SAGA PLC
ANNUAL REPORT
AND ACCOUNTS 2023
DELIVERING FOR
OUR CUSTOMERS
Saga’s purpose is to deliver exceptional
experiences every day, while being a driver of
positive change in our markets and communities.
At the heart of our business model is the drive to understand
our customers’ needs so that we can provide them with the
products and services they want and the exceptional experiences
they deserve.
Our aim is to become the largest and fastest-growing business for
older people in the UK, ‘The Superbrand’ famous for delivering
exceptional experiences every day, building confidence and connections
with our customers.
8
Chairman’s Statement
A statement from our Chairman,
Sir Roger De Haan, outlining his view
of the year.
It is evident to me that there is
a tremendous opportunity for
Saga to broaden its services
to its customers, reduce its
debt, enlarge its business and
increase its profitability and that
the Company is now well placed
to take advantage of this.”
Sir Roger De Haan
Non-Executive Chairman
Our key performance indicators
Underlying Profit/(Loss) Before Tax1
Loss before tax
£21.5m
2021/22 – (£6.7m)
(£254.2m)
2021/22 – (£23.5m)
Available Operating Cash Flow1
Net Debt1
£54.9m
2021/22 – £75.8m
£711.7m
2021/22 – £729.0m
Colleague engagement
8.0 out of 10
2021/22 – 7.7 out of 10
Customer net promoter score
51
2021/22 – 49
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Alternative Performance Measures
In addition to statutory performance measures, the Group also measures performance using Alternative Performance Measures. These are reconciled to statutory
measures of performance on page 56 of the Group Chief Financial Officer’s Review and defined in full on page 209.
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Group Chief Executive
Officer’s Statement
Euan Sutherland, Group Chief Executive Officer
(CEO), summarises the 2022/23 financial year.
22
Our strategy
Details of our three-step strategic plan,
aimed at returning Saga to sustainable
long-term growth.
Overall, I am pleased with the
progress made during the year
as we began to make the
strategic pivot towards
becoming a capital-light
marketing, content and
distribution business.”
Euan Sutherland
Group Chief Executive Officer
Watch our Group CEO,
Euan Sutherland,
outlining our vision
and three-step
growth plan
44
Group Chief Financial
Officer’s Review
James Quin, Group Chief Financial Officer
(CFO), details our operating and financial
performance for the year ended
31 January 2023.
Although the last 12 months
have been challenging in
both Insurance and Travel,
the Group returned to an
Underlying Profit Before Tax1.”
James Quin
Group Chief Financial Officer
Key performance indicators
Strategic Report
4
The year in review
6
Saga at a glance
8
Chairman’s Statement
10 Group Chief Executive Officer’s Statement
14
16 Market review
18
20
22 Our strategy
26
Environmental, Social and Governance
44 Group Chief Financial Officer’s Review
62
65
68
69
Risk management
Principal risks and uncertainties
Viability Statement
Key disclosure statements
Purpose and business model
Engaging with stakeholders
Governance
Corporate Governance Statement
71
Application of UK Corporate Governance Code
72
Chairman’s introduction to governance
74
Board of Directors
76 Governance at a glance
78
Board activities
81
Board leadership and Company purpose
82 Division of responsibilities
83 Composition, succession and evaluation
84 Nomination Committee Report
86
Audit Committee Report
90 Risk Committee Report
Directors’ Remuneration Report
92
96
98
111
Annual Statement
Remuneration at a glance
Annual Report on Remuneration
Directors’ Remuneration Policy
124 Directors’ Report
128 Statements of responsibilities
129
Independent Auditor’s Report to the
Members of Saga plc
Financial statements
Consolidated financial statements
138 Consolidated income statement
139
Consolidated statement of
comprehensive income
140 Consolidated statement of financial position
141 Consolidated statement of changes in equity
142 Consolidated statement of cash flows
143 Notes to the consolidated financial statements
Company financial statements of Saga plc
203 Balance sheet
204 Statement of changes in equity
205 Notes to the Company financial statements
Additional information
209 Alternative Performance Measures Glossary
210 Glossary
213 Shareholder information
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 3
STRATEGIC REPORT
The year in review
DEMONSTRABLE PROGRESS
Saga is emerging from the pandemic, focused on
returning to growth
Underlying Profit Before Tax1
£21.5m
Return to underlying
profit as Cruise and Travel
recovery continued
Following an extended period of uncertainty,
initially with the pandemic and more recently
geopolitical and macroeconomic uncertainty,
Saga reports an Underlying Profit Before Tax1
of £21.5m after returning to more normal
Cruise and Travel operations.
Acquisition of the Big Window
to strengthen our insight
and understanding
In February 2022, we announced the
acquisition of the Big Window, a specialist
research and insight business focused on the
ageing process. This move allows us to ensure
we are developing the products and services
our customers want and need.
Launch of our three-step
growth plan
To build on the foundations laid over the past
two years and return Saga to sustainable
growth, we launched our three-step strategic
growth plan, focused on maximising our
existing businesses, step-changing our ability
to scale while reducing debt and creating
‘The Superbrand’ for older people.
Watch our Group CEO,
Euan Sutherland,
outlining our growth plan
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
4 Saga plc Annual Report and Accounts 2023
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Introduction of Saga Media
As part of our ambition to become ‘The
Superbrand’ for older people, we introduced
Saga Media, aimed at providing digital media
that represents the needs and interests of
people over 50, giving them great advice,
inspirational stories and a place where they
are heard and valued.
Watch the launch
of Saga Media
at our Capital
Markets Event
Launch of new digital
Travel business
In the first half of the year, we combined the
operations of Saga Holidays and Titan Travel
to create the UK’s largest and market-leading
touring business. We also moved away from a
largely paper brochure-based approach to a
digital business, with dynamic pricing and an
enhanced website and booking platform.
Strengthened leadership team
in support of our growth plan
We were pleased to announce six new
senior appointments to support the
delivery of our strategy and accelerate
growth. Peter Bazalgette, Gemma Godfrey
and Anand Aithal all joined the Board,
alongside three additions to the Executive
Leadership Team to drive the areas of
Money, Media and Data.
Saga plc Annual Report and Accounts 2023 5
STRATEGIC REPORT
Saga at a glance
BUILDING OUR FUTURE
Our purpose is to deliver exceptional experiences every day, while
being a driver of positive change in our markets and communities.
Our strategy
Our values
Our aim is to become the largest and fastest-growing
business for older people in the UK. Through our
three-step growth plan, we are focused on the
following priorities:
Our values represent who we are and how we
work, brought to life every day by our colleagues.
We believe that every interaction, in whatever
form that takes, should reflect these values.
1. Maximising our existing businesses
We plan to maximise our existing businesses
through a specific plan for each, enabling growth,
accountability, efficiency and delivery of a common
brand purpose.
2. Step-changing our ability to scale
while reducing debt
We will grow our existing businesses while reducing
debt, and develop new businesses through innovation,
in a capital-light way.
3. Creating ‘The Superbrand’ for
older people
We will commercialise and grow our database, build
exceptional insights, deliver a brand repositioning,
create a content platform that reaches millions of
customers every day, and provide an exceptional
colleague experience.
Precision pace
Always owning and
making things happen
We agree clear goals
and plans, move quickly
and take ownership for
our actions.
Curiosity
Always asking why
We are open minded,
always seeking new
insights and learning
about our customers,
markets, competitors
and each other.
We welcome and
provide challenge.
Empathy
Always aware of others
We understand and
acknowledge how others
are feeling and we walk
in their shoes.
Collaboration
Always one team,
the Saga team
We are one team,
working together.
We are inclusive and
value difference.
Find out more about our strategy on pages 22-25
Reasons to invest in Saga
Our investment case is designed to create value for shareholders by returning the business to
sustainable long-term growth and reducing debt.
How we are different
Saga focuses on people over 50, the
fastest-growing, most affluent and
influential segment in the UK. Our deep
customer insight gives us a unique view
into our customers’ lives. We exist to
deliver exceptional experiences for
these customers every day, while being
a driver for positive change in our
markets and communities.
The model works
We offer differentiated products and
services, underpinned by a trusted
brand. Our business model is capital
efficient and cash generative, providing
flexibility to balance investment in our
brand and businesses with debt
reduction and delivery of long-term
returns to shareholders.
Confidence in future delivery
We have a clear and compelling strategy,
focused on returning the business to
growth through maximising our existing
businesses, reducing debt while
step-changing our ability to scale, and
positioning Saga as ‘The Superbrand’
for older people. This will create a truly
customer-orientated experience and
continue to drive longer and deeper
relationships with our customers.
6 Saga plc Annual Report and Accounts 2023
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Our businesses
Saga’s business units all focus on the specific needs and wishes of our unique customer group.
Cruise1
Travel1
Insurance
Our Cruise business offers a boutique
cruising experience consisting of:
• ocean cruises on board our two ships,
Spirit of Discovery and Spirit of
Adventure; and
• river cruises along Europe’s waterways
on board our fleet of luxury ships.
Highlights for 2022/23
• Ocean and River Cruise teams
combined to deliver the same
consistently high service across
both products.
• Ocean Cruise delivered target load
factor of 75% and per diem of £318.
• Strong Ocean Cruise bookings into
2023/24 with load factor of 72% and
per diem of £339 at 26 March 2023.
• Achieved excellent guest satisfaction
scores, of 9.0 out of 10 in Ocean and
8.2 in River Cruise at 31 January 2023.
Underlying Loss Before Tax2
Ocean Cruise
(£0.7m)
2021/22 – (£47.7m)
River Cruise
(£5.1m)
2021/22 – (£6.4m)
Our Travel business, which has always been
at the heart of the Saga brand, offers:
• hotel stays;
• escorted tours; and
• Tailor-Made holidays.
Highlights for 2022/23
• Combined the operations of Titan
Travel and Saga Holidays to create
the UK’s largest and market-leading
touring business.
• Launched the new Saga Travel business,
moving away from a largely paper
brochure-based approach to a digital
business with dynamic pricing and an
enhanced website and booking platform.
• Introduction of our Saga Deluxe and
Titan’s VIP Travel Services which feature
home-to-airport pick-up, airport lounge
access and fast-track security
clearance at selected UK airports.
• Launched exciting new products
including ‘Tailor-Made by Saga’ and
our private jet tours.
• Strong bookings into 2023/24 of
£137m at 26 March 2023, 32% ahead
of the same point in the prior year.
Underlying Loss Before Tax2
(£4.1m)
2021/22 – (£25.2m)
Insurance is the largest part of the Group,
providing primarily motor, home, travel and
private medical insurance through a panel
of underwriters. This panel includes the
Group’s in-house underwriter, Acromas
Insurance Company Limited (AICL) which
underwrites over 65% of Saga’s motor
insurance policies.
Highlights for 2022/23
• Successfully implemented new
regulatory requirements arising from
the Financial Conduct Authority’s (FCA)
review of General Insurance Pricing
Practices (GIPP).
• Introduced a range of new motor
products including a lower-cost
standard one-year policy, alongside
electric vehicle and multi-car products.
• Maintained pricing discipline while
navigating a challenging motor
insurance market.
• Continued improvement in motor and
home customer retention, now at 83.8%
compared with 82.8% in the prior year.
Underlying Profit Before Tax2
£88.2m
2021/22 – £120.5m
Find out more in our Group Chief
Financial Officer’s Review on
pages 47-48
Find out more in our Group Chief
Financial Officer’s Review on
pages 47-48
Find out more in our Group Chief
Financial Officer’s Review on
pages 49-52
Other Businesses
Find out more in our Group Chief
Financial Officer’s Review on page 53
The Group’s Other Businesses include:
• Money, offering equity release and
savings products;
• Media, providing engaging content
online and through the Saga Magazine;
• Insight, generating unique insights
into ‘Generation Experience’; and
• CustomerKNECT (formerly
MetroMail), our in-house mailing
and printing business.
Highlights for 2022/23
• Delivered revenue and customer
growth within Saga Money.
• Launch of Saga Exceptional,
a new website providing
best-in-class consumer advice
and inspirational stories.
• Development of a detailed customer
segmentation, identifying significant
growth opportunities.
Underlying (Loss)/Profit Before Tax2
(£0.8m)
2021/22 – £1.8m
1 Cruise was reported within Travel in the 2022 Annual Report and Accounts, however, is now reported separately to reflect the management structure of those businesses
2 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 7
I am pleased to report that last year the
performance of our core Cruise, Travel and
Insurance businesses enabled us to return to
underlying profitability whilst we also made
good progress in relation to the strategy
we set out 12 months ago.
Saga continued to build on the progress
reported at the half year, with revenue for
the Group increasing by over 50% when
compared with the previous year, following
the return to more normal Cruise and Travel
operations post the pandemic.
Our Ocean Cruise business, with its new
ships, performed well in the second half of the
year, sailing with an average 84% occupancy,
testament to the exceptional service we
provide on board, the model that we are now
mirroring on board our River Cruise vessels.
Looking ahead, the level of revenue booked
for the 2023/2024 financial year is very
encouraging and we are now in a good
position to generate our targeted levels of
EBITDA, £80m excluding overheads, from
the two ships.
There have been exciting new developments
in our Travel business in the past year,
including the move to a more agile, more
digital operation, and the launch of our new
“Tailor-Made by Saga” holidays. Currently,
demand for our holidays is strong, particularly
for our touring programmes.
Our Insurance business operated in the
highly competitive market last year following
continued disruption and uncertainty
created by the regulatory changes to the
industry’s pricing and the high cost of settling
insurance claims. We continued to take a
disciplined approach to our pricing.
STRATEGIC REPORT
Chairman’s Statement
AN EXCITING FUTURE LIES AHEAD
I am very positive about the future potential of Saga. We have
managed our way through three difficult years and, in 2023/24,
we expect all of our three main businesses to be profitable.
I am confident that our strategy is the right one and will lead
to growth and a significant reduction in our levels of debt.”
Sir Roger De Haan
Non-Executive Chairman
8 Saga plc Annual Report and Accounts 2023
As we have indicated previously, we have
decided to focus on Insurance Broking and
to sell our Insurance Underwriting business,
a move that will reduce the risk we take and
release capital and allow us to further reduce
our debt. With this in mind, I was pleased to
be able to provide a £50m facility to give the
Company additional flexibility.
In order to increase the products and
services we offer and the frequency of
our customer interactions and the
understanding we have of them, I am
delighted that we strengthened our
leadership team during the year. Three very
experienced and talented executives were
appointed to set up and lead our new Media
business, our Personal Finance operations,
Saga Money and our Data team. Each of
these areas has great potential.
As I set out in my statement last year, Saga
has always had a strong sense of purpose
and we have embraced our Environmental,
Social and Governance (ESG)
responsibilities. During the year, we
conducted an assessment to understand
fully the ESG factors that are most material
to our business. Our new sustainability
strategy is published later in this report on
pages 26-28. In due course we will set out
further details of the key metrics that we will
use to track our performance.
I am very positive about the future potential
of Saga. We have managed our way through
three difficult years and, in 2023/24, we
expect all of our three main businesses to be
profitable. I am confident that our strategy
is the right one and will lead to growth and
a significant reduction in our levels of debt.
Finally, I’d like to thank the team at Saga for
their hard work over the past year. It is evident
to me that there is a tremendous opportunity
for Saga to broaden its services to its
customers, reduce its debt, enlarge its
business and increase its profitability and
that the Company is now well placed to take
advantage of this.
Sir Roger De Haan
Non-Executive Chairman
17 April 2023
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Gemma Godfrey
Independent Non-Executive
Director
Gemma, a founder of two
digital businesses, was a
boardroom adviser to
Arnold Schwarzenegger on
The Apprentice USA and is
a business and money expert
on ITV’s Good Morning Britain
and Sky News.
Find out more about our
Board of Directors on
pages 74-75
Welcoming three new Non-Executive Directors
We were pleased to announce the appointment of three new
Non-Executive Directors to the Board, from 1 September 2022,
to support the Group’s growth strategy and positioning as
‘The Superbrand’ for older people in the UK.
Peter Bazalgette
Senior Independent
Non-Executive Director
Peter Bazalgette brings
a wealth of experience
from the media and wider
creative industries, including
with Endemol, ITV, the BBC,
YouGov and Channel Four.
Anand Aithal
Independent Non-Executive
Director
Anand Aithal has extensive
non-executive experience from
fintech, insurance broking,
asset management and
accountancy, bringing an
entrepreneurial perspective,
having co-founded his own data
analytics business.
Saga plc Annual Report and Accounts 2023 9
STRATEGIC REPORT
Group Chief Executive Officer’s Statement
PREPARING FOR GROWTH
The progress made throughout the course of the year
demonstrates that Saga is on the right track to, in time,
deliver long-term sustainable growth for our stakeholders.”
Euan Sutherland
Group Chief Executive Officer
Watch our Group CEO,
Euan Sutherland,
presenting our
full year results
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
10 Saga plc Annual Report and Accounts 2023
Continued pandemic recovery
During 2022/23, we made strong progress
against the growth plan that we set out in
March 2022, as our Cruise and Travel
businesses continued to recover from the
pandemic, and we navigated a particularly
challenging motor insurance market as it
adjusted to regulatory changes, a sharp rise
in claims inflation and a highly competitive
environment in light of those changes. This
was achieved alongside the launch of our new
Media business, significant enhancements to
our data capabilities and the strengthening
of our leadership team.
Return to underlying profit
I am pleased to report that, for the year
ended 31 January 2023, Saga generated
an Underlying Profit Before Tax1 of £21.5m,
compared with an Underlying Loss Before
Tax1 of £6.7m in the prior year. This reflects
significant improvements across Cruise and
Travel as those businesses returned to more
normal operations, and consistent Insurance
Broking performance, which was partially
offset by reduced earnings from our
Insurance Underwriting business.
After reflecting the £269.0m Insurance
goodwill impairment that we reported within
our interim results, alongside other smaller
one-off below-the-line items, we report a loss
before tax of £254.2m. This compares to a
loss before tax of £23.5m in the prior year.
In addition, we reduced our level of Net Debt1
which, at 31 January 2023, was £711.7m and
continued to hold significant Available Cash1
of £157.5m at the same date. Net Debt1 and
Available Cash1, at 31 January 2022, were
£729.0m and £186.6m respectively.
To further reduce debt and increase liquidity
ahead of the maturity of our £150m bond in
May 2024, we have taken a series of actions
which include the initiation of a sales process
in relation to our Insurance Underwriting
business and the agreement of a £50m
loan facility with Sir Roger De Haan.
The progress made throughout the course
of the year demonstrates that Saga is on the
right track to, in time, deliver long-term
sustainable growth for our stakeholders.
Our growth plan
An update on our progress, during the past
year, in each of these areas is set out below.
In March 2022, we set out our ambition
to become the largest and
fastest-growing business for older
people in the UK which we will achieve
through delivery of our three-step
growth plan. This plan is focused on the
following three priorities:
1. Maximising our
existing businesses
2. Step-changing our
ability to scale while
reducing debt
3. Creating ‘The
Superbrand’ for
older people
1. Maximising our
existing businesses
Cruise
Our Ocean Cruise business reported an
Underlying Loss Before Tax2 of £0.7m for the
year ended 31 January 2023. This comprises
an underlying loss of £6.9m in the first half
and a profit of £6.2m in the second half as the
impact of COVID-19 lessened. This compares
to an Underlying Loss Before Tax2 of £47.7m
in the prior year.
For the 2022/23 financial year, Ocean Cruise
achieved a load factor of 75%, made up of
66% in the first half of the year and 84% in the
second, accompanied by a per diem of £318.
This compares with a 68% load factor and
£299 per diem in the prior year. These
factors, when combined, result in Ocean
Cruise year-on-year revenue growth in
excess of 100%.
Looking ahead to the 2023/24 financial
year, our booked load factor positions us
well to meet our target of at least 80%.
At 26 March 2023, we had secured
bookings equivalent to a 72% load factor
and £339 per diem. This positions us well
to deliver our target of £40m EBITDA
per ship, excluding overheads, in the year
ending 31 January 2024.
As our Ocean and River Cruise businesses
are now managed by the same team, we
have taken steps to not only ensure that our
River Cruise guests experience the same
exceptional service as within Ocean Cruise,
but also provide more visibility over the
performance of our River Cruise operation.
Our River Cruise business, in line with the
guidance within our January Trading Update,
reported an Underlying Loss Before Tax2 of
£5.1m which compares with a £6.4m loss in
the prior year. This improvement was largely
driven by significantly more guests sailing
with us, being 12,000 in 2022/23 compared
with just 1,000 in the prior year.
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Financial performance
Underlying Profit/(Loss)
Before Tax2,3
£21.5m
£17.1m
£21.5m
30
20
10
0
-10
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Loss before tax
Available Operating Cash Flow2,3
(£254.2m)
£54.9m
0
-50
-100
-150
-200
-250
-300
(£23.5m)
(£61.2m)
80
60
40
20
0
£3.4m
(£254.2m)
£75.8m
£54.9m
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2020/21
(£6.7m)
2021/22
2022/23
2020/21
2021/22
2022/23
2020/21
2021/22
2022/23
Basic loss per share
(185.8p)
Underlying Earnings/(Loss)
Per Share2
11.9p
Leverage ratio
7.5x
13.2p
11.9p
0
-50
-100
-150
-200
(20.1p)
(67.0p)
2020/21
2021/22
(185.8p)
2022/23
15
10
5
0
-5
-10
-15
10.3x
11.7x
7.5x
12
10
8
6
4
2
0
2020/21
(11.1p)
2021/22
2022/23
2020/21
2021/22
2022/23
2 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
3 Refer to the key performance indicators on pages 14-15 for definition and explanation
Saga plc Annual Report and Accounts 2023 11
STRATEGIC REPORT
Group Chief Executive Officer’s Statement continued
For the 2023/24 financial year, the River
Cruise business is expected to generate a
small Underlying Profit Before Tax4 before
becoming a more meaningful proportion of
the Group’s earnings over time. In support of
this, bookings for the year ending 31 January
2024 are strong and, at 26 March 2023,
we had already secured bookings from more
than 12,500 guests which equated to a load
factor of 63% and per diem of £298.
We actively encourage our guests to openly
express their views and provide feedback in
relation to our Cruise offering as it is this that
allows us to continuously enhance our guest
experience. We are exceptionally proud that,
at 31 January 2023, our guest satisfaction
score was 9.0 out of 10 for Ocean Cruise and
8.2 for River Cruise.
