sit on Saga's Executive Committee and will be responsible for branding and customer engagement across all of our marketing channels to help ensure we continue to build Saga's brand and maintain the excellent reputation so fundamental to the company.

We are also making progress with the sale of Allied. This marketplace continues to face challenges, particularly given the potential financial impact of the Chancellors announcement of the National Living Wage in his latest Budget. We expect to complete the process by the end of the financial year.

Financial Services

Motor Insurance

Saga has a number of competitive advantages within the motor insurance market including:

· a low cost of acquisition due to our brand and database covering 11.0 m of the UK's over 50s;

· a differentiated retailer, Saga Services, with the flexibility to act as underwriter or broker;

· an experienced in-house underwriter, AICL, with a clear focus and data-driven insight into a relatively low risk section of the market; and,

· an efficient claims management function that enables us to manage claims costs down to market leading levels.

We have worked hard to capitalise on these advantages to deliver growth in both profit and core policy numbers during the first half of the year. We have grown our core motor policies and delivered a 2.6% increase in Trading EBITDA to £68.3m (H1 2014: £66.6m). Our Combined Operating Ratio stands at 68.0% (H1 2014: 68.1%) as a result of positive claims experience.

Our experience across the motor insurance book supports the market view that the price increases seen in the second quarter of 2015 appear to be sustainable. However, within our underwriter, AICL, we are not seeing the increases in claims frequency or personal injury claims costs reported elsewhere. This gives us an advantage in a rising market as we can share some of the resulting margin enhancement with our customers, growing market share while maintaining our prudent approach to underwriting.

Overall, we are well placed to deliver on our plans in motor insurance this year and into next, with a differentiated retail distribution channel and in-house underwriter, complemented by the recently launched panel and Bennetts.

Home Insurance

The market for home insurance remains highly competitive with premiums continuing to fall through the first half of the year. The efficiency of our home panel has largely protected us in this environment and we have delivered a 16.2% increase in Trading EBITDA to £33.7m (H1 2014: 29.0m). However, given falling premiums, we have seen less churn in the marketplace, leading to a reduction in the number of quotes available. As a result, we have seen a 2.6% decrease in core policy numbers against the same period last year.

Other Financial Services

Other financial services delivered a 5.2% increase in policy numbers with Trading EBITDA 6.9% lower at £17.6m (H1 2014: £18.9m) due to the investment in legal services and Saga Investment Services.

Earnings continue to be driven by travel insurance, where we are further developing our product range to ensure it is relevant for our entire customer base and PMI, which continues to perform well in a very difficult market as we invest in product innovation.

Travel

The travel business has continued to build on the momentum of last year, with Trading EBITDA 11.2% higher at £16.9m (H1 2014: £15.2m).

The tour operating business is delivering on a number of strategic initiatives to drive growth through the business, including: new distribution channels; driving our digital presence and enhancing our customer's digital journey; continuing to connect the various brands within the business into the Saga database; and developing new products.

The travel business continues to win awards. Saga Holidays was recently named The Times and Sunday Times Specialist Tour Operator of the Year, Titan Travel was named the Best Escorted Tour Operator at the Travel Bulletin Star Awards and Saga Cruises Best Value For Money Cruise Line for the second year running at the Cruise International Magazine awards.

Within our cruise operation, we continue to make improvements and investments to ensure that customer satisfaction levels are maintained at the highest levels. Currently, 98% of our cruise customers rate their experience as excellent or good and, during August of this year, both the Saga Sapphire and Saga Pearl II achieved their best ever overall customer feedback scores.

The cruise operation remains at the heart of the Saga brand, continually demonstrating the service excellence and value that Saga is renowned for. The decision we have made to invest in our shipping capacity will be transformational for the cruise business and for our cruise customers. The precise details of the new ships will be finalised over the coming months and the result will be a significant upgrade while retaining the traditional features our customers cherish. This means that all cabins will have balconies but we will still provide an intimate small-ship feel (under 1,000 passengers), a high crew-to-customer ratio and great public spaces and entertainment facilities.

We have made good progress again in the first half of the year in travel and in the year to date our reservation levels for departures in holidays and cruising for the remainder of this financial year and for the financial year ending 31 January 2017 are very encouraging.

