TIDMSAGA
RNS Number : 0855C
SAGA PLC
27 September 2018
27 September 2018
Saga plc
Interim Results for the six months ended 31 July 2018
Investing in new business; Results in line with expectations
Saga plc ("Saga" or "the Group"), the UK's specialist in
products and services for life after 50, announces its interim
results for the six months ended 31 July 2018.
Financial highlights
31 July 31 July Change
2018 2017
(restated)
------------------------------------------ ----------- ------------- --------
Profit before tax GBP109.0m GBP105.6m 3.2%
Underlying Profit Before Tax(1) GBP106.8m GBP110.9m (3.7)%
Interim dividend 3.0p 3.0p -
Available operating cash flow(1) GBP89.5m GBP89.6m (0.1)%
Net debt(2) GBP429.7m GBP460.4m (6.7)%
Debt ratio (net debt to Trading EBITDA) 1.77x 1.77x -
1 Alternative performance measure - refer to the glossary on
pages 55-56 for definition and explanation
2 Bank debt and borrowings net of available cash (excluding
restricted cash)
-- Profit before tax of GBP109.0m up 3.2%, benefitting from a
GBP2.2m positive movement in the fair value of derivatives.
-- Underlying Profit Before Tax 3.7% lower at GBP106.8m, reflecting:
- planned investment in new business and improved retention in insurance;
- increase in new business acquisition costs in a challenging insurance market;
- strong underwriting performance; and
- decline in the written to earned adjustment, as expected.
-- Sustained strong cash generation of GBP89.5m, with operating
cash conversion rising to 67.2%.
-- Interim dividend of 3.0p.
Operational and divisional highlights
-- Customer numbers back to H1 2017 levels driven by a 19%
increase in Motor and Home new business.
-- Lower operating expenses across all our businesses with
administrative and selling expenses falling from GBP126.3m to
GBP120.0m.
-- Industry leading levels of multiple product holdings across
the Group, with 44% of customers owning more than one product.
-- Possibilities membership up to 850,000 members.
Insurance
-- Retail Broking written profits 6.2% lower at GBP63.4m,
reflecting planned investment in new business.
-- Motor panel helped drive footprint expansion with third-party
share of policies rising to 22.0% (H1 2017: 14.9%), with 67% of new
business growth from under 65s.
-- Strong Underwriting performance of GBP45.6m (H1 2017:
GBP47.0m), with reported COR (excluding quota share) of 61.5% (H1
2017: 61.2%) and reserve releases of GBP38.0m.
Travel
-- Solid Travel performance with profit before tax of GBP12.0m, as expected.
-- Spirit of Discovery forward sales continue to meet our
ambitious plan with over 64% of our sales target for the first 19
cruises already achieved at attractive rates.
Commenting on the results, Lance Batchelor, Group Chief
Executive Officer, said:
"At the end of last year, we announced our intention to invest
in new customer acquisition. I am pleased to report significant
progress in the first half of the year. Our Retail Broking policy
count is back to the levels seen in the first half of 2017, despite
a more competitive pricing landscape. Underwriting results continue
to be strong, with another excellent claims management
performance.
"Travel has delivered a solid performance and we are seeing
encouraging demand for our new ship, Spirit of Discovery, in line
with our ambitious plan. Construction is on track, with keel laying
this summer, ahead of her maiden cruise next year.
"The Group is benefitting from lower operating expenses across
the business, reflecting a more efficient operating structure and
investment in our IT systems.
"The business continues to be highly cash generative allowing us
to pay a dividend of 3.0p. We remain confident in the Group's
prospects."
An interim results presentation to analysts and investors will
be held at 09.45 Thursday 27 September 2018 at the offices of
Goldman Sachs, Peterborough Court, 133 Fleet Street, London EC4A
2BB. The presentation will be broadcast via a webcast and a
conference call for registered participants. Registration for the
webcast can be completed at http://corporate.saga.co.uk/. The
conference call can be accessed on: UK: 0330 336 9104, all other
locations: +44 (0) 330 336 9104. Participant Password: 742195.
For further information please contact:
Saga plc
Mark Watkins, Investor Relations Director Tel: 07738 777 479
Email: mark.watkins@saga.co.uk
MHP Communications
Tim Rowntree/Simon Hockridge/Reg Hoare Tel: 020 3128 8742 /
8572
Email: saga@mhpc.com
Notes to editors
Saga is a specialist in the provision of products and services
for life after 50. The Saga brand is one of the most recognised and
trusted brands in the UK and is known for its high level of
customer service and its high quality, award winning products and
services including cruises and holidays, insurance, personal
finance and publishing. www.saga.co.uk
Group CEO's statement
Overview
We started this year with a clear plan to invest in new customer
acquisition and to reduce our costs, with a more efficient
operating structure. I'm pleased to report that we have made
significant progress. The investments in new business and improved
retention in our Retail Broking business have seen policy count
back to the levels seen in the first half of 2017. This has been
driven by a 19% increase in motor and home new business volumes.
Our Underwriter has performed strongly with a reported Combined
Operating Ratio (excluding quota share) of 61.5% and reserve
releases of GBP38.0m. Travel has delivered a solid performance and
demand for our new ship is in line with our ambitious plan.
Reported profit before tax increased by 3.2% to GBP109.0m (H1
2017: GBP105.6m) with a benefit of GBP2.2m from positive movements
in the fair value of derivatives. Underlying Profit Before Tax
reduced to GBP106.8m (H1 2017: GBP110.9m) reflecting the
investments we made in new business and improved retention during
the period and a reduction in the written to earned benefit, offset
by a strong underwriting performance.
The Group continues to be highly cash generative and we
increased our available operating cash flow percentage to 67.2% (H1
2017: 63.4%). This resulted in GBP89.5m of available operating cash
flow. Our continued confidence in the cash generation of the
business has allowed us to declare an interim dividend of 3.0p.
Insurance
Retail Broking
The motor insurance market remained challenging during the
period. We have seen lower average retail premiums, but this has
been partially offset by lower net rates from our motor panel
members. In the first half of 2017 we delivered a strong motor
broking performance of GBP24.9m, when motor premiums were rising
strongly. Our profitability fell significantly in the second half
of 2017/18 to GBP14.4m because of slowing premium inflation and a
fall in retention. Our profitability in the first half of this year
has increased to GBP20.5m, reflecting an improvement in our
retention levels and a lower cost base.
We have started to see an increase in the efficiency of our
motor panel. During the period, 67% of the growth of motor new
business volumes was from drivers below the age of 65. This
demographic is typically more competitively underwritten by our
third-party panel members and has resulted in third-party panel
share increasing to 22.0% (H1 2017: 14.9%) of policies sold.
After a positive first half for our home product, we are now
seeing upward pressure on net rates from the panel after the
adverse weather conditions seen at the start of the year. This is
expected to impact broker revenue and profitability in the second
half.
Despite these market challenges we have seen retention rates for
motor and home recover from the levels seen in H2 2017/18 and we
have been able to continue writing new business on attractive
terms. This resulted in our total core policies sold being flat
against the first half of 2017/18 and up 6.8% against the second
half of 2017/18.
The growth in customer numbers has been achieved at attractive
long term values, supported by an improvement in retention and a
high level of multiple product holdings.
Underwriting
AICL has again achieved a strong underwriting performance, with
a reported COR (excluding quota share) of 61.5% (H1 2017: 61.2%),
generating profit before tax of GBP45.6m (H1 2017: GBP47.0m). Our
excellent claims management and our consistent claims experience
continue to be very positive for small and large personal injury
claims. This has resulted in reserve releases at approximately the
same level seen in H1 2017, at GBP38.0m.
Underlying claims inflation continues to be in the mid-single
digit percentages, reflecting the industry wide long-term downward
trend in frequency, offset by a higher average claims cost.
Travel
Our Travel business continues to perform as it manages a change
in mix towards higher margin products, with fewer passengers.
Underlying profitability is flat despite some headwinds relating to
fuel hedges and a GBP1.5m investment in marketing.
The construction of our new cruise ship, Spirit of Discovery,
reached another milestone in June with the keel laying in
Papenburg. The construction continues to be on time and on budget
for her maiden cruise in July 2019.
Our forward sales continue to meet our ambitious plan. We have
achieved over 64% of our sales target for the first 19 cruises
starting June 2019, at per diems that continue to be in line with
our expectations. We have now sold over 90% of targeted capacity
for her first five cruises.
Multiple product holdings
We continue to see higher than industry levels of multiple
product holdings demonstrating the high affinity our customers have
for the Saga brand. Not only do we have a high level of product
holdings between businesses, the product holdings within each
business is also very high. For example, 15% of our insurance
customers own both motor and home products. Within emerging
businesses is the Saga Magazine which has over 300,000 monthly
subscribers. These customers have a significantly higher propensity
to buy more than one product from Saga.
Proportion of multiple product holdings
by division (August 2018)
% of customers buying an additional
product from:
Emerging
Insurance Travel businesses
------------ ------------- --------- ---------------
Insurance n/a 2.9% 8.8%
------------- ------------- --------- ---------------
Travel 31.5% n/a 31.0%
------------- ------------- --------- ---------------
Other 30.6% 9.9% n/a
------------- ------------- --------- ---------------
With the replacement of IT platforms across the business and a
more centralised view of the customer, we are now better positioned
to focus on increasing multiple product holdings within our
customer base.
Multiple product holdings
(August 2018)
Total
-------------------- --------
One product 972k
--------------------- --------
Two products 473k
--------------------- --------
Three products 186k
--------------------- --------
Four products 92
--------------------- --------
Total 1,723k
--------------------- --------
Average product
holding 1.7
--------------------- --------
44% of our customers own more than one product
Possibilities
The growth in our Possibilities membership scheme continues. We
now have over 850,000 members who have joined the scheme. We are
seeing high levels of engagement from our members with over 300,000
ballot entries for 111 exclusive events. We further developed the
proposition with the launch of Travel Possibilities in April. This
provides our members with exclusive offers from Saga and our travel
partners.
Summary and outlook
We are now starting to see the benefits from the overhaul of our
systems and our decision to make the necessary investments in new
customer acquisition. Our insurance policy count is back to H1 2017
levels and demand for Spirit of Discovery continues to support our
ambitious plan.
Overall, the Group has traded in line with our expectations for
the first six months of the year.
For the second half, the Retail Broking business is expected to
be adversely impacted by increases in net rates from our home panel
and lower average premiums in the motor market. AICL's stable
performance is expected to continue, albeit with a small reduction
in investment returns.
This ability to win new customers that offer attractive
long-term value from across the broader Group gives us confidence
for the future. Continued strong cash generation allows us to make
targeted investments, reduce debt and support the dividend.
Chief Financial Officer's Review
The Group has delivered an increase in profit before tax of 3.2%
to GBP109.0m. Underlying Profit Before Tax decreased by 3.7% to
GBP106.8m. Available operating cash flows of GBP89.5m have enabled
us to maintain a stable debt ratio of 1.77x, compared to 31 July
2017. Net debt has reduced from GBP432.0m at 31 January 2018 to
GBP429.7m at 31 July 2018. Based on these results and the stability
of our highly cash generative model, we are paying an interim
dividend of 3.0p (2017: 3.0p).
The Group has adopted IFRS 15 Revenue from Contracts with
Customers and IFRS 9 Financial Instruments and is reporting its
performance for the 6 months to July 2018 against a restated
comparative period for the 6 months to 31 July 2017 under these new
standards. For further details, see note 19.
Income Statement
Group Income Statement 6m to Growth 6m to
July 2018 July 2017
(restated)
------------------------------------------------- ------------- -------- -------------
Revenue GBP430.6m (1.7%) GBP438.0m
------------- -------------
Administrative and selling expenses (GBP120.0m) 5.0% (GBP126.3m)
Trading EBITDA(1) GBP133.2m (5.7%) GBP141.3m
Depreciation & amortisation (excluding (GBP17.8m) (GBP16.8m)
acquired intangibles)
Trading Profit(1) GBP115.4m (7.3%) GBP124.5m
Non-trading costs (GBP0.9m) (GBP2.2m)
Amortisation of acquired intangibles (GBP1.9m) (GBP2.5m)
Pension charge IAS19R (2) (GBP0.2m) (GBP2.6m)
Net finance costs (3) (GBP5.6m) (GBP6.3m)
Underlying Profit Before Tax (1) GBP106.8m (3.7%) GBP110.9m
Net fair value gains/(losses) on derivatives GBP2.2m (GBP1.0m)
Debt write off costs - (GBP4.3m)
Profit before tax GBP109.0m 3.2% GBP105.6m
------------- -------------
Tax expense (GBP21.1m) (5.5%) (GBP20.0m)
Profit after tax GBP87.9m 2.7% GBP85.6m
------------- -------------
Basic earnings per share:
Underlying earnings per share (1) 7.7p (4.9%) 8.1p
Earnings per share 7.8p 1.3% 7.7p
Revenue decreased by 1.7% to GBP430.6m (H1 2017: GBP438.0m).
Total customer spend(1) with Saga increased by 1.6% to GBP627.2m
(H1 2017: GBP617.1m), which includes gross written premiums and
insurance premium tax for all insurance policies sold.
Trading Profit was GBP115.4m (H1 2017: GBP124.5m). The reduction
was due to a decline in written to earned benefit in Retail Broking
and a lower motor broking performance, compared to a very strong
performance in H1 2017. Depreciation and amortisation increased by
GBP1.0m due to the planned investment in Guidewire.
Note
(1) Alternative performance measures - refer to the Glossary on page
55-56 for definition and explanation
(2) Pension charge IAS19R includes the additional non-cash pension
current service cost in excess of employer contributions made in the
prior period and the non-cash pension interest cost that are both required
under IAS19R
(3) Net finance costs excludes net fair value gains / (losses) on derivatives
and IAS19R pension interest costs
Underlying Profit Before Tax decreased by 3.7% to GBP106.8m (H1
2017: GBP110.9m). There was a benefit, compared to the prior
period, from a lower pension charge from IAS19R and reduced
non-trading costs. The prior period non-trading costs were impacted
by the charge related to changing the joint venture with Tilney to
a commercial arrangement.
Profit before tax increased to GBP109.0m (H1 2017: GBP105.6m).
This is due to favourable movements on foreign exchange and oil
price derivatives that were recognised in the income statement and
one-off costs associated with the unamortised facility fees of our
previous banking facilities in the prior period.
Finance costs
Net finance costs in the period were GBP5.6m (H1 2017:
GBP6.3m).
Tax expense
The Group's tax expense for the period was GBP21.1m (H1 2017:
GBP20.0m) representing a tax effective rate of 19.4% (H1 2017:
18.9%).
Earnings per share
The Group's earnings per share were 7.8p (H1 2017: 7.7p) and
underlying earnings per share were 7.7p (H1 2017: 8.1p).
Dividends
The Directors have declared an interim dividend of 3.0p per
share. The dividend will be paid on 23 November 2018 to
shareholders of ordinary shares on the register at the close of
business on 19 October 2018.