Travel
Our Travel business returned to more normal
operations following the COVID-19 pandemic
and, as such, revenue for the year ended
31 January 2023 increased by more than
10 times when compared with the year
before. The business reported a small
Underlying Loss Before Tax4 of £4.1m.
2022/23 was a year of transformation for
our Travel business, moving from a largely
traditional paper-based business to one that
offers awe-inspiring holidays through a more
digital and agile operating model.
As part of the move, we developed a series of
exciting new products, including ‘Tailor-Made
by Saga’, which offers customers a truly
personalised travel experience, and our
private jet tours which represent our most
luxurious holidays yet with a succession of
unforgettable encounters and travel
exclusively by chartered plane. In addition, all
bookings now benefit from our Saga Deluxe
and Titan VIP Travel Services which include
home-to-airport pick up, airport lounge
access and fast-track security clearance
at selected UK airports.
We developed a series of
exciting new products, including
‘Tailor-Made by Saga’ and
our private jet tours which
represent our most luxurious
holidays yet.”
Customer feedback received to date in
relation to our revamped Travel offering has
been incredibly positive and is reflected in
our forward bookings. At 26 March 2023,
booked revenue totalled £136.6m which is
32% ahead of the same point in the prior year.
This level of bookings places the business
firmly on track to return to profit in 2023/24.
Insurance
The UK insurance market has faced
particularly challenging times over the past
year as insurers adjusted to market-wide
regulatory changes and high levels of
claims inflation.
Overall, Insurance Broking reported an
Underlying Profit Before Tax4, on a written
basis, of £67.7m which compares to £66.6m
in the previous year.
The number of policies in force across all
products, at 31 January 2023, was 1.7m or
3% behind the position at 31 January 2022.
Total policy sales for the year as a whole were
2% behind the prior year, reflecting a 103%
increase in the number of travel insurance
policies sold, broadly stable sales of private
medical insurance and motor and home sales
that were 7% behind the prior year.
While the level of new motor and home
policies sold was significantly behind the prior
year at 50% and 17% respectively, customer
retention improved to 83.8%, or 1.0ppt
ahead of the prior year. The average margin
per policy was £71, compared with £74 in
the year before.
The proportion of customers coming
to Saga directly, rather than through
price-comparison websites, was 49%,
compared with 59% in the prior year,
reflecting the competitive nature of
the market.
Our Insurance Underwriting business
reported an Underlying Profit Before Tax4 of
£19.1m for the year, supported by £25.1m of
underlying prior year reserve releases.
Excluding the impact of these reserve
releases, and our quota share reinsurance
arrangements, our current year underlying
combined operating ratio was 125.8% which
compares with 96.3% in the prior year.
This reflects the expected unwind of the prior
year COVID-19 frequency benefits, a sharp
rise in inflation to the cost of settling claims
and an above-average level of current year
large claims.
In response to the rise in claims inflation,
throughout the year, we applied material
increases to our pricing which incorporated
both the level of inflation already observed,
and the expected inflation in the coming year.
4 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
12 Saga plc Annual Report and Accounts 2023
Money
Our personal finance business, Saga Money,
reported an Underlying Profit Before Tax4 of
£2.3m for the 2022/23 financial year, broadly
in line with that of the prior year.
In equity release, which was supported by
the launch of our new television advertising,
total loan volumes were 29% ahead of the
prior year, with the average loan value also
19% higher.
Our savings product, provided in partnership
with Goldman Sachs, secured 17% more
accounts than in the year ended 31 January
2022, with assets under management of
around £3.5bn.
2. Step-changing our ability
to scale while reducing debt
The second focus within our growth plan is on
reducing our level of debt and step-changing
our ability to scale the business. At 31 January
2023, Net Debt4 was £711.7m, £17.3m lower
than at 31 January 2022. This represents the
Group’s gross debt at that date, less £157.5m
of Available Cash4.
Following two years of agreed deferrals, we
re-commenced payments on our two ocean
cruise ship facilities and a total of £46.4m
was repaid during 2022/23. Future Cruise
bookings are encouraging and, over time,
we expect to generate sufficient cash from
Ocean Cruise to meet interest and capital
repayments, including catch-up payments
on elements deferred during the pandemic.
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To maintain flexibility in relation to our
short-term liquidity needs, we concluded
discussions with the lending banks behind
our revolving credit facility and agreed a
series of amendments, including changes to
the leverage and interest cover covenants
attached to the facility. Full details of the
changes and revised covenant levels can be
found on page 58.
As part of our property strategy, we are
continuously assessing our ways of working
and how best to support colleagues.
Following the pandemic, and in line with our
hybrid working approach, we saw that far
fewer colleagues were choosing to work
regularly from our Enbrook Park
headquarters in Folkestone. We made the
decision to close the site in favour of two
smaller hubs in Kent, in addition to our
existing London hub. This will reduce
operating expenses while we explore
longer-term options for the site.
As part of our plan to reduce debt and move
towards a more capital-light model, we are
continuing to evaluate our options in relation
to our Insurance Underwriting business and
an active sales process is ongoing.
3. Creating ‘The Superbrand’
for older people
The final step in our growth plan is to create
‘The Superbrand’ for older people through
focus on our brand, data, insights and
customer interactions.
Saga is a brand that has exceptionally high
awareness amongst people over 50, however,
historically too many have seen Saga as
something that ‘isn’t for them’. Over the past
couple of years, our mission has been to
reframe the conversation with a focus on
experience as opposed to age. The brand
relaunch in 2021 was only the start and, since
then, we have expanded our new marketing
campaigns to cover more products, and
increased our customer net promoter
score (NPS) to its highest ever level. When
compared to 2021, NPS in the fourth quarter
was two points higher, at 51. This reflects
improvements within our contact centres
which reduce wait times and improve the
customer journey.
As we highlighted at our Capital Markets
Event in January 2023, the data we hold
and the way that we use it, will be key to our
success in becoming a superbrand. At the
beginning of the year, we set a target to
achieve three million new consents by
31 January 2023 which would allow us to
communicate our products and services to
a wider audience than before. I am pleased
to confirm that we achieved this, and more.
The insights we hold about ‘Generation
Experience’ are crucial as they allow us to
develop products and services that meet the
specific needs of our customers. Following
the acquisition of The Big Window Consulting
Limited at the start of the year, we have taken
great strides in this space. These include
developing our detailed customer
segmentation, building our Experienced
Voices panel which now consists of more than
10,000 of our customers and championing a
conversation on positive ageing, most
recently supported by the release of our
‘Generation Experience’ economic study.
In addition, increasing the depth, and
frequency, of our interactions with customers
is a key part of our superbrand plan. Through
this, we are able to learn more about their
specific interests and viewpoints, enabling us
to continuously improve the products and
services we offer. Saga Media, which was
launched in January 2023, is pivotal to this
process. Through Saga Media, and our
brand-new Saga Exceptional website, we are
providing people over 50 with an online home
and a corner of the internet that is designed
specifically for them. Not only does this allow
us to become part of our customers’ lives and
learn more about what they want, but it will
also become a profit-generative business
in its own right within five years, through
advertising and affiliate partnerships.
In order to transform Saga into ‘The
Superbrand’ for older people, we need to
create an exceptional colleague experience,
giving each and every colleague the
opportunity to do the best work of their lives.
During 2022/23, we made great progress
in this space, providing colleagues with
access to a new reward platform and
enhancing the financial support available
through acceleration of our annual pay
review cycle and two additional cost of living
support payments for our colleagues with
lower earnings.
The engagement of our colleagues, measured
through a survey hosted by an independent
third party, remains high at 8 out of 10.
Building Saga into the largest and
fastest-growing business for
older people
We are continuing with the delivery of our
three-step growth plan, focused on
maximising our existing businesses, reducing
debt while step-changing our ability to scale
and creating ‘The Superbrand’ for older
people. We will continue to pay down our
ocean cruise ship debt, and we expect to
repay the £150m bond maturing in May 2024
from Available Cash5.
Overall, I am pleased with the progress
made during the year as we began to make
the strategic pivot towards becoming a
capital-light marketing, content and
distribution business. We now have the right
team, strategy and structure in place that will
return Saga to sustainable long-term growth.
Finally, I would like to pass my thanks on to our
colleagues for their relentless efforts during
this period of change. I recognise that any
business is only as strong as its colleagues
and, looking at the team around me, that fills
me with confidence.
Euan Sutherland
Group Chief Executive Officer
17 April 2023
Read our ‘Generation
Experience’ economic study
In order to transform Saga
into ‘The Superbrand’ for
older people, we need to
create an exceptional colleague
experience, giving each and
every colleague the opportunity
to do the best work of their lives.”
5 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 13
STRATEGIC REPORT
Key performance indicators
Financial KPIs
RESILIENT
PERFORMANCE
During the financial year,
the following key performance
indicators (KPIs) were used
to assess the financial and
operational performance
of the business against our
three-step growth plan.
These include an additional
KPI measuring our marketable
database, which is one of
several contributing elements
to the directors’ remuneration.
References to our three-step growth plan
1
2
3
Maximising our existing
businesses
Step-changing our ability to
scale while reducing debt
Creating ‘The Superbrand’
for older people
2022/23 Bonus KPIs
Underlying Profit/(Loss)
Before Tax1
£21.5m
Available Operating Cash Flow1
£54.9m
2022/23
2021/22
2020/21
2019/20
1
£21.5m
2022/23
(£6.7m)
2021/22
£17.1m
2020/21
£109.9m
2019/20
1
£54.9m
£75.8m
£3.4m
£92.7m
Purpose and definition
Underlying Profit/(Loss) Before Tax1
is the Group’s primary KPI and a
meaningful representation of the
Group’s underlying trading performance.
It is defined as loss before tax excluding
items which are not expected to recur.
Refer to page 209 for full definition
and explanation.
Performance
Increase of £28.2m in comparison to
2021/22, largely as a result of our Cruise
and Travel operations returning to more
normal operating conditions as we
emerge from the pandemic.
Purpose and definition
Available Operating Cash Flow1
represents net cash flow from operating
activities which is not subject to regulatory
restriction, after capital expenditure but
before tax, interest paid, restructuring
costs, proceeds from business and
property disposals and other non-trading
items. Refer to page 209 for full definition
and explanation.
Performance
Decrease in Available Operating
Cash Flow1 due to higher central costs,
movements in working capital, lower
dividends from our Underwriting
business and higher capital expenditure,
partly offset by increased cash
generation from Cruise and Travel.
Loss before tax
Net Debt1
(£254.2m)
£711.7m
2022/23
2021/22
2020/21
2019/20
1
(£254.2m)
2022/23
(£23.5m)
2021/22
(£61.2m)
2020/21
(£300.9m)
2019/20
2
£711.7m
£729.0m
£760.2m
£593.9m
Purpose and definition
Loss before tax as presented in
accordance with UK-adopted
international accounting standards.
Performance
Loss before tax for the year of £254.2m,
reflecting a £269.0m Insurance goodwill
impairment alongside other smaller
one-off below the line items.
Purpose and definition
Net Debt1 represents the sum of the
carrying value of the Group’s debt
facilities, less the amount of Available
Cash1 it holds. Refer to page 59 of the
Group Chief Financial Officer’s Review
for a full breakdown.
Performance
Net Debt1 reduced by £17.3m compared
with 31 January 2022, as a result of
the net operating cash generated
and dividends received from our
Underwriting business being only
partially offset by movements in working
capital, cash injections into our River
Cruise and Travel businesses, capital
expenditure and the servicing of debt.
Refer to page 54 of the Group Chief
Financial Officer’s Review for full details.
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
14 Saga plc Annual Report and Accounts 2023
Non-financial KPIs
Motor and home insurance
customer retention
83.8%
2022/23
2021/22
2020/21
2019/20
1
Purpose and definition
Motor and home retention is a key
indicator of performance within the
Insurance business and represents
the proportion of motor and home
customers who choose to remain with
Saga when their policy is due for renewal.
Performance
Motor and home retention is 1.0ppt
ahead of 2021/22, due to market-wide
regulatory changes that give customers
more reason to stay loyal to their insurer.
Customer net promoter
score (NPS)
51
2022/23
2021/22
2020/21
2019/20
3
Purpose and definition
Customer NPS represents the
willingness of customers to recommend
Saga products and services to family,
friends and colleagues. The score is
calculated by analysing customer
survey responses and subtracting the
percentage of detractors (those scoring
six or less) from the percentage of
advocates (those scoring nine or more)
which is then weighted by business unit.
Performance
Customer NPS reached a record high
of 51, reflecting improvements within our
contact centres which reduce wait times
and improve the customer journey.
Ocean Cruise load factor2
Ocean Cruise per diem2
75%
83.8%
2022/23
82.8%
2021/22
80.5%
75.1%
£318
75%
2022/23
68%
2021/22
£318
£299
1
1
Purpose and definition
Load factor is the most sensitive
driver of Cruise profit before tax and
represents the booked proportion of
the total capacity across our two ocean
ships. It is calculated by dividing the
number of berths booked by the total
berths available.
Performance
Load factor of 75% for 2022/23,
reflecting 66% in the first half of the
year, following residual impacts from the
pandemic and geopolitical uncertainty,
and 84% in the second half of the year
as we returned to more normal
operating conditions.
Purpose and definition
Per diem provides an indication of
pricing within the Cruise business and
reflects the average revenue charged
per guest per night on board our
ocean cruise ships.
Performance
The £318 per diem for 2022/23 is
significantly ahead of the prior year,
reflecting the impact of inflation
and improvements made to our
Cruise products to enhance the
guest experience.
Colleague engagement3
Marketable database
8.0 out of 10
5.9m
51
November 2022
8.0
31 January 2023
49
44
38
November 2021
7.7
31 January 2022
31 January 2021
31 January 2020
5.9m
6.2m
7.9m
8.2m
3
3
Purpose and definition
Colleague engagement provides an
indication of how committed and
enthusiastic colleagues are towards
both Saga and their work. It is measured
through responses to quarterly
colleague surveys hosted by an
independent third party.
Performance
Overall colleague engagement increased
to 8.0 from our previous score of 7.7
reflecting higher scores in loyalty and
satisfaction as a result of the support
that colleagues received in response to
the rising cost of living.
Purpose and definition
Our marketable database reflects the
number of people over 50 for whom
we hold details and are able to contact
via either post or email in relation to the
products and services offered by at
least one of our business units.
Performance
Our marketable database has been in
decline due to lapsing permissions and
a higher proportion of customers opting
out of postal communications. The rate
of decline has, however, slowed over
time due to an increase in customers
opting in to email.
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2 No comparative data prior to 2021/22 has been provided for Cruise, as operations were suspended for much of 2020/21, with the offering prior to that not
comparable with our two current ocean ships
3 During 2020/21, Saga appointed a new third-party survey provider. As such, the data prior to February 2021 is not comparable
Saga plc Annual Report and Accounts 2023 15
STRATEGIC REPORT
Market review
DELIVERING IN CHALLENGING MARKETS
Saga operates in highly attractive
markets, serving the fastest-growing
and wealthiest demographic with
significant opportunity for growth.
There were an
estimated
26.1m
individuals in the UK aged
over 50 during 20221
…spending
£292bn
per year on non-household
expenditure2
Our customers
Saga exists to serve people over 50 with uniquely
tailored products and services, accompanied
by exceptional experiences. This segment of
the UK population is the fastest-growing
demographic in the UK today with considerable
disposable wealth.
We know that people, their views and their needs change as they
age and that these changes impact their spending behaviours.
At Saga, we are uniquely positioned to fulfil these needs by
utilising our in-depth insights and data to offer meaningful,
relevant and compelling products and services to this group.
…and this population is expected to grow
faster than any other age group1
Our businesses
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2.0
1.5
1.0
0.5
–
(0.5)
(1.0)
2022 2024 2026 2028 2030 2032
0-29-year-olds
30-49-year-olds
50+ year-olds
While we continue to face significant competition in
the more commoditised areas of the business, with
the use of our unique insight and data, we have, and
will continue to develop differentiated products to
suit the specific needs of our customers.
Cruise
In Cruise, while we have a significant number of competitors, we
are uniquely placed within the market, offering a truly all-inclusive
UK-to-UK experience on board smaller, purpose-built luxury
ships that consistently deliver exceptional service.
Travel
In what continues to be a commoditised market, our recently
relaunched Travel business constantly develops and launches
new products that set us apart, with our new private jet tours
being a prime example of this.
Insurance
The UK market remains competitive, particularly within motor
insurance, following the regulatory changes arising from the
FCA’s review into GIPP and the impact of inflation on the cost
of settling claims. We will continue to grow the range of products
we offer our customers, focusing not only on motor and home
insurance but also on how we can provide our customers with
great value and peace of mind for their wider insurance needs.
1 Office for National Statistics – 2020-based principal projections
2
‘Generation Experience’ economic study – Total VAT receipts for the 2021/22 tax year were £117.4bn. While no age breakdowns of that data exist, using the Office
for National Statistics data on total expenditure per person based on the age of the ‘household reference person’, we estimate that VAT receipts from individuals
aged 50 years and over amount to £58.4bn. Assuming the standard 20% rate of VAT, this equates to an estimated £292bn of non-household expenditure from
this age group
16 Saga plc Annual Report and Accounts 2023
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Regulatory and legislative developments
Background
Our Insurance Broking and Money
businesses are regulated by the FCA,
with the Insurance Underwriting business
regulated by the Gibraltar Financial
Services Commission operating under the
Solvency II Directive. The Travel business is
regulated by the Civil Aviation Authority
and is a member of the Association of
British Travel Agents (ABTA) as well as an
Accredited Agent of the International
Air Transport Association. The Cruise
business is regulated by the International
Maritime Organisation, the Maritime and
Coastguard Agency and is a member of
the Cruise Lines International Association,
the UK Chamber of Shipping and ABTA.
Saga also operates processes and
procedures to comply with other
regulations and legislation that apply to
its business including, but not limited to,
the Data Protection Act 2018, the Bribery
Act 2010, the Equality Act 2010 and health
and safety legislation.
Developments during the year
During 2022, Saga implemented the FCA
policy requirements for GIPP to address
the difference between new business and
renewal pricing for motor and home
policies. The changes came into effect on
1 January 2022 and we believe they are
positive for consumers as a whole and
encourage more focus on service and
claims handlings as prices become more
aligned across the industry.
In July 2022, the FCA published its policy
statement, ‘A new Consumer Duty’, which
incorporates new consumer protection
standards in retail financial services,
designed to raise overall customer
outcomes and to encourage firms to
‘get it right first time’. It is supported
through a set of rules and four customer
outcomes, and is the cornerstone of
the FCA’s three-year strategy. The new
rules come into force on 31 July 2023
and Saga is well positioned to meet
these new standards, building upon
customer-orientated working practices
already embedded and operating to
good effect.
Macroeconomic conditions
The macroeconomic environment was
volatile during 2022, with rapid changes
to sanctions, rising food, energy and wage
costs, and supply chain shortages which
were partly driven by the Russian invasion
of Ukraine, but also impacted by Brexit,
the COVID-19 pandemic, UK Government
leadership changes, and adjustment to a
post-pandemic operating environment.
These significant events, often viewed
as ‘black swan’-type events, have led to
interlinked and compounded impacts
which have been complex to navigate
across industries. The factors which
posed the most risk to Saga were increases
to claims inflation which impacts our
Insurance business, the costs of goods
and services, wage inflation, the ability
to attract and retain colleagues and the
cost of living crisis.
Post-pandemic operating
With no COVID-19 restrictions throughout
the majority of 2022 in most jurisdictions,
the Cruise business continued its return
to service. A COVID-19 crew vaccination
programme remained in place to ensure
the safety of all on board, and tried and
tested COVID-19 protocols are ready to
be re-initiated if needed.
Elsewhere in the business, although
absences due to COVID-19 fluctuated
throughout 2022, they were significantly
lower than the previous year. We continue
to see higher rates in the contact centre
in comparison with other areas however,
this is managed through the absence
protocols in place.
Increased claims inflation
Material increases in claims inflation have
proved a challenging environment for the
insurance market, with inflation emerging
off the back of changing claims trends
through COVID-19 periods and the
impacts of the FCA’s review into GIPP.
Our Underwriting business focused on
disciplined management of the result,
actioning material price increases as well
as developing and delivering a range of
initiatives to mitigate inflationary impacts.
Claims inflation is now tracking in line with
expectations and is forecast to reduce
next year.
Recruitment and retention
During the latter half of 2021, UK
companies started to suffer high levels
of resignations, commonly referred to
as the ‘Great Resignation’. This elevated
attrition continued into 2022 across
the industry, and, in Saga, particularly
impacted those with less than 12 months’
service in the contact centres.
We adapted our recruitment approach
during 2022 and began recruiting
nationwide to mitigate the issue. Attrition
plans were in place throughout 2022 to
fully understand and address the reasons
behind colleagues leaving, and continued
focus on this in 2023 is expected to further
reduce colleague turnover.
Cost of living crisis
With rising cost of living pressures in 2022,
we supported our colleagues in a number
of ways. We awarded all colleagues a 2.5%
pay increase in February 2022 and brought
forward our February 2023 pay increase
to award a further 5% in December 2022
for colleagues below senior leadership
level. Additionally, we provided a lump sum
payment of £500 in September 2022,
and again in February 2023, to all
colleagues below senior management
level. Overall, for 2022, colleagues below
senior management received an average
11% pay increase in the year and senior
management received a 7.5% pay increase
to assist with the rising cost of living.
Colleagues also had access to a wide
range of benefits including an Employee
Assistance Programme, mental health
first aiders, a hardship fund and retail and
supermarket discounts.
Saga plc Annual Report and Accounts 2023 17
STRATEGIC REPORT
Purpose and business model
BUILDING ON OUR STRENGTHS
Our purpose is to deliver exceptional experiences every day, whilst being a driver of positive change
in our markets and communities. We are a direct-to-customer marketing, content and distribution
business with unique insights into our customers that help us build long and deep relationships.
Our strengths
Our diverse business
Our colleagues and culture
We recognise that our colleagues are key to delivering
exceptional experiences every day for our customers.
Therefore, focus on, and investment in, our colleagues
and the culture in which they work is a priority to ensure
that we inspire colleagues to do the best work of their
lives, empowering them to better serve our customers.
Find out more in Environmental, Social and
Governance on pages 26-43
Our brand
The Saga brand has always been exceptionally
well-known amongst people over 50. This is a key
strength in the highly competitive markets that we
operate in, as the brand is often associated with trust.
As part of our strategy, we aim to build Saga into
‘The Superbrand’ for older people, which will allow us
to reach a wider audience and further build on our
already distinct brand.