Healthcare Services

With our private homecare trial, we have focussed attention on a small group of customers, ensuring we can get the offer right, as well as testing the economics before expanding it further. Whilst we are still very much in pilot mode, we are making progress and have recently scaled up the project from one town in Hertfordshire to the whole county.

Outlook

At the start of 2015 we outlined a clear strategy to deliver long-term, sustainable shareholder returns through profit growth, cash generation and a progressive dividend policy. This strategy is centred on capitalising on our competitive advantages to unlock the growth potential within our core businesses whilst maintaining our capital efficient business model. I am very pleased, therefore, that we are able to demonstrate progress both with respect to our financial performance and the implementation of strategic initiatives.

The launch of a motor panel, our decision to invest in new shipping capacity and the forthcoming launch of Saga Investment Services are all important initiatives for the future of the business. These are balanced by our ability to consistently generate profitable growth from our existing businesses and the progress made in both insurance and travel is encouraging.

The Group is well positioned to continue its positive momentum into the second half of the year and we are on track to meet expectations for the year as a whole.

I would like to thank everyone who has played a part in this delivery most notably all of our employees and, of course, all of our customers.

Chief Financial Officer's Review

The Group has delivered a robust financial performance during the first half of its second year as a listed company with growth in the core businesses. This growth has been partially offset by the normalisation of the Group's plc costs, resulting in Trading Profit increasing by 1.0% in the first half.

During the first six months of the financial year, the Group increased Total Revenue from continuing operations by 8.7% to £478.3m (H1 2014: £440.1m), primarily due to growth in travel, largely resulting from the acquisition of Destinology.

Trading EBITDA from continuing operations increased by 0.8% to £130.6m (H1 2014: £129.6m). Financial services and travel delivered EBITDA growth of 5.2%, offset by an increase in costs within media and central costs as the Group had a full six months of listed company costs.

At the Trading Profit level, the Group achieved an increase of 1.0% to £117.5m (H1 2014: £116.3m). Trading Profit excludes amortisation of acquired intangibles in respect of the Group's acquisitions (Destinology and Bennetts), as these are not related to underlying trading performance of these businesses.

Non-trading credits result primarily from a reduction in the expected deferred consideration of Destinology from the initial, cautious estimate.

Profit before interest, tax and IPO costs increased by 1.5%, with the amortisation of acquired intangibles of £2.4m in H1 2015 (H1 2014: Nil) being offset by the non-trading credit.

Finance costs in the period were £14.1m, comprising of £10.2m of interest costs on debt and borrowings, £2.5m of amortisation of debt issue costs, £0.6m of finance charge associated with pension schemes and £0.8m of charge associated with the unwinding of the discount on the deferred consideration associated with Destinology. This compares to £10.3m in H1 2014, comprising of £9.8m of interest costs on debt and borrowings, £0.2m of amortisation of debt issue costs and £0.2m of finance charge associated with pension schemes. The Group's financing arrangements were put in place in April 2014, part way through H1 2014.

Tax Expense

The tax charge reported in the income statement of £20.2m (H1 2014: £12.2m) equates to 19.9% of profit before tax (H1 2014: 28.9%).

Earnings per Share

The Group's basic earnings per share for the six months ending 31 July 2015 was 7.0p (H1 2014: 2.4p). Basic earnings per share from continuing operations was 7.3p (H1 2014: 3.3p). Earnings per share in H1 2014 was impacted by the Group's IPO and exceptional debt costs during that period.

Dividends

The Directors declared an interim dividend of 2.2p per share. At the time of the Preliminary Results announcement, the Group guided to a payout ratio of approximately 40% to 60% of the Group's net income, excluding exceptional items. The IPO Prospectus stated that the interim and final dividend would be paid in the approximate proportions of one-third and two-thirds, respectively, of the total annual dividend.

This dividend will be paid on 19 November 2015 to holders of ordinary shares on the register at the close of business on 9 October 2015.

Cash Flow and Liquidity

The Group achieved a strong cash flow performance in the six months to 31 July 2015 with an available operating cash flow from continuing operations of 106.5% of Trading EBITDA (H1 2014: 106.3%).