Saga offers a share alternative in the form of a dividend
re-investment plan ("DRIP") for those shareholders who wish to
elect to use their dividend payments to purchase additional shares
in the Group, rather than receive a cash payment. The last date for
shareholders to elect to participate in the DRIP will be 2 November
2018.
Cash flow and liquidity
Available operating cash flow is made up of the unrestricted
cash flows from the Retail Broking and Emerging Businesses and
Central Costs, plus any dividends paid by our restricted
businesses, Acromas Insurance Company Limited ("AICL") and Travel.
As well as a regulatory restriction on the cash within our Travel
business, the capex for Spirit of Discovery and Spirit of Adventure
is being funded from Travel cash. Therefore, until both ships are
delivered, Travel is not expected to contribute to the Group's
available operating cash flow.
The Group delivered a strong cash flow performance in the six
months to 31 July 2018, achieving available operating cash flow of
GBP89.5m, 67.2% of Trading EBITDA. This cash flow decreased by
GBP0.1m on the previous period, which was primarily driven by the
reduction in available Trading EBITDA offset by an increased
dividend paid from AICL.
Available Cash Flow 6m to Growth 6m to
July July 2017
2018 (restated)
----------------------------------------------- ------------ --------- -------------
Retail Broking Trading EBITDA GBP69.1m (10.1%) GBP76.9m
AICL Trading EBITDA GBP46.1m (2.5%) GBP47.3m
Travel Trading EBITDA GBP21.0m (2.8%) GBP21.6m
Emerging Businesses and Central Costs (GBP3.0m) (33.3%) (GBP4.5m)
Trading EBITDA
Group Trading EBITDA(1) GBP133.2m (5.7%) GBP141.3m
Less Trading EBITDA relating to restricted (GBP67.1m) 2.6% (GBP68.9m)
businesses
Intra-group dividends paid by AICL GBP50.0m 11.1% GBP45.0m
Intra-group dividends paid by Travel GBP0.0m 0.0% GBP0.0m
Working capital and non-cash items(2) (GBP16.5m) (10.7%) (GBP14.9m)
Capital expenditure funded with available (GBP10.1m) 21.7% (GBP12.9m)
cash
Available operating cash flow (1) GBP89.5m (0.1%) GBP89.6m
------------ -------------
Available operating cash flow % 67.2% 3.8% 63.4%
Available operating cash flow reconciles to net cash flows from
operating activities as follows:
6m to 6m to
July 2018 July 2017
----------------------------------------- -------------- ------------
Net cash flow from operating activities GBP81.7m GBP96.8m
(reported)
Exclude cash impact of:
Trading of restricted divisions (GBP59.8m) (GBP61.4m)
Non-trading costs GBP4.3m GBP2.9m
Interest paid GBP6.5m GBP4.3m
Tax paid GBP16.9m GBP14.9m
(GBP32.1m) (GBP39.3m)
Cash released from restricted divisions GBP50.0m GBP45.0m
Include capital expenditure funded from (GBP10.1m) (GBP12.9m)
available cash
Available operating cash flow GBP89.5m GBP89.6m
------------ ------------
Per the condensed consolidated statement of cash flows on page
23, there has been a net decrease in cash and cash equivalents in
the period to 31 July 2018 of GBP55.7m which is due to a net
purchase of financial assets of GBP44.3m.
Note
(1) Alternative performance measure - refer to glossary on page 55-56
for definition and explanation
(2) Restated to exclude IAS19R pension
current service costs
Financing
Continued strong cash flows have enabled the Group to maintain a
stable debt ratio of 1.77x compared to 31 July 2017. The debt ratio
is higher than the year end position of 1.73x, as the final
dividend is paid during H1, which is consistent with the prior
year. The Group's net debt has decreased by GBP2.3m to GBP429.7m
from GBP432.0m at 31 January 2018 and by GBP30.7m from GBP460.4m at
31 July 2017. It is made up as follows:
Net debt 31 July 31 January
2018 2018
--------------------------- ------------ ------------
Corporate bond GBP250.0m GBP250.0m
Term loan GBP170.0m GBP180.0m
Revolving credit facility GBP30.0m GBP15.0m
Less - available cash (1) (GBP20.3m) (GBP13.0m)
Total Net debt GBP429.7m GBP432.0m
------------ ------------
Pensions
Over the six month period, the valuation of the Group's pension
scheme has strengthened on an IAS19R basis by GBP11.6m to a surplus
of GBP4.6m (31 January 2018: deficit GBP7.0m):
Saga Scheme 31 July 31 January
2018 2018
--------------------------------------------- ------------- -------------
Fair value of scheme assets GBP314.5m GBP307.3m
Present value of defined benefit obligation (GBP309.9m) (GBP314.3m)
Defined benefit scheme surplus/(liability) GBP4.6m (GBP7.0m)
------------- -------------
The strengthening has been driven by a GBP7.2m increase in the
fair value of the scheme assets to GBP314.5m (January 2018:
GBP307.3m); and a decrease in the scheme liabilities of GBP4.4m to
GBP309.9m (January 2018: GBP314.3m), which was driven by a small
increase in corporate bond yields over the period and a slight
reduction in the expected future rate of inflation.
Net assets
Since 31 January 2018, total assets have increased by GBP12.3m
and total liabilities have decreased by GBP29.0m, increasing
overall net assets by GBP41.3m.
The increase in total assets is the result of an increase in
cash and short-term deposits of GBP37.1m mainly as a result of
higher levels of cash deposits received in our Travel business at
this time of year, an increase in property, plant and equipment of
GBP12.3m, primarily due to the fourth stage payment for the Spirit
of Discovery being paid in July 2018 of GBP13.4m and an increase in
trade and other receivables of GBP13.2m. This was partly offset by
a decrease in financial assets of GBP52.0m, which coincides with
the release of surplus solvency capital from the Group's
Underwriting business.
The decrease in total liabilities reflects a GBP44.9m reduction
in gross insurance contract liabilities in line with further
positive claims experience in the period, a GBP7.0m reduction in
pension scheme obligations and a decrease in financial liabilities
of GBP10.3m as a result of improved performance in cash flow hedges
in the period. This was partly offset by a GBP32.4m increase in
other liabilities due to a higher deferred revenue driven by the
seasonality of the Travel business.
Note
(1) Refer to note 13 of the Financial Statements for information
as to how this reconciles to a statutory measure of cash
Segmental Performance
6m to Growth 6m to
July July 2017
2018 (restated)
---------------------------------- ------------ --------- -------------
Revenue
Motor broking (written) GBP56.8m (9.7%) GBP62.9m
Home broking (written) GBP38.7m (2.5%) GBP39.7m
Other broking (written) GBP39.6m (1.0%) GBP40.0m
Total Retail Broking (written) GBP135.1m (5.3%) GBP142.6m
Written to earned adjustment GBP3.0m 15.4% GBP2.6m
Total Retail Broking (earned) GBP138.1m (4.9%) GBP145.2m
Underwriting GBP47.6m (0.8%) GBP48.0m
------------ -------------
Total Insurance GBP185.7m (3.9%) GBP193.2m
Travel GBP228.7m (0.7%) GBP230.4m
Emerging Businesses and Central GBP16.2m 12.5% GBP14.4m
Costs
GBP430.6m (1.7%) GBP438.0m
------------ -------------
Underlying Profit Before Tax
Motor broking (written) GBP20.5m (17.7%) GBP24.9m
Home broking (written) GBP24.6m (3.9%) GBP25.6m
Other broking (written) GBP18.3m 7.0% GBP17.1m
Total Retail Broking (written) GBP63.4m (6.2%) GBP67.6m
Written to earned adjustment GBP0.3m (92.1%) GBP3.8m
Total Retail Broking (earned) GBP63.7m (10.8%) GBP71.4m
Underwriting GBP45.6m (3.0%) GBP47.0m
------------ -------------
Total Insurance GBP109.3m (7.7%) GBP118.4m
Travel GBP12.0m 0.8% GBP11.9m
Emerging Businesses and Central (GBP14.5m) 25.3% (GBP19.4m)
Costs
GBP106.8m (3.7%) GBP110.9m
------------ -------------
KPIs
Total core policies
- Saga branded 1,252k (0.3%) 1,256k
- Non-Saga branded 176k (6.4%) 188k
1,428k (1.1%) 1,444k
------------ -------------
Passengers travelled
- Tour operations 89k (7.3%) 96k
- Cruise 14k 7.7% 13k
103k (5.5%) 109k
------------ -------------
Pure COR (underlying excl.
QS) 97.0% 0.0% 97.0%
Total revenue for the Retail Broking business reduced to
GBP135.1m (H1 2017: GBP142.6m) on a written basis, with a strong
performance of motor broking in the first half of the prior year.
Revenue for the Underwriting business was GBP47.6m (H1 2017:
GBP48.0m) and Travel revenue was relatively flat at GBP228.7m (H1
2017: GBP230.4m).
Profit in Retail Broking was GBP63.4m (H1 2017: GBP67.6m) on a
written basis. The prior period motor broking performance
benefitted from strongly rising motor premiums, while the current
period includes additional investment in policy growth, but still
represents a strong improvement on the H2 2017 written motor
profit. As guided, there was a reduction in the written to earned
adjustment principally driven by our decision to outsource the
underwriting of add-on home products.
Underwriting profit was GBP45.6m (H1 2017: GBP47.0m) with
reserve releases of GBP38.0m (H1 2017: GBP39.0m). Profit in Travel
was broadly flat against the prior period with higher average
revenues and fewer ship maintenance days offset by increased
marketing spend to drive future passenger growth and the
recognition of undesignated fuel hedging benefit in the prior year.
Emerging Businesses and Central Costs saw a 25.3% decrease in
underlying loss before tax, reflecting the reduction in non-trading
items and IAS19R pension charge.
Motor broking
6m to July 2018 Written 6m to July 2017 (restated)
Earned WTE Written Growth Earned WTE Written
------- --------------- ------------- ------------ ------------ --------- ------------ ----------- ------------
GWP
Broked GBP62.1m - GBP62.1m 14.2% GBP54.4m - GBP54.4m
Underwritten GBP105.7m - GBP105.7m (7.0%) GBP113.7m - GBP113.7m
GBP167.8m - GBP167.8m (0.2%) GBP168.1m - GBP168.1m
------------- ------------ ------------ ------------ ----------- ------------
Broker revenue GBP19.5m GBP3.0m GBP16.5m (35.8%) GBP21.1m (GBP4.6m) GBP25.7m
Instalment revenue GBP3.6m - GBP3.6m 20.0% GBP3.0m - GBP3.0m
Add-on revenue GBP14.7m - GBP14.7m (2.6%) GBP19.5m GBP4.4m GBP15.1m
Other revenue GBP22.0m - GBP22.0m 15.2% GBP19.1m - GBP19.1m
Revenue GBP59.8m GBP3.0m GBP56.8m (9.7%) GBP62.7m (GBP0.2m) GBP62.9m
------------- ------------ ------------ ------------ ----------- ------------
Gross profit GBP58.7m GBP3.0m GBP55.7m (9.0%) GBP61.0m (GBP0.2m) GBP61.2m
Marketing expenses (GBP9.8m) (GBP0.2m) (GBP9.6m) (15.7%) (GBP9.7m) (GBP1.4m) (GBP8.3m)
Other operating (GBP28.1m) (GBP2.5m) (GBP25.6m) 8.6% (GBP25.4m) GBP2.6m (GBP28.0m)
expenses
Underlying Profit GBP20.8m GBP0.3m GBP20.5m (17.7%) GBP25.9m GBP1.0m GBP24.9m
Before
Tax
------------- ------------ ------------ ------------ ----------- ------------
Number of policies
sold
- core 662k 0.2% 661k
- add-ons 831k (1.2%) 841k
------------ ------------
1,493k (0.6%) 1,502k
- Core Saga branded 486k 2.7% 473k
- Core non-Saga
branded 176k (6.4%) 188k
------------ ------------
662k 0.2% 661k
Core Saga branded
third-party
panel share (by
policy
count) 22.0% 7.1ppt 14.9%
The first half of the prior year benefitted from strongly rising
premiums in the motor market and the approach AICL adopted in
relation to pricing the Ogden rate change. As a result, revenue and
profit per core policy sold in the prior period were GBP95 and
GBP38 respectively. In H2 of the prior year, these reduced to GBP89
and GBP23 respectively with Underlying Profit Before Tax reducing
to GBP14.4m. The profit reduction in H2 resulted from significantly
lower persistency affecting policy volumes. Core policies sold
reduced from 661k in H1 to 620k in H2.
During the first half of this year, our investment in policy
growth and improved persistency compared to the second half of last
year enabled us to increase core policies sold to 662k. While
revenue per core policy has reduced to GBP86, reflecting the
increased proportion of new policies sold, profit per core policy
has improved to GBP31 and profit to GBP20.5m, benefitting not only
from increased policy volumes but also from reductions in other
expenses due to cost reduction programmes and savings from the
closure of Direct Choice.
Gross written premiums decreased by 0.2% as average gross
written premiums were 0.4% lower and core policies 0.2% higher.
Saga branded polices increased by 2.7% after the discontinuation of
the Direct Choice brand last year.
Gross written premiums from business underwritten by AICL
decreased by 7.0% to GBP105.7m (H1 2017: GBP113.7m), given the more
competitive position of third party underwriters on the panel in H1
this year.
Written marketing expenses have increased by 15.7%, reflecting
an increase in new business volumes. Overall Underlying written
profit before tax has decreased by 17.7% to GBP20.5m (H1 2017:
GBP24.9m).
Home broking
6m to July 2018 Written 6m to July 2017 (restated)
Earned WTE Written Growth Earned WTE Written
----------- ----------------- ------------- ------ ------------ --------- ------------ --------- ------------
GWP
Broked GBP72.1m - GBP72.1m (3.5%) GBP74.7m - GBP74.7m
Underwritten - - - 0.0% - - -
GBP72.1m - GBP72.1m (3.5%) GBP74.7m - GBP74.7m
------------- ------ ------------ ------------ --------- ------------
Broker revenue GBP22.9m - GBP22.9m (7.7%) GBP24.8m - GBP24.8m
Instalment revenue GBP1.4m - GBP1.4m 0.0% GBP1.4m - GBP1.4m
Add-on revenue GBP5.8m - GBP5.8m (6.5%) GBP9.0m GBP2.8m GBP6.2m
Other revenue GBP8.6m - GBP8.6m 17.8% GBP7.3m - GBP7.3m
Revenue GBP38.7m - GBP38.7m (2.5%) GBP42.5m GBP2.8m GBP39.7m
------------- ------ ------------ ------------ --------- ------------
Gross profit GBP38.7m - GBP38.7m (2.5%) GBP42.5m GBP2.8m GBP39.7m
Marketing expenses (GBP3.4m) - (GBP3.4m) (13.3%) (GBP3.0m) - (GBP3.0m)
Other operating expenses (GBP10.7m) - (GBP10.7m) 3.6% (GBP11.1m) - (GBP11.1m)
Underlying Profit Before GBP24.6m - GBP24.6m (3.9%) GBP28.4m GBP2.8m GBP25.6m
Tax
------------- ------ ------------ ------------ --------- ------------
Number of policies
sold (all Saga branded)
- core 595k (1.2%) 602k
- add-ons 284k 2.9% 276k
------------ ------------
879k 0.1% 878k
The home market remains challenging. We have delivered a small
reduction in revenues and underlying profits. At the same time we
have maintained comparable core policy numbers to H1 2017. Average
gross written premiums per policy have reduced marginally,
resulting in decreases in written revenue and written profit to
GBP38.7m and GBP24.6m respectively (H1 2017: GBP39.7m and
GBP25.6m).