Find out more in our strategy on pages 22-25
Our customers and insight
At Saga, our customers are the heart of our business
and we aim to create exceptional experiences for
them every day. Through our unique customer insight,
we are able to develop a deep understanding of the
ageing experience and what is important to this unique
group so that we are able to develop products and
services that meet their wants and needs.
Supplier partnerships
Our supplier partnerships are integral to our business
model as leveraging their specialist expertise,
resources and capital allows us to deliver the best
possible products and services to our customers.
Proprietary data and technology
The size of our database, and the depth of information
we hold on our customer group, is one of Saga’s core
assets. The continual expansion and development of
this data, coupled with our unique insights, allows us to
develop products and services that are tailored
specifically for this unique group.
18 Saga plc Annual Report and Accounts 2023
Our distinct business units are ambitious and autonomous,
whilst leveraging our core strengths to build deep and
long-lasting relationships with our customers.
Cruise
What we do
We provide our guests with ocean
and river cruises on board our
luxury ships.
How we add value
• We offer guests a truly
all-inclusive cruising experience
which includes all meals and
drinks, a chauffeur service,
private balconies as standard
and selected excursions.
• Guests travel with the added
peace of mind through
inclusion of travel insurance
and a price promise guarantee.
Travel
What we do
We provide our guests with a
variety of travel experiences
through hotel stays, escorted
tours and Tailor-Made holidays.
Marketplace and position
We are one of the smaller cruise
businesses operating from the
UK, however, our unique offering
and value for money leaves us
well-placed within the market.
Key competitors
Royal Caribbean, Carnival, Fred
Olsen and Riviera
Guests travelled
48k
2021/22 – 23k
How we add value
• Our Saga Deluxe and Titan
VIP Travel Services provide
ease and reassurance through
home-to-airport pick-up,
airport lounge access and
fast-track security clearance
at selected UK airports.
Marketplace and position
We are one of the leading travel
businesses serving people
over 50 in the UK.
Key competitors
TUI, On the Beach, Trailfinders
and Kuoni
• Customer money is
Guests travelled
safeguarded in a trust
arrangement until they return
from their holiday, providing
further peace of mind.
47k
2021/22 – 8k
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Insurance
What we do
We provide our customers with
tailored insurance products,
principally motor, home, private
medical and travel insurance.
How we add value
• We offer customers flexibility
through a range of products
from our lower-cost standard
one-year motor policies
through to our premium
three-year fixed-price policies.
• We use a combination of our
own in-house underwriter,
AICL, and a third-party panel of
underwriters to ensure that
customers receive the
best price.
• We aim to acquire as many
customers as possible
directly, reducing the cost
of acquisition.
Other Businesses
What we do
The Group’s Other Businesses
offer personal finance products
through Saga Money and a range
of online and printed content
through Saga Media. We also
operate Saga Insight, which
specialises in generating unique
insights into ‘Generation
Experience’, and CustomerKNECT
(formerly MetroMail), our mailing
and printing business.
Saga Money customers1
139k
2021/22 – 128k
Saga Media weekly
newsletter reach2
0.5m
Marketplace and position
We are the UK’s specialist in
insurance products for people
over 50 in the UK.
Key competitors
Admiral, Direct Line, Hastings,
LV, RSA and Aviva
Total policies in force
1.7m
2021/22 – 1.7m
How we add value
• Saga Money partners our
in-house expertise with
specialist third parties to
deliver personal finance
products that meet the needs
of our customers.
• Saga Media delivers engaging
and insightful content through
Saga Exceptional and the
Saga Magazine.
• Saga Insight specialises in
understanding the ageing
process and what it means
to get older, allowing us to
develop products and services
that our customers want.
Creating value
Saga is committed to maximising value
for our key stakeholders
Customers
Delivering for our customers is what drives us to
succeed. We develop tailored, differentiated products
that allow them to live a life unlimited.
Colleagues
So that our colleagues feel highly engaged with
Saga and their work, we continually invest in their
development and wellbeing, creating a culture of high
performance and high support across the Group.
Community
Saga strives to have a positive impact on our
communities through our colleague volunteering
schemes and charitable giving.
Partners and suppliers
To provide our customers with the best products and
services possible, we partner with carefully chosen
suppliers who, in return for their expertise, experience,
or financial resources, gain access to our knowledge,
brand and deep customer insight.
Shareholders and investors
Saga is committed to creating long-term value for our
investors by maximising our businesses, returning to
sustainable growth and reducing our debt.
Find out more in engaging with stakeholders on
pages 20-21
1
2021/22 Saga Money customers have been restated from those published in the 2022 Annual
Report and Accounts to align with current reporting methodology
2 No comparable data exists for 2021/22 as the weekly newsletter was introduced in May 2022
Saga plc Annual Report and Accounts 2023 19
STRATEGIC REPORT
Engaging with stakeholders
CREATING STAKEHOLDER VALUE
Customers
Colleagues
Partners and
suppliers
In order for us to deliver exceptional
experiences every day for our
customers, we depend on the support
of our partners and suppliers. Our
ambition is to develop long-term,
mutually beneficial relationships with
all our key suppliers.
What matters to them
• Reliable relationships that
support the delivery of their
own strategic objectives.
• Regular and open communication.
• Innovation that encourages
simplification and efficiency
where practicable.
How we engage
Our relationships with our supply
chain are governed by our supplier
relationship management and supplier
risk management policies, which provide
a framework for our operations. This
ensures that communication with our
partners and suppliers is regular and
consistent, allowing us to continually
develop the way we work together.
Our individual business units are
responsible for management and
control of these relationships.
How the Board is kept informed
The Risk Committee is kept informed
of any changes to supplier risk
management through the Executive
Leadership Team Committee.
Our customers continue to be the heart
of our brand. Our success relies on
engaging new customers and building
and maintaining the loyalty of our
existing customers.
Our colleagues will always be an integral
part of the business and so creating an
inclusive and supportive culture that
allows them to reach their full potential
is crucial.
What matters to them
• Value for money products and
services that are designed
specifically for their needs.
• Exceptional customer service in
every interaction with Saga.
• Clear and informative communication
in the format that best suits them.
How we engage
Our ambition is to increase the
frequency of engagement with our
customers from once a year to daily. In
addition to our existing telephone and
email support, social media interactions,
publication of Saga Magazine and
utilisation of our customer panel, we also
launched a brand-new website, Saga
Exceptional, which was created to
provide a dedicated space online for
people over 50.
How the Board is kept informed
The Board receives regular reports
from management based on customer
insights and feedback, and reviews
NPS scores as part of a range of
customer scorecards from each of our
business units which are presented at
each meeting.
Customer-facing colleagues are also
invited to Board meetings to present
details of customer experiences.
Customer NPS
51
20 Saga plc Annual Report and Accounts 2023
What matters to them
• A culture where they feel not only
accepted but understood and
valued for the characteristics
that make them individual.
• Regular, honest and open
communication that encourages
them to speak up and know
they’ll be heard.
• Receiving fair reward
and recognition.
How we engage
We strive to maintain active two-way
communication with our colleagues
through a variety of channels including
our internal communications platform,
Workplace, quarterly engagement
surveys, regular one-to-one meetings
with line managers, collaborative team
events, Tell Euan About sessions and
through our People Committee.
Find out more in Environmental,
Social and Governance on
pages 26-43
How the Board is kept informed
Our nominated ‘People Champion’
is Eva Eisenschimmel, one of our
Non-Executive Directors who regularly
attends our People Committee
meetings. The Board are also kept
informed through regular updates from
our Chief People Officer (CPO) on
colleague engagement, feedback from
our colleague engagement survey and
progress against our colleague strategy.
Colleague engagement
8.0
out of 10
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Communities
Shareholders
and investors
Regulators
Part of our purpose is to drive positive
change in our markets and communities
so we therefore aim to understand and
carefully consider the impact of every
decision we make.
What matters to them
• Maintaining clear and open
communication with us to ensure
that they are aware of our strategy
and plans, as well as any impact it
may have on them.
• The chance to share what matters
to them and how we may be able
to support.
• Opportunity to share knowledge
and skills between our colleagues
and the wider community.
How we engage
Our Group CEO, alongside specific
members of the wider Saga team, host
two meetings a year with community
stakeholders which include a business
update and the opportunity to ask
questions and engage with us on
key topics.
In addition, our colleagues are each
provided with one paid volunteering
day per year, allowing them to give back
to our communities.
How the Board is kept informed
Our Group CEO attends each meeting,
enabling him to directly feed back to
the Board.
Colleague volunteering time
1,078
days
We are focused on creating a business
which delivers long-term sustainable
value to our shareholders. We aim to
treat all shareholders fairly, providing
them with opportunities to express
their views.
What matters to them
• Active engagement with the
Group CEO, Group CFO and
Investor Relations (IR) team.
• Regular updates on the Group’s
financial performance and progress
against our strategy.
How we engage
We have frequent communication
with our shareholders and investors
through results announcements, press
releases, updates to our corporate and
shareholder websites, group events,
one-on-one meetings and ad hoc
telephone and email interaction.
How the Board is kept informed
The agenda for each Board meeting
includes review of an IR report that
provides an update on investor
engagement and feedback received.
Our Non-Executive Chairman, Group
CEO, and Group CFO meet with
investors on a regular basis, assisted
by our Head of IR. Additionally, the
chair of our Remuneration Committee
interacts with shareholders throughout
the year and relays any feedback to the
Board. Our Annual General Meeting,
Capital Markets Events and results
presentations also provide the
opportunity for in-person interaction
with investors.
Our regulators set the framework in
which we operate, and it is therefore
crucial that we maintain strong
relationships with them.
What matters to them
• Proactive and transparent
communication.
• Protection of our customers
and the markets we operate in.
• Increasing the trust of the
public and encouraging
market competition.
How we engage
Regulator relationships are maintained
at subsidiary level and monitored by
the respective audit, risk and
compliance committees.
How the Board is kept informed
The Risk Committee escalates any
matters of strategic or reputational
importance to the Board. The chairs of
our regulated businesses, Saga Personal
Finance (SPF) Limited, Saga Services
Limited (SSL)and AICL, are also plc
Directors and report on our
relationships with regulators.
Find out more in our Risk Committee
Report on pages 90-91
Saga plc Annual Report and Accounts 2023 21
STRATEGIC REPORT
Our strategy
OUR THREE-STEP GROWTH PLAN
1. MAXIMISING OUR
EXISTING BUSINESSES
We plan to maximise our existing businesses
through a specific plan for each, enabling growth,
accountability, efficiency and the delivery of a
common brand purpose.
Saga launches exclusive
private jet tour
We launched our first ever exclusive
private jet tour in June 2022, offering
the opportunity for guests to tour a
series of unforgettable encounters
while travelling in a privately chartered
plane and staying in a succession of
exquisite hotels. Following the first tour
reaching 70% sold just 10 weeks after it
was launched, a further two itineraries
have now been added.
70%
sold just
10 weeks
after launch
22 Saga plc Annual Report and Accounts 2023
Cruise
Objective
Build Ocean Cruise into an exceptional
experience every day, whilst maximising
our returns, and build a River Cruise
proposition that mirrors Ocean.
Challenges
• Impact of COVID-19 pandemic posing
restrictions on the industry, alongside
increased consumer caution.
• Geopolitical factors requiring
amendments to itineraries and some
limited guest cancellations.
• Potential for the cost of living crisis to
impact levels of discretionary spending
on cruises.
• Regulatory, financial and physical impacts
associated with climate change.
Progress in 2022/23
• Appointment of Ian Simkins, who brings a
wealth of experience from the luxury travel
market, to chair the Cruise board.
• Uninterrupted sailing with the last of the
COVID-19 restrictions lifted during
summer 2022.
• Ocean Cruise load factor of 75% for the
full year and 84% for the second half.
• Awarded ‘Best Value For Money Cruise
Line’ at the 2022 Wave Awards.
• Secured strong bookings for 2023/24
(at 26 March 2023):
– Ocean Cruise load factor of 72% and
per diem of £339.
– River Cruise load factor of 63% and
per diem of £298.
• Ocean and River Cruise teams combined
to deliver same exceptionally high service
across both products.
Travel
Insurance
Money
Objective
Create a market-leading, more digital
travel business from a low-cost
operating platform to accelerate
growth and modernise the business.
Objective
Move from reset to growth, focused on
optimising our products and broadening
the range, build customer relationship
marketing capability, shift distribution
from price-comparison websites to
direct and refocus our product
sourcing approach.
Objective
Attract new customers, accelerate
growth within existing equity release and
savings products and add new products
to deepen our customer relationships.
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Challenges
• Risk of interest rate fluctuations causing
market uncertainty and lower demand for
our products.
• Regulatory restrictions applicable to our
third-party partners, limiting the number
and value of products that we are able
to sell.
Progress in 2022/23
• Appointment of dedicated CEO who will
be pivotal in developing Saga Money into
a significantly larger business.
• Equity release total loan volumes 29%
ahead of the prior year, with the average
loan value also 19% higher.
• Increased the number of savings accounts
by 17% compared to the prior year, with
assets under management of £3.5bn.
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Challenges
• Impact of COVID-19 pandemic posing
restrictions on the industry, alongside
increased consumer caution.
• Potential for the cost of living crisis to
impact levels of discretionary spending
on travel.
• Changes to itineraries, financial and
regulatory impacts associated with
climate change.
Progress in 2022/23
• Successful combination of Saga Holidays
and Titan Travel to create the UK’s largest
and market-leading touring business.
• Launched Saga Travel, a new digital
business with dynamic pricing and an
enhanced website and booking platform.
• The introduction of our Saga Deluxe and
Titan VIP Travel Services, with home-to-
airport pick-up, airport lounge access and
fast-track security clearance at selected
UK airports.
• Launch of our new ‘Tailor-Made by Saga’
proposition and first ever private jet tour
which was awarded the ‘Breakthrough
Product Innovation’ Award at the Silver
Travel Awards.
Challenges
• Potential for the cost of living crisis to
change consumer attitudes towards
premium products and increase the
number of customers who shop around
for their insurance.
• Regulatory changes arising from the
FCA’s review into GIPP causing volatility
in the market.
• Inflationary increases on the cost of
settling insurance claims causing
short-term pressure on earnings.
Progress in 2022/23
• Successful implementation of new
regulatory requirements arising from
the FCA’s review of GIPP.
• Strong recovery in travel insurance with
the number of policies sold 103% ahead
of the prior year.
• Customer retention within motor and
home improved by 1.0ppt to 83.8% with
a margin per policy of £71, compared
with £74 in the prior year.
• Launch of new products including a
lower-cost standard one-year policy,
a multi-car proposition and a policy for
electric vehicles.
• Strong bookings into 2023/24 of £136.6m
as at 26 March 2023, 32% ahead of the
same point in the prior year.
• Achieved ‘Highest Rated Home Insurer’
in the first ever Woman & Home Smart
with Money Awards 2022.
Saga plc Annual Report and Accounts 2023 23
STRATEGIC REPORT
Our strategy continued
2. STEP-CHANGING OUR ABILITY
TO SCALE WHILE REDUCING DEBT
Reducing our level of debt is a key driver in creating
value for our investors.
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
24 Saga plc Annual Report and Accounts 2023
Objective
Grow existing businesses while reducing
debt and develop new businesses
through innovation, in a capital-light way.
Challenges
• Balancing the level of investment required
to scale our operations with maximising
cash generation and accelerating
debt reduction.
Progress in 2022/23
• Net Debt1, at 31 January 2023, of £711.7m,
£17.3m lower than 31 January 2022.
• Following two years of agreed payment
deferrals in relation to our ocean cruise
ship facilities, repayments recommenced
in June 2022 and a total of £46.4m was
repaid during the year.
• We concluded discussions with our
lending banks to amend the covenants
in relation to our revolving credit facility,
providing us with greater flexibility in
relation to liquidity used for short-term
working capital purposes.
• Decision made to close our Folkestone
headquarters in favour of multiple smaller
hubs, reducing operating expenses.
• Initiated a sales process for our Insurance
Underwriting business as part of our
ambition to move towards a more
capital-light model.
In 2022/23, our Net Debt1
reduced from £729.0m
to £711.7m with gross debt
reducing by £46.4m, all
relating to the debt financing
of our two ocean cruise ships.”
James Quin
Group Chief Financial Officer
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3. CREATING ‘THE SUPERBRAND’
FOR OLDER PEOPLE
We are focused on building Saga into the largest and
fastest-growing business for older people in the UK
and delivering sustainable growth for our investors
by creating ‘The Superbrand’ for this age group.
Saga Exceptional
In January 2023, we launched
Saga Exceptional, a brand-new
website made for people over 50,
with best-in-class consumer advice
and inspirational stories that celebrate
this incredible generation.
66’
CHANGED
MY LIFE
D I S C O V E R H O W
V I C T O R Y S H AP E D
L I V E S BE Y O N D
T H E P I T C H
’66 Changed My Life
At Saga, we are a brand that celebrates
and champions experience in all its forms,
no matter who you are, who you love or
where you’re from and, through this
campaign, we focused on the wonderful
stories of people whose lives were
changed by that moment in our history.
Over 500k2
visits since launch
Watch these
amazing life
stories that
were shaped by
the ’66 final
Read our high-quality,
purpose-driven
content at Saga
Exceptional
Objective
We will commercialise and grow our
database, build exceptional insights into
‘Generation Experience’, deliver a brand
repositioning, create a content platform
that reaches millions of customers
every day and deliver an exceptional
colleague experience.
Challenges
• The impact of regulatory changes on
the number of customers we can
communicate with.
• The pace of change in relation to the wants
and needs of ‘Generation Experience’.
• Converting our exceptional levels of
consideration for the Saga brand into
customers who believe that Saga is
for them.
Progress in 2022/23
• Research conducted by Saga Insight
identified eight key segments of people
over 50, allowing us to pinpoint significant
growth opportunities.
• Appointment of Chief Data Officer to
support driving commercial value and
radically transforming our database.
• Exceeded our target of three million new
marketing consents in the year ended
31 January 2023.
• Launched two new television adverts
showcasing our equity release and
Tailor-Made travel propositions in
addition to our ‘’66 Changed My Life’
campaign to support the repositioning
of the Saga brand.
• Launch of Saga Exceptional, allowing us to
reach more customers through a broader
range of content.
• Colleague engagement increased to
8.0 out of 10.
• Enhanced the financial support available
to colleagues through the acceleration
of our annual pay review cycle and two
additional support payments for our
colleagues with lower earnings.
2 Visits refers to a session as defined by Google Analytics
Saga plc Annual Report and Accounts 2023 25
STRATEGIC REPORT
Environmental, Social and Governance
PROGRESS IN ENVIRONMENTAL,
SOCIAL AND GOVERNANCE (ESG)
Saga provides an ecosystem of services for older people to create
connections, communities and confidence. We aim to create a diverse
and inclusive workforce that champions positive ageing, whilst taking
responsibility for the environment so that future generations can thrive.
Our ESG strategy
We have been on a journey to enhance our
ESG approach, and we are now positioning
Saga for sustainable growth. As international
travel returns to pre-pandemic levels, and
our business continues to evolve, we continue
to evaluate our impact on society and the
climate as we endeavour to create positive
change within our markets and communities.
At Saga, we aim to operate as a responsible
and sustainable business and we are aware
of the increasing expectations of regulators,
stakeholders and customers. In 2022, we
achieved a significant milestone by improving
our FTSE4Good index score from 2.6 to 4.1
(out of 5), a recognition of our strong
performance. We also maintained a ‘B’ score
from CDP (formerly Carbon Disclosure
Project), reflecting our commitment to
reducing our carbon footprint.
In our 2022 Annual Report and Accounts,
we announced our intention to publish an
ESG strategy. Over the last year, we have
been working hard to deliver on that promise,
striving to create an approach with greater
scale, ambition and importantly, impact.
We are delighted to present our strategic
framework in this report.
Our ESG strategy, which was informed by
our double materiality assessment, will serve
as a roadmap for making decisions and
generating meaningful change. The three
pillars of our strategic framework:
championing positive ageing, acting on
climate change and biodiversity and
strengthening our exceptional culture,
encapsulate our priority ESG topics.
The process used to identify these priority
topics is outlined on page 28.
In the coming months, we will publish a report
detailing the key performance indicators and
metrics we will use to track progress against
our ESG strategy. We will measure and
communicate our progress to stakeholders
and adjust our approach as needed.
Our targets and metrics will be published
on our corporate website (www.corporate.
saga.co.uk/about-us/environmental-social-
and-governance/).
We are committed to delivering against
our ESG responsibilities and continuously
improving in this area. We recognise that
sustainability is a journey, not a destination.
We will be transparent and accountable
regarding our sustainability efforts moving
forward as we strive to realise our ESG goals.
Paula Kerrigan
Chief Operating Officer (COO)
17 April 2023
26 Saga plc Annual Report and Accounts 2023
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Our ESG framework
Vision
Strategic
pillars
Saga exists to deliver exceptional experiences every day, while being
a driver of positive change in our markets and communities
Championing
positive ageing
Acting on climate
change and
biodiversity
Strengthening our
exceptional culture
Strategic objectives
The ambition to enhance the
lives of older people is at the
heart of everything we do.
We lead with a strong social
purpose and aim to pioneer the
conversation on positive ageing.
We will continue to curate
purposeful and sustainable
products and services that
create connection, confidence
and experience.
Priority topics
• Customer accessibility
and satisfaction
• Purposeful service and
product offering
Related Sustainable
Development Goals (SDGs)
Strategic objectives
As we provide opportunities
for older people, we must
ensure that we protect
our environment.
We commit to further
evaluating our environmental
impact and taking responsibility
for our actions. We will work to
address our footprint on the
oceans and natural world while
striving towards achieving
net zero.
Priority topics
• Carbon emissions
• Oceans and biodiversity
Strategic objectives
An engaged, inclusive and
diverse culture encourages
our people to thrive.
We embrace diversity and
will continue to develop an
equitable culture that is
focused on growing our
exceptional people through
engagement and promoting
their wellbeing. We promote
an inclusive culture where
all colleagues have the
opportunity to bring their
authentic selves to work.
Priority topics
• Diversity, equity and
inclusion (DE&I)
Related SDGs
Related SDGs
Find out more on page 29
Find out more on page 30
Find out more on page 37
Governance
A governance framework that ensures how we work
is as important as what we do and why we do it
Priority topics
• Business ethics and compliance
• Data privacy and security
• Fair and decent work
Saga plc Annual Report and Accounts 2023 27
STRATEGIC REPORT
Environmental, Social and Governance continued
To inform the development of our ESG
strategy, we conducted a double materiality
assessment. This involved a comprehensive
analysis of the ESG landscape and gathering
insights from over 400 internal and 900
external stakeholders through online surveys
and detailed discussions. We plotted the
importance of each ESG topic for
stakeholders against business priorities
across 16 ESG themes to identify the most
material topics for Saga to address.