Available operating cash flow reconciles to net cash flows from operating activities as follows:

Financing and Capital Structure

During the six months to 31 July 2015, strong cash flow has enabled the Group to reduce its debt ratio to 2.35x from 2.56x at 31 January 2015. As at 31 July 2015, net debt was £536.3m, comprising £500.0m of gross debt and £70.0m of drawn revolving credit facility, offset by £33.7m of available cash. This compared to net debt as at 31 July 2014 of £595.7m, comprising £700.0m of gross debt, offset by £104.3m of available cash.

Having considered the capital requirements of the business going forward and the expected medium term cash flows, it is the Group's intention to reduce the debt ratio (net debt to Trading EBITDA) to between 1.5x and 2.0x in the medium term, subject to the achievement of profit and cash flow delivery in line with the Group's expectations. As the delivery of the new ship is not expected before mid-2019, the intention is to target the lower end of this range before any debt associated with this purchase is drawn down and remain within this range even after the investment in shipping. This deleveraging is consistent with our current dividend payout guidance.

Pensions

Over the six month period, the valuation of the Group's pension schemes has improved on an IAS19 basis by £20.8m to a deficit of £34.3m (Jan 2015: deficit £55.1m).

The reductions in the present value of future obligations have been driven by an increase in the discount rate applied reflecting the increase in gilt yields in the current period. The Nestor scheme liabilities are included as part of the liabilities held for sale in respect of the discontinued operation.

Net Assets

Since 31 January 2015, total assets and liabilities have reduced by £70.6m and £110.8m respectively, increasing overall net assets by £40.2m.

Total assets have reduced as a result of a decrease in cash and short term deposits of £58.8m and a reduction in other financial assets (predominantly the investment portfolio) of £55.7m. Offsetting this is an increase in trade and other receivables of £18.1m driven by the seasonality of the business and increased goodwill and intangible fixed assets of £28.4m, primarily relating to the acquisition of Bennetts.

The reduction in total liabilities reflects a £128.4m reduction in financial liabilities following the repayment of debt during the period and a lowering of the pension scheme deficit of £14.4m. Other liabilities have increased by £32.1m reflecting a higher level of advance receipts in the travel business and current tax liabilities are £22.6m higher partly reflecting the higher level of profits, but predominantly due to the timing of payments in respect of the previous year's tax liability.

Motor Insurance

The motor market remains highly competitive with the fall in average premiums of the past two years continuing into the start of the period. However, in the second quarter of 2015 there have been signs of the sustainable price increases that have been reported across the market.

Revenue at £157.2m was 1.8% lower than H1 2014 (£160.0m), driven by the reductions in premium levels over the past year for core underwritten policies. This has been partially offset by the increase in the number of core motor policies underwritten with additional broking income from the acquisition of Bennetts. Ancillary revenue was marginally lower with a reduction in add-on policy sales.

Overall, the positive claims experience within the core business, and good performance in other areas, has allowed us to grow Trading EBITDA by 2.6% despite the challenging market conditions that prevailed for most of the period.

Motor Underwriting

Profit from the core underwritten motor business has reduced marginally, with a consistent combined operating ratio on lower net earned premiums.

The Group has not seen the increase in claims frequency that is being reported elsewhere in the market, with frequency being broadly flat across accidental damage, third party injury and personal injury claims. This is largely a result of the different characteristics of the Group's target demographic, with the majority of customers being retired, therefore lessening the impact of recent falls in fuel costs and economic growth. Claims severity during H1 2015 has also been broadly stable across accidental damage and personal injury claims, with the Group not currently experiencing the inflation in personal injury claims costs reported elsewhere. The Group has continued to maintain strong levels of retention within the Ministry of Justice ("MOJ") Portal, in addition to its significant and ongoing focus on effective management of these types of claims. The Group has seen some moderate increases in third party damage severity, in line with others in the market, and chiefly driven by increases in at-fault repair costs which are being seen as a result of the recent Coles v Hetherton judgement.

Combined operating ratio of 68.0% has improved marginally against H1 2014 (68.1%). Pure combined operating ratio is 6.4% higher than H1 2014 at 103.6%, with the impact of lower net earned premiums resulting from market conditions and the year-on-year increase in regulatory fees. Actions taken to increase motor premiums during Q2 and Q3 of this year give us confidence that for the full year to 31 January 2016, both the pure combined operating ratio and the reported combined operating ratio will be materially in line with the full year to 31 January 2015, with no material change in the level of reserve margin. The reported combined operating ratio for the full year to January 2015 was 79.2%.