The reduction in the written to earned adjustment in the current
period is due to the Group no longer underwriting any add-on home
products following the outsourcing of home products.
Other insurance broking
6m to July 2018 Written 6m to July 2017 (restated)
Earned WTE Written Growth Earned WTE Written
----------- ----------------- ------------- ------ ------------ --------- ------------ ----- ------------
GWP
Broked GBP66.6m - GBP66.6m 1.2% GBP65.8m - GBP65.8m
Underwritten GBP2.4m - GBP2.4m (11.1%) GBP2.7m - GBP2.7m
GBP69.0m - GBP69.0m 0.7% GBP68.5m - GBP68.5m
------------- ------ ------------ ------------ ----- ------------
Broker revenue GBP27.0m - GBP27.0m (6.9%) GBP29.0m - GBP29.0m
Instalment revenue GBP0.1m - GBP0.1m 0.0% GBP0.1m - GBP0.1m
Other revenue GBP12.5m - GBP12.5m 14.7% GBP10.9m - GBP10.9m
Revenue GBP39.6m - GBP39.6m (1.0%) GBP40.0m - GBP40.0m
------------- ------ ------------ ------------ ----- ------------
Gross profit GBP34.5m - GBP34.5m 0.3% GBP34.4m - GBP34.4m
Marketing expenses (GBP6.2m) - (GBP6.2m) 4.6% (GBP6.5m) - (GBP6.5m)
Other operating expenses (GBP10.0m) - (GBP10.0m) 7.4% (GBP10.8m) - (GBP10.8m)
Underlying Profit Before GBP18.3m - GBP18.3m 7.0% GBP17.1m - GBP17.1m
Tax
------------- ------ ------------ ------------ ----- ------------
Number of policies
sold (all Saga branded)
- core 171k (5.5%) 181k
- add-ons 5k 0.0% 5k
------------ ------------
176k (5.4%) 186k
Gross written premiums have increased by 0.7%. Higher premiums
on private medical insurance ("PMI") have been offset by lower
travel insurance volumes. PMI premium rises in the market reflected
increasing claims frequency, given the ongoing pressures within the
NHS. Our broker revenue has reduced 6.9%, as we have managed the
balance between price increases on PMI to our customers and the net
rate increases that we have received from our PMI underwriter.
The policy reduction is wholly due to travel insurance, where we
have seen aggressive pricing actions by certain competitors,
leading to us reducing marketing spend and maintaining the right
balance between volume and value.
Within other revenue, we include the results of our credit hire
business, which has performed well in the period.
Overall with the benefit of lower marketing spend and reductions
in other operating costs, we have delivered an increase in
Underlying Profit Before Tax of 7.0% to GBP18.3m (H1 2017:
GBP17.1m).
Insurance Underwriting
6m to July 2018 6m to July 2017 (restated)
Reported Quota Underlying Growth Reported Quota Underlying
Share (excl. Share (excl.
(QS) QS) (QS) QS)
------------- ------------ ------------ ------------ ------------ -------- ------------ ------------ ------------
Revenue A GBP47.6m (GBP59.3m) GBP106.9m (1.9%) GBP48.0m (GBP61.0m) GBP109.0m
Claims costs B (GBP36.4m) GBP53.8m (GBP90.2m) (2.3%) (GBP36.8m) GBP55.5m (GBP92.3m)
Reserve C GBP38.0m - GBP38.0m (2.6%) GBP39.0m - GBP39.0m
releases
Other cost D (GBP5.0m) GBP6.0m (GBP11.0m) (0.9%) (GBP4.9m) GBP6.2m (GBP11.1m)
of
sales
------------ ------------ ------------ ------------ ------------ ------------
E (GBP3.4m) GBP59.8m (GBP63.2m) (1.9%) (GBP2.7m) GBP61.7m (GBP64.4m)
Gross profit GBP44.2m GBP0.5m GBP43.7m (2.0%) GBP45.3m GBP0.7m GBP44.6m
------------ ------------ ------------ ------------ ------------ ------------
Operating F (GBP1.0m) GBP1.5m (GBP2.5m) (8.7%) (GBP1.2m) GBP1.1m (GBP2.3m)
expenses
Investment GBP2.4m (GBP2.9m) GBP5.3m (8.6%) GBP2.9m (GBP2.9m) GBP5.8m
return
Quota share - GBP0.9m (GBP0.9m) 18.2% - GBP1.1m (GBP1.1m)
net cost
Underlying GBP45.6m - GBP45.6m (3.0%) GBP47.0m - GBP47.0m
Profit
Before Tax
------------ ------------ ------------ ------------ ------------ ------------
Reported
loss
ratio (B+C)/A (3.4%) 48.8% (0.1%) (4.6%) 48.9%
Expense
ratio (D+F)/A 12.6% 12.6% 0.3% 12.7% 12.3%
Reported COR (E+F)/A 9.2% 61.5% 0.3% 8.1% 61.2%
Pure COR (E+F-C)/A 89.1% 97.0% 0.0% 89.4% 97.0%
Number of earned policies 426k (8.2%) 464k
Excluding the impact of the quota share agreement, Underwriting
revenue decreased by 1.9% to GBP106.9m (H1 2017: GBP109.0m) as AICL
underwrote a lower number of policies, with external panel members
winning a greater share compared with H1 in the prior year. This
was partially offset by higher revenue per policy. Excluding the
impact of quota share, the Underwriting business delivered a
consistent pure combined operating ratio of 97.0%. Including the
quota share, the pure combined operating ratio was 89.1%
Reserve releases of GBP38.0m (H1 2017: GBP39.0m) have resulted
in an Underlying Profit Before Tax of GBP45.6m (H1 2017: GBP47.0m)
and a stable reported combined operating ratio of 61.5% (H1 2017:
61.2%) which excludes the impact of the quota share.
Reserve releases
6m to Growth 6m to
July 2018 July 2017
----------------- ------------ -------- ------------
Motor insurance GBP38.0m (2.6%) GBP39.0m
Home insurance - -
Other insurance - -
Total GBP38.0m (2.6%) GBP39.0m
------------ ------------
Continued strong claims management and favourable claims
development experience during the six months to 31 July 2018 has
resulted in a reduction in the reserves required in respect of
prior year claims. This has been driven by the experience on large
and small personal injury claims and has enabled reserve releases
on motor totalling GBP38.0m during the period. There has been no
deterioration in the underlying reserve margin held over best
estimate in percentage terms.
Analysis of insurance contract liabilities at 31 July 2018 and
31 Jan 2018 is as follows:
At 31 July 2018 At 31 Jan 2018 (restated)
Gross Reinsurance Net Gross Reinsurance Net
Assets Assets
(1) (1)
-------------------------- ----------- ------------- ----------- ----------- ------------- -----------
Reported claims GBP296.6m (GBP77.7m) GBP218.9m GBP306.5m (GBP76.1m) GBP230.4m
Incurred but not GBP124.6m (GBP17.5m) GBP107.1m GBP149.3m (GBP17.9m) GBP131.4m
reported(2)
Claims handling GBP9.2m - GBP9.2m GBP10.6m - GBP10.6m
provision
----------- ------------- ----------- ----------- ------------- -----------
Total claims outstanding GBP430.4m (GBP95.2m) GBP335.2m GBP466.4m (GBP94.0m) GBP372.4m
Unearned premiums GBP106.1m (GBP4.1m) GBP102.0m GBP115.0m (GBP6.2m) GBP108.8m
Total GBP536.5m (GBP99.3m) GBP437.2m GBP581.4m (GBP100.2m) GBP481.2m
----------- ------------- ----------- ----------- ------------- -----------
The Group's total insurance contract liabilities net of
reinsurance assets have reduced by GBP44.0m as at 31 July 2018 from
the previous year end, driven by a decrease in reported claims of
GBP11.5m, a GBP24.3m reduction in IBNR claims reserves, a GBP1.4m
decrease in the claims handling provision and GBP6.8m less in
unearned premium reserve. The reduction in IBNR claims reserves was
mainly due to favourable experience on large and small personal
injury claims.
Note
(1) Excludes funds-withheld quota
share agreement
(2) Includes amounts for reported claims that are expected
to become periodical payment orders
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 GBP58.3m compared
with the year end, from GBP475.1m as at 31 January 2018 to
GBP416.8m as at 31 July 2018. As at 31 July 2018, 96% of the
financial assets held by the Group were invested with
counterparties with a risk rating of BBB or above, which is in line
with the previous year and reflects the stable credit risk rating
of the Group's counterparties.
At 31 July 2018 AAA AA A BBB Unrated Total
----------------------------- ---------- ----------- ----------- ----------- ---------- -----------
Underwriting investment
portfolio:
Deposits with financial - GBP30.3m GBP20.3m GBP23.5m - GBP74.1m
institutions
Debt securities GBP15.0m GBP123.0m GBP55.9m GBP78.5m GBP10.3m GBP282.7m
Money market funds GBP53.6m - - - - GBP53.6m
Loan funds - - - - GBP6.4m GBP6.4m
Total invested funds GBP68.6m GBP153.3m GBP76.2m GBP102.0m GBP16.7m GBP416.8m
Hedging derivative assets - - GBP43.3m GBP1.4m - GBP44.7m
Total financial assets GBP68.6m GBP153.3m GBP119.5m GBP103.4m GBP16.7m GBP461.5m
---------- ----------- ----------- ----------- ---------- -----------
Solvency Capital
6m to 12m to
July 2018(1) Jan 2018
------------------------------------- --------------- -----------
Undertaking-specific parameters
Solvency Capital Requirement (SCR) GBP71.2m GBP79.9m
Available capital GBP110.9m GBP137.0m
Surplus GBP39.7m GBP57.1m
--------------- -----------
Coverage 156% 171%
Under Solvency II the Group had an SCR of GBP71.2m at 31 July
2018 (Jan 2018: GBP79.9m) and available capital was GBP110.9m (Jan
2018 GBP137.0m), giving a coverage ratio of 156% (Jan 2018:
171%).
Note
(1) The amounts shown for 6m to July 2018 are estimated and unaudited
Travel
6m to July 2018 6m to July 2017 (restated)
Tour Cruising Total Growth Tour Cruising Total
Operations Travel Operations Travel
---------------- --------------- ----------- ------------ --------- ---------------- ----------- ------------
Revenue GBP181.1m GBP47.6m GBP228.7m (0.7%) GBP185.5m GBP44.9m GBP230.4m
--------------- ----------- ------------ ---------------- ----------- ------------
Gross profit GBP35.3m GBP12.5m GBP47.8m 0.0% GBP35.5m GBP12.3m GBP47.8m
Marketing (GBP10.0m) (GBP4.5m) (GBP14.5m) (11.5%) (GBP9.4m) (GBP3.6m) (GBP13.0m)
expenses
Other (GBP18.2m) (GBP3.2m) (GBP21.4m) 7.0% (GBP19.0m) (GBP4.0m) (GBP23.0m)
operating
expenses
Investment GBP0.1m - GBP0.1m 0.0% GBP0.1m - GBP0.1m
return
Underlying GBP7.2m GBP4.8m GBP12.0m 0.8% GBP7.2m GBP4.7m GBP11.9m
Profit Before
Tax
--------------- ----------- ------------ ---------------- ----------- ------------
Number of
holidays
passengers 89k n/a 89k (7.3%) 96k n/a 96k
Number of
cruise
passengers n/a 14k 14k 7.7% n/a 13k 13k
Number of
cruise
passenger
days n/a 167k 167k 1.8% n/a 164k 164k
The Tour operations business generated a revenue of GBP181.1m
(H1 2017: GBP185.5m) with lower departing passenger numbers of 89k
(H1 2017: 96k). This was partially offset by an increase in spend
per passenger due to a continued shift in product mix towards
higher value long haul, river cruise and third party cruise
products. As a result of the mix shift and improved cost control,
the gross profit margin has improved from 19.1% to 19.5%. We have
increased marketing spend within tour operating by GBP0.6m compared
to H1 in the previous year to drive passenger bookings. Underlying
Profit Before Tax from Tour Operations is in line with the prior
period at GBP7.2m at an increased profit margin of 4.0% (H1 2017:
3.9%).
Saga Cruising delivered a 6.0% increase in revenue to GBP47.6m
(H1 2017: GBP44.9m) reflecting an increase in passenger days of 3k
with increased capacity. There were no scheduled maintenance days
in the period compared with 19 days of maintenance on the Saga
Pearl in the comparable period.
The Gross profit for Cruising was impacted by the treatment of
hedging gains on fuel. Owing to the significant rise in the price
of oil through December 2017 and January 2018, the year-end
derivatives charge included a GBP1.6m mark-to-market benefit on
undesignated fuel hedges related to the current financial year. Of
this, GBP0.8m related to the first half of the year. This will not
be an issue after this financial year with the introduction of
IFRS9, which will enable improved matching of hedging
contracts.
Underlying Profit Before Tax from the Cruising business was
GBP4.8m (H1 2017: GBP4.7m). Increased marketing spend was partially
offset by cost savings from operational efficiencies.
Trading to week ending 16 2018/19 departures 2019/20 departures
September 2018
-------------------------------
2018/19 Growth 2017/18 2018/19 Growth 2017/18
------------------------------- --------- -------- --------- --------- -------- ---------
Tour operating revenue GBP'm 342.3 (0.2%) 342.9 113.6 (2.4%) 116.4
Tour operating passengers 172.7 (5.0%) 181.7 48.1 (5.9%) 51.1
Cruise revenue GBP'm 87.6 8.0% 81.1 66.5 26.7% 52.5
Cruise passengers 25.8 7.9% 23.9 19.7 37.8% 14.3
------------------------------- --------- -------- --------- --------- -------- ---------
Emerging Businesses and Central Costs
6m to July 2018 6m to July 2017 (restated)
Emerging Central Total Growth Emerging Central Total
Businesses costs Businesses costs
---------------------- ------------- ------------ ------------ ------------- ------------ ------------
Revenue GBP15.6m GBP0.6m GBP16.2m 12.5% GBP13.4m GBP1.0m GBP14.4m
------------- ------------ ------------ ------------- ------------ ------------
Profit before GBP2.1m (GBP10.8m) (GBP8.7m) 17.1% GBP0.5m (GBP11.0m) (GBP10.5m)
interest,
tax & the IAS19R
pension charge
IAS19R pension - (GBP0.2m) (GBP0.2m) 92.3% - (GBP2.6m) (GBP2.6m)
charge
Net finance costs - (GBP5.6m) (GBP5.6m) 11.1% - (GBP6.3m) (GBP6.3m)
Underlying Profit GBP2.1m (GBP16.6m) (GBP14.5m) 25.3% GBP0.5m (GBP19.9m) (GBP19.4m)
/ (Loss) Before Tax
------------- ------------ ------------ ------------- ------------ ------------
Revenue from Emerging Businesses (which includes personal
finance, healthcare services, retirement villages and the media
businesses) increased by 16.4% to GBP15.6m (H1 2017: GBP13.4m) and
delivered an improved profit of GBP2.1m (H1 2017: GBP0.5m).