The outcome of our double materiality
assessment is demonstrated in the matrix
below. The materiality matrix presents the
importance of each topic to our stakeholders
(y-axis) and the impact of each on the
business (x-axis). The business impact was
based on the residual risks associated with
key ESG topics.
Sustainability priorities
The materiality matrix helped us
understand the topics most important to
the business and our stakeholders; however,
to ensure a fully holistic understanding,
we carried out additional strategic analysis.
By conducting a maturity assessment,
competitor analysis and a horizon-scanning
exercise, we identified where a step-change
was needed. This enabled us to determine
the following priorities for Saga:
• Carbon emissions
• Customer accessibility and satisfaction
• DE&I
• Oceans and biodiversity
• Purposeful service and product offerings
These form the foundation of the pillars of our
strategic ESG framework. Moving forward,
we commit to setting targets on each topic
and will report against these going forward.
Whilst these five topics have been identified
as our key priorities, we have already made
significant progress on a number of the
remaining topics and will continue
momentum in these areas.
ESG governance
At Saga, we understand that the successful
implementation of our strategy is dependent
on robust, transparent governance.
Having clear accountability drives our
sustainability ambitions. This year, we
appointed a Head of ESG, reporting to our
COO demonstrating our commitment
to ESG. Euan Sutherland, Group Chief
Executive Officer (CEO) is the ESG
representative on the Board.
Our ESG strategy, which
was informed by our double
materiality assessment, will
serve as a roadmap for making
decisions and generating
meaningful change.”
Paula Kerrigan
Chief Operating Officer
Double materiality assessment
Customer accessibility and satisfaction
Data privacy
and security
Fair and decent work
Business ethics and compliance
Health safety and wellbeing
Human rights and
modern slavery
Employee engagement,
training and development
Oceans and biodiversity
DE&I
Circular
economy
Innovation
Supporting
communities
Moderate
Tracking
Impact to the business
Sustainable
supply chain
Purposeful
service and
product
offerings
High
Actively
monitoring
Climate change resilience
Carbon emissions
Very high
Need active
management
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28 Saga plc Annual Report and Accounts 2023
Championing positive ageing
Our ambition is to enhance the lives of older people.
This is at the heart of everything we do.
Championing
positive ageing
Priority topics
• Customer accessibility
and satisfaction
• Purposeful service and
product offering
Related SDGs
We lead with a strong social purpose and
aim to pioneer the conversation on positive
ageing. We will continue to curate purposeful
and sustainable products and services
that create connection, confidence
and experience.
Our double materiality assessment shows
that customer accessibility and satisfaction
is integral to Saga’s work and is considered
a material topic by stakeholders and the
business. Stakeholders also recognised
Saga’s role in curating purposeful service
and product offerings, including sustainable
travel opportunities, and responsible ESG
underwriting and investment options.
Unmatched insights
During the year, we introduced Saga Insight
which has further strengthened our
understanding of ‘Generation Experience’ –
discerning, sharp and savvy people over 50
who bring a wealth of vibrant life experience
to society and represent over a third of the
UK population.
Saga Insight ensures we continue to develop
services and products that our customers
want and need. We listen to our customers
to truly understand who they are and we will
continue to innovate to create purposeful
products that generate a sense of
community and belonging for our customers.
Inclusive of an ageing workforce
We want to ensure our brand is inclusive
and a visible driver of positive change in our
markets and communities, making us the
champions of age at work in the UK. Through
Saga Insight, we have shaped an all-colleague
upskill on age, challenging perceptions
around ageing. We launched a Basics of
Ageing learning experience in October 2022
for over 2,000 colleagues to ensure that
we understand our customers better
than anyone.
We were the first employer to introduce
Grandparents’ Leave for all colleagues –
a week paid time off to celebrate the birth of
a grandchild. During the year, 24 colleagues
used this benefit, with 125 days of leave taken.
We also supported the launch of the Centre
for Ageing Better’s employment pledge
and are a signatory to this. We are conscious
of the wording we use in recruitment
advertising, avoiding language which could
introduce an age bias. We also look to offer
flexibility in hours and location, recognising
that this can be valuable to people whatever
their age. To gain insight from colleagues
about what is working and where we could
do better, we hold Age Inclusion Forums,
listening sessions on age, with members
of our Executive Leadership Team (ELT).
Read the Saga
case study from the
Centre for Ageing Better
on their website
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Future goals and commitments
Going forward, we commit to continuing to
upskill our colleagues on the ageing process
and how this influences our customers.
We will launch the second part of our Basics
of Ageing learning experience, ensuring our
colleagues understand our customers better
than anyone.
We aim to accelerate digital journeys for our
customers, improving ease, while continuing
to deliver high levels of service within our
contact centres. Through Saga Insight, we will
lead the conversation on ageing in the UK.
Case study
A menopause friendly employer
Over the last two years, we have taken
active steps to move forward the
conversation regarding menopause,
upskilling our leaders and role-modelling
a more accepting and open culture.
We worked closely with industry
experts, Henpicked, to create the
tools and resources to support our
colleagues in the best way. We were
delighted to receive The Menopause
Friendly Accreditation.
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Saga plc Annual Report and Accounts 2023 29
STRATEGIC REPORT
Environmental, Social and Governance continued
Acting on climate change and biodiversity
As we provide opportunities for older people, we must
ensure that we protect our environment.
Acting on climate
change and biodiversity
Priority topics
• Carbon emissions
• Oceans and biodiversity
Related SDGs
We commit to evaluating our environmental
impact and taking responsibility for our
actions. We will work to address our negative
footprint on the oceans and natural world
whilst striving towards achieving net zero.
As a cruise operator, Saga’s internal and
external stakeholders recognised the
importance of oceans, biodiversity and
managing carbon emissions. We support the
UK Government’s commitment to net zero
and recognise the need to better understand
our own impacts on climate and biodiversity.
Reducing our
environmental impact
Over the coming months, we will be
developing targets and metrics to support
our strategy, and our ambition is to
undertake Scope 3 greenhouse gas (GHG)
emissions accounting to boost our value
chain understanding.
During the year, we worked on a number of
sustainability initiatives to reduce energy
consumption, emissions and waste. Over the
next year we will prioritise creating a robust
and joined-up approach to achieving net zero
(and setting realistic and meaningful near-
and long-term targets).
We have remained focused on implementing
a number of energy efficiency measures
as detailed on page 32. The past year
has seen an increase in Scope 2 energy
savings, amounting to an 82 tCO2e reduction.
Our colleague car scheme offers fully electric
or hybrid vehicles as standard, and we
continue to purchase 100% of our site-based
electricity on a zero carbon renewable tariff.
As in previous years, the dual reporting of
our emissions (location- and market-based)
demonstrates that we are making efforts
to reduce our climate impact through the
purchase of electricity generated from
cleaner sources.
Scope 3 categories reported include
business travel, fuel-and-energy-related
activities and homeworking emissions.
Our measured Scope 3 emissions totalled
3,932 tCO2e. However, we recognise the
value of broader Scope 3 emissions reporting
and will develop this during 2023/24.
Reporting our
environmental impact
We recognise that in order to make impactful
carbon reductions, it is important to evaluate
and understand our current impact and
where opportunities for improvement lie.
Energy and carbon statement
This statement has been prepared in
accordance with our regulatory obligation
to report GHG emissions pursuant to the
Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon
Report) Regulations 2018 which implement
the government’s policy on Streamlined
Energy and Carbon Reporting.
Emissions summary
During the reporting period 1 February 2022
to 31 January 2023, our measured Scope 1
and 2 emissions (location-based) totalled
107,235 tCO2e.
Overall, our Scope 1 and 2 emissions have
increased by 32% compared to 2021/22.
This is attributed to an increase in marine fuel
consumption by Saga’s cruise ships as nearly
all COVID-19-related travel restrictions have
been removed, leading to a return to usual
cruising activity, which was significantly
curtailed during the previous two years.
In addition, our Scope 1 fleet and business
travel have also seen an increase in emissions
due to the removal of restrictions. We will
work to ensure the bounce-back in emissions
is monitored, and actions are taken to avoid
further increases.
Greenhouse gas emissions in tonnes of carbon dioxide (tCO2e)
Emissions scope
Scope 1
Scope 2 (location-based)
Scope 2 (market-based)
Total Scope 1 and 2 (location-based)
Scope 1 and 2 tCO2e per £m Trading EBITDA2
Scope 3
Total Scope 1, 2 and 3 (location-based)
2022/23
emissions
105,939
1,296
–
107,235
1,110
3,932
111,167
2021/221
emissions
79,618
1,378
3
80,996
1,242
2,385
83,381
1 Saga’s emissions are verified following the release of the Annual Report and Accounts and, as such, emissions may be restated slightly year on year.
Our 2021/22 emissions vary slightly to those published in the 2022 Annual Report and Accounts due to an immaterial correction in Scope 1 and 2 emissions
identified during verification
2 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
30 Saga plc Annual Report and Accounts 2023
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During the reporting period, our Scope 1
and 2 methane emissions totalled 46.8 tCH4
and Scope 3 totalled 0.6 tCH4. Of this, 87%
originates from marine fuel (Scope 1) and
11% is from electricity (Scope 2). Our nitrous
oxide Scope 1 and 2 emissions totalled
1,461.5 tN2O and Scope 3 totalled 1.2 tN2O.
Of this, 99% is from marine fuel (Scope 1),
and 1% from electricity (Scope 2).
Emissions scope
Scope 1
Scope 2
Scope 3
2022/23 emissions3
tCH4
41.4
5.4
0.6
tN20
1,452.3
9.2
1.2
Total Scope 1, 2 and 3
47.4
1,462.7
Energy summary
During the year, our total fuel and electricity
consumption totalled 407,783 megawatt
hours. The split between fuel and electricity
consumption is displayed below.
Energy
usage
Electricity
Fuels4
Total
energy
2022/23
MWh
6,704
401,079
2021/22
MWh5
6,491
336,518
407,783
343,009
Methodology
We quantify and report our organisational
GHG emissions in alignment with the
World Resources Institute’s Greenhouse
Gas Protocol Corporate Accounting and
Reporting Standard and in alignment with
the GHG Protocol Scope 2 Guidance
(the Scope 2 Guidance). We consolidate
our organisational boundary according
to the operational control approach,
which includes emissions from Saga plc.
Assumptions and estimations
In some instances, where data is missing,
values have been estimated using either
an extrapolation of available data from the
reporting period, or data from 2021/22
as a proxy.
Natural gas and electricity
Due to low data coverage across natural
gas (Scope 1) and electricity (Scope 2),
an estimation methodology was used
as required.
Where data was available for a site, this
was used to extrapolate missing months
of data for the same site. Where sites did
not have any data for the reporting year,
2021/22 consumption was used as a proxy.
For new sites where 2021/22 consumption
was not available, 2022/23 consumption
was estimated using floor area.
Waste management
With a focus on recycling, and a zero to landfill
policy, we collected 38.8 tonnes of waste
from our sites, of which 16.3 tonnes were
recycled and the residual was diverted to
an energy-from-waste facility.
Our 2022 CDP disclosure
Our commitment to understanding
and ensuring transparency around
our climate-related impacts, risks
and opportunities is reflected in our
continued participation in the CDP climate
change questionnaire. In 2022, we received
a score of ‘B’, which is the same score we
received in the previous year.
The CDP questionnaire is an important tool
used to assess our progress and identify
areas for improvement in terms of our
sustainability and environmental impact.
We are committed to ongoing improvement
and ensuring that our actions align with our
values and goals.
We have adopted a materiality threshold of
5% for GHG reporting purposes. The GHG
sources that constituted our operational
boundary for the year include:
• Scope 1: Natural gas combustion within
boilers, marine fuel combustion within
ships, road fuel combustion within
vehicles, fuel combustion within non-road
mobile machinery, and fugitive
refrigerants from air-conditioning
equipment.
• Scope 2: Purchased electricity
consumption for own use.
• Scope 3: Business travel from air,
grey fleet, taxis, rail and hotel stays,
transmission and distribution losses
associated with electricity consumption
and colleague commuting and
homeworking emissions.
The Scope 2 Guidance requires that we
quantify and report Scope 2 emissions
in accordance with two different
methodologies (dual reporting): (i) the
location-based method, using average
emissions factors for the country in which
the reported operations take place;
and (ii) the market-based method, which
uses the actual emissions factors of the
energy procured.
As in previous years, Scope 3 business
travel included rail and hotel stays. However,
for the first year, Scope 3 business travel
emissions from air have been included.
Spend was used to calculate business travel
emissions when more accurate forms of
data were unavailable.
We are committed to delivering
against our ESG responsibilities
and continuously improving
in this area. We recognise
that sustainability is a journey,
not a destination.”
Paula Kerrigan
Chief Operating Officer
3 For N2O and CH4 calculations, Scope 3 emissions have been calculated for fuel-and-energy-related activities and business travel (excluding hotels). Therefore,
Scope 3 CH4 and N2O emissions do not include hotel stays, colleague commuting and homeworking
4 Fuels are comprised of natural gas, diesel, petrol, marine fuel oil and marine gas oil
5 Saga’s energy usage is verified following the release of the Annual Report and Accounts and, as such, emissions may be restated slightly year on year. Our 2021/22
energy usage varied slightly to that published in the 2022 Annual Report and Accounts due to an immaterial correction identified during verification
Saga plc Annual Report and Accounts 2023 31
STRATEGIC REPORT
Environmental, Social and Governance continued
Acting on climate change and biodiversity continued
Environment highlights
Sustainable services
Electric vehicle (EV) insurance
We developed our EV insurance product,
providing cover for charging points,
equipment and batteries, and allowing our
customers to use their breakdown cover
for out-of-charge battery incidents as
standard. We relaunched our proposition
during 2022/23 and have seen an increase
of more than 100% in policies taken out
compared to the previous financial year.
River cruising
We added Amadeus Elegant to our
river cruising fleet, recipient of the river
cruising ‘Green Award’, in recognition of
industry-leading performance in safety
and environmental standards. Amadeus
Elegant’s first sailing is planned for May 2023.
60 e-bikes
added to our ocean cruise ships
offering guests a sustainable shore
exploration option.
Reducing emissions
Cold ironing
We began installation of shore power
connectivity on board Spirit of Discovery,
with Spirit of Adventure to follow
during 2024/25.
This technology allows our ships’ engines
to be turned off when in port while
maintaining on board power, reducing
emissions compared to using fuel.
Fuel efficiency
We implemented enhanced hull cleaning
to remove marine growth and maximise
fuel efficiency on our ocean cruise ships.
We also applied new hull coatings to Spirit
of Discovery to improve hull cleanliness
and fuel efficiency and will apply the same
to Spirit of Adventure at its next dry dock.
LED lighting
Our CustomerKNECT (formerly
MetroMail) Seaham facility installed
LED lighting, achieving a power efficiency
saving of over 50%.
Remote monitoring
We set up remote monitoring software
to enable real-time analysis and
benchmarking of performance data
from our ocean cruise ships.
Green fleet
Our green colleague car scheme means
that we offer full battery electrical
vehicles, or hybrid vehicles as standard.
Our supply chain
We incorporated an ESG questionnaire
into our procurement process to ensure
that ESG factors in our supply chain are a
key part of the decision-making process.
32 Saga plc Annual Report and Accounts 2023
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Mitigating the risks
of climate change
Our climate-related
financial disclosures
In accordance with Listing Rule 9.8.6 (8),
we are disclosing our alignment with
the Task Force on Climate-Related
Financial Disclosures (TCFD)
recommendations. This is Saga’s
second annual TCFD report. It sets out
our actions and progress against the
four pillars of the TCFD framework;
governance, strategy, risk management,
and metrics and targets.
We deem ourselves to be compliant
with the TCFD recommendations other
than the recommendation to describe
the resilience of the organisation’s
strategy taking into account different
climate related scenarios, and the
recommendations to disclose the
metrics and targets used to assess
climate risk and opportunity.
1 Governance
Find out more on page 33
2 Strategy
Find out more on page 34
3 Risk management
Find out more on page 36
4 Metrics and targets
Find out more on page 36
1 Governance
Our Board of Directors has responsibility for
our risk management framework, including
climate-related risk, and monitoring the
effectiveness of the Group’s risk management
and control systems. The Board’s Risk and
Audit Committees, each composed of three
independent Non-Executive Directors,
oversee principal risks, tolerance thresholds
and the internal control framework.
The Board is informed of climate-related
issues via updates on ESG topics and through
escalation of risk considerations from the
Risk Committee. The Board received its
latest update on ESG on 22 February 2023,
presented by the COO and the Head of ESG.
During 2022, the Risk Committee received
an update on climate risk management,
including risks related to climate change,
regulatory expectations, and the process
for embedding climate risk consideration
throughout the business. The Board receives
ESG updates regularly and climate risk
considerations are examined quarterly by the
Risk Committee as part of the principal risks
and uncertainties (PRUs). Further formal
training around climate issues is being
developed for the future.
The Risk Committee meets to discuss
the Group’s overall risk tolerance, strategy
and ability to detect new risks, including
those related to climate change, which
is captured within the PRU relating to
ESG. The Committee Chair reports
recommendations to the Board, outlining
PRUs, how they are identified, and mitigating
actions. Also reporting to the Board, the
Audit Committee monitors the integrity
of the Group’s financial statements and
works with the Risk Committee to oversee
the efficacy of internal control systems.
The Board commits to including
climate-related risk formally on the Board
agenda, including the oversight of emissions
performance, embedding climate resilience
and risk management, as well as oversight of
the wider ESG strategy. We recognise that
the Board has overall accountability for
financial risks associated with climate change.
In 2022, a Head of ESG was appointed,
reporting to the COO, to oversee and
monitor ESG matters, including
climate-related considerations and other
activities related to sustainability and climate
change. The work co-ordinated by the Head
of ESG informs the relevant PRU, which is
monitored by the ELT. This ensures that
oversight, review of performance, and action
are delivered throughout the organisation.
The Head of ESG is tasked with ESG delivery,
including climate-related risks and ESG
strategy performance.
In early 2023, we developed our ESG
strategy. The Board was engaged in the
development process and approved the
final ESG strategy for inclusion in this report.
The ELT considers ESG and climate-related
risk. ELT incentives will be partially aligned
with progress on climate-related goals
where appropriate, beginning with 2023/24
objectives. This will ensure that ESG
considerations are embedded into Group
strategy, future-proofing the businesses.
The ELT reports to the Board via the
Group CEO.
Committee responsibilities
• Audit Committee – Responsible for
monitoring the integrity of the financial
statements, reviewing the Group’s
framework of internal controls (including
those related to climate) and maintaining
the external auditor relationship.
• Risk Committee – Responsible for
monitoring the Group’s risk management
framework and ability to identify and
manage new and emerging risks (including
those related to climate) and deal with
material breaches of risk limits.
• Remuneration Committee –
Responsible for the Remuneration Policy,
performance-linked pay schemes
(including ESG considerations) and
share-based incentive plans.
• Innovation and Enterprise Committee
– Responsible for assisting the Board in
assessing whether proposals to expand
product ranges and services are aligned
with the Company’s purpose, while
ensuring a balance of appropriate levels
of governance within entrepreneurship
(including ESG strategy considerations).
• ELT Committee – Responsible for the
development and recommendation of
strategy, setting business principles,
values, behaviours and standards,
monitoring business performance,
resource allocation, material projects
and capital expenditure proposals, talent
management, culture and diversity, equity
and inclusion.
Find out more in division of
responsibilities on page 82
Saga plc Annual Report and Accounts 2023 33
STRATEGIC REPORT
Environmental, Social and Governance continued
Acting on climate change and biodiversity continued
2 Strategy
We engaged our Cruise, Travel and Insurance
businesses separately to provide a
comprehensive and robust analysis to
identify and assess climate-related risks and
the resilience of our businesses to manage
the links between our climate-related risks
and opportunities and our business strategy.
We aim to set emissions reduction targets
as part of our ESG strategy development
and will communicate details when finalised.
This is a key management control for our
climate-related risks, including reputation
and market risks. An initial assessment of
the climate-related risks and opportunities
for our Cruise, Travel and Insurance
businesses was determined over three
different time horizons: short- (end of 2023),
medium- (2024-2035) and long-term
(2036-2050) as assessed by TCFD.
Risks and opportunities for each time
frame are expanded to the right.
We are assessing the controls and processes
in place to mitigate and manage our
climate-related risks, as well as capture our
climate opportunities. We will also assess
where we need to strengthen our approach
to climate risk management to embed
climate into everyday business decision-
making and planning. Saga acknowledges
that climate risk and strategy are interrelated
and should be managed in unison. During
2023, we will continue to review climate
resilience and control effectiveness to ensure
an integrated approach to climate strategy
and climate risk.
Scenario analysis
We recognise the importance of performing
climate scenario analysis. It is our ambition to
integrate the completion of 2˚C and 1.5˚C
climate scenario modelling within the
executive bonus structure across each
business unit for 2023/24 to ensure that this
activity is completed in a meaningful way.
We intend to disclose the results of this
analysis in our next TCFD report.
34 Saga plc Annual Report and Accounts 2023
Risks
Group-wide
Cruise and Travel
Short-term (end of 2023)
Short-term (end of 2023)
Saga has identified two short-term
climate-related risks that could potentially
impact all business units dependent on
government policy decisions. First, direct
and indirect carbon pricing and cost
pass-on within our supply chains could
reduce Saga’s financial returns as
upstream supply material costs increase,
specifically on energy and fuel-intensive
materials. Second, Saga’s market valuation
may be impacted by investors challenging
Saga’s dedication to, or progress on,
climate-change commitments in line
with their own obligations.
To mitigate increased climate scrutiny,
we are focusing on achieving gains in
ratings from FTSE4Good, CDP and other
rating agencies. We are publishing our
ESG strategy, which has a focus on climate.
We are also considering full Scope 3
value-chain emissions inventory to broaden
our understanding and drive reductions.
Long-term (2036-2050)
Disruption of office-based and on-site
operations could be caused by incidents
of climate-related diseases similar in effect
to COVID-19. Increasing physical risk of
extreme weather events, including
storms, may damage Saga’s offices,
disrupting business operations. Warmer
temperatures, inducing a wetter climate,
particularly in the UK, increase the
likelihood of floods and damage to property.