Home Insurance

The home insurance market has remained highly competitive in the first half of the year, as continuing benign weather conditions have reduced claims costs across the industry resulting in falling premiums. The lower market premium levels have directly reduced the number of quotes available, leading to a slight fall in the number of core policies sold.

Despite these market conditions, the efficiency of the home panel has allowed the Group to continue to improve the net rates it receives from its underwriters and grow revenue by 15.8% to £50.6m (H1 2014: £43.7m) and Trading EBITDA by 16.2% to £33.7m (H1 2014: 29.0m)

Other Financial Services

Other financial services have delivered a solid performance. Revenue from broking and non-insurance trading was 7.0% higher at £30.6m reflecting strong performance on the PMI and travel insurance products, and in respect of the latter, a greater proportion of annual policies over single trip policies. Core underwriting policy volumes were consistent with the previous half-year, although revenue generated of £19.7m was down slightly by 3.4%.

Trading EBITDA of £17.6m was £1.3m lower than the previous half-year due to the impact of the investment in marketing and other start-up costs to launch the legal services product, as well as initial costs associated with Saga Investment Services, the wealth management joint venture with Tilney BestInvest.

Insurance Underwriting (AICL)

Reserving and Reserve Releases

Favourable claims development experience during the six months to 31 July 2015 has resulted in a reduction in the reserves required in respect of prior year claims. This has been driven by large and small personal injury claims and by other classes and resulted in reserve releases totalling £41.5m during the half-year.

Analysis of insurance contract liabilities at 31 July 2015 and 31 July 2014 is as follows:

The Group's total insurance contract liabilities net of reinsurance assets have reduced by £33.0m as at 31 July 2015 from 12 months earlier, driven primarily by a £22.7m reduction in IBNR claims reserves.

Investment Portfolio

The majority of the Group's financial assets are held by its underwriting entity and represent premium income received and invested to settle claims and to meet regulatory capital requirements. The maturity profile of the invested financial assets is aligned with the expected cash outflow profile associated with the settlement of claims in the future.

The amount held in invested funds decreased by £19.7m compared to the previous half-year, from £623.6m as at 31 July 2014 to £603.9m as at 31 July 2015. As at 31 July 2015, 89.5% of the financial assets held by the Group were invested with counterparties with a risk rating of A or above reflecting the Group's prudent investment strategy.

With the Solvency II regime commencing in January 2016 and the implications of specific investment classes on the Solvency Capital Requirement ("SCR"), the Group is intending to take a more conservative approach to its investment portfolio with a reduction in the proportion of higher risk assets held. While this may lead to a reduction in the investment return in the underwriting business, a lower level of SCR will be required to be held.

Solvency Capital

The Group's underwriting entity continues to hold more than twice the amount of capital reserves that it is statutorily required to hold pursuant to Gibraltar Financial Services Commission regulations. The coverage ratio maintained by the underwriting company of 234% at 31 July 2015 is materially in line with 31 July 2014. The regulator requires a minimum of 200% and the Group therefore has significant headroom against this.

The coverage ratio has reduced from 277% as at 31 January 2015 level following the distribution of underwriting profits by way of dividend from the restricted underwriting company to the Group.

The Group continues to make excellent progress in preparation for the Solvency II regime and is confident that it will be fully compliant as at 1 January 2016 when the regulations take effect. The Group has decided to pursue the Undertaking Specific Parameters route and anticipates that this will be approved by our regulator, the Financial Services Commission in Gibraltar, in early Q4 2015.

Having completed the analysis of the effects of the regulations, the Group remains comfortable in our capital position as we transition to Solvency II.

TRAVEL

The travel business has delivered a strong performance in the six months to 31 July 2015 despite competitive, and at times uncertain, market conditions. The acquisition of Destinology in August 2014 has contributed to the strong growth in revenues and profits.

Holidays

The Holidays business revenue increased by 25.3% to £166.9m (H1 2014: £133.2m). £30.8m of this was contributed by Destinology with the balance coming from increases in both Saga Holidays and Titan Travel. The growth has been driven by a shift in product mix to higher value long-haul holidays and sales of the new third party cruise product.

Gross profit generated of £35.6m was 22.3% higher than H1 2014 (£29.1m). Of this, £4.1m was attributable to Destinology, with the remainder due to the shift in mix towards higher value, higher profit long-haul holidays.