Central Costs reduced slightly to GBP10.8m (H1 2017: GBP11.0m).
There was a GBP2.4m reduction in the additional IAS19R pension
charge following the completion of the triennial review of the
Group's defined benefit pension scheme in the previous year that
aligned the pension current service cost with the employer
contributions being paid. This resulted in a reduced loss from
Central Costs of GBP16.6m (H1 2017: GBP19.9m).
Condensed consolidated income statement
for the period ended 31 July 2018
Unaudited
Unaudited 6m to 12m to
6m to Jul 2017 Jan 2018
Note Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
Revenue 3 430.6 438.0 860.3
Cost of sales 3 (198.8) (199.6) (412.8)
----------- ------------- --------------
Gross profit 231.8 238.4 447.5
Administrative and selling expenses (120.0) (126.3) (254.3)
Investment income 0.6 1.4 7.6
Finance costs (5.6) (8.1) (19.1)
Finance income 2.2 0.7 1.5
Share of loss of joint ventures - (0.5) (2.2)
-----------
Profit before tax from continuing
operations 109.0 105.6 181.0
Tax expense 5 (21.1) (20.0) (33.9)
----------- ------------- --------------
Profit for the period from continuing
operations 87.9 85.6 147.1
Loss after tax for the year from
discontinued operations - - (7.6)
Profit for the year 87.9 85.6 139.5
=========== ============= ==============
Attributable to:
Equity holders of the parent 87.9 85.6 139.5
=========== ============= ==============
Earnings per share:
Basic 7 7.9p 7.7p 12.5p
Diluted 7 7.9p 7.6p 12.4p
Earnings per share for continuing
operations:
Basic 7 7.8p 7.7p 13.2p
Diluted 7 7.8p 7.6p 13.1p
Condensed consolidated statement of comprehensive income
for the period ended 31 July 2018
Unaudited
Unaudited 6m to 12m to
6m to Jul 2017 Jan 2018
Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
Profit for the period 87.9 85.6 139.5
Other comprehensive income
Other comprehensive income to be reclassified
to the income statement in subsequent periods
Net gains/(losses) on hedging instruments
during the period 17.5 9.5 (5.3)
Recycling of previous gains to income statement
on matured hedges (2.6) (11.4) (18.8)
----------- ------------- --------------
Total net gain/(loss) on cash flow hedges 14.9 (1.9) (24.1)
Associated tax effect (2.5) 0.3 4.1
Net (losses)/gains on fair value financial
assets (1.3) 1.3 (0.3)
Recycling of previous gains to income statement
on sale of fair value financial assets
during the year - - (4.4)
----------- ------------- --------------
Total net (losses)/gains on fair value
financial assets (1.3) 1.3 (4.7)
Associated tax effect 0.2 (0.2) 0.8
Total other comprehensive gains/(losses)
with recycling to income statement 11.3 (0.5) (23.9)
Other comprehensive income not to be reclassified
to the income statement in subsequent periods
Re-measurement gains on defined benefit
plans 9.3 5.8 10.2
Tax effect (1.6) (1.0) (1.7)
Total other comprehensive gains without
recycling to income statement 7.7 4.8 8.5
----------- ------------- --------------
Total other comprehensive income/(losses) 19.0 4.3 (15.4)
----------- ------------- --------------
Total comprehensive income for the period 106.9 89.9 124.1
=========== ============= ==============
Attributable to:
Equity holders of the parent 106.9 89.9 124.1
======= ====== =======
Condensed consolidated statement of financial position
as at 31 July 2018
Unaudited
As at Jul As at Jan
Unaudited 2017 2018
As at Jul
Note 2018 (restated) (restated)
Assets GBP'm GBP'm GBP'm
Goodwill 9 1,485.0 1,485.0 1,485.0
Intangible assets 10 60.7 58.3 61.2
Retirement benefit scheme surplus 14 4.6 - -
Property, plant and equipment 11 175.7 142.0 163.4
Financial assets 12 461.5 551.8 513.5
Deferred tax assets 12.3 14.1 13.7
Reinsurance assets 15 99.3 98.0 100.2
Inventories 5.7 5.6 5.8
Trade and other receivables 229.4 212.1 216.2
Assets held for sale 6.8 - 6.8
Cash and short-term deposits 13 120.3 144.5 83.2
------------
Total assets 2,661.3 2,711.4 2,649.0
============ ============== ==============
Liabilities
Retirement benefit scheme obligations 14 - 8.6 7.0
Gross insurance contract liabilities 15 536.5 600.5 581.4
Provisions 3.4 0.5 4.7
Financial liabilities 12 458.2 487.6 468.5
Current tax liabilities 20.9 18.6 15.2
Deferred tax liabilities 18.3 22.6 17.2
Other liabilities 175.3 171.1 142.9
Trade and other payables 180.6 177.6 185.3
Total liabilities 1,393.2 1,487.1 1,422.2
------------ -------------- --------------
Equity
Issued capital 11.2 11.2 11.2
Share premium 519.3 519.3 519.3
Retained earnings 695.0 640.7 666.1
Share-based payment reserve 12.5 10.9 11.4
Fair value reserve (1.8) 4.3 (0.7)
Hedging reserve 31.9 37.9 19.5
------------
Total equity 1,268.1 1,224.3 1,226.8
------------ -------------- --------------
Total liabilities and equity 2,661.3 2,711.4 2,649.0
============ ============== ==============
Condensed consolidated statement of changes in equity
for the period ended 31 July 2018
Attributable to the equity holders of the parent
------------------------------------------------------------------------------------------
Share-based
Issued Share Retained payment Fair value Hedging Total
capital premium earnings reserve reserve reserve equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Unaudited
At 1 February 2018 (as
reported) 11.2 519.3 662.8 11.4 (0.6) 19.4 1,223.5
Effect of adoption IFRS
9 and
15 - - 3.3 - (0.1) 0.1 3.3
----------- ---------- ----------- ------------- ------------ ---------- ---------
At 1 February 2018
(restated) 11.2 519.3 666.1 11.4 (0.7) 19.5 1,226.8
Profit for the period - - 87.9 - - - 87.9
Other comprehensive
income/(losses)
excluding recycling - - 7.7 - (1.1) 14.5 21.1
Recycling of previous
gains
to income statement - - - - - (2.1) (2.1)
----------- ---------- ----------- ------------- ------------ ---------- ---------
Total comprehensive
income - - 95.6 - (1.1) 12.4 106.9
Dividends paid - - (67.3) - - - (67.3)
Share-based payment
charge - - - 2.3 - - 2.3
Exercise of share
options - - 0.6 (1.2) - - (0.6)
At 31 July 2018 11.2 519.3 695.0 12.5 (1.8) 31.9 1,268.1
=========== ========== =========== ============= ============ ========== =========
Unaudited
At 1 February 2017 (as
reported) 11.2 519.3 607.8 15.6 3.3 38.0 1,195.2
Effect of adoption IFRS
9 and
15 - - 1.3 - (0.1) 1.5 2.7
----------- ---------- ----------- ------------- ------------ ---------- ---------
At 1 February
2017(restated) 11.2 519.3 609.1 15.6 3.2 39.5 1,197.9
Profit for the period
(restated) - - 85.6 - - - 85.6
Other comprehensive
income/(losses)
excluding recycling
(restated) - - 4.8 - 1.1 7.8 13.7
Recycling of previous
gains
to income statement - - - - - (9.4) (9.4)
----------- ---------- ----------- ------------- ------------ ---------- ---------
Total comprehensive
income/(losses)
(restated) - - 90.4 - 1.1 (1.6) 89.9
Dividends paid - - (64.9) - - - (64.9)
Share-based payment
transactions - - - 2.1 - - 2.1
Exercise of share
options - - 6.1 (6.8) - - (0.7)
----------- ---------- ----------- ------------- ------------ ---------- ---------
At 31 July 2017
(restated) 11.2 519.3 640.7 10.9 4.3 37.9 1,224.3
=========== ========== =========== ============= ============ ========== =========
At 1 February 2017 (as
reported) 11.2 519.3 607.8 15.6 3.3 38.0 1,195.2
Effect of adoption IFRS
9 and
15 - - 1.3 - (0.1) 1.5 2.7
----------- ---------- ----------- ------------- ------------ ---------- ---------
At 1 February 2017
(restated) 11.2 519.3 609.1 15.6 3.2 39.5 1,197.9
Profit for the year
(restated) - - 139.5 - - - 139.5
Other comprehensive
income/(losses)
excluding recycling
(restated) - - 8.5 - (0.3) (4.4) 3.8
Recycling of previous
gains
to income statement - - - - (3.6) (15.6) (19.2)
----------- ---------- ----------- ------------- ------------ ---------- ---------
Total comprehensive
income/(losses)
(restated) - - 148.0 - (3.9) (20.0) 124.1
Dividends paid - - (98.5) - - - (98.5)
Share-based payment
transactions - - - 4.0 - - 4.0
Exercise of share
options - - 7.5 (8.2) - - (0.7)
----------- ---------- ----------- ------------- ------------ ---------- ---------
At 31 January 2018
(restated) 11.2 519.3 666.1 11.4 (0.7) 19.5 1,226.8
=========== ========== =========== ============= ============ ========== =========
Condensed consolidated statement of cash flows
for the period ended 31 July 2018
Unaudited
Unaudited 6m to 12m to
6m to Jul 2017 Jan 2018
Note Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
Profit before tax from continuing operations 109.0 105.6 180.8
Loss before tax from discontinued operations - - (7.8)
----------- ------------- -------------
Profit before tax 109.0 105.6 173.0
Depreciation, impairment and loss on
disposal of property, plant and equipment 9.4 10.2 20.0
Amortisation and impairment of intangible
assets 10.3 9.1 18.5
Share-based payment transactions 2.2 1.2 3.0
Accelerated amortisation of debt issue
costs - 4.3 4.3
Impairment of investment in joint venture - 1.9 1.9
Impairment of financial assets - - 6.6
Finance costs 5.6 8.1 14.9
Finance income (2.2) (0.7) (1.5)
Share of loss of joint ventures - 0.5 0.5
Interest income from investments (0.5) (1.4) (7.7)
Movements in other assets and liabilities (29.2) (24.1) (62.0)
----------- ------------- -------------
104.6 114.7 171.5
Interest received 0.5 1.3 7.4
Interest paid (6.5) (4.3) (10.9)
Income tax paid (16.9) (14.9) (32.8)
----------- ------------- -------------
Net cash flows from operating activities 81.7 96.8 135.2
Investing activities
Proceeds from sale of property, plant
and equipment 0.1 0.4 0.4
Purchase of property, plant and equipment
and intangible assets (30.1) (32.9) (82.5)
Net (purchase)/disposal of financial
assets (44.3) 61.4 93.1
Investment in joint venture - (1.0) (1.0)
Net cash flows (used in)/from investing
activities (74.3) 27.9 10.0
Financing activities
Proceeds from exercise of share options - 0.2 0.3
Payment of finance lease liabilities (0.8) (0.3) (1.1)
Proceeds from borrowings 16 20.0 480.0 485.0
Repayment of borrowings 16 (15.0) (480.0) (520.0)
Debt issue costs - (5.1) (5.1)
Dividends paid (67.3) (65.1) (98.8)
----------- ------------- -------------
Net cash flows used in financing activities (63.1) (70.3) (139.7)
Net (decrease)/increase in cash and
cash equivalents (55.7) 54.4 5.5
Net foreign exchange differences - - -
Cash and cash equivalents at the start
of the period 227.0 221.5 221.5
-----------
Cash and cash equivalents at the end
of the period 13 171.3 275.9 227.0
=========== ============= =============
Notes to the condensed consolidated interim financial
statements
1 Corporate information
Saga plc ('the Company') is a public limited company
incorporated and domiciled in the United Kingdom under the
Companies Act 2006 (registration number 8804263). Its registered
office is located at Enbrook Park, Folkestone, Kent, CT20 3SE.
The interim condensed consolidated financial statements of Saga
plc and the entities controlled by the Company (its subsidiaries,
collectively 'the Group') for the six months ended 31 July 2018
were authorised for issue in accordance with a resolution of the
Directors on 26 September 2018.
2.1 Basis of preparation
These condensed financial statements comprise the interim
financial statements of the Group for the six month period to 31
July 2018.
The presentation currency of the Group is sterling. Unless
otherwise stated, the amounts shown in the condensed consolidated
financial statements are in millions of pounds sterling
(GBP'm).
The condensed consolidated interim financial statements have
been prepared in accordance with the Disclosure and Transparency
Rules (DTR) of the Financial Conduct Authority (FCA) and in
accordance with IAS 34 'Interim Financial Reporting'. The
significant accounting policies applied by the Group are set out in
note 2.3 and 2.4. The Group has applied all IFRS standards and
interpretations adopted and endorsed by the EU effective for the
period ending 31 January 2019. The condensed consolidated interim
financial statements have been reviewed by KPMG LLP and include
their review conclusion.
These condensed consolidated interim financial statements do not
comprise statutory financial statements within the meaning of
Section 435 of the Companies Act 2006. Statutory financial
statements for the year ended 31 January 2018 have been delivered
to the Registrar of Companies. The auditor's report on those
financial statements:
(i) was unqualified;
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report; and
(iii) did not constitute a statement under Section 498 (2) or (3) of the Companies Act 2006.
2.2 Basis of consolidation
The condensed consolidated financial statements comprise the
financial position and results of each of the companies within the
Group. Where necessary, adjustments have been made to the financial
position and results of subsidiaries to bring the accounting
policies used into line with those used by the Group. All
intra-group transactions, balances, income and expenses have been
eliminated on consolidation. The policies set out below have been
applied consistently throughout the periods presented to items
considered material to the condensed consolidated interim financial
statements.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies
The condensed set of interim financial statements for the period
ended 31 July 2018 have been prepared applying the same accounting
policies that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 31
January 2018, except for changes required as a result of the
transition to two new accounting standards, IFRS 9 Financial
Instruments and IFRS 15 Revenue from Contracts with Customers.