To moderate these risks, Saga has adopted
a hybrid working model allowing colleagues
to work from anywhere while also replacing
owned property with rented office spaces.
Further, Saga has the ambition to utilise
smaller regional hubs rather than a single
main office going forward.
Another long-term climate-related risk is
changing consumer expectations. Linked
to our short-term reputational risks, Saga
will also face the long-term risk of changing
consumer trends around low-carbon travel
options, shrinking the potential market for
Saga if not addressed. We will consider
options for sustainable travel solutions.
Our businesses will face short-term risks
including increased fuel costs and financial
strain on Saga’s key partners (such as
airlines) as carbon taxation drives climate
transition, particularly in relation to fossil
fuels. We are investigating opportunities
in new technologies in Cruise to create
emissions reductions, and carbon
offsetting for our jet tours as mitigating
controls for this risk. This will also be
considered when performing our full
Scope 3 value chain emissions inventory
to drive further reductions.
Medium-term (2024-2035)
The businesses face the medium-term
risk of increasing emissions regulations
introducing a burden on cruise and tour
operators and a financial burden on Saga.
Also, primarily for our Cruise and Travel
businesses, but also for our Insurance and
Money businesses, there is an increased
risk of public health issues. Pandemics and
extreme weather could impact itineraries
and customer travel plans. To mitigate
this risk, we adjust itineraries, as required,
in response to any outbreaks.
Long-term (2036-2050)
Extreme weather events are important
long-term climate-related risks that Saga
takes seriously. Acute events like extreme
weather, or chronic changes such as sea
level rises, may damage critical supply
chain locations including cruise ports and
airports, causing disruption to operations,
requiring Saga to cancel or reschedule
trips, resulting in revenue loss or
increased costs. These same extreme
weather events could also affect holiday
destinations, food and beverage supply,
and entertainment, therefore limiting
or changing our product offerings to our
customers, potentially resulting in the
loss of revenue. We will adjust itineraries,
as required, in response to extreme
weather events.
2 Strategy
Opportunities
Insurance and Money
Group-wide
Medium-term (2024-2035)
Short-term (end of 2023)
In our Insurance and Money business
units, and in some parts of the Cruise
and Travel businesses (such as
sourcing), we face increased costs as
a medium-term climate-related risk.
The impacts of these increased costs
include Saga’s ability to quickly repair
or replace insured physical assets,
suppliers’ ability to service a
replacement (particularly given the rate
of technological change in sustainable
vehicles), and increased costs of
products driving up the cost for Saga
to repair or replace underlying insured
assets. We have developed our electric
vehicle insurance offering and seek to
review our supply chain to understand
where efficiency gains can be made.
Seasonal diseases such as COVID-19,
started or accelerated by climate
drivers, could impact pay out for medical
and travel insurance products as well as
increase pay outs for insured assets,
and supply chain products covered in
Saga’s current and future policies (such
as smart home technologies), damaged
by climate-related extreme weather.
There is a short-term climate-related
opportunity linked to energy efficiency
and carbon reduction. We can reduce
our exposure to the rising price of carbon
by reducing our carbon footprint and
contribution to climate change through, for
example, utilising technology to optimise fuel
consumption on our ships and implement a
rented property model for our office hubs.
We have already taken the opportunity to
change our colleague car scheme to include
hybrid or electric cars as standard.
Cruise and Travel
Short-term (end of 2023)
Our businesses can achieve a high ESG
profile by responding to customers’
interest in climate-related issues and
by demonstrating a responsible and
sustainable approach to ESG. This has the
potential to enable increased investment
capacity through new green financing
opportunities. In addition, for our ships
and our operations specifically, we can
achieve increased climate leadership
and a reduction in our carbon footprint
by collaborating with new low-carbon
partners and exploring and taking
advantage of fuel-efficient technologies.
Medium-term (2024-2035)
Further to the above short-term
climate-related opportunities, we can
achieve increased climate leadership as
well as a reduction in our carbon footprint
in the medium-term by collaborating
with new, low-carbon partners and
exploring and taking advantage of
fuel-efficient technologies.
Insurance and Money
Short-term (end of 2023)
In our Insurance and Money business units,
we can develop product lines to support
the shift to a low-carbon economy,
including strengthening our electric vehicle
insurance offering.
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Saga plc Annual Report and Accounts 2023 35
STRATEGIC REPORT
Environmental, Social and Governance continued
Acting on climate change and biodiversity continued
3 Risk management
4 Metrics and targets
We will develop new targets and metrics,
to be published later in 2023/24, to support
our ESG strategy. In the meantime, Saga’s
current focus is on Scope 1 and 2 GHG
emissions. We intend to disclose the targets
used by the organisation to manage climate
related risks and opportunities and
performance against these targets in our
next TCFD report.
During the reporting period 1 February 2022
to 31 January 2023, our measured Scope 1
and 2 emissions (location-based) totalled
107,235 tCO2e, and reported Scope 3
emissions totalled 3,932 tCO2e. These
emissions have been calculated in line with
the Greenhouse Gas Protocol.
Our ambition is to set a science-based target
for our carbon and GHG emissions, aligned
to our business strategy and to the 1.5˚C
warming scenario set out within the Paris
Agreement. For details of our emissions,
see page 30.
We are proud of our progress so far,
purchasing 100% of our site-based
electricity from a 100% renewable supply,
and significantly reducing our Scope 2
emissions under market-based reporting.
As in previous years, the dual reporting of our
emissions demonstrates that we are making
efforts to reduce our climate impact through
the purchase of electricity generated from
cleaner sources, but we recognise that we
are only at the start of our journey.
To identify the risks detailed above, we
carried out workshops and consulted with
internal subject matter expects, which
enabled us to identify and assess the risks
and opportunities we face. Short-, medium-
and long-term climate change risk is
managed within the ESG PRU for the Group
(see page 67). A combination of overarching
risks apply to all business units, and more
distinct risks apply to specific business units.
Process for identifying risks
A new risk team was established in 2022/23
to align with our new operating model.
Revisions are being made to the risk
management framework to improve our
ability to more maturely capture, manage
and report climate risks.
Climate risk considerations are built into the
Group risk management framework and this
is being further enhanced during 2023/24.
Currently, a risk identification process is in
place across the organisation to support
colleagues in identifying their risks against
a categorisation system. Identification of
all risks is completed against the risk
assessment matrix which scores frequency
and probability against severity.
Our approach to scoring risks (see page 65)
lists various impacts and quantifies what each
score means in that context. Most ESG risks
would currently be scored based on the
financial, regulatory, or business disruption
impacts. This helps to ensure that the scoring
of ESG risks is consistent with other risks.
A further improvement on this process is
to add an ESG-specific category in the risk
assessment matrix. This will help to improve
the accuracy of ESG risk scoring.
Process for integrating
climate-related risks into
risk management
Risks identified as part of the risk
identification process must have the relevant
key controls documented against them.
This is the same for all risks, regardless of
whether they are climate-related or not.
Saga’s PRUs are discussed regularly at the
Risk Committee, including the scoring of the
overarching risks and what mitigation is in
place. This Committee has Board-level
attendance, and where risks are considered
out of appetite, or further mitigation is
required, actions are assigned to resolve this.
During 2023/24, further improvements to
our risk appetite approach are being made,
which will further support management in
assessing their top risks against the agreed
risk appetite and establishing their comfort
level with risk exposure. Risk appetite status,
and any action plans required to bring risks
back within appetite are reported to the Risk
Committee. Building ESG considerations
more explicitly into our risk appetite
approach will help to drive conversation
on our key ESG risks at a senior level.
Process to manage
climate-related risks
Please see page 62 for details on how
Saga assesses the size, and scope, of
identified risks and details about the risk
terminology framework.
We understand the critical importance
of delivering sustainable growth, and we
have taken steps to measure our current
impact on the environment and set
targets to mitigate this. Our Energy and
Carbon Statement has been prepared
in accordance with our regulatory
obligation to report GHG emissions,
which can be found on page 30. To ensure
transparency and accuracy, we also commit
to having our carbon footprint verified by
a third party, and our 2022 CDP report
can be found on our corporate website
(www.corporate.saga.co.uk/about-us/
environmental-social-and-governance/).
We aim to score an ‘A’ for our climate change
CDP disclosure in the coming years.
36 Saga plc Annual Report and Accounts 2023
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Strengthening our exceptional culture
An inclusive and diverse culture allows our colleagues to thrive.
Strengthening our
exceptional culture
Priority topics
• DE&I
Related SDGs
Overall colleague
engagement
8.0
out of 10
Employee net promoter
score (eNPS)
40
(13 points above
industry benchmark)
Peak participation
in colleague
engagement surveys
94%
(92% across the year)
We embrace diversity and will continue
to develop an equitable culture that is
focused on growing our exceptional people.
We promote inclusion and aim to lead the
conversation on age diversity in the
workplace. Our materiality assessment
recognised the importance of DE&I
among our colleagues.
Engagement
Colleague engagement
At Saga, we understand that, to strengthen
our exceptional culture, we need to listen
to our colleagues. Continuous listening is
part of our culture and provides us with
opportunities for colleagues’ voices to be
heard through a range of channels. Each
channel helps to support and drive positive
change and can be measured by our
colleague engagement survey.
We received our highest colleague survey
response rate to date, at 94%, and have seen
a significant improvement in our overall
colleague engagement score, increasing to
8.0 (from 7.7 in 2021). Our focus is on ensuring
all managers have an action plan in place,
addressing what they can do to make
colleagues’ working experiences exceptional.
We know that flexibility is one of the things most
valued by our colleagues, and we continue to
offer a flexible, hybrid way of working.
Saga plc Annual Report and Accounts 2023 37
STRATEGIC REPORT
Environmental, Social and Governance continued
Strengthening our exceptional culture continued
Wellbeing
We continue to focus on colleague wellbeing through a suite of products and
services, including private medical insurance and the mental health app, Unmind.
We strengthened our colleague commitment by appointing a Head of Wellbeing
to develop our longer-term strategy and commitment in this space.
Our vision for wellbeing at Saga is to be known for a culture of high care and high
trust that delivers high performance. We take care of ourselves and each other,
giving us the energy to perform and be our best. To support this vision, in
October 2022, we launched our new wellbeing brand and proposition, Be Well,
which is made up of three core pillars; Work Well, Live Well and Think Well.
In support of keeping colleagues engaged with wellbeing, we started a weekly
newsletter, Be Well Wednesdays, covering health and wellbeing awareness
campaigns such as World Mental Health Day, Stress Awareness Month, Mental
Health Awareness Week and nutrition campaigns.
Work Well
Creating healthy work and
embedding wellbeing as a core
business performance skill
We introduced our flagship
wellbeing programme,
Performance Energy, in
partnership with Dr Bill Mitchell,
a clinical psychologist with a
wealth of experience in managing
workplace stress. We also rolled
out workshops to all our senior
leaders and people managers.
Live Well
Physical, social, and
financial wellbeing
Think Well
Mental and
emotional wellbeing
45 of our colleagues completed
the Saga-sponsored Folkestone
10k and 60 colleagues took part
in a football tournament. We ran
a financial wellbeing campaign in
the fourth quarter, supporting
our colleagues with helpful
information and advice on how
to manage their finances.
We also offered all colleagues a
free flu vaccination.
We have 35 trained Mental
Health First Aiders who support
colleagues with their mental health.
In November, we supported
Movember for Men’s Mental
Health Month, and contributed
£2,500 to charity. We promoted
colleague awareness and
utilisation of our Employee
Assistance Programme.
38 Saga plc Annual Report and Accounts 2023
Work WellThink WellLive WellBe Well i
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We are passionate about our DE&I strategy
and this is integral to who we are as a business.
We remain a committed member of the UK
Government’s Disability Confident Scheme
and are supportive of the employment and
advancement of disabled persons in the UK.
Moving into 2023/24, we will continue
our DE&I journey, and further build on the
success of the last year. Over the coming
months, we will be developing targets and
metrics to support our strategy and will
publish these later in the year.
DE&I
We remain committed to a culture that is
inclusive, and where all colleagues have the
opportunity to bring their full and authentic
selves to work.
We continued to evolve our DE&I strategy
and take positive steps forward in this space.
Our strategy focuses on five key areas, and
the highlights of what we delivered during the
year are presented below.
Our five key focus areas
We have five key focus areas for our DE&I work. Here are the
highlights of what we delivered under each during 2022.
Culture
Talent
#BeYou
Champions
of age
Data and
insights
Levelling the playing
field through an
inclusive culture.
Being a culture
enabler and a
driver of increased
colleague
engagement.
• We were recognised in
industry awards for our
DE&I activity, winning
‘Best Benefits to
Support Colleagues
Post-Pandemic’ for our
policy improvements;
and ‘Most Dynamic
Mentoring Organisation’
in Moving Ahead’s 30%
Club Awards.
• We held focused DE&I
upskilling for our Talent
Acquisition and People
Analytics teams, and
reviewed and updated
our people policies,
ensuring that they are
future-facing and fit
for purpose.
Diversity of thought
helps us stay
relevant, expand
our reach and
create a sustainable
talent pool.
Creating an inclusive
culture that enables
high performance.
• We extended our
partnership with
Moving Ahead and
the 30% Club,
with 31 colleagues
participating in
external mentoring
programmes
in 2022/23.
• We launched
MyMentor, our
internal mentoring
programme to support
female colleagues.
Building a reputation
internally and
externally as an
employer of choice
for diverse talent
and a culture
of inclusion.
• Throughout 2022, we
organised a calendar
of events, including
in-person events
such as Pride and
International Women’s
Day, alongside virtual
speaker events,
inclusion forums and
broadcasts.
• Colleagues have
continued to be central
to our DE&I strategy,
sharing their feedback
and stories across the
business – bringing
the DE&I conversation
to life.
Being the champion
of age at work in the
UK. Ensuring our
brand is inclusive
and a visible driver
of positive change
in our markets and
communities.
• Through Saga Insight,
we shaped an all-
colleague up-skilling
programme on age,
challenging perceptions
around ageing
and ensuring our
colleagues are
true champions
in this space.
• We supported the
launch of the Centre
for Ageing Better’s
employment pledge
and are a signatory
of this.
• We are delighted
to have been
independently certified
as a menopause
friendly employer.
Building
transparency and
accountability.
• We continue to
welcome and respond
to colleague feedback
and offer inclusive bank
holidays, giving all
colleagues choice
around when they
take these.
• We have supported
our colleagues,
empowering them
to grow and continue
to have a voice.
• We have better
representation of
women in senior
positions and improved
ethnic diversity
among colleagues.
• We reduced our gender
pay gap and made firm
commitments to take
this further.
Saga plc Annual Report and Accounts 2023 39
STRATEGIC REPORT
Environmental, Social and Governance continued
Strengthening our exceptional culture continued
Gender pay report
We support the UK Government’s ambition
to address the gender pay gap and are
delighted that our gender pay gap reduced
in 2022. Our commitment to equal pay for
equal work is central to this. Our report
detailing our gender pay gap and
commitments can be found on our website
(www.saga.co.uk/gender-pay-review).
We embrace diversity and
will continue to develop an
equitable culture that is
focused on growing our
exceptional people.”
Our gender diversity
Board
Senior managers
Other colleagues
Gender
%
Gender
%
Gender
%
Female
30%
Male
70%
Female
41%
Male
59%
Female
47%
Male
53%
Board6
Senior managers7
Other colleagues8
All
Male
Female
Actual
%
Actual
7
33
2,116
2,156
70%
59%
53%
53%
3
23
1,882
1,908
%
30%
41%
47%
47%
Total
10
56
3,998
4,064
6 Directors of Saga plc
7 Senior management includes all colleagues within our ELT and Senior Leadership Team
8 All Saga colleagues other than Board members and senior managers
40 Saga plc Annual Report and Accounts 2023
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Supporting our colleagues
People Committee and Colleague Forums
We remain committed to creating ongoing conversations with our colleagues, enabling them to have their say through multiple channels,
including our People Committee and Colleague Forums which will grow in 2023/24 to reflect our new business areas such as Saga Media.
Our People Committee is:
• chaired by our Chief People Officer;
• attended by Lead Colleague
Ambassadors from across the Group; and
• typically meets during the first week of
every month (quarterly as a minimum).
Our Colleague Forums are:
• chaired by the ELT member of the
business unit or function;
• attended by a Lead Colleague
Ambassador for each business unit
or function;
• held during the third week of every
month; and
• fed back to the People Committee by
our Lead Colleague Ambassadors.
Chief People
Officer
In s ura n c e
P
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C
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Eight Lead Colleague
Ambassadors from
across the business
T
r
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l
Customer
and Brand
Strategy and
Innovation
e a n d
s i o n a l
e s
v i c
F i n a n c
P r o f e s
S e r
Workplace
Since implementing our flexible hybrid
working model, Workplace has been our
primary communications platform for
colleagues. The platform enables colleagues
to be part of the conversation and instantly
share opinions, thoughts, and feedback, as
well as recognise and celebrate success.
24k
posts
379k
reactions
80k
comments
61%
were active at least
10 times a month
An average of
113
connections per day
(more than double
compared with 2020)
96%
of colleagues
were active
Saga plc Annual Report and Accounts 2023 41
STRATEGIC REPORT
Environmental, Social and Governance continued
Strengthening our exceptional culture continued
Community
We believe volunteering
is critical, enabling our
colleagues to share their
time and skills to benefit the
communities in which they
live and work. During the
2022/23 financial year:
£200k+
charitable donations made
by Saga, supporting charities
local to our office hubs, the
cost of living crisis and the
conflict in Ukraine.
1,078
colleagues used their
volunteer day, equating
to over 7,500 hours and
£71,000 of social value9.
This is an increase of 120%
from the previous year.
12 volunteer days
provided to those colleagues
in uniformed and voluntary
public duties roles,
recognising the positive
impact these roles play in
the community.
443
children of our Filipino crew
received an educational
bursary during the 2022/23
academic year.
85
festive hampers donated,
packed and delivered to
families needing a little extra
help through the Shepway
Foodbank at Christmas.
6
Saga cadets, of which
three are female, started
their journey to become
officers of the future, taking
part in career inspiration
sessions alongside
sixth-form students on
Spirit of Discovery during
Maritime Week.
100
guests joined us for our
Christmas community
lunch, giving older members
of the community a chance
to socialise and enjoy
time together.
£100k+
raised by colleagues and
customers for good causes.
£12k+
in hardship fund grants
given to colleagues when
unexpected costs arise.
During the year, we
supported 80 colleagues,
providing funding toward
replacement white goods,
clothing (including school
uniforms) and food vouchers.
9 Calculated using the national living wage
42 Saga plc Annual Report and Accounts 2023
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Governance
Our governance framework ensures that how we work
is as important as what we do and why we do it.
We know that good governance is essential
to achieving our sustainability goals.
Our materiality assessment showed that
stakeholders care about governance,
with both data privacy and security and
business ethics and compliance featuring
as significant ESG topics. Fair and decent
work was also considered material by
stakeholders. Our strong governance
controls play a critical role in ensuring that
we operate in a sustainable way.
Anti-bribery and corruption
We take our responsibility for ethical and
transparent governance seriously and we
recognise our duty to protect our customers
from bribery and corruption. As a result we
have a zero-tolerance approach to any
incidents that may arise.
Our Anti-Bribery and Anti-Corruption
Policy is available on our corporate website
(www.corporate.saga.co.uk/media/1608/
anti-bribery-and-anti-corruption-policy.pdf).
Modern slavery, human rights,
and labour standards
We conduct our business operations with a
strong emphasis on ethics and transparency,
and our policies are aligned with human
rights principles, including those related
to non-discrimination, health and safety,
wellbeing, and environmental factors.
In addition, we are committed to ensuring
that our supply chains are free from modern
slavery and human trafficking. Our Modern
Slavery Statement, which outlines our
approach and efforts to address this issue,
is available on our website (www.saga.co.uk/
modern-slavery-statement).
Responsible investments
Our approach to investing continues to
consider ESG factors. Saga’s subsidiary
boards consider investment decisions,
including requiring external investment
managers to consider ESG risk factors and
report on ESG metrics where appropriate,
and the Saga plc Board considers and
approves all material investments. Our
investment book, through our in-house
underwriter, scored a Morgan Stanley
Capital International rating of ‘AA’ in
February 2023.
Case study
Risk management and ESG
During 2023, we will develop our risk
assessment process to take account
of ESG considerations, including
impacts around climate change and
social and governance factors. This new
approach ensures that ESG factors are
integrated when considering risks and
opportunities for our businesses.
Find out more in risk management
on page 62.
Saga plc Annual Report and Accounts 2023 43
STRATEGIC REPORT
Group Chief Financial Officer’s Review
RETURN TO UNDERLYING PROFIT
IN A CHALLENGING YEAR
Our focus now is on growing earnings and significantly reducing
leverage as our Cruise and Travel businesses continue their
positive momentum and as we capitalise on investment in
Media, Money and data.”
James Quin
Group Chief Financial Officer
Watch our Group CFO,
James Quin, presenting
our full year results
1 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
44 Saga plc Annual Report and Accounts 2023
Although the last 12 months have been
challenging in both Insurance and Travel,
in 2022/23 the Group returned to an
Underlying Profit Before Tax1 of £21.5m
compared to an Underlying Loss Before Tax1
of £6.7m in the prior year. This was mainly
due to a £69.4m improvement in the results
of our Cruise and Travel operations, offset
by a £35.0m reduction in the results from
Insurance Underwriting.
For Cruise and Travel, the first half of
2022/23 was far from ‘plain sailing’. The
Cruise business was affected by ongoing
impacts from COVID-19, which led to the
curtailing of two ocean cruises and higher
cancellations on other departures. The Travel
business was impacted by lower demand
and also experienced higher-than-normal
cancellations, in part due to the operational
issues impacting the industry. These factors
were much less of an issue in the second half,
although revenues and profitability have yet
to recover to levels anticipated pre-pandemic.
Insurance Broking has been under pressure
from a combination of pricing reforms,
inflation squeezing distribution margins
and from a generally highly competitive
environment. This led to a significant decline
in new business sales for motor and home.
The overall Insurance Broking result was at
a similar level to the prior year, with lower
motor and home profits offset by improved
results on other products, especially
travel insurance.
Results for Insurance Underwriting were,
however, much lower than in the prior year.
Part of this was expected, with the prior year
benefiting from reduced motor claims
frequency during periods of lockdown.