Cruising

Saga Cruising generated revenue of £42.8m, 1.2% lower than H1 2014, the result of a changing mix of itineraries during the period. Improved yield management has continued to deliver benefits to average daily rates and load factors achieved in the period were 83.8%, compared to 85.3% in H1 2014. These are high occupancy levels given the customer demographic of the ships where single occupancy and the absence of children in cabins naturally reduce the load factors.

The Cruising business generated gross profit of £7.8m, which was down £0.8m on the previous half-year. This reflects the slightly lower revenues and increased expenditure on repairs and maintenance of the ships. The Group expects profits from the cruising business to grow for the year as a whole.

The Group's business case for the purchase of the new ship is primarily based on margin improvement, resulting from the increased efficiency of operating new capacity. The Group's financial projections for the new ship generate an ungeared IRR in the mid-teens, comfortably above the Group's cost of capital.

Trading EBITDA and Trading Profit

Trading EBITDA of £16.9m was 11.2% higher than H1 2014. Just under half of this increase arose from the acquisition of Destinology, with the remainder driven by margin improvements in Titan. Trading profit grew by 17.6% to £10.7m.

Current Trading

As at 26 September 2015, Holidays revenues booked for 2015/16 departures are 2.5% ahead of the comparable point in 2014 for 2014/15 departures. Additionally for 2016/17 departures, revenues booked are 3.7% ahead of the comparable prior year date for 2015/16 departures.

As at 26 September 2015 for 2015/16 Cruising departures, load factors are 84.3% compared to 85.4% at the comparable date in 2014 for 2014/15 departures. Load factors for 2016/17 departures are 57.2%, 1.0 percentage point lower than the comparable date in 2014 for 2015/16 departures. Daily rates were also higher than the prior year.

HEALTHCARE SERVICES

Continuing Operations

The Saga Healthcare business comprising the Country Cousins and Patricia White's brands, the Saga SOS Personal Alarms product and the new private pay pilot, has experienced a good trading period, growing revenue by 9.5% to £2.3m (H1 2014: £2.1m).

Investment in the new private pay pilot, primarily in the establishment of a back office for the new business, has resulted in Trading Profit being £0.4m lower. This investment was necessary to position the business for future growth.

MEDIA AND CENTRAL COSTS

The Group generated third-party revenue of £8.2m within Media and Central (H1 2014: £8.8m). The operating loss of £10.0m resulted primarily from the normalisation of listed company costs, which accounted for £4.2m of the movement, given that H1 2014 had limited comparable costs. As many of these costs were being incurred during the six months to 31 January 2015, there will not be a similar increase in central costs in the six months to 31 January 2016 when compared to the prior year.

Discontinued Operations

In January 2015, the Group announced its intention to divest the local authority section of its healthcare business, Allied Healthcare, and accordingly this is treated as a discontinued operation and its value written down to zero. The Group has recognised a total loss after tax in respect of the discontinued operation of £3.2m, compared to £2.7m in the previous half-year.

The market has remained challenging and revenue for the half-year of £126.9m was 11.5% lower than H1 2014 (£143.4m). This is driven by significant volume decreases on all contracts coupled with continuing deflationary pressures on hourly rates which has affected the whole market.

Positive actions on costs have reduced the £6.4m shortfall in gross profit to a £1.1m reduction in Trading EBITDA. The £3.0m cost of the on-going restructuring programme, which has been treated as exceptional, is comparable to the prior half-year period.

Following the classification of the operation as held for sale, the amortisation of the associated acquired intangible assets has ceased (H1 2014: £5.2m), resulting in a reduced operating loss for the period of £1.8m (H1 2014: £6.3m). After this cost, the business made a loss after tax of £3.2m (2014: £7.9m).

Conclusion

The Group is confident that growth in Trading EBITDA for the year as a whole will be in line with market expectations, with further growth in the core businesses and limited increases in the Group's plc costs in H2 of this financial year compared to the second half of the prior year. The year-on-year incremental effect of the amortisation of acquired intangibles will be an increased charge of c£4m. With a reducing net debt level, the finance charge for the second half of the year will be marginally below the charge in the first six months.

Condensed consolidated income statement

for the period ended 31 July 2015