Revenue from Contracts with Customers
The Group has adopted IFRS 15 Revenue from Contracts with
Customers for the first time in the year ended 31 January 2019. The
Group applied IFRS 15 retrospectively and the details of the new
accounting policies for revenue recognition and cost recognition
are disclosed below, with note references corresponding to the
financial statements for the year ended 31 January 2018:
a. Revenue recognition
Revenue represents amounts receivable from the sale or supply of
goods and services provided to customers in the ordinary course of
business, and is recognised as and when each performance obligation
inherent in contracts with customers is satisfied. The recognition
policies for the Group's various revenue streams by segment are as
follows:
i) Insurance
Insurance premiums received for risks underwritten by the Group
are recognised on a straight-line time-apportioned basis over the
period of the policy. Any changes to premium arising as a result of
adjustments to the underlying risk as notified by the policyholders
are recognised over the remaining period of the policy from the
effective date of notification.
Revenue received in connection with insurance policies not
underwritten by the Group is recognised in line with the
performance obligations. A proportion of the insurance premium
received, and all of the arrangement fee is recognised on inception
of the policy when the obligation to arrange insurance for the
customer has been satisfied. The remaining proportion of revenue is
deferred until the Group's post placement obligations have been
satisfied, namely claims handling services. The portion of
insurance premiums received for risks which are not underwritten by
the Group that is passed to a third party insurer is not recognised
in the income statement.
Insurance premiums and sales revenues received in advance of the
inception date of a policy are treated as advanced receipts and
included as other liabilities in the statement of financial
position.
Premiums and sales revenue in respect of insurance policies
underwritten by the Group that are live at the reporting date and
which relate to the period after the reporting date are treated as
unearned and included in insurance contract liabilities in the
statement of financial position.
Income from credit provided to customers to facilitate payment
of their insurance premiums over the life of their policy is
treated as part of the revenue from insurance operations and
recognised over the period of the policy in proportion to the
outstanding premium balance.
Profit commissions due under coinsurance or reinsurance
arrangements are recognised and valued in accordance with the
contractual terms to which they are subject and on the same basis,
where appropriate, as the related reinsured liabilities.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
a. Revenue recognition (continued)
i) Insurance (continued)
For credit hire and repair revenue the Group initially
recognises the associated financial asset at fair value, based on a
historical assessment of debt recovery, including any discounts
offered retrospectively. Credit hire revenue is recognised from the
date a vehicle is placed on hire equally over the duration of the
hire. Credit repair revenue represents income from the recovery of
the costs of repair of customers' vehicles. Credit repair revenue
is recognised when the work has been completed. Late payment
penalties afforded under the terms of the ABI GTA are recognised as
they become payable by the insurance company.
ii) Travel
Revenue from tour operations and cruise holidays where the Group
does not operate the cruise ship is recognised in line with the
performance obligations that are included in a package holiday,
namely the provision of flights, accommodation, transfers and
travel insurance. Revenue is recognised as and when each
performance obligation is satisfied.
Revenue in respect of cruise holidays where the Group operates
the cruise ship is also recognised in line with the performance
obligations being the cruise itself, flights (where applicable),
travel insurance and transfers. The portion of revenue allocated to
the cruise itself is recognised on a per diem basis over the
duration of the cruise in line with when the performance obligation
is satisfied. The portion of revenue allocated to each of flights
(where applicable), travel insurance and transfers is recognised as
and when each performance obligation is satisfied.
An element of revenue which represents the non-refundable
deposit received at the time of booking is recognised in the income
statement immediately in line with the prevailing rate of
cancellation.
Revenue from sales in resort, for example for optional
excursions, or on board a cruise ship operated by Group, for
example bar sales or optional excursions, is recognised as it is
earned.
Revenue from all tour operations and cruising holidays received
in advance of when each performance obligation is satisfied are
included as other liabilities in the statement of financial
position.
iii) Emerging Businesses and Central Costs
Personal finance
Revenue from personal finance products is recognised when the
customer contracts with the provider of the relevant personal
finance product where the revenue comprises a one-off payment by
the provider of the product.
Where the personal finance product is one that delivers a
recurring income stream, the present value of the future expected
revenue to be received is recognised when the customer contracts
with the provider of the relevant personal finance product.
There are no significant changes to each of the Healthcare,
Magazine subscriptions, Retirement Villages and Sale of goods
accounting policies.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
b. Cost recognition
ii) Acquisition costs
Acquisition costs arising from the selling or renewing of
insurance policies underwritten by the Group are recognised on a
straight-line time-apportioned basis over the period of the policy
in which the related revenues are earned. The proportion of
acquisition costs relating to premiums treated as unearned at the
reporting date are deferred and included as other receivables in
the statement of financial position.
Incremental costs of obtaining an insurance contract not
underwritten by the Group, namely fees charged by price-comparison
websites are recognised as an asset on the statement of financial
position. Such costs are amortised in line with the pattern of
revenue for the related insurance contract, which incorporate the
propensity for that contract to renew for several years into the
future based on the prevailing rate of renewal for these types of
contract. If the expected amortisation period is one year or less,
then incremental costs are expensed when incurred.
There are no other significant changes to accounting policies
for Cost recognition under IFRS 15.
See note 19 for a reconciliation of the impact on the financial
statements arising from the transition to IFRS 15.
l. Financial Instruments
The Group has adopted IFRS 9 Financial Instruments for the first
time for the year ended 31 January 2019. The requirements of IFRS 9
represent a significant change from IAS 39 Financial Instruments:
Recognition and Measurement. As such, the Group has changed its
accounting policy and applied it retrospectively, for financial
instruments as detailed below.
i) Financial Assets
On initial recognition, a financial asset is classified as
either amortised cost; Fair Value Through Other Comprehensive
Income (FVOCI) - debt investment; FVOCI - equity investment; or
Fair Value through Profit and loss (FVTPL). The classification of
financial assets under IFRS 9 is based on the business model in
which a financial asset is managed and its contractual cash flow
characteristics. Derivatives embedded in contracts where the host
is a financial asset in the scope of the standard are never
separated. Instead, the hybrid financial instrument as a whole is
assessed for classification.
Financial Assets at Amortised Cost
Initial Recognition
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not elected to be designated as
a FVTPL:
-- It is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- Its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
Subsequent Measurement
These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by
impairment losses (see (ii) below). Interest income, foreign
exchange gains and losses and impairment are recognised in profit
or loss as they are incurred. Any gain or loss on derecognition is
recognised in profit or loss immediately.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
l. Financial Instruments (continued)
i) Financial assets (continued)
Financial Assets at Fair Value through Other Comprehensive
Income (FVOCI)
Initial Recognition
A debt investment is measured at FVOCI if it meets both of the
following conditions and is not elected to be designated as
FVTPL:
-- It is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling
financial assets; and
-- Its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
Subsequent Measurement
Debt instruments are subsequently measured at fair value.
Interest income calculated using the effective interest method,
foreign exchange gains and losses and impairment are recognised in
profit or loss. Other net gains and losses are recognised in OCI.
On derecognition, gains and losses accumulated in OCI are recycled
to profit or loss.
Equity investments are measured at fair value. Dividends are
recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. Other
net gains and losses are recognised in OCI and are never
reclassified to profit or loss.
Financial Assets at Fair Value through Profit and Loss
(FVTPL)
Initial Recognition
All financial assets not classified as amortised cost or FVOCI
as described above are classified as FVTPL. This includes all
derivative financial assets. On initial recognition, the Group may
irrevocably elect to designate a financial asset that otherwise
meets the requirements to be measured at amortised cost or FVOCI as
FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise. This election is made on an
investment by investment basis.
A financial asset is initially measured at fair value less, for
an item not at FVTPL, transaction costs that are directly
attributable to its acquisition.
Subsequent Measurement
These assets are subsequently measured at fair value. Net gains
and losses, including any interest or dividend income, are
recognised in profit or loss, unless such instrument is designated
in a hedging relationship.
Derecognition
A financial asset is derecognised when the rights to receive
cash flows from the asset have expired or when the Group has
transferred substantially all the risks and rewards relating to the
asset to a third party.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
l. Financial Instruments (continued)
ii) Impairment of financial assets
The IFRS 9 expected credit loss (ECL) impairment model applies
to financial assets measured at amortised cost and debt investments
at FVOCI.
Under IFRS 9, loss allowances are measured on either of the
following bases:
-- 12-month ECLs: these are ECLs that result from probable
default events within the 12 months after the reporting date;
and
-- Lifetime ECLs: these are ECLs that result from all possible
default events over the expected life of a financial
instrument.
The Group measures loss allowances at an amount equal to
12-month ECLs, except for the following, which are measured as
lifetime ECLs:
-- Debt securities that are determined to have high credit risk at the reporting date; and
-- Other debt securities and bank balances for which credit risk
(i.e. the risk of default occurring over the expected life of the
financial instrument) has increased significantly since initial
recognition.
The Group has elected to measure loss allowances for trade
receivables at an amount equal to 12-month ECLs.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Group's historical experience and
informed credit assessment and including forward-looking
information.
The Group considers a debt security to have low credit risk when
its credit risk rating is equivalent to the definition of
'investment grade'. The Group considers this to be BBB or higher as
per Standard & Poor's rating scale.
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Group is exposed to
credit risk.
Measurement of ECLs
ECLs are measured as a probability-weighted estimate of credit
losses. Credit losses are measured as the probability of default in
conjunction with the present value of the Group's exposure. ECLs
are recognised as a reduction in carrying value of financial assets
in the statement of financial position with a corresponding charge
to the income statement or statement of other comprehensive income,
in line with the recognition criteria of the underlying asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost and debt securities at FVOCI are
credit-impaired. A financial asset is 'credit-impaired' when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred. In such an event,
the lifetime ECL will be recognised in lieu of the 12-month
ECL.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
l. Financial Instruments (continued)
iii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified as financial liabilities at
FVTPL, amortised cost or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial liabilities at
initial recognition.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings, net of directly
attributable transaction costs.
The Group's financial liabilities include trade and other
payables, loans and borrowings and derivative
financial instruments.
Subsequent measurement
Financial liabilities at amortised cost
After initial recognition, interest bearing loans and borrowings
and other payables are subsequently measured at amortised cost
using the effective interest rate (EIR) method. Gains and losses
are recognised in the income statement when the liabilities are
derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in finance costs
in the income statement.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the income
statement.
iv) Derivatives
Derivatives are measured at fair value both initially and
subsequent to initial recognition. All changes in fair value of
non-designated derivatives are recognised in the income statement
immediately. Changes in fair value of derivatives designated as
hedges are initially recognised in other comprehensive income until
maturity when any gain or loss is recognised in the income
statement. Derivatives are presented as assets when the fair values
are positive and as liabilities when the fair values are negative.
A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than
12 months and it is not expected to be realised or settled within
12 months.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
l. Financial Instruments (continued)
v) Fair Values
The Group measures financial instruments, such as derivatives
and financial instruments not designated as a hedge classified as
FVOCI and at FVTPL, at fair value at each reporting date.
Fair value is the price that would be required to sell an asset
or to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is
based on the presumption that the transaction to sell the asset or
transfer the liability takes place either in the principal market
accessible by the Group for the asset or liability or in the
absence of a principal market, in the most advantageous market
accessible by the Group for the asset or liability.
The fair values are quoted market prices where there is an
active market or are based on valuation techniques when there is no
active market, or the instruments are unlisted. Valuation
techniques include the use of recent arm's length market
transactions, discounted cash flow analysis and other commonly used
valuation techniques. An analysis of the fair values of financial
instruments and further details as to how they are measured are
provided below.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy based on the lowest level input that is
significant to the fair value measurement as a whole.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
reassessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of
each reporting period.
vi) Hedge accounting
The Group designates certain derivative financial instruments as
cash flow hedges of certain forecast transactions. These forecast
transactions are highly probable to occur and present an exposure
to variations in cash flows that could ultimately affect amounts
determined in profit or loss.
The Group has elected to adopt the general hedge accounting
model in IFRS 9. This requires the Group to ensure that hedge
accounting relationships are aligned with its risk management
objectives and strategy and to apply a qualitative and
forward-looking approach to assessing hedge effectiveness.
The Group uses forward foreign exchange contracts and commodity
swap contracts to hedge the variability in cash flows arising from
changes in foreign currency rates and oil prices. For foreign
exchange contracts, the Group designates the fair value change of
the full forward price as the hedging instrument in cash flow
hedging relationships. For commodity hedging, the Group designates
the fair value change of the benchmark price. The effective portion
of changes in fair value of hedging instruments is accumulated in a
cash flow hedge reserve as a separate component of equity. Any
ineffective portion of the fair value gain or loss is recognised
immediately within the income statement.
When a hedging instrument no longer meets the criteria for hedge
accounting, through maturity, sale, or other termination, hedge
accounting is discontinued prospectively. If the hedged forecast
transaction is still expected to occur, the associated cumulative
gain or loss remains in the hedging reserve and is recognised in
accordance with the above policy when the transaction occurs. If
the hedged transaction is no longer expected to occur, the
cumulative unrealised gain or loss is recognised in the income
statement immediately.
Notes to the condensed consolidated interim financial
statements
2.3 Summary of significant accounting policies (continued)
l. Financial Instruments (continued)
See note 19 for a reconciliation of the impact on the financial
statements arising from the transition to IFRS 9.
Full details of all other accounting policies of the Group can
be found in the annual report and accounts for the year ended 31
January 2018 available at www.corporate.saga.co.uk.
2.4 Standards issued but not yet effective
Standards and amendments to standards in issue but not effective
or not adopted by the Group as at 31 January 2018 continue to be
not yet effective or not adopted by the Group at 31 July 2018 and
can be found in the annual report and accounts for the year ended
31 January 2018 available at www.corporate.saga.co.uk with the
exception of IFRS 15 Revenue from Contracts with Customers and IFRS
9 Financial Instruments which have been implemented from the
beginning of the financial period.
The transition to IFRS 15 has increased profit after tax by
GBP0.5m for the period ended 31 July 2017 and GBP0.4m for the year
ended 31 January 2018. Net assets have increased by GBP3.9m as at
31 July 2017 and by GBP3.8m as at 31 January 2018.
The transition to IFRS 9 has increased profit after tax by
GBP1.7m for the period ended 31 July 2017 and by GBP1.6m for the
year ended 31 January 2018. Net assets have decreased by GBP0.6m as
at 31 July 2017 and by GBP0.5m as at 31 January 2018.
Refer to note 19 for a reconciliation of the impact on the
financial statements arising from the transition to IFRS 9 and IFRS
15.
2.5 Significant accounting judgements, estimates and
assumptions
Full details of significant accounting judgements, estimates and
assumptions used in the application of the Group's accounting
policies can be found in the annual report and accounts for the
year ended 31 January 2018 available at www.corporate.saga.co.uk.
There have been no changes to the principles or assumptions in
these critical accounting estimate and judgement areas during the
period.