This reduction in claims frequency reversed
as we expected, but results for the second
half of the year were adversely impacted by
a sharp increase in claims inflation and an
increase in large losses. This resulted in us
reporting an underlying current year
combined operating ratio (COR) of 125.8%
for the full year, considerably adverse to
expectations, albeit with a significant portion
of the lower result ceded to our reinsurers.
While the Group generated an Underlying
Profit Before Tax1, we reported a loss before
tax of £254.2m, mainly due to a £269.0m
impairment of the goodwill related to our
Insurance business, included in our
interim results.
As reported at the half year, the combination
of a very competitive motor market and
regulatory changes equalising new business
and renewal pricing are adversely impacting
motor and home new business sales and
pricing, which in turn has led to a reduction in
the discounted cash flows that underpin the
carrying value of Insurance goodwill.
For the 2023/24 financial year, we expect
to see a further recovery in the Cruise and
Travel businesses. Ocean Cruise bookings
are positive, and we expect our load factors
for the current year to be in line with the levels
expected pre-pandemic. The River Cruise
and Travel businesses are also starting to
see much better booking momentum and
we are on track to return to profit in 2023/24.
In Insurance Broking, we expect policy sales
to continue to reduce, as lower new business
in 2022/23 translates into lower renewals in
2023/24, with motor and home margins of
around £60 per policy, as previously indicated.
For Insurance Underwriting, we expect a
broadly break-even result; while underlying
performance should be considerably better
than in 2022/23, significant rate increases will
not be fully reflected in earned premiums until
the second half and improvement in results
will, in the first instance, go towards reducing
reinsurer losses. In addition, we also expect
only limited reserve releases in future years.
In terms of our financial position, in 2022/23,
our Net Debt2 reduced from £729.0m to
£711.7m with gross debt reducing by £46.4m,
all relating to the debt financing of our two
ocean cruise ships, of which £29.1m was
financed from a reduction in Available Cash2.
While this was a lower pace of reduction than
we had anticipated, reflecting the challenges
we faced in 2022/23, we continue to have
significant liquidity, with £157.5m of Available
Cash2 at 31 January 2023.
Over the course of the past year, we have
taken a series of actions which increase
our financial flexibility. These include
amendments in relation to our revolving
credit facility, the initiation of a sales process
for our Insurance Underwriting business and,
most recently, the agreement of a loan facility
with Sir Roger De Haan. This facility, which
was provided on an arm’s-length basis,
commences on 1 January 2024 and would
allow the Group to draw down up to £50m,
as required, to support liquidity needs and
specifically the repayment of £150m bonds
maturing in May 2024.
Our focus now is on growing earnings and
significantly reducing leverage as our Cruise
and Travel businesses continue their positive
momentum and as we capitalise on
investment in Media, Money and data.
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Operating performance
Group income statement
£m
Revenue3
Underlying Profit/(Loss) Before Tax2
Cruise and Travel
Insurance Broking (earned)
Insurance Underwriting
Total Insurance
Other Businesses and Central Costs
Net finance costs4
Underlying Profit/(Loss) Before Tax2
Impairment of Insurance goodwill
Other exceptional items
Loss before tax
Tax expense
Loss after tax
Basic earnings per share:
Underlying Earnings/(Loss) Per Share2
Loss per share
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12m to
Jan 2023
581.1
Change
54.1%
12m to
Jan 2022
377.2
87.5%
4.1%
(64.7%)
(26.8%)
(19.1%)
(17.7%)
420.9%
(9.9)
69.1
19.1
88.2
(34.9)
(21.9)
21.5
(269.0)
(6.7)
(254.2)
(981.7%)
(5.0)
(11.1%)
(259.2)
(825.7%)
(79.3)
66.4
54.1
120.5
(29.3)
(18.6)
(6.7)
–
(16.8)
(23.5)
(4.5)
(28.0)
11.9p
207.2%
(185.8p)
(824.4%)
(11.1p)
(20.1p)
2 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
3 Revenue is stated net of ceded reinsurance premiums earned on business underwritten by the Group of £111.3m (2022: £123.8m)
4 Net finance costs exclude Cruise and Travel finance costs, net fair value gains/(losses) on derivatives and IAS 19R pension interest
Saga plc Annual Report and Accounts 2023 45
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Tax expense
The Group’s tax expense for the year was
£5.0m (2022: £4.5m), representing a tax
effective rate of 33.8% (2022: negative
19.1%), excluding the Insurance goodwill
impairment charge. In the prior year, the
difference between the Group’s tax effective
rate and the standard rate of corporation
tax of 19%, was mainly due to the Group’s
Ocean Cruise business being in the tonnage
tax regime.
There was also an adjustment in the current
year for the under-provision of prior year tax
of £0.8m (2022: £1.0m). In the prior year,
there was an adjustment for the impact of the
change in the tax rate on opening deferred
tax balances of a £2.6m credit. Excluding the
impact of the Ocean Cruise business being
in the tonnage tax regime, Insurance goodwill
impairment and adjustments to prior year
tax, the tax effective rate for the current
period is 28.4%.
Earnings/(loss) per share
The Group’s Underlying Basic Earnings
Per Share6 was 11.9p (2022: Loss of 11.1p).
The Group’s reported basic loss per share
was 185.8p (2022: loss of 20.1p).
Loss before tax
Loss before tax for the year of £254.2m
includes a £269.0m impairment to Insurance
goodwill and other exceptional items of
£6.7m. Other exceptional items are made up
of £1.1m of impairments to assets (net of
amounts recoverable under quota share
arrangements), £3.7m of restructuring costs,
a £2.0m foreign exchange loss on river cruise
ship leases, £0.6m IFRS 16 adjustment loss
on river cruise ships, £0.7m acquisition costs
on the purchase of The Big Window
Consulting Limited and a £1.4m fair value gain
on derivatives de-designated in the year.
The loss before tax in the prior year of
£23.5m includes a £2.7m fair value loss on
derivatives de-designated in the year due
to the suspension of Travel operations,
£6.3m of restructuring costs, mainly relating
to the Travel business, a £2.0m charge due
to the closure of the defined benefit pension
scheme and £2.4m of costs incurred on
the ship debt holiday, partially offset by
£0.9m foreign exchange gains on river
cruise ship leases.
The prior year also includes a net impairment
of assets of £4.3m that represents £10.2m
and £0.5m of impairments and loss on
disposals of software and property, plant and
equipment respectively, mainly relating to the
Travel business, £1.0m of impairment on
assets held for sale, a £7.1m profit on disposal
of assets, after costs of £0.1m in relation to a
sale of property and a £0.3m gain on a lease
modification within right-of-use assets.
The Group’s business model is based on
providing high-quality and differentiated
products to its target demographic,
predominantly focused on cruise, travel and
insurance. The Cruise and Travel business
comprises Ocean Cruise, River Cruise and
Travel. The Insurance business operates
mainly as a broker, sourcing underwriting
capacity from selected third-party insurance
companies, and, for motor and home, also
from the Group’s in-house underwriter.
Other Businesses comprises Saga Money,
Saga Media, Saga Insight and
CustomerKNECT (formerly MetroMail),
a mailing and printing business.
Revenue5
Revenue5 increased by 54.1% to £581.1m
(2022: £377.2m) due to increased trading
in the Cruise and Travel businesses. The
current year has a full year of trading in Cruise
and Travel compared to a suspension of
these businesses for the majority of the first
half of the prior year.
Underlying Profit/(Loss) Before Tax6
The Group generated a total Underlying
Profit Before Tax6 of £21.5m in the current
year compared to an Underlying Loss Before
Tax6 of £6.7m in the prior year. This is
primarily due to a £69.4m reduction in Cruise
and Travel losses, of which £47.0m relates
to the Ocean Cruise business. This was
partially offset by a reduction in Insurance
Underwriting profitability due to lower
reserve releases and an increased current
year loss ratio.
Net finance costs7 in the year were £21.9m
(2022: £18.6m), which excludes finance costs
that are included within the Cruise and Travel
businesses of £19.2m (2022: £19.5m). The
increase of 17.7% was due to the higher bond
interest costs following the completion of the
new bond issue in July 2021. This was partially
offset by a reduction in debt issue costs in
current year compared with the prior year.
5 Revenue is stated net of ceded reinsurance premiums earned on business underwritten by the Group of £111.3m (2022: £123.8m)
6 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
7 Net finance costs exclude Cruise and Travel finance costs, net fair value gains/(losses) on derivatives and IAS 19R pension interest
46 Saga plc Annual Report and Accounts 2023
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Cruise and Travel
Our Cruise business comprises our Ocean and River
Cruise operations while Travel offers hotel stays,
escorted tours and Tailor-Made holidays.
£m
Revenue
Gross profit/(loss)
Marketing expenses
Other operating expenses
Investment return
Finance costs
Underlying Loss Before Tax8
12m to Jan 2023
12m to Jan 2022
Ocean
Cruise
168.3
40.2
(11.0)
(10.7)
–
(19.2)
(0.7)
River
Cruise
28.8
1.5
(3.2)
(3.4)
–
–
Travel
108.4
20.9
(10.2)
(14.8)
–
–
(5.1)
(4.1)
Total
Cruise and
Travel
Change
305.5
222.6%
62.6
863.4%
(24.4)
(28.9)
(17.3%)
6.5%
–
(100.0%)
(19.2)
(9.9)
1.5%
87.5%
Ocean
Cruise
82.5
(7.7)
(12.1)
(9.2)
0.1
(18.8)
(47.7)
River
Cruise
1.7
0.2
(2.2)
(3.8)
–
(0.6)
(6.4)
Total
Cruise and
Travel
94.7
(8.2)
(20.8)
(30.9)
0.1
(19.5)
(79.3)
Travel
10.5
(0.7)
(6.5)
(17.9)
–
(0.1)
(25.2)
Average revenue per passenger (£)
4,675
2,400
2,306
3,216
Ocean Cruise passengers (‘000)
Ocean Cruise load factor
Ocean Cruise per diem (£)
36
75%
318
River Cruise passengers (‘000)
12
Travel passengers (‘000)
47
36
75%
318
12
47
5.3%
63.6%
7ppts
6.4%
1,100.0%
487.5%
3,750
1,700
1,313
3,055
22
68%
299
22
68%
299
1
8
1
8
Ocean Cruise
Ocean Cruise returned to more normal
operating conditions and achieved a load
factor of 75% (2022: 68%) and a per diem
of £318 (2022: £299). These two factors,
when combined, equate to year-on-year
revenue growth in excess of 100% and have
resulted in a significantly reduced Underlying
Loss Before Tax8 from £47.7m to £0.7m.
The first half of the prior year only included
a month of Spirit of Discovery trading and a
few days of Spirit of Adventure trading, at a
government-enforced load factor restriction
of 50% that was removed towards the end
of July 2021.
In the first half of the current year, there were
some adverse impacts on a small number of
cruises due to COVID-19, while the conflict
in Ukraine dampened customer demand
for departures to the Baltics and Black Sea,
resulting in late itinerary changes and some
limited cancellations, which led to a first half
load factor of 66%.
In the second half of the year, as impacts
from the pandemic lessened and customer
demand continued to build, a load factor of
84% was achieved.
River Cruise
The River Cruise business has long-term
leases in place for two boutique river cruise
ships, Spirit of the Rhine and Spirit of the
Danube, alongside other charters which are
managed on an annual basis. Although the
business is now operating, both the Omicron
variant of COVID-19 and the conflict in
Ukraine impacted the number of passengers
travelling in the current year, especially in the
first half, due to continued customer caution
in relation to Central Europe. The River
Cruise business did not operate for the
majority of the prior year due to the travel
restrictions that were in place at the time.
This resulted in a reduced Underlying Loss
Before Tax8 from £6.4m to £5.1m.
Travel
The Travel business, which includes both
the Saga Holidays and Titan brands, has
seen much increased volumes compared
to the prior year, with passenger numbers
increasing from 8k to 47k. The recovery in
volumes has been impacted by a level of
disruption from a variety of factors, including
operational challenges faced by airlines and
airports, particularly in the first half.
The recovery in passenger volumes led to an
improvement in the Underlying Loss Before
Tax8 from £25.2m to £4.1m.
In the second half of the year, we saw
customer cancellations returning closer to
pre-pandemic levels, with multiple initiatives
underway to return to growth, including
the recently launched ‘Tailor-Made by Saga’
proposition.
8 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 47
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Cruise and Travel continued
River Cruise revenue and passengers booked
for 2023/24 are ahead of the same point last
year for 2022/23 by 29.8% and 22.5%
respectively. This is due to increased
customer demand for 2023/24 compared
to customer caution in respect of Central
Europe in 2022/23. For 2023/24, the Cruise
team have aligned management information
for the River Cruise business to the Ocean
Cruise business so load factor and per diems
are now key performance indicators for
River Cruise.
Travel bookings for 2023/24 are ahead of
the same point last year for 2022/23 by
31.7% and 17.1% for revenue and passengers
respectively. The increased revenue is due in
part to higher passengers but also increases
in operating costs being incorporated in
customer pricing and a move towards a
higher revenue, higher margin product range.
The increase in passengers is due to higher
uptake of long-haul travel within our Titan
brand as customer confidence returns.
Current year departures
26 March
2023
175.1
72%
339
34.0
12.5
63%
298
136.6
49.2
Change
6.6%
(3ppts)
6.3%
29.8%
22.5%
n/a
n/a
31.7%
17.1%
27 March
2022
164.2
75%
319
26.2
10.2
n/a
n/a
103.7
42.0
For the 2023/24 financial year,
we expect to see a further
recovery in the Cruise and
Travel businesses. Ocean Cruise
bookings are positive, and we
expect our load factors for the
current year to be in line with
the levels expected
pre-pandemic.”
James Quin
Group Chief Financial Officer
Ocean Cruise revenue (£m)
Ocean Cruise load factor
Ocean Cruise per diem (£)
River Cruise revenue (£m)
River Cruise passengers (‘000)
River Cruise load factor
River Cruise per diem (£)
Travel revenue (£m)
Travel passengers (‘000)
Forward Cruise and Travel sales
Ocean Cruise load factors for 2023/24 are
behind the same point last year for 2022/23
by 3ppts. This is partly due to the release of
itineraries in the prior year being earlier than
usual as we emerged from COVID-19
lockdowns, and partly due to the prior year
including bookings which had been
postponed during the period of COVID-19
suspension. The per diem for 2023/24 is
6.3% higher than the same point last year
for 2022/23 as the Group has reflected the
inflationary impact on operating costs in
customer pricing.
Ocean Cruise revenue
(at 26 March 2023)
£175.1m
27 March 2022 – £164.2m
River Cruise revenue
(at 26 March 2023)
£34.0m
27 March 2022 – £26.2m
Travel revenue
(at 26 March 2023)
£136.6m
27 March 2022 – £103.7m
48 Saga plc Annual Report and Accounts 2023
Insurance
Insurance encompasses our Motor, Home and Other Broking
operations and our in-house Insurance Underwriting business.
Insurance Broking
The Insurance Broking business provides
tailored insurance products and services,
principally motor, home, private medical and
travel insurance.
Its role is to price the policies and source the
lowest cost of risk, whether through the panel
of motor and home underwriters or through
solus arrangements for private medical and
travel insurance. The Group’s in-house
insurer, AICL, sits on the motor and home
panels and competes for that business with
other panel members on equal terms.
AICL offers its underwriting capacity on the
home panel through a coinsurance deal with
a third party, and so the Group takes no
underwriting risk for that product. Even if
underwritten by a third party, the product is
presented as a Saga product and the Group
manages the customer relationship.
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£m
Gross written premiums (GWP):
Brokered
Underwritten
GWP
Broker revenue
Instalment revenue
Add-on revenue
Other revenue
Written revenue
Written gross profit
Marketing expenses
Written gross profit after
marketing expenses
Other operating expenses
Written Underlying Profit
Before Tax (PBT)9
Written to earned adjustment
Earned Underlying PBT9
Policies in force
Policies sold
Third-party panel share10
12m to Jan 2023
12m to Jan 2022
Motor
Broking
Home
Broking
Other
Broking
Total
Change
Motor
Broking
Home
Broking
Other
Broking
150.1
–
150.1
26.5
3.0
10.4
17.7
57.6
57.6
123.9
3.2
127.1
42.1
–
–
3.2
45.3
48.6
379.0
184.1
563.1
100.0
9.4
19.6
47.0
176.0
176.6
(6.7)
(5.5)
(25.2)
6.9%
(11.9%)
(0.1%)
(5.1%)
(4.1%)
(10.5%)
0.9%
(4.2%)
(2.6%)
10.6%
(1.2%)
3.3%
50.9
(28.4)
22.5
–
22.5
645k
670k
43.1
(16.0)
27.1
–
27.1
151.4
(83.7)
67.7
1.7%
1.4
800.0%
69.1
4.1%
207k
206k
1,652k
1,725k
(2.5%)
(2.4%)
2.6ppts
30.1%
105.0
205.5
310.5
43.2
6.6
11.0
27.4
88.2
85.6
153.2
–
153.2
29.0
3.2
10.9
17.1
60.2
60.2
96.5
3.4
99.9
33.2
–
–
2.1
35.3
35.6
Total
354.7
208.9
563.6
105.4
9.8
21.9
46.6
183.7
181.4
(17.5)
(7.1)
(3.6)
(28.2)
68.1
(38.0)
30.1
(0.2)
29.9
884k
943k
53.1
(27.9)
25.2
–
25.2
682k
696k
32.0
(20.7)
11.3
–
11.3
129k
129k
153.2
(86.6)
66.6
(0.2)
66.4
1,695k
1,768k
105.0
180.9
285.9
31.4
6.4
9.2
26.1
73.1
70.4
(13.0)
57.4
(39.3)
18.1
1.4
19.5
800k
849k
32.7%
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9 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
10 Third-party underwriter’s share of the motor panel for policies
Saga plc Annual Report and Accounts 2023 49
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Insurance continued
Insurance Broking Underlying Profit Before
Tax11 on a written basis (which excludes the
impact of the written to earned adjustment)
increased slightly to £67.7m from £66.6m,
and on an earned basis (which includes the
impact of the written to earned adjustment),
increased to £69.1m from £66.4m.
A key metric for the Insurance Broking
business is written gross profit, after
deducting marketing expenses, but before
deducting overheads. This reduced from
£153.2m in the prior year to £151.4m in the
current year due to reduced new business
volumes and lower renewal margins on motor
and home business. The fall of £12.9m in
written gross profits after marketing
expenses in motor and home was partially
offset by an £11.1m improvement in Other
Broking, mainly due to a recovery in sales of
travel insurance compared to the prior year.
For motor and home insurance, in terms of
the total gross margin after marketing
expenses, new business profits increased by
£9.5m, while there was a £22.4m reduction
in renewal profits.
Motor and home
customer retention
83.8%
2022 – 82.8%
Written profit and gross margin per policy
for motor and home are stated after allowing
for deferral of part of the revenues from
three-year fixed-price policies, which is then
recognised in profit or loss when the option
to renew those policies at a predetermined
fixed price is exercised or lapses, recognising
inflation risk inherent in this product. As at
31 January 2023, £9.7m (2022: £8.7m) of
income had been deferred in relation to
three-year fixed-price policies, £7.9m (2022:
£7.3m) of which related to income written in
the year to 31 January 2023.
Motor Broking
Gross written premiums decreased by 7.9%
due to a 10.0% decrease in core policies sold,
partially offset by a 2.3% increase in average
premiums. Gross written premiums from
business underwritten by AICL decreased
12.0% to £180.9m (2022: £205.5m) due to
a 13.0% decrease in core policies sold that
were underwritten by AICL, offset by a 1.2%
increase in average premiums.
Written gross profit minus marketing
expenses was £57.4m (2022: £68.1m),
contributing £67.6/policy (2022: £72.2/
policy). The decrease in written gross profits
and margin per policy is mainly due to lower
renewal margins, partially offset by a 7%
increase in renewal policies and higher new
business margins.
Home Broking
Gross written premiums decreased by 2.0%
due to a 3.7% reduction in core policies sold,
partially offset by a 1.8% increase in
average premiums.
Written gross profit minus marketing
expenses was £50.9m (2022: £53.1m) and,
on a per policy basis, this was £76.0/policy
(2022: £76.3/policy). The decrease is due to
lower renewal margins and a 17% decrease in
new business policies sold, partially offset by
higher new business margins.
The changes in profitability of motor and
home business are, in part, attributable to the
equalisation of pricing between new business
and renewals following the implementation
of the General Insurance Pricing Practices
(GIPP) review by the Financial Conduct
Authority (FCA) from 1 January 2022.
This led to an improvement in new business
margins, partially offset by a 50% and 17%
reduction in motor and home new business
policies sold respectively compared to the
prior year. The reduction in renewal profits
is due to lower motor and home renewal
margins, partially offset by a 7% increase
in motor renewal policies sold.
The average gross margin per policy for
motor and home combined, calculated as
written gross profit less marketing expenses,
divided by the number of policies sold, was
£71.3 in the current year, compared with
£73.9 in the prior year. Comparison of
margins across the two years is impacted by
a significant reduction in the sales of lower
margin new business relative to the number
of renewals. Based on the same mix of new
business and renewals as in 2021/22, the
average gross margin per policy in 2022/23
would have been £67.2.
While the pricing implications of the FCA’s
review into GIPP have impacted Insurance
Broking earnings in the year, it has also
impacted some of the key metrics in the
past 12 months:
• Motor and home policies in force
decreased by 7.7% in the year.
• Increase in customer retention at 83.8%
across motor and home from 82.8% in
the prior year.
• 714k three-year fixed-price policies were
sold in the year; 47% of total motor and
home policies incepting, with 35% of
direct new business taking the product.
• Direct new business sales for motor and
home were 49% of the total, 10ppts lower
than the prior year with the Group
balancing volumes and renewals post the
GIPP reforms across direct and price-
comparison website distribution channels.
11 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
50 Saga plc Annual Report and Accounts 2023
Gross written premiums increased 27.2%
as a result of higher sales of travel insurance,
with policy sales increasing from 77k in the
prior year to 158k as a result of increased
customer confidence in the travel outlook
and fewer restrictions on travel than in
the prior year.
Gross profits after marketing costs
relating to travel insurance products
increased by £9.5m.
While sales of the PMI product were broadly
stable, gross profit after marketing costs
was £2.2m higher. This increase is a result
of increased renewal margins, alongside a
higher profit share.
12m to Jan 2023
12m to Jan 2022
Reported Quota share Underlying12
Change
Reported Quota share Underlying12
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49.6
25.6
75.2
(79.0)
27.0
(4.1)
(56.1)
19.1
(3.7)
3.7
–
19.1
69.1%
10.4%
79.5%
115.4%
(98.7)
22.9
(75.8)
83.0
1.9
12.7
97.6
21.8
7.4
(3.9)
(25.3)
–
148.3
2.7
151.0
(162.0)
25.1
(16.8)
(8.2%)
(38.6%)
(9.0%)
(22.7%)
(40.4%)
(1.2%)
(153.7)
(44.3%)
(2.7)
(11.1)
7.6
25.3
19.1
(104.5%)
–
(2.6%)
1,365.0%
(64.7%)
90.7%
18.5%
109.1%
(36.5ppts)
(1.8ppts)
(38.2ppts)
125.8%
(29.5ppts)
662k
535k
(6.9%)
(15.0%)
51.5
33.2
84.7
(44.3)
18.3
(3.9)
(29.9)
54.8
(4.2)
3.5
–
54.1
30.7%
9.6%
40.3%
61.9%
(110.0)
28.8
(81.2)
87.7
(23.8)
12.7
76.6
(4.6)
6.9
(4.3)
2.0
–
161.5
4.4
165.9
(132.0)
42.1
(16.6)
(106.5)
59.4
(11.1)
7.8
(2.0)
54.1
54.2%
16.7%
70.9%
96.3%
711k
629k
The reduction in the number of earned
policies was due to lower volumes on
non-Saga panels.
Also excluding the impact of the quota share
arrangements12, AICL saw an increase in the
current year underlying COR to 125.8%
(2022: 96.3%) and the current year reported
COR to 115.4% (2022: 61.9%).
The first half of the prior year benefited from
significantly reduced motor claims frequency
due to customers driving fewer miles during
the COVID-19 lockdown, with motor claims
experience in the second half of the prior year
broadly in line with pricing assumptions.
In the current year, motor attritional claims
experience and claims inflation have been
well in excess of pricing assumptions for the
current accident year, with claims inflation
estimated to have averaged around 13% for
the year as a whole. In addition, there was a
modest increase in claims frequency and
an above-average level of current year
large losses. In response to these trends,
we have been taking significant actions
to re-price the motor book, in line with
technical pricing. These price increases will
begin to flow through to earned premium
in 2023/24 and will be reflected in full in
the 2024/25 result.
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Other Broking
The Other Insurance Broking business
primarily comprises private medical
insurance (PMI) and travel insurance.
Insurance Underwriting
£m
Net earned premium
Other revenue
Revenue
Claims costs
Reserve releases
Other cost of sales
Gross profit
Operating expenses
Investment return
a
b
c
d
e
f
Quota share net income/(cost)
Underlying Profit Before Tax13
Reported loss ratio
Expense ratio
Reported COR
Current year COR
Number of earned policies
Policies in force – Saga motor
(b+c)/a
(d+f)/a
(e+f)/a
(e+f-c)/a
The Group’s in-house underwriter, AICL,
underwrites over 65% of the motor business
sold by Insurance Broking. AICL also
underwrites a portion of the home panel,
although all home underwriting risk is passed
to third-party insurance and reinsurance
providers. AICL also has excess of loss and
funds-withheld quota share reinsurance
arrangements in place relating to its motor
underwriting line of business, which transfer
a significant proportion of motor insurance
risk to third-party reinsurers.
Excluding the impact of the quota share
reinsurance arrangements12, net earned
premiums decreased by 8.2% to £148.3m
(2022: £161.5m) reflecting a 6.9%
reduction in the number of earned policies
underwritten by AICL coupled with a 1.6%
decrease in average earned premiums.
12 Underlying within Insurance Underwriting shows the commercial position of the business by removing the impact of the proportional line-item accounting of the
quota share reinsurance arrangements
13 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 51
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Insurance continued
Underlying prior year reserve releases of £25.1m (2022: £42.1m) resulted in an underlying reported COR of 109.1% (2022: 70.9%). The Group
retains an economic interest in motor reserve development with reserve releases on other lines typically having limited net impact on AICL
profit. Reserve releases for the past two years can be analysed as follows:
£m
Motor insurance
Home insurance
Other insurance
12m to Jan 2023
12m to Jan 2022
Reported Quota share Underlying14
Change
Reported Quota share Underlying14
23.8
1.2
2.0
27.0
(3.2)
0.7
4.4
1.9
27.0
0.5
(2.4)
25.1
(40.4%)
16.0
–
2.3
18.3
(26.5)
0.1
2.6
(23.8)
42.5
(0.1)
(0.3)
42.1
Reserve releases reflect continued
favourable experience on large bodily injury
claims relating to prior accident years. Also,
the final part of the additional component of
reserve margin for the increased uncertainty
over claims development held in respect of
the 2020/21 accident year was released in
the first half of this year.
While the Group remains prudently reserved
and expects to see a level of reserve releases
in 2023/24, these are expected to be at a
much lower level than in 2022/23.
Excluding the impact of the quota share
arrangement14, the investment return
decreased by £0.2m to £7.6m (2022: £7.8m)
due to a reduced investment portfolio and
lower reinvestment yields.
During 2022/23, the Group recorded a
recovery from quota share reinsurance of
£25.3m, compared to a cost of £2.0m in the
prior year. The recovery is due to the high
underlying current year COR of 125.8%, with
80% of current year losses in excess of an
underlying current year COR of around 105%
ceded to quota share reinsurers. The result
for the last 12 months will be aggregated with
the results of the next two financial years in
determining the final outcome for the current
quota share contract.
14 Underlying within Insurance Underwriting shows the commercial position of the business by removing the impact of the proportional line-item accounting of the
quota share reinsurance arrangements
52 Saga plc Annual Report and Accounts 2023
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Total
5.9
9.9
–
1.5
17.3
9.1
Other Businesses and Central Costs
£m
Revenue:
Money
Media and printing
Insight
Other
Total revenue
Gross profit
Operating expenses
Investment income
IAS 19R pension charge
Net finance costs
12m to Jan 2023
12m to Jan 2022
Other
Businesses
Central
Costs
Total
Change
Other
Businesses
Central
Costs
7.9
10.3
0.6
–
18.8
8.1
–
–
–
1.0
1.0
2.6
7.9
10.3
0.6
1.0
19.8
10.7
33.9%
4.0%
100.0%
(33.3%)
14.5%
17.6%
(8.9)
(37.7)
(46.6)
(26.6%)
–
–
–
1.0
–
(21.9)
(56.0)
1.0
–
(21.9)
(56.8)
100.0%
100.0%
(17.7%)
(18.6%)
5.9
9.9
–
–
15.8
5.7
(3.9)
–
–
–
1.8
–
–
–
1.5
1.5
3.4
(32.9)
(36.8)
–
(1.6)
(18.6)
(49.7)
–
(1.6)
(18.6)
(47.9)
Underlying (Loss)/Profit Before Tax15
(0.8)
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The Group’s Other Businesses include
Saga Money, Saga Media, Saga Insight
and CustomerKNECT.
Underlying Profit Before Tax15 for Other
Businesses combined has decreased by
£2.6m from £1.8m to an Underlying Loss
Before Tax15 of £0.8m, partly due to an
investment in marketing in the Saga Money
business of £2.7m above the prior year, which
has been partially offset by a £2.0m increase
in revenue. A further £1.9m of investment has
been made in Saga Media and Saga Insight
in the year.
Central operating expenses increased to
£37.7m (2022: £32.9m). Administration
costs, adjusted for transfers to local business
units, decreased by £1.0m in the year, but
net costs increased by £4.8m due to lower
Group recharges to the business units,
particularly Travel. The IAS 19R pension
charge ceased following the closure of the
defined benefit pension scheme in the
second half of the prior year.
Net finance costs in the year were £21.9m
(2022: £18.6m), which excludes finance
costs that are included within the Cruise and
Travel businesses of £19.2m (2022: £19.5m).
The increase of 17.7% was due to the higher
bond interest costs following the completion
of the new bond issue in July 2021.
15 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 53
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Cash flow and liquidity
Available Operating Cash Flow16
£m
Insurance Broking Trading EBITDA16
Other Businesses and Central Costs Trading EBITDA16
Trading EBITDA16, 17 from unrestricted businesses
Dividends paid by Insurance Underwriting business
Working capital and non-cash items18
Capital expenditure funded with Available Cash16
Available Operating Cash Flow16 before cash injections to Cruise and Travel operations
Cash injection into River Cruise and Travel businesses
Ocean Cruise Available Operating Cash Flow16
Available Operating Cash Flow16
Restructuring costs
Interest and financing costs
Business and property (acquisitions)/disposals
Tax receipts
Other receipts/(payments)
Change in cash flow from operations
Change in bond debt
Change in bank debt
Change in ship debt
Cash at 1 February
Available Cash16 at 31 January
12m to Jan
2023
Change
12m to Jan
2022
75.9
(29.5)
46.4
25.0
(6.5)
(15.8)
49.1
(17.8)
23.6
54.9
(1.4)
(38.0)
(0.9)
2.4
0.3
17.3
–
–
(46.4)
186.6
157.5
4%
(37%)
(10%)
(29%)
(143%)
(26%)
(45%)
51%
4%
(28%)
18%
10%
(120%)
(58%)
103%
(45%)
(100%)
100%
(100%)
148%
(16%)
73.2
(21.5)
51.7
35.0
15.2
(12.5)
89.4
(36.4)
22.8
75.8
(1.7)
(42.4)
4.5
5.7
(10.7)
31.2
150.0
(70.0)
–
75.4
186.6
Available Operating Cash Flow16 is made up of
the cash flows of unrestricted businesses and
the dividends paid by restricted companies,
less any cash injections to those businesses.
Unrestricted businesses include Insurance
Broking (excluding specific ring-fenced funds
to satisfy FCA regulatory requirements),
Other Businesses and Central Costs, and
the Group’s Ocean Cruise business.
Restricted businesses include AICL,
River Cruise and Travel.
Excluding cash transfers to and from the
Cruise and Travel businesses, the Group
continued to be cash generative in the year,
with an Available Operating Cash Flow16 of
£49.1m compared with £89.4m in the prior
year. Trading EBITDA16, 17 from unrestricted
businesses reduced by £5.3m, mainly due
to lower Group recharges from the Other
Businesses and Central Costs segment.
There was also a decrease in working capital
which fell from a £15.2m inflow to a £6.5m
outflow, mainly relating to the Insurance
Broking segment, and a £10.0m reduction
in dividends paid by AICL.
For River Cruise and Travel, the Group
provided £17.8m of cash to the business to
cover trading cash flows in the current year.
This is a reduction of £18.6m when compared
with the £36.4m funded in the prior year.
The Group continues to provide additional
liquidity into the River Cruise and Travel
businesses, although at a lower level, to meet
supplier and other trading payments as
both businesses operate under a ring-fenced
trust arrangement and so cannot access
customer cash from the trust until they have
returned from their river cruise or holiday.
At 31 January 2023, the ring-fenced
businesses held cash of £44.3m, of which
£36.2m was held in trust. The Group must
hold a minimum of £5.9m of cash outside of
trust within the ring-fenced businesses as
agreed with the Civil Aviation Authority.
The Ocean Cruise business reported an
operating cash inflow of £23.6m (2022:
£22.8m), with net trading income of £31.6m
(2022: net trading costs of £2.7m), partially
offset by a decrease in advance customer
receipts of £4.1m (2022: increase of £28.5m),
and capital expenditure of £3.9m
(2022: £3.0m). Net of interest costs of
£15.2m (2022: £15.2m), the Ocean Cruise
business reported net cash inflow before
any capital repayments on the ship debt
of £8.4m for 2022/23 compared to £7.6m
in the prior year.
As a result of a reduction in cash generation
from unrestricted businesses, partially offset
by a reduction in cash injections to the River
Cruise and Travel businesses, Available
Operating Cash Flow16 decreased from an
inflow of £75.8m in the prior year to £54.9m
in the current year.
16 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
17 Trading EBITDA includes the line-item impact of IFRS 16 with the corresponding impact to net finance costs included in net cash flows used in financing activities
18 Adjusted to exclude IAS 19R pension current service costs
54 Saga plc Annual Report and Accounts 2023
Other cash flow movements
Interest and financing costs were higher in
the prior year due to the debt issue costs
associated with the new bond, the tender of
the bond due in May 2024 and amendments
to the revolving credit facility (RCF). This has
been partially offset by higher interest costs
on the new bond in the current year.
In the current year, business and property
acquisitions and disposals relate to the
purchase of The Big Window Consulting
Limited. The prior year included cash
received from the sale of property, net of
related sale costs and expenses.
The Group continued to make the agreed
payments to the defined benefit pension fund
as part of the deficit recovery plan of £5.8m
(2022: £4.2m). These are included within
other receipts/(payments).
During the year, the Group released £5.0m
of restricted cash to Available Cash19 that it
had previously agreed with the FCA to hold
on a temporary basis. The Group has also
released a further £1.1m in respect of the
Threshold Condition 2.4 balance that the
Insurance Broking business holds as
restricted cash. Both of these are included
within other receipts/(payments).
In the current year, the Group restarted
capital repayments against its ship debt
facilities, with two payments totalling £30.6m
on Spirit of Discovery’s debt facility and one
payment totalling £15.8m on Spirit of
Adventure’s debt facility. In the prior year, the
Group issued a five-year £250m fixed-rate
unsecured bond. The proceeds of the bond
were used to fund the settlement of £100m
of the existing bond and to repay, in full, the
£70m term loan.
Available Operating
Cash Flow19
£54.9m
2021/22 – £75.8m
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19 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 55
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Reconciliation between operating and reported metrics
Available Operating Cash Flow20 reconciles to net cash flows from operating activities as follows:
£m
Net cash flow from operating activities (reported)
Exclude cash impact of:
Trading of restricted divisions
Non-trading costs
Interest paid
Tax paid
Cash released from/(paid) to restricted divisions
Include capital expenditure funded from Available Cash20
Include Ocean Cruise capital expenditure
Available Operating Cash Flow20
Trading EBITDA20 reconciles to Underlying Profit/(Loss) Before Tax20 as follows:
£m
Insurance Broking Trading EBITDA20
Insurance Underwriting Trading EBITDA20
Ocean Cruise Trading EBITDA20, 21
River Cruise and Travel Trading EBITDA20
Other Businesses and Central Costs Trading EBITDA20
Trading EBITDA20
Depreciation and amortisation
Pension charge IAS 19R
Net finance costs (including Cruise and Travel)
Underlying Profit/(Loss) Before Tax20
12m to
Jan 2023
12m to
Jan 2022
(13.9)
35.3
7.5
37.6
0.9
81.3
7.2
(15.8)
(3.9)
54.9
46.5
3.8
3.6
34.2
4.6
46.2
(1.4)
(12.5)
(3.0)
75.8
12m to
Jan 2023
Change
12m to
Jan 2022
75.9
19.3
39.0
(8.1)
(29.5)
96.6
(34.0)
–
(41.1)
21.5
48.2%
420.9%
73.2
54.3
(12.7)
(28.1)
(21.5)
65.2
(32.2)
(1.6)
(38.1)
(6.7)
Adjusted Trading EBITDA20 is used in the Group’s leverage calculation for the RCF covenant and is calculated as follows:
£m
Trading EBITDA20
Impact of IFRS 16 ‘Leases’
Spirit of Discovery and Spirit of Adventure Trading EBITDA20, 21
Adjusted Trading EBITDA20
12m to
Jan 2023
96.6
(1.3)
(39.0)
56.3
Change
48.2%
(23.5%)
12m to
Jan 2022
65.2
(3.1)
11.5
73.6
20 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
21 EBITDA includes central Ocean Cruise overheads
56 Saga plc Annual Report and Accounts 2023
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Statement of financial position
Goodwill
During the first half of the current year, the
Group’s new business sales of motor and
home insurance were significantly lower than
expected as a result of competitive market
conditions and a challenging environment
following the implementation of the FCA’s
review of GIPP from 1 January 2022. In order
to remain competitive and to restore the
business to policy growth in future years,
the Group launched a new standard motor
product. This product, and other actions
taken to improve competitiveness, are
expected to lead to materially lower margins
per policy in future years, and lower overall
profit before tax, compared to prior
assumptions. Since the lower expected
future cash flows represent a potential
indicator of impairment, the Group
conducted an impairment review of the
£718.6m goodwill asset at 31 July 2022
relating to the Insurance business that was
included on the statement of financial
position at 31 January 2022.
The Group’s revised five-year financial
forecasts incorporated the modelled impact
of the changes in the market environment,
including also an expected reduction in margins
from a switch to more standard products
and lower sales of more feature-rich policies.
Further stress tests were also considered
including the continuation of the current
competitive environment for an extended
period and further downsides compared to
revised base case assumptions. This resulted
in management taking the decision to impair
Insurance goodwill by £269.0m in the first
half of 2022/23. Consistent with the approach
taken in prior years, this impairment is not
included within Underlying Profit Before Tax22.
At 31 January 2023, the Group conducted a
further impairment review of the remaining
£449.6m goodwill asset relating to the
Insurance business and concluded that its
recoverable amount was above the carrying
value, and no further impairment was
considered necessary.
Carrying value of ocean cruise ships
At 31 July 2022 and 31 January 2023, the
carrying value of the Group’s ocean cruise
ships was £612.5m and £607.0m
respectively (31 January 2022: £621.3m).
Due to the continued challenging operating
environment in the first half of the year for
the Ocean Cruise business, the Group
carried out an impairment review of both of
its vessels at 31 July 2022. The results of the
review showed that there was headroom in
the central and stress test scenarios for both
Spirit of Discovery and Spirit of Adventure,
with no impairment required.
In the second half of the year, further
COVID-19 restrictions were lifted for cruise
passengers and trading was in line with
forecasts. Discount rates have risen, but
not to the extent that they materially change
the headroom in the impairment calculation.
The Directors therefore concluded that
there were no additional indicators of
impairment at 31 January 2023 and,
accordingly, no further impairment review
was deemed necessary.
Investment portfolio
The majority of the Group’s financial assets
are held by its Insurance Underwriting entity
and represent premium income received
and invested to settle claims and meet
regulatory capital requirements.
The amount held in invested funds decreased
by £50.3m to £279.9m (31 January 2022:
£330.2m), partly due to payment of £25.0m
of dividends from AICL in the year. At
31 January 2023, 98% 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 prior period
and reflects the relatively stable credit risk
rating of the Group’s investment holdings.
£m
At 31 January 2023
Insurance Underwriting investment portfolio:
Debt securities
Money market funds
Loan funds
Total invested funds
Derivative assets
Total financial assets
£m
At 31 January 2022
Insurance Underwriting investment portfolio:
Deposits with financial institutions
Debt securities
Money market funds
Loan funds
Total invested funds
Derivative assets
Total financial assets
AAA
AA
A
BBB
Unrated
Total
Credit risk rating
23.5
19.6
–
43.1
–
43.1
74.9
–
–
74.9
–
74.9
64.2
–
–
64.2
2.5
66.7
91.8
–
–
91.8
–
91.8
–
–
5.9
5.9
–
5.9
254.4
19.6
5.9
279.9
2.5
282.4
AAA
AA
A
BBB
Unrated
Total
Credit risk rating
–
20.2
29.2
–
49.4
–
49.4
–
94.4
–
–
94.4
–
94.4
14.0
68.0
–
–
82.0
1.8
83.8
–
98.2
–
–
98.2
0.1
98.3
–
–
–
6.2
6.2
–
6.2
14.0
280.8
29.2
6.2
330.2
1.9
332.1
22 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 57
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Statement of financial position continued
Insurance reserves
Analysis of insurance contract liabilities at 31 January 2023 and 31 January 2022 is as follows:
£m
Reported claims
Incurred but not reported24
Claims handling provision
Total claims outstanding
Unearned premiums
Total
At 31 January 2023
At 31 January 2022 (restated)
Gross
231.1
47.3
6.8
285.2
83.1
368.3
Reinsurance
assets23
(60.4)
(1.7)
–
(62.1)
(6.7)
Net
170.7
45.6
6.8
223.1
76.4
(68.8)
299.5
Gross
227.4
57.5
7.9
292.8
93.9
386.7
Reinsurance
assets23
(55.8)
(3.3)
–
(59.1)
(6.3)
(65.4)
Net
171.6
54.2
7.9
233.7
87.6
321.3
The Group’s total insurance contract
liabilities, net of reinsurance assets,
decreased by £21.8m in the year to
31 January 2023 from the previous year end,
primarily due to a £11.2m reduction in
unearned premiums, coupled with an £8.6m
decrease in net incurred but not reported
claims reserves. The reduction in net
incurred but not reported claims reserves
is due to reserve releases that reflect
continued favourable experience on large
bodily injury claims relating to prior accident
years. In addition, the final part of the
additional component of reserve margin held
in respect of the 2020/21 accident year was
released in the current year. The 31 January
2022 position has been restated due to an
incorrect classification between reported
claims and incurred but not reported of
£16.1m. The restatement had no net impact
on total claims outstanding.
Financing
At 31 January 2023, the Group’s Net Debt 25
was £711.7m, £17.3m lower than at the
beginning of the financial year.
In the first half of 2022/23, the RCF
agreement was reduced from £100m to
£50m and was simplified by the removal of
certain clauses that were introduced during
the pandemic, including:
• removal of the £40m minimum free
liquidity requirement; and
• removal of the condition that the facility
is terminated on 1 March 2024, should
the 2024 bond not be repaid by that date.
In the second half of the year, we concluded
discussions with our lending banks and
agreed the following amendments to the
facility which, in aggregate, provide us with
increased financial flexibility:
• The introduction of a restriction whereby
no utilisation of the facility is permitted prior
to repayment of the 2024 bond if leverage
exceeds 5.5x, or liquidity is below £170m.
• During 2023 and 2024, should the RCF
be drawn, leverage covenant testing will
be quarterly.
• Repayment of the 2024 bond, ahead of
maturity, is restricted while leverage
remains above 3.75x.
• Amendments to the leverage and interest
cover covenants attached to the facility,
as follows:
31 January 2023
30 April 2023
31 July 2023
31 October 2023
31 January 2024
30 April 2024
31 July 2024
31 October 2024
31 January 2025
23 Excludes funds-withheld quota share arrangement
24 Includes amounts for reported claims that are expected to become periodical payment orders
25 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
58 Saga plc Annual Report and Accounts 2023
Leverage
(excl. Ocean
Cruise)
Interest
cover
4.75x
6.75x
6.75x
5.5x
5.5x
5.5x
5.5x
5.5x
4.75x
2.5x
n/a
2.5x
n/a
2.75x
n/a
3.0x
n/a
3.0x
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The Group’s total leverage ratio was 7.5x as at 31 January 2023 (31 January 2022: 11.7x). Excluding the impact of debt and earnings relating
to the ocean cruise ships, the Group’s leverage ratio relating to the RCF was 4.3x as at 31 January 2023 (31 January 2022: 3.0x), within the
4.75x covenant.