2.6 Going concern
The condensed consolidated interim financial statements have
been prepared on a going concern basis.
The Directors have reviewed the Group's projections including
cash flows for the twelve months from the date of approval of the
condensed consolidated interim financial statements and beyond and
have concluded that the Group has sufficient funds to continue
trading for this period, and for the foreseeable future.
Notes to the condensed consolidated financial statements
(continued)
3 Segmental information
For management purposes, the Group is organised into business
units based on their products and services and has three reportable
operating segments as follows:
-- Insurance: primarily comprising general insurance products,
further analysed into four sub-segments:
o Motor Broking
o Home Broking
o Other Insurance Broking
o Underwriting
-- Travel: primarily comprising the operation and delivery of
package tours and cruise holiday products
-- Emerging Businesses and Central Costs: comprises the Group's
other businesses and its central cost base. The other businesses
include the financial services product offering including the
wealth management joint venture, the domiciliary care services
offering, the retirement villages offering, a monthly subscription
magazine product and the Group's internal mailing house.
Seasonality
The Group is subject to seasonal fluctuations in both its
Insurance and Travel segments resulting in varying profits over
each quarter.
The Insurance segment experiences increased motor insurance
sales in the month of March, and to a lesser degree September, due
to the issue of new vehicle registration plates; and increased home
insurance sales in March, June and September coinciding with the
historic quarter days. In the motor underwriting business, a
greater proportion of claims are notified in the second half of the
financial year.
Typically, increased holiday departures in the shoulder months
of May, June and September and low departure volumes during July
and August create seasonal fluctuations in the profit of the Travel
segment.
When the seasonalities of the various segments are considered in
aggregate, the resultant half yearly Underlying Profit Before Tax
is broadly consistent with half of the full year result.
Notes to the condensed consolidated financial statements
(continued)
3 Segmental information (continued)
Insurance
------------------------------------------------------------
Emerging
Other Businesses
Unaudited Motor Home Insurance & Central
6m to Jul 2018 Broking Broking Broking Under-writing Total Travel Costs Adjust-ments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 59.8 38.7 39.6 47.6 185.7 228.7 19.6 (3.4) 430.6
Cost of sales (1.1) - (5.1) (3.4) (9.6) (180.9) (8.3) - (198.8)
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Gross profit 58.7 38.7 34.5 44.2 176.1 47.8 11.3 (3.4) 231.8
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Administrative
and selling
expenses (37.9) (14.1) (16.2) (1.0) (69.2) (35.9) (18.3) 3.4 (120.0)
Investment
income - - - 2.4 2.4 0.1 (1.9) - 0.6
Finance costs - - - - - - (5.6) - (5.6)
Finance income - - - - - - - - -
Share of loss
of joint
venture - - - - - - - - -
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Underlying
Profit Before
Tax 20.8 24.6 18.3 45.6 109.3 12.0 (14.5) - 106.8
Net fair value
gain on
derivative
financial
instruments - - - - - 2.2 - - 2.2
Profit before
tax 20.8 24.6 18.3 45.6 109.3 14.2 (14.5) - 109.0
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Insurance
------------------------------------------------------------
Emerging
Unaudited Other Businesses
6m to Jul 2017 Motor Home Insurance & Central
(restated) Broking Broking Broking Under-writing Total Travel Costs Adjust-ments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 62.7 42.5 40.0 48.0 193.2 230.4 17.8 (3.4) 438.0
Cost of sales (1.7) - (5.6) (2.7) (10.0) (182.6) (7.0) - (199.6)
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Gross profit 61.0 42.5 34.4 45.3 183.2 47.8 10.8 (3.4) 238.4
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Administrative
and selling
expenses (35.1) (14.1) (17.3) (1.2) (67.7) (36.0) (21.7) 3.4 (122.0)
Investment
income - - - 2.9 2.9 0.1 (1.6) - 1.4
Finance costs - - - - - - (7.1) - (7.1)
Finance income - - - - - - 0.7 - 0.7
Share of loss
of joint
venture - - - - - - (0.5) - (0.5)
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Underlying
Profit Before
Tax 25.9 28.4 17.1 47.0 118.4 11.9 (19.4) - 110.9
Net fair value
loss on
derivative
financial
instruments - - - - - (1.0) - - (1.0)
Accelerated
amortisation
of debt issue
costs - - - - - - (4.3) - (4.3)
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Profit before
tax 25.9 28.4 17.1 47.0 118.4 10.9 (23.7) - 105.6
--------- --------- ----------- --------------- -------- --------- ------------ -------------- ---------
Notes to the condensed consolidated financial statements
(continued)
3 Segmental information (continued)
Insurance
-------------------------------------------------------------
Emerging
Other Businesses
12m to Jan Motor Home insurance & Central
2018 (restated) broking broking broking Under-writing Total Travel Costs Adjust-ments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 121.4 85.0 76.5 99.0 381.9 448.8 36.4 (6.8) 860.3
Cost of sales (2.5) - (11.9) (28.0) (42.4) (355.9) (14.5) - (412.8)
--------- --------- ----------- --------------- --------- --------- ------------ -------------- ---------
Gross Profit 118.9 85.0 64.6 71.0 339.5 92.9 21.9 (6.8) 447.5
--------- --------- ----------- --------------- --------- --------- ------------ -------------- ---------
Administrative
and selling
expenses (76.0) (28.7) (33.1) (2.3) (140.1) (72.4) (43.8) 6.8 (249.5)
Investment
income - - - 10.6 10.6 0.2 (3.2) - 7.6
Finance costs - - - - - - (14.2) - (14.2)
Finance income - - - - - - 1.5 - 1.5
Share of loss
of joint
venture - - - - - - (2.2) - (2.2)
--------- --------- ----------- --------------- --------- --------- ------------ -------------- ---------
Underlying
Profit Before
Tax 42.9 56.3 31.5 79.3 210.0 20.7 (40.0) - 190.7
Net fair value
loss on
derivative
financial
instruments - - - - - (0.6) - - (0.6)
Accelerated
amortisation
of debt issue
costs - - - - - - (4.3) - (4.3)
Restructuring
costs - - - - - - (4.8) - (4.8)
--------- --------- ----------- --------------- --------- --------- ------------ -------------- ---------
Profit before
tax from
continuing
operations 42.9 56.3 31.5 79.3 210.0 20.1 (49.1) - 181.0
--------- --------- ----------- --------------- --------- --------- ------------ -------------- ---------
Revenue is generated solely in the UK.
Cost of sales within the insurance segment includes claims costs
incurred on insurance policies underwritten by the Group (see note
3b).
Notes to the condensed consolidated financial statements
(continued)
3a Analysis of Insurance revenue
Unaudited
Unaudited 6m to 12m to
6m to Jul 2017 Jan 2018
Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
Gross earned premiums on insurance
underwritten by the Group 123.2 137.8 259.6
Less: ceded to reinsurers (68.7) (69.4) (139.9)
Net earned premiums on insurance
underwritten by the Group
- Motor broking 11.3 20.7 30.4
- Home broking - 4.6 3.6
- Other insurance broking 0.8 0.7 1.5
- Underwriting 42.4 42.4 84.2
----------- ------------ --------------------
54.5 68.4 119.7
Other income from insurance products 131.2 124.8 262.2
-----------
185.7 193.2 381.9
=========== ============ ====================
3b Analysis of Insurance cost of sales
Unaudited Unaudited 12m to
6m to 6m to Jan 2018
Jul 2018 Jul 2017 (restated)
GBP'm GBP'm GBP'm
Gross claims incurred on insurance
underwritten by the Group 63.5 65.6 156.1
Less: ceded to reinsurers (59.8) (61.8) (127.1)
Net claims incurred on insurance
underwritten by the Group
- Motor broking 1.1 1.7 2.5
- Underwriting 2.6 2.1 26.5
----------- ----------- ------------
3.7 3.8 29.0
Other cost of sales 5.9 6.2 13.4
----------- ----------- ------------
9.6 10.0 42.4
=========== =========== ============
Notes to the condensed consolidated financial statements
(continued)
4 Non-trading items
Unaudited Unaudited
6m to 6m to 12m to
Jul 2018 Jul 2017 Jan 2018
GBP'm GBP'm GBP'm
Share-based payment costs (note 17) 0.1 0.2 0.3
Flotation and other costs - 0.1 -
Redundancy costs 0.8 0.7 1.4
----------- ----------- ----------
Non-trading items included within
Administrative and Selling expenses 0.9 1.0 1.7
Impairment of joint venture - 1.2 1.7
Total non-trading items 0.9 2.2 3.4
=========== =========== ==========
Non-trading items represent one-off or extraneous costs or
revenues that are related to the primary trading activities of the
Group. These items are reported separately to enable the user of
the accounts to understand these items in more detail. Further
detail on each category of item is provided as follows:
Flotation and other costs comprise the cost of awards made at
the time of the IPO and which vest over a period of time
post-award.
Redundancy costs represent costs associated with restructuring
and reorganising a number of Group operations and includes
staff-related costs such as redundancy and other termination costs,
together with various professional fees for advice and processes
associated with the restructuring.
Impairment of joint venture represents the write-down of the
carrying value of the Group's joint venture, Saga Investment
Services Limited, following the decision to replace the current
legal structure with a new, more cost-efficient structure.
Notes to the condensed consolidated financial statements
(continued)
5 Tax
Unaudited
Unaudited 6m to 12m to
6m to Jul 2017 Jan 2018
Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
Current income tax
Current income tax charge 22.1 19.1 34.3
Adjustments in respect of previous
years 0.4 (0.6) (1.0)
22.5 18.5 33.3
Deferred tax
Origination and reversal of temporary
differences (1.4) 1.5 0.6
Effect of change in tax rate on opening
balance - - -
Tax expense in the income statement 21.1 20.0 33.9
=========== ============ ============
Reconciliation of net deferred tax (liabilities)/assets:
Unaudited
Unaudited 6m to 12m to
6m to Jul 2017 Jan 2018
Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
At 1 February (3.5) (6.1) (6.1)
Tax charge in the income statement 1.4 (1.5) (0.6)
Tax charge in other comprehensive
income (3.9) (0.9) 3.2
At the end of the period (6.0) (8.5) (3.5)
=========== ============ ============
For further detail on the tax impact of IFRS 15 and IFRS 9, see
note 19.
Measures were enacted in the Finance Act 2015 to reduce the
corporation tax rate from 20% to 19% from 1 April 2017, and to 18%
from 1 April 2020. A further reduction to 17% from 1 April 2020 was
announced on 16 March 2016 and has been enacted at the balance
sheet date. As a result, the closing deferred tax balances have
been reflected at 17%.
The Group has tax losses which arose in the UK of GBP4.2m (July
2017: GBP4.2m) that are available indefinitely for offsetting
against future taxable profits of the companies in which the losses
arose.
Deferred tax assets have not been recognised in respect of these
losses as they may not be used to offset taxable profits elsewhere
in the Group. They have arisen in subsidiaries that have been
loss-making for some time, and there are no other tax planning
opportunities or other evidence of recoverability in the near
future. If the Group were able to recognise all unrecognised
deferred tax assets, the profit would increase by GBP0.7m (July
2017: GBP0.7m).
6 Dividends
The Company paid an ordinary dividend of 6.0p per share during
the period. The total dividend paid was GBP67.2m (July 2017:
GBP64.8m).
Notes to the condensed consolidated financial statements
(continued)
7 Earnings per share
Basic EPS is calculated by dividing the profit after tax for the
year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
period. Diluted EPS is calculated by also including the weighted
average number of ordinary shares that would be issued on
conversion of all potentially dilutive options.
There have been no transactions involving ordinary shares or
potential ordinary shares between the reporting date and the date
of authorisation of these financial statements.
The calculation of basic and diluted EPS is as follows:
Unaudited Unaudited
6m to 6m to 12m to
Jul 2018 Jul 2017 Jan 2018
(restated) (restated)
GBP'm GBP'm GBP'm
Profit attributable to ordinary
equity holders 87.9 85.6 139.5
Profit from continuing operations 87.9 85.6 147.1
=============== ==================== ===================
Weighted average number of ordinary
shares 'm 'm 'm
Shares in issue at 1 February 1,118.1 1,114.0 1,114.0
IPO share options exercised - 2.8 3.1
LTIP share options exercised 0.5 0.4 0.9
Deferred bonus plan options exercised 0.1 - -
Other share options exercised - 0.1 0.1
Weighted average number for Basic
EPS 1,118.7 1,117.3 1,118.1
Dilutive options
IPO share options not yet exercised 0.4 0.6 0.4
Other share options not yet vested - 0.1 -
LTIP share options not yet vested 4.8 4.9 4.7
Deferred bonus plan share options
not yet vested 0.3 0.3 0.4
Free shares options not yet vested 0.1 - -
--------------- -------------------- -------------------
Weighted average number for Diluted
EPS 1,124.3 1,123.2 1,123.6
=============== ==================== ===================
Basic EPS 7.9p 7.7p 12.5p
--------------- -------------------- -------------------
Basic EPS for continuing operations 7.9p 7.7p 13.2p
--------------- -------------------- -------------------
Diluted EPS 7.8p 7.6p 12.4p
--------------- -------------------- -------------------
Diluted EPS for continuing operations 7.8p 7.6p 13.1p
--------------- -------------------- -------------------
Notes to the condensed consolidated financial statements
(continued)
8 Acquisitions
The Group made no acquisitions during the six month period ended
31 July 2018 or six month period ended 31 July 2017.
9 Goodwill
The net book value of goodwill is GBP1,485.0m (July 2017:
GBP1,485.0m).
The Group has tested all goodwill for impairment at 31 July
2018. The impairment test compares the recoverable amount of the
goodwill of each CGU to its carrying value. No impairment of
goodwill has been recognised following the impairment test.
10 Intangible fixed assets
During the period, the Group capitalised GBP9.8m (July 2017:
GBP13.6m) of software assets and charged GBP10.3m of amortisation
to its intangible assets (July 2017: GBP9.1m).
The Group has performed a review for indicators of impairment of
the acquired contracts, brands and customer relationships at 31
July 2018, and concluded that no indicators of impairment exist at
that date.
11 Property, plant and equipment
During the period, the Group capitalised assets with a cost of
GBP21.7m (July 2017: GBP21.3m).
On 21 December 2015, the Group contracted with Meyer Werft GmbH
& Co. KG to purchase Spirit of Discovery for delivery in July
2019, with an option to purchase a second similar cruise ship for
delivery in 2021. On 24 April 2017, the Group signed an agreement
with the shipyard to bring forward the delivery date by one month
to June 2019. On 20 September 2017, the Saga plc Board approved the
purchase of the second cruise ship, Spirit of Adventure, with an
earlier delivery date of August 2020, and the Group exercised the
option in December 2017.
Four stage payments for Spirit of Discovery were made between
February 2016 and July 2018. The remaining element of the contract
price is due on delivery of the ship, and the Group entered into
appropriate financing for this on 21 December 2015.
The first stage payment for Spirit of Adventure was made in
December 2017. Three similar stage payments will be made during the
construction period (24 months, 18 months, and 12 months prior to
delivery) funded via cash resources of the Group. The remaining
element of the contract price is due on delivery of the ship, and
the Group entered into appropriate financing for this on 20
September 2017.
As at 31 July 2018, capital amounts contracted for but not
provided in the financial statements in respect of the ships
amounted to GBP562.8m (July 2017: GBP266.9m).
Notes to the condensed consolidated financial statements
(continued)
12 Financial assets and financial liabilities
a) Financial assets
Unaudited Unaudited
As at Jul As at Jul As at Jan
Note 2018 2017 (restated) 2018 (restated)
GBP'm GBP'm GBP'm
Fair value through profit or loss
Foreign exchange forward contracts 0.5 0.7 0.1
Fuel oil swaps 1.9 0.8 1.8
Loan funds 6.4 6.5 6.4
Money market funds 13 53.6 135.6 153.2
Unlisted equity shares - 1.7 1.7
Loan notes - 5.9 -
Hedge funds - 21.1 7.5
Equities - - 31.4
62.4 172.3 202.1
------------ ------------------ -------------------
Fair value through other comprehensive
income
Foreign exchange forward contracts 39.8 48.8 35.2
Fuel oil swaps 2.5 0.6 1.3
Debt securities 282.7 78.3 159.4
------------ ------------------ -------------------
325.0 127.7 195.9
------------ ------------------ -------------------
Amortised cost
Deposits with financial institutions 74.1 251.8 115.5
74.1 251.8 115.5
------------ ------------------ -------------------
Total financial assets 461.5 551.8 513.5
============ ================== ===================
Current 409.0 307.9 229.4
Non-current 52.5 243.9 284.1
------------ ------------------ -------------------
461.5 551.8 513.5
============ ================== ===================
The Group's financial assets are analysed by Moody's rating on
page 16 of the Chief Financial Officer's Review.
Notes to the condensed consolidated financial statements
(continued)
12 Financial assets and financial liabilities (continued)
b) Financial liabilities
Unaudited Unaudited As at
As at Jul As at Jul Jan 2018
Note 2018 2017 (restated) (restated)
GBP'm GBP'm GBP'm
Fair value through profit or loss
Foreign exchange forward contracts 0.1 0.6 1.0
Fuel oil swaps - 0.1 0.1
------------ ------------------ --------------------------------
0.1 0.7 1.1
------------ ------------------ --------------------------------
Fair value through other
comprehensive
income
Foreign exchange forward contracts 3.2 1.4 11.4
Fuel oil swaps - - 0.2
------------ ------------------ --------------------------------
3.2 1.4 11.6
------------ ------------------ --------------------------------
Amortised cost
Bank loans 16 448.6 477.4 443.0
Finance leases and hire purchase
obligations 3.7 3.9 3.4
Bank overdrafts 13 2.6 4.2 9.4
454.9 485.5 455.8
------------ ------------------ --------------------------------
Total financial liabilities 458.2 487.6 468.5
================== ================================
Current 8.0 9.1 34.8
Non-current 450.2 478.5 433.7
------------ ------------------ --------------------------------
458.2 487.6 468.5
============ ================== ================================
c) Fair value hierarchy
Unaudited Unaudited
As at Jul 18 As at Jul 17 (restated)
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Financial assets measured at fair
value
Foreign exchange forwards - 40.3 - 40.3 - 49.5 - 49.5
Fuel oil swaps - 4.4 - 4.4 - 1.4 - 1.4
Loan funds 6.4 - - 6.4 6.5 - - 6.5
Hedge funds - - - - 21.1 - - 21.1
Debt securities 282.7 - - 282.7 78.3 - - 78.3
Money market funds - 53.6 - 53.6 - 135.6 - 135.6
Unlisted equity shares - - - - - - 1.7 1.7
Loan notes - - - - - - 5.9 5.9
======= ======= ======= ======= ======= ======= ======= =======
Financial liabilities measured at
fair value
Foreign exchange forwards - 3.3 - 3.3 - 2.0 - 2.0
Fuel oil swaps - - - - - 0.1 - 0.1
======= ======= ======= ======= ======= ======= ======= =======
Assets for which fair values are disclosed
Deposits with institutions - 74.1 - 74.1 - 251.8 - 251.8
Liabilities for which fair values
are disclosed
Bank loans - 448.6 - 448.6 - 477.4 - 477.4
Finance leases and hire purchase
obligations - 3.7 - 3.7 - 3.9 - 3.9
Bank overdrafts - 2.6 - 2.6 - 4.2 - 4.2
======= ======= ======= ======= ======= ======= ======= =======
Notes to the condensed consolidated financial statements
(continued)
12 Financial assets and financial liabilities (continued)
c) Fair value hierarchy (continued)
As at Jan 18 (restated)
Level Level Level
1 2 3 Total
GBP'm GBP'm GBP'm GBP'm
Financial assets measured at fair
value
Foreign exchange forwards - 35.3 - 35.3
Fuel oil swaps - 3.1 - 3.1
Loan funds 6.4 - - 6.4
Equities 31.4 - - 31.4
Hedge funds 7.5 - - 7.5
Debt securities 159.4 - - 159.4
Money market funds 153.2 - - 153.2
Unlisted equity shares - - 1.7 1.7
========= ======= ======= =======
Financial liabilities measured at
fair value
Foreign exchange forwards - 12.4 - 12.4
Fuel oil swaps - 0.3 - 0.3
========= ======= ======= =======
Assets for which fair values are disclosed
Deposits with institutions - 115.5 - 115.5
========= ======= ======= =======
Liabilities for which fair values
are disclosed
Bank loans - 443.0 - 443.0
Finance leases and hire purchase obligations - 3.4 - 3.4
Bank overdrafts - 9.4 - 9.4
========= ======= ======= =======
d) Other information
Debt securities, money market funds and deposits with financial
institutions relate to monies held by the Group's insurance
underwriting business and are subject to contractual restrictions
and are not readily available to be used for other purposes within
the Group. Whilst the Group's fixed / floating interest securities
investments could be realised at short notice, it is anticipated
that they will be held until maturity.
The Group operates a programme of economic hedging against its
foreign currency and fuel oil exposures. During the period, the
Group designated 255 foreign exchange forward currency contracts as
hedges of highly probable foreign currency cash expenses in future
periods, and designated no fuel oil swaps as hedges of highly
probable fuel oil purchases in future periods. As at 31 July 2018,
the Group has designated 707 forward currency contracts and 99 fuel
oil swaps as hedges.
During the period, the Group recognised net gains of GBP9.8m on
cash flow hedging instruments through other comprehensive income
into the hedging reserve. Additionally, the Group recognised net
gains of GBP6.9m through other comprehensive income into the
hedging reserve, in relation to the specific hedging instrument for
the acquisition of a new ship. The overall net gains of GBP16.7m
are supplemented by a net GBP0.8m gain on forecast transactions
recognised in the financial statements. The Group recognised a
GBP0.2m loss through the income statement in respect of the
ineffective portion of hedges measured during the period.
There has been no de-designation of hedges during the period as
a result of cash flows forecast that are no longer expected to
occur, or as a result of failed ineffectiveness testing. During the
period, the Group recognised a GBP2.6m gain through the income
statement in respect of matured hedges, which has been recycled
from other comprehensive income. No amounts have been removed from
the hedging reserve to be included in the carrying value of
non-financial assets.
Notes to the condensed consolidated financial statements
(continued)
13 Cash and cash equivalents
Unaudited Unaudited
As at Jul As at Jul As at Jan
2018 2017 2018
GBP'm GBP'm GBP'm
Cash at bank and in hand 65.5 59.3 33.4
Short term deposits 54.8 85.2 49.8
------------ ------------ -------------
Cash and short term deposits 120.3 144.5 83.2
Money markets funds (note 12a) 53.6 135.6 153.2
Bank overdraft (note 12b) (2.6) (4.2) (9.4)
Cash and cash equivalents in the cash
flow statement 171.3 275.9 227.0
============ ============ =============
Included within cash and cash equivalents are amounts held by
the Group's Travel and Insurance businesses which are subject to
contractual or regulatory restrictions. These amounts held are not
readily available to be used for other purposes within the Group
and total GBP151.0m (July 2017: GBP256.3m). Available cash excludes
these amounts and any amounts held by disposal groups.
14 Retirement benefit schemes
The Group operates a funded defined benefit scheme, The Saga
Pension Scheme ("Saga Scheme") which is open to new members who
accrue benefits on a career average salary basis. The assets of the
scheme are held separately from those of the Group in independently
administered funds.
The fair value of the assets and present value of the
obligations of the Saga defined benefit scheme are as follows:
Unaudited Unaudited
As at Jul As at Jul As at Jan
2018 2017 2018
GBP'm GBP'm GBP'm
Fair value of scheme assets 314.5 291.3 307.3
Present value of defined benefit
obligation (309.9) (299.9) (314.3)
Defined benefit scheme surplus/(liability) 4.6 (8.6) (7.0)
============ ============ =============
The present values of the defined benefit obligation at 31
January 2018, the related current service cost and any past service
costs were measured using the projected unit credit method.
Liabilities at 31 July 2018 have been estimated by rolling forward
from 31 January 2018, allowing for changes in market conditions and
estimating the value of benefits accrued and paid out over the
period.
During the period ended 31 July 2018, the net liability of the
Saga Scheme has improved by GBP11.6m to a total scheme asset of
GBP4.6m.
Notes to the condensed consolidated financial statements
(continued)
15 Insurance contract liabilities and reinsurance assets
Gross and net insurance liabilities are analysed as follows:
Unaudited
Unaudited As at As at
As at Jul 2017 Jan 18
Jul 2018 (restated) (restated)
GBP'm GBP'm GBP'm
Gross
Claims outstanding 430.4 480.1 466.4
Provision for unearned premiums 106.1 120.4 115.0
----------- -------------- -------------
Total gross liabilities 536.5 600.5 581.4
=========== ============== =============
Recoverable from reinsurers
Claims outstanding 95.2 95.3 94.0
Provision for unearned reinsurance
premiums 4.1 2.7 6.2
--------- -------- ---------
Total reinsurers' share of insurance
liabilities (as presented on the
face of the condensed statement
financial position) 99.3 98.0 100.2
Amounts recoverable under funds
withheld quota share agreements
recognised within trade payables:
Claims outstanding 115.9 76.5 100.2
Provision for unearned premiums 62.7 65.6 63.2
--------- -------- ---------
Total reinsurers' share of insurance
liabilities after funds withheld
quota share 277.9 240.1 263.6
========= ======== =========
Net
Claims outstanding 335.2 384.8 372.4
Provision for unearned premiums 102.0 117.7 108.8
--------- -------- ---------
Total net insurance liabilities 437.2 502.5 481.2
--------- -------- ---------
Amounts recoverable under funds
withheld quota share agreements
recognised within trade payables:
Claims outstanding (115.9) (76.5) (100.2)
Provision for unearned premiums (62.7) (65.6) (63.2)
--------- -------- ---------
Total net insurance liabilities
after funds withheld quota share 258.6 360.4 317.8
========= ======== =========
The total loss on purchasing reinsurance recognised during the
period was GBP4.1m (July 2017: GBP12.8m).
Notes to the condensed consolidated financial statements
(continued)
16 Loans and borrowings
Unaudited Unaudited
As at As at As at
Jul 2018 Jul 2017 Jan 2018
GBP'm GBP'm GBP'm
Bond 250.0 250.0 250.0
Bank loans 170.0 200.0 180.0
Revolving credit facility 30.0 30.0 15.0
Accrued interest payable 2.2 2.2 2.2
----------- --------------- --------------------
452.2 482.2 447.2
Less: deferred issue costs (3.6) (4.8) (4.2)
----------- --------------- --------------------
448.6 477.4 443.0
=========== =============== ====================
On 12 May 2017, the Group refinanced its existing bank
facilities with the launch of a debut GBP250.0m seven-year senior
unsecured bond, a GBP200.0m five-year term loan facility and a
GBP100.0m five-year revolving credit facility with an option to
extend the term by two years. The Bond was issued on 12 May 2017 on
the Irish Stock Exchange.
At 31 July 2018, the Group had drawn GBP30.0m of its GBP100.0m
revolving credit facility.
Interest on the bond is incurred at an annual interest rate of
3.375%. Interest on the term loan and revolving credit facility is
incurred at a variable rate of LIBOR plus between 1% and 2.2%,
which is linked to and dependent on the Group's leverage ratio.
During the period the Group charged GBP5.4m (July 2017: GBP6.6m)
to the income statement in respect of fees and interest associated
with the bonds, term loan and revolving credit facility. In
addition, finance costs recognised in the income statement includes
GBP0.2m (July 2017: GBP0.5m) relating to interest on finance lease
liabilities, net finance expense on pension schemes and other
interest costs. The Group recognised GBP2.2m of net fair value
gains on derivatives (July 2017: GBP1.0m losses).
17 Share-based payments
The Group has granted a number of different equity-based awards
which it has determined to be share-based payments. New awards
granted during the period were as follows:
a) On 1 May 2018, options over 4,314,573 shares were issued
under the Long-Term Incentive Plan to certain Directors and other
senior employees which vest and become exercisable on the third
anniversary of the grant date and are 30% linked to ROCE
performance, 30% linked to Organic EPS performance and 40% linked
to TSR performance;
b) On 11 July 2018, 700,815 shares were awarded to eligible
staff on the 4(th) anniversary of the IPO and allocated at GBPnil
cost; these shares become beneficially owned over a three-year
period from allocation subject to continuing service.
The fair values of all awards are assessed using techniques
based upon the "Black-Scholes" pricing model. The Group charged
GBP2.3m during the period (July 2017: GBP2.1m) to the income
statement in respect of equity-settled share-based payment
transactions. Of this, GBP0.1m (July 2017: GBP0.2m) is included
within non-trading items (note 4), which represents the share based
payment charge on options awarded at the IPO that are still
vesting.
18 Related party transactions
Related party transactions during the six months ended 31 July
2018 were consistent in nature, scope and quantum with those
disclosed in the Group's annual report and accounts for the year
ended 31 January 2018 available at www.corporate.saga.co.uk.