The Group resumed repayments on its ship debt facilities with repayments made on its Spirit of Discovery ship facility in June 2022 and
December 2022 and on its Spirit of Adventure ship facility in September 2022.
Net Debt26 is analysed as follows:
£m
3.375% Corporate bond
5.5% Corporate bond
Revolving credit facility
Spirit of Discovery ship loan
Spirit of Adventure ship loan
Less Available Cash26, 29
Net Debt26
Maturity
date28
31 January
2023
31 January
2022
May 2024
July 2026
May 202527
June 2031
September 2032
150.0
250.0
–
204.2
265.0
(157.5)
711.7
150.0
250.0
–
234.8
280.8
(186.6)
729.0
31 January
2023
31 January
2022
711.7
(469.2)
1.4
243.9
729.0
(515.6)
4.7
218.1
Adjusted Net Debt26 is used in the Group’s leverage calculation and reconciles to Net Debt26 as follows:
£m
Net Debt26
Exclude ship loans
Exclude Ocean Cruise Available Cash26
Adjusted Net Debt26
The Group entered into a £50m unsecured loan facility with Sir Roger De Haan on 3 April 2023. This facility can be drawn, on 30 days’ notice,
from 1 January 2024 and terminates on 30 June 2025. As is the case with the senior bonds in issue and with the RCF, the loan is guaranteed by
Saga plc, Saga MidCo and Saga Services Limited. The Group is able to use the funds drawn under the facility for general corporate purposes
although in practice would only do so to support repayment of the £150m bonds due in May 2024.
The interest rate paid on the drawn funds under this facility is 10%. In addition, a drawing fee of 2% is payable, alongside milestone payments of
2% of any uncancelled amounts of the facility on each of 31 March 2024 and 31 December 2024. The facility would automatically terminate on
the completed sale of AICL.
26 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
27 At 31 January 2022, the terms also included a requirement to repay the RCF on 1 March 2024 if the remaining £150m of the 3.375% bond notes had not been
redeemed prior to this date. This term has now been removed and does not apply at 31 January 2023
28 Maturity date represents the date that the principal must be repaid, other than the ship loans, which are repaid in instalments over the next 10 years
29 Refer to Note 25 of the financial statements for information as to how this reconciles to a statutory measure of cash
Saga plc Annual Report and Accounts 2023 59
STRATEGIC REPORT
Group Chief Financial Officer’s Review continued
Statement of financial position continued
Pensions
The Group’s defined benefit pension scheme surplus, as measured on an IAS 19R basis reduced by £13.2m to a £12.1m liability at 31 January 2023
(£1.1m surplus as at 31 January 2022).
£m
Fair value of scheme assets
Present value of defined benefit obligation
Defined benefit pension scheme (liability)/surplus
During the year ended 31 January 2023,
the net position of the scheme decreased by
£13.2m, resulting in an overall scheme deficit
of £12.1m. The movements observed in the
scheme’s assets and obligations have been
impacted significantly by macroeconomic
factors during the year where, at a global level,
there have been rising inflation and cost of
living pressures, as well as shifts in long-term
bond yields. The present value of defined
benefit obligations decreased by £174.7m to
£236.2m, primarily due to a 245bps increase
in the discount rate which is based on
increases in long-term trend corporate
bond yields. The fair value of scheme assets
decreased by £187.9m to £224.1m. A £5.8m
deficit funding contribution was paid by the
Group in February 2022 in relation to a
recovery plan agreed under the latest
triennial valuation of the scheme as at
31 January 2020.
Net assets
Since 31 January 2022, total assets have
decreased by £324.7m and total liabilities
have decreased by £41.3m, resulting in an
overall decrease in net assets of £283.4m.
The decrease in total assets is primarily
due to:
• a reduction in goodwill of £269.0m
following the impairment to the Insurance
cash generating unit;
• a decrease in property, plant and
equipment of £35.5m of which £19.5m has
been transferred to assets held for sale,
£23.5m relates to depreciation in the year,
partially offset by £8.2m of additions in
the year;
• a decrease in financial assets of £49.7m,
mainly relating to a reduction to the
Insurance Underwriting investment
portfolio, partly to fund £25.0m of
dividends from AICL;
• a decrease in cash and short-term
deposits of £50.4m;
• an increase in trade and other receivables
of £43.0m due to the quota share
contract with AICL’s reinsurance
partners being in a receivable position
and the further ramp-up of Cruise and
Travel operations;
• an increase in assets held for sale of
£18.3m; and
• an increase in trust accounts of £12.8m.
31 January
2023
31 January
2022
224.1
(236.2)
(12.1)
412.0
(410.9)
1.1
The decrease in total liabilities reflects:
• a decrease of £18.4m in insurance
contract liabilities due to reserve releases
during the year;
• a decrease of £39.4m in financial liabilities,
which is mainly due to a reduction of
£41.9m in bond and bank loans, as a
result of capital repayments on Spirit
of Discovery and Spirit of Adventure
facilities; and
• the recognition of a defined benefit
pension scheme liability of £12.1m.
Going concern
The Directors have performed an
assessment of going concern to determine
the adequacy of the Group and Company’s
financial resources over a period of 14 months
from the date of signing these financial
statements, a period which includes the
maturity of £150m of senior bonds in
May 2024.
This assessment is based on higher and lower
case financial projections which incorporate
scenario analysis and stress tests on
expected business performance.
The Group’s higher case modelling assumes
good performance in the Cruise division in
2023/24, on the back of strong booked load
factors and per diems. Travel is also expected
to achieve continued growth in revenues with
encouraging bookings for 2023/24 as at the
end of March 2023. As previously indicated,
the outlook for Insurance is likely to be
challenging over the next 12 to 18 months,
with high cost and claims inflation in a
competitive market expected to
squeeze margins.
60 Saga plc Annual Report and Accounts 2023
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In addition, in both higher and lower case
scenarios and incorporating either the
expected net proceeds from a sale of the
Insurance Underwriting business or a draw
down of the £50m loan facility with Sir Roger
De Haan, the Group expects to have
sufficient resources to continue operations
for at least the next 14 months and to repay
the £150m senior bonds on maturity in May
2024 from Available Cash30 resources.
Over the same time frame and on the same
basis, the Group also expects to remain
within the renegotiated financial covenants
and other terms relating to its £50m RCF, as
set out in Note 30, enabling it to draw down
on this currently undrawn facility in 2024/25
to meet short-term working capital
requirements should the need arise.
Noting that it is not possible to predict
accurately all possible future risks to the
Group’s future trading, based on this analysis
and the scenarios modelled, the Directors
are confident that the Group will have
sufficient funds to continue to meet its
liabilities as they fall due for a period of at least
14 months from the date of approval of these
financial statements. They have therefore
deemed it appropriate to prepare the
financial statements to 31 January 2023
on a going concern basis.
Dividends and financial
priorities for 2023/24
Dividends
Given the Group’s priority of reducing Net
Debt30, the Board of Directors does not
recommend payment of a final dividend for
the 2022/23 financial year, nor would this
currently be permissible under financing
arrangements due to the leverage ratio being
above 3.0x and while the ship debt facility
deferred amounts are outstanding.
Financial priorities for 2023/24
The Group’s financial priorities for the
current financial year are to reduce Net
Debt30, build on the already positive load
factor and per diem in Ocean Cruise, return
the River Cruise and Travel businesses to
profitability, and to continue progress in
execution of its Insurance strategy.
James Quin
Group Chief Financial Officer
17 April 2023
The Group’s lower case scenario
incorporates lower load factors for Ocean
Cruise, lower levels of demand in River Cruise,
and slower growth in the Travel business
across the going concern period. Downside
risks modelled for the Insurance business
include the impact of worsening competitive
market pressures on the Insurance Broking
business, continued high cost and claims
inflation putting pressure on margins, among
other stress tests. These stresses are
partially offset by discretionary cost savings
and the deferral of investment expenditure
that would be achieved in the event of
downside trading risks materialising.
To increase liquidity and consistent also with
a strategy of reducing capital intensity, in the
autumn of 2022, the Group commenced a
sale process for its Insurance Underwriting
business, AICL. The Group aims for this sale
process to be concluded in the second
half of 2023.
However, given that there is no certainty that
a sale of AICL will be concluded in the next 14
months, the Group has agreed a loan facility
with Sir Roger De Haan. Under the terms of
this facility, if the sale of AICL is not completed
prior to the end of 2023, the Group will, from
1 January 2024, be able to borrow up to
£50m to fund any liquidity needs, including
repayment of the 2024 bonds. This facility is
unsecured, on arms-length terms and can be
drawn at the option of the Group on 30 days’
notice. The facility matures on 30 June 2025,
at which point any outstanding amounts,
including interest, must be repaid. Availability
of funds under the facility is not contingent on
financial performance or on compliance with
any financial covenants.
Under both higher and lower case scenarios,
the Group expects to meet scheduled Ocean
Cruise debt principal repayments as they fall
due over the next 14 months, and to also meet
the financial covenants relating to its secured
cruise debt facilities (see Note 30)
throughout the assessment period, except
for the July 2023 testing date where lenders
have agreed to a waiver of the EBITDA to debt
repayment covenant ratio (see Note 41).
30 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 61
STRATEGIC REPORT
Risk management
EFFECTIVELY MANAGING OUR RISKS
Board assessment of risk
management and internal control
Our Board has ultimate responsibility for the
Company’s risk management, internal
control and risk culture. It is also responsible
for regularly reviewing the effectiveness of
risk management and control systems,
ensuring that there is an ongoing systematic
process for identifying, evaluating, and
managing the emerging and principal risks
faced by Saga.
This system accords with the Financial
Reporting Council guidance on risk
management, internal control and related
financial and business reporting, and was
in place for the year under review and up to
the date of approval of this Annual Report
and Accounts.
During 2022/23, as the business structure
changed to move more accountability and
independence into the individual business
units, the risk management framework was
revised to suit the changing business needs.
Areas of commonality remain to ensure
that a consistent basis for managing risk
is maintained, as stipulated by our risk
management policy. Development has been
in progress to ensure that each business unit
operates a risk management framework
that is proportionate and relevant to its
needs, and the expectations of its regulators
where applicable.
Risk maturity is measured and all business
units are seeking to continuously improve
their maturity over time in line with the
targets set.
Our governance framework
Effective risk management and control is achieved through application of the ‘three lines of defence’ model as follows:
Governing body
Accountability to stakeholders for organisational oversight
Governing body roles: integrity, leadership and transparency
Management
Actions (including managing risk)
to achieve organisational objectives
Internal Audit and
Assurance (IAA)
Independent assurance
1st line roles
2nd line roles
2nd and 3rd line roles1
Provision of
products/services
to clients and managing risk
Expertise, support,
monitoring and challenge
on risk-related matters
Independent and objective
assurance and advice on all matters
related to the achievement of
objectives expertise, support,
monitoring and challenge on
risk-related matters
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Risk strategy and plan
Our risk strategy and plan, which are aligned
with our overarching strategy, are considered
and approved annually.
Risk framework
Risk governance – The main consideration
within risk governance is the Board
management of risk and subsequent
delegation to risk committees and other
governance forums. This ensures that risk
is managed effectively and that there is
appropriate oversight through reporting
and accountability defined within each
committee’s Terms of Reference and, where
applicable, through the application of the
Senior Managers and Certification Regime.
Additionally, the suite of Saga risk policies,
including, but not limited to, conduct risk,
incident management and internal control,
define our risk management framework and
high-level expectations of the 1st and 2nd line in
respect of risk management activity.
Incident management – The 1st line business
areas are responsible for raising any risk
incidents identified in a timely manner,
conducting appropriate root cause analysis
to prevent recurrence, and resolving
incidents promptly. The 2nd line oversees
this activity to ensure fair customer
outcomes, and that the process is managed
in line with policy.
Risk and control registers – Each operating
company and enterprise function is
responsible for identifying and managing its
risks and associated key controls, which are
captured on risk and control registers and
scored using a risk matrix that rates risk
against both likelihood and severity.
Key controls are subject to design and
operational effectiveness testing by the
business and validated through periodic
2nd line assurance reviews, with action taken
where controls are found to be ineffective.
Our risk registers help to identify the top
risks facing the various business units,
which in turn inform our principal risks and
uncertainties (PRUs).
1
2nd and 3rd line roles for AICL, SSL and SPF are separated in line with regulatory requirements
62 Saga plc Annual Report and Accounts 2023
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Our risk framework
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Purpose
and vision
Our purpose is to deliver exceptional experiences every day, whilst being
a driver for positive change in our markets and communities
Growth plan
priorities
Maximising our existing
businesses
Step-changing our ability to
scale while reducing debt
Creating ‘The Superbrand’
for older people
STRATEGIC
OPERATIONAL
INSURANCE
LIQUIDITY
CREDIT
MARKET
REPUTATION
Types of risk
ESG
ESG considerations are embedded into each of the risk framework processes
Risk governance and accountability
Incident management
Risk registers
Control assurance
Risk appetites
Top risks
Risk framework
processes
Risk reporting,
monitoring, oversight
and measurement
Emerging risk management
Adequacy of resources (including Threshold Condition 2.4,
Solvency II and wind-down plans)
Risk culture
Operates across all aspects of the above framework and aligns to our purpose
of delivering exceptional experiences every day
Risk framework key:
Risk framework element applies to the whole Company
Risk framework element applies to AICL, SSL and SPF
Saga plc Annual Report and Accounts 2023 63
STRATEGIC REPORT
Risk management continued
Risk appetites – Refer to the type and
amount of risk that we are willing to take
to achieve our strategic objectives.
Board-approved risk appetites exist for
all primary risk types including strategic,
operational, insurance, liquidity, credit,
market and reputational risk, with a further
subdivision of operational risk to ensure our
subsidiary boards and our plc Board have
visibility and oversight of all the key areas
of risk and, in particular, to ensure that we
promptly respond to any risks moving
towards, or already out of, appetite. Our risk
appetites support the formation of our
strategy and our decision-making.
PRUs – The PRUs are informed by the
detailed functional/entity risk registers and
top risk assessments and are linked back to
the relevant strategic objectives. This gives
visibility to management of the most
significant risks which may impede our ability
to achieve our strategic objectives.
Risk maturity – Each operating entity is
assessed periodically against our risk
maturity framework in both the 1st and 2nd
lines of defence, with actions agreed for any
areas where there is a desire to move further
up the risk maturity scale, which are tracked
through to completion.
Process feedback
Outputs from the risk management cycle
are fed back to our risk committees and
boards by exception to ensure that the risk
framework remains effective and supports
our strategy, business model and
decision-making processes.
Independent process assurance
Saga’s IAA function is positioned centrally
within the enterprise, operating
independently of the business units. It is
therefore able to provide independent
assurance of the effectiveness of the risk
management procedures.
The objective of IAA is to help protect the
assets, reputation and sustainability of the
organisation by providing independent,
reliable, valued and timely assurance to the
Board and ELT. To preserve the
independence of the function, the IAA
Director’s primary reporting line is to the
chair of the Audit Committee, and the
IAA team is prohibited from performing
operational duties for the business. For risk
management responsibilities, the IAA
Director also has an independent reporting
line into the chair of the Risk Committee.
All activities of the Company fall within the
remit of the IAA team, and there are no
restrictions on their work. IAA fulfils its role
and responsibilities by delivering the annual
risk-based audit plan. Each audit provides
an opinion on the control environment and
details of any issues found. IAA work with
the businesses to agree the remedial
actions necessary to improve the control
environment and these are tracked to
completion. The relevant Head of IAA
submits reports to, and/or attends, board
and audit committee meetings for the
business units, with the IAA Director
reporting to the Audit and Risk Committees.
Statement of review
As a result of its consideration and
contribution to risk management and internal
control activities, the Board is satisfied that
there is an appropriate framework for
identifying, evaluating and managing the
Group’s risks and internal controls and, up
to the date of the approval of this Annual
Report and Accounts, it is regularly reviewed.
The Board’s statement of review of the
effectiveness of Saga’s risk management
and internal control systems is set out
on page 77.
Our risk management framework and
systems are designed to manage, rather than
eliminate risk, and operate to facilitate the
achievement of our business objectives within
our stated risk appetites.
There has been regular reporting to the
Audit and Risk Committees throughout the
year on the status and evolution of Saga’s
risk framework.
64 Saga plc Annual Report and Accounts 2023
Principal risks and uncertainties
MITIGATING EACH RISK
t
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The following matrix and table
set out the principal risks and
uncertainties (PRUs) facing the
Company, including those that
would threaten its business model,
future performance, solvency,
or liquidity.
The table on the next page provides
further details including the mitigating
actions being taken to manage these risks.
The trend denotes the anticipated future
direction of each risk after mitigation,
which is influenced by known key external
or internal factors. Saga takes a
‘bottom-up’ and ‘top-down’ approach to
developing and reviewing its PRUs, which
occurs at least twice a year with oversight
from the Executive Leadership Team (ELT)
and the Board. Each PRU has been aligned
to the most relevant strategic priorities.
2
13
6
14
7
12
1
3
5
8
11
4
9
10
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Low likelihood
High likelihood
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Our risk categories
Our risks
A Strategic
B Operational
C Insurance
D Liquidity
E Credit
F Market
G Reputational
1 Pandemic/COVID-19 disruption
B
9 Third-party suppliers
2 Cybercrime
B G
10 Fraud and financial crime
B
B
3 Delivery and execution
B
11 Insurance pricing/modelling error B
4 Capability
5
Saga brand and
relevance
6 Regulatory action
7 Operational resilience
A B
A G
B G
B
12 Breach of Data Protection
Act/General Data Protection
Regulation (GDPR)
13 Liquidity risk/debt repayment
B
D
14 Culture
B G
8 Environmental, Social
and Governance (ESG)
A B G
Saga plc Annual Report and Accounts 2023 65
STRATEGIC REPORT
Principal risks and uncertainties continued
Key
1
2
3
Maximising our
existing businesses
Step-changing our
ability to scale while
reducing debt
Creating
‘The Superbrand’
for older people
Threat to
business model
Improving
Worsening
Stable
New risk
1. Pandemic/
COVID-19
disruption
2. Cybercrime
3. Delivery and
execution
4. Capability
5. Saga brand
and relevance
6. Regulatory
action
Risk trend
Link to strategy
1
2 3
Group-wide
Risk category
B
Risk trend
Link to strategy
1
Group-wide
Risk category
B G
Risk trend
Link to strategy
1
2
Group-wide
Risk category
B
Risk trend
Link to strategy
2
Group-wide
Risk category
A B
Risk trend
Link to strategy
3
Group-wide
Risk category
A G
Risk trend
Link to strategy
1
Group-wide
Risk category
B G
Description
Risk to the Cruise and Travel businesses
and financial resilience of Saga in the event
of a new and significant pandemic or
extended duration of COVID-19 arising
from further variants.
Mitigation
Cost controls integrated into annual budget
and five-year plans, complete restructuring
of the Saga Travel Group, continuation of
remote working capability that is now
integrated into a hybrid working model,
and ongoing monitoring of COVID-19 cases
is undertaken on both ocean and river
cruise ships.
Description
Cyber security breach resulting in system
lockdown, ransom demands and/or
compromise of confidential and/or
personal data.
Mitigation
Ongoing vulnerability management
programme in place, including industry
benchmarking and external penetration
testing to help maintain security posture.
Continued investment in cyber prevention,
detection, and intelligence technologies to
help mitigate attacks.
Awareness and testing programme in place
to protect against social engineering attacks
on colleagues.
Strategy in place to further reduce our
footprint of potential system targets.
Mitigation
Robust project governance covering how
significant changes are prioritised and
delivered, with close oversight from the ELT
and the Board with 2nd and 3rd line assurance
conducted for the change initiatives carrying
the greatest risk.
Description
Key business change initiatives fail to be
delivered effectively, or at all, due to one,
or a combination of, the following:
• Resource capability or capacity.
• Unexpected business as usual risk issues.
• New regulation.
• Material defects in the delivery.
Description
A new strategy and purpose has created a
new demand for capability to deliver the
five-year plan, which requires new
investment, leadership commitment and a
learning culture. There is a risk that this step
change is not achieved.
Mitigation
Increased focus on talent management,
career development, recruitment, succession
planning and embedding a new reward
framework that drives colleague performance
and aligns to effective risk management,
delivering fair customer outcomes.
Description
The Saga brand and its products do not
appeal sufficiently to our target customer
group, resulting in loss of appeal and market
share, such that competitors gain market
share and customer volume continues
to decline.
Mitigation
Delivery of the next phase of the brand
campaign in addition to continuous
monitoring of metrics.
Description
Risk of customer harm because of our
actions/inaction or failure to implement
regulatory change correctly.
Mitigation
Consumer Duty Project in progress.
Continued focus on embedding 1st line control
self-assessment testing. Horizon-scanning
reports produced to identify upcoming
regulatory changes and necessary action.
66 Saga plc Annual Report and Accounts 2023
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7. Operational
resilience
8. ESG
9. Third-party
suppliers
10. Fraud and
financial crime
11. Insurance
pricing/modelling
error
12. Breach of
Data Protection
Act/GDPR
13. Liquidity
risk/debt
repayment
14. Culture
Risk trend
Link to strategy
2 3
1
Group-wide
Risk category
B
Risk trend
Link to strategy
2 3
Group-wide
Risk category
A B G
Risk trend
Link to strategy
1
3
Group-wide
Risk category
B
Risk trend
Link to strategy
1
Group-wide
Risk category
B
Risk trend
Link to strategy
1
Insurance
Risk category
B
Risk trend
Link to strategy
1
3
Group-wide
Risk category
B
Risk trend
Link to strategy
2
Group-wide
Risk category
D
Risk trend
Link to strategy
1
3
Group-wide
Risk category
B G
Description
Failure in critical services or operations and
inability to recover within defined
parameters, made more complex by
remote working arrangements.
Mitigation
Migration onto new technology to increase
colleague connectivity. Change governance
ensures that system changes are delivered
consistently within risk appetite.
Description
Increasing regulation coupled with industry
and societal pressure leaves Saga trailing its
peers, causing reputational, customer and
financial impacts.
Description
Reputational impact, business interruption
and financial losses arising from