Notes to the condensed consolidated financial statements
(continued)
19 Transition to IFRS 15 and IFRS 9
IFRS 9/15 adjustment As restated
As reported 31 July
31 Jul 2017 2017
Insurance Travel EB&CC
GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 435.4 0.4 2.2 - 438.0
Cost of sales (197.4) - (2.2) - (199.6)
-------------- ----------- -------- ------- -------------
Gross profit 238.0 0.4 - - 238.4
Administrative and selling expenses (126.5) 0.2 - - (126.3)
Investment income 1.3 0.1 - - 1.4
Finance costs (10.0) - 1.9 - (8.1)
Finance income 0.7 - - - 0.7
Share of loss of joint ventures (0.5) - - - (0.5)
-------------- ----------- -------- -------
Profit before tax 103.0 0.7 1.9 - 105.6
Tax expense (19.6) (0.1) (0.3) - (20.0)
-------------- ----------- -------- ------- -------------
Profit for the period 83.4 0.6 1.6 - 85.6
Attributable to:
Equity holders of the parent 83.4 0.6 1.6 - 85.6
============== =========== ======== ======= =============
Earnings per share:
Basic 7.5p 7.7p
Diluted 7.4p 7.6p
Notes to the condensed consolidated financial statements
(continued)
19 Transition to IFRS 15 and IFRS 9 (continued)
As reported IFRS 9/15 adjustment As restated
31 Jan 31 Jan
18 18
Insurance Travel EB&CC
GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 860.1 0.5 - (0.3) 860.3
Cost of sales (412.8) (0.3) 0.3 - (412.8)
------------- ----------- -------- ------- -------------
Gross profit 447.3 0.2 0.3 (0.3) 447.5
Administrative and selling expenses (254.5) 0.2 - - (254.3)
Investment income 7.4 0.2 - - 7.6
Finance costs (20.8) - 1.7 - (19.1)
Finance income 1.5 - - - 1.5
Share of loss of joint ventures (2.2) - - - (2.2)
------------- ----------- -------- -------
Profit before tax from continuing
operations 178.7 0.6 2.0 (0.3) 181.0
Tax expense (33.6) (0.1) (0.3) 0.1 (33.9)
------------- ----------- -------- ------- -------------
Profit for the period from continuing
operations 145.1 0.5 1.7 (0.2) 147.1
Loss after tax for the year from
discontinued operations (7.6) - - - (7.6)
Profit for the year 137.5 0.5 1.7 (0.2) 139.5
============= =========== ======== ======= =============
Attributable to:
Equity holders of the parent 137.5 0.5 1.7 (0.2) 139.5
============= =========== ======== ======= =============
Earnings per share:
Basic 12.3p 12.5p
Diluted 12.2p 12.4p
Earnings per share for continuing
operations:
Basic 13.0p 13.2p
Diluted 12.9p 13.1p
Notes to the condensed consolidated financial statements
(continued)
19 Transition to IFRS 15 and IFRS 9 (continued)
IFRS 9/15 adjustment As restated
As reported 31 Jul
31 Jul 2017 2017
Insurance Travel EB&CC
GBP'm GBP'm GBP'm GBP'm GBP'm
Profit for the period 83.4 0.6 1.6 - 85.6
Other comprehensive income
Other comprehensive income to be
reclassified to the income statement
in subsequent periods
Net gains/(losses) on hedging instruments
during the period 11.4 - (1.9) - 9.5
Recycling of previous gains to
income statement on matured hedges (11.4) - - - (11.4)
-------------- ----------- -------- ------- -------------
Total net gain/(loss) on cash flow
hedges - - (1.9) - (1.9)
Associated tax effect - - 0.3 - 0.3
Net gains/(losses) on fair value
financial assets 1.3 - - - 1.3
Recycling of previous gains to
income statement on sale of fair
value financial assets during the
period - - - - -
-------------- ----------- -------- ------- -------------
Total net gain/(loss) on fair value
financial assets 1.3 - - - 1.3
Associated tax effect (0.2) - - - (0.2)
Total other comprehensive gains/(losses)
with recycling to income statement 1.1 - (1.6) - (0.5)
Other comprehensive income not
to be reclassified to the income
statement in subsequent periods
Re-measurement gains/(losses) on
defined benefit plans 5.8 - - - 5.8
Tax effect (1.0) - - - (1.0)
-------------- ----------- -------------
Total other comprehensive gains
without recycling to income statement 4.8 - - - 4.8
Total other comprehensive income/(losses) 5.9 - (1.6) - 4.3
Total comprehensive income for
the period 89.3 0.6 - - 89.9
Notes to the condensed consolidated financial statements
(continued)
19 Transition to IFRS 15 and IFRS 9 (continued)
IFRS 9/15 adjustment As restated
As reported 31 Jan
31 Jan 18 18
Insurance Travel EB&CC
GBP'm GBP'm GBP'm GBP'm GBP'm
Profit for the year 137.5 0.5 1.7 (0.2) 139.5
Other comprehensive income
Other comprehensive income to be
reclassified to the income statement
in subsequent periods
Net gains/(losses) on hedging instruments
during the year (3.6) - (1.7) - (5.3)
Recycling of previous gains to
income statement on matured hedges (18.8) - - - (18.8)
Total net gain/(loss) on cash flow
hedges (22.4) - (1.7) - (24.1)
Associated tax effect 3.8 0.3 4.1
Net gains/(losses) on fair value
financial assets (0.3) - - - (0.3)
Recycling of previous gains to
income statement on sale of fair
value financial assets during the
year (4.4) - - - (4.4)
Total net gain/(loss) on fair value
financial assets (4.7) - - - (4.7)
Associated tax effect 0.8 - - - 0.8
Total other comprehensive gains/(losses)
with recycling to income statement (22.5) - (1.4) - (23.9)
Other comprehensive income not
to be reclassified to the income
statement in subsequent periods
Re-measurement gains/(losses) on
defined benefit plans 10.2 - - - 10.2
Tax effect (1.7) - - - (1.7)
------------- ----------- -------------
Total other comprehensive gains
without recycling to income statement 8.5 - - - 8.5
Total other comprehensive income/(losses) (14.0) - (1.4) - (15.4)
Total comprehensive income for
the year 123.5 0.5 0.3 (0.2) 124.1
Notes to the condensed consolidated financial statements
(continued)
19 Transition to IFRS 15 and IFRS 9 (continued)
As IFRS 9/15 As As IFRS 9/15 As As IFRS 9/15 As
reported adjustment restated reported adjustment restated reported adjustment restated
31 Jan 31 Jan 31 Jul 31 Jul 31 Jan 31 Jan
17 17 17 17 18 18
Assets GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Goodwill 1,485.0 - 1,485.0 1,485.0 - 1,485.0 1,485.0 - 1,485.0
Intangible
assets 53.8 - 53.8 58.3 - 58.3 61.2 - 61.2
Investment in
joint
ventures 1.4 - 1.4 - - - - - -
Property,
plant and
equipment 131.5 - 131.5 142.0 - 142.0 163.4 - 163.4
Financial
assets 600.3 (0.9) 599.4 553.0 (1.2) 551.8 514.5 (1.0) 513.5
Deferred tax
assets 16.3 - 16.3 14.1 - 14.1 13.7 - 13.7
Reinsurance
assets 97.5 - 97.5 98.0 - 98.0 100.2 - 100.2
Inventories 5.6 - 5.6 5.6 - 5.6 5.8 - 5.8
Trade and
other
receivables 198.7 6.2 204.9 208.2 3.9 212.1 210.0 6.2 216.2
Assets held
for sale - - - - - - 6.8 - 6.8
Cash and
short-term
deposits 108.7 - 108.7 144.5 - 144.5 83.2 - 83.2
Total assets 2,698.8 5.3 2,704.1 2,708.7 2.7 2,711.4 2,643.8 5.2 2,649.0
Liabilities
Retirement
benefit
scheme
obligations 13.7 - 13.7 8.6 - 8.6 7.0 - 7.0
Gross
insurance
contract
liabilities 642.3 (0.9) 641.4 601.4 (0.9) 600.5 582.0 (0.6) 581.4
Provisions 4.0 - 4.0 0.5 - 0.5 4.7 - 4.7
Financial
liabilities 489.8 (0.4) 489.4 488.4 (0.8) 487.6 469.2 (0.7) 468.5
Current tax
liabilities 14.9 - 14.9 18.6 - 18.6 15.2 - 15.2
Deferred tax
liabilities 21.5 0.9 22.4 21.6 1.0 22.6 16.3 0.9 17.2
Other
liabilities 134.9 2.6 137.5 171.3 (0.2) 171.1 140.9 2.0 142.9
Trade and
other
payables 182.5 0.4 182.9 177.3 0.3 177.6 185.0 0.3 185.3
Total
liabilities 1,503.6 2.6 1,506.2 1,487.7 (0.6) 1,487.1 1,420.3 1.9 1,422.2
Notes to the condensed consolidated financial statements
(continued)
19 Transition to IFRS 15 and IFRS 9 (continued)
As IFRS 9/15 As As IFRS 9/15 As As IFRS 9/15 As
reported adjustment restated reported adjustment restated reported adjustment restated
31 Jan 31 Jan 31 Jul 31 Jul 31 Jan 31 Jan
17 17 17 17 18 18
Equity GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Issued
capital 11.2 - 11.2 11.2 - 11.2 11.2 - 11.2
Share premium 519.3 - 519.3 519.3 - 519.3 519.3 - 519.3
Retained
earnings 607.8 1.3 609.1 637.2 3.5 640.7 662.8 3.3 666.1
Share-based
payment
reserve 15.6 - 15.6 10.9 - 10.9 11.4 - 11.4
Fair value
reserve 3.3 (0.1) 3.2 4.4 (0.1) 4.3 (0.6) (0.1) (0.7)
Hedging
reserve 38.0 1.5 39.5 38.0 (0.1) 37.9 19.4 0.1 19.5
Total equity 1,195.2 2.7 1,197.9 1,221.0 3.3 1,224.3 1,223.5 3.3 1,226.8
Total
liabilities
and equity 2,698.8 5.3 2,704.1 2,708.7 2.7 2,711.4 2,643.8 5.2 2,649.0
Insurance
These adjustments represent the deferral of a proportion of
revenue in respect of the performance obligation associated with
the provision of claims first notification and the deferral of
aggregator fees as incremental contract costs over the expected
customer term as required by IFRS 15.
Travel
Under IFRS 15, it is necessary to allocate tour operations and
cruise revenue to various performance obligations such as the
provision of flights, accommodation, transfers and travel
insurance. Therefore, it is appropriate to defer a proportion of
revenue and associated direct costs in line with when these
obligations are discharged. Previously, revenue from tour
operations and cruise holidays where the Group does not operate the
cruise ship was recognised in full on the date of departure.
Under IFRS 9, the hedging requirements are more closely aligned
with the Group's risk management strategy and risk management
objectives.
Emerging business and central costs
This adjustment represents a deferral of a proportion of revenue
in respect to the performance obligations arising from the Saga
Membership scheme, Possibilities. The deferral is calculated as a
proportion of the product or service purchased with respect of the
costs of the membership scheme. Revenue is deferred until a time
when a customer ceases to be a Saga member.
Principal Risks and Uncertainties
The Group is subject to a number of risks and uncertainties as
part of its activities. The Board regularly considers these and
seeks to ensure that appropriate processes are in place to manage,
monitor and mitigate these risks. The Directors consider that the
principal risks and uncertainties facing the Group during the
period under review and for the remainder of the financial period
have not materially changed from those outlined on pages 24 to 29
of the annual report and accounts for the year ended 31 January
2018 available at www.corporate.saga.co.uk. The Group has in place
processes to monitor and mitigate these risks.
Responsibility Statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules
, being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
On behalf of the Board
Lance Batchelor
Chief Executive Officer
26 September 2018
INDEPENT REVIEW REPORT TO SAGA PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 July 2018 which comprises condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated statement of financial
position, condensed consolidated statement of changes in equity,
condensed consolidated statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
July 2018 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA. As disclosed in note 2.1, the annual
financial statements of the group are prepared in accordance with
International Financial Reporting Standards as adopted by the EU.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Stuart Crisp
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
26 September 2018
Alternative Performance Measures Glossary
The Group uses a number of Alternative Performance Measures
("APMs"), which are not required or commonly reported under
International Financial Reporting Standards, the Generally Accepted
Accounting Principles (GAAP) under which the Group prepares its
financial statements, but which are used by the Group to help the
user of the accounts better understand the financial performance
and position of the business.
Definitions for the primary APMs used in this report and set out
below. APMs are usually derived from financial statement items and
are calculated using consistent accounting policies to those
applied in the financial statements, unless otherwise stated.
APMs may not necessarily be defined in a consistent manner to
similar APMs used by the Group's competitors. They should be
considered as a supplement rather than a substitute for GAAP
measures.
Underlying Profit Before Tax
Underlying Profit Before Tax represents profit before tax from
continuing operations excluding unrealised fair value gains and
losses on derivatives. In the prior year it also excludes the
one-off costs associated with the unamortised facility fees of the
previous banking facilities and the one-off restructuring costs. It
is reconciled to statutory profit before tax within the Chief
Financial Officer's Review on page 6.
This measure is the Group's key performance indicator and is
useful for presenting the Group's underlying trading performance,
as it excludes non-cash derivative adjustments and one-off
financial impacts that are not expected to recur.
Trading EBITDA
Trading EBITDA is defined as earnings before interest payable,
tax, depreciation and amortisation, excluding amortisation of
acquired intangibles. It also excludes the non-cash impact of
IAS19R current service costs, which increased notably in the prior
year, in line with the Group's latest debt covenants. It is
reconciled to statutory profit before tax within the Chief
Financial Officer's Review on page 6.
This measure has been presented by the Group in every Annual
Report since it became a listed Group in 2014. It is presented due
to it being linked to the Group's debt covenants, as it is the
denominator in the Group's leverage ratio calculation.
Trading Profit
Trading Profit is defined as Trading EBITDA less depreciation
and amortisation, excluding amortisation of acquired intangibles
and non-cash IAS19R current service costs. It is reconciled to
statutory profit before tax within the Chief Financial Officer's
Review on page 6.
This measure has been presented by the Group since the Annual
Report published for the year ended 31 January 2016 and was used as
part of the Group's transition from Trading EBITDA to Underlying
Profit Before Tax as its key performance indicator. Although it is
no longer one of the Group's key performance indicators, it has
been provided to ensure reporting consistency with previous
periods.
Underlying basic earnings per share from continuing
operations
Underlying basic earnings per share from continuing operations
represents basic earnings per share from continuing operations
excluding the post-tax effect of unrealised fair value gains and
losses on derivatives. In the prior year it also excludes the
post-tax effect of the one-off non-cash costs associated with the
unamortised facility fees of the previous banking facilities and
the post-tax effect of the one-off restructuring costs
This measure is linked to the Group's key performance indicator
Underlying Profit Before Tax and represents what management
consider to be the underlying shareholder value generated in the
period.
Alternative Performance Measures Glossary (continued)
Customer spend
Customer spend represents the total amount that customers spent
on products provided by the Saga Group of companies, including
gross written premiums, ancillary income and Insurance Premium Tax
for all of the core policies and add-ons sold in the period.
Available operating cash flow
Available operating cash flow is net cashflow from operating
activities after capital expenditure but before tax, interest paid
and non-trading items, which is available to be used by the Group
as it chooses and is not subject to regulatory restriction. It is
reconciled to statutory net cash flow from operating activities
within the Chief Financial Officer's Review on page 8.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LFFILALIRFIT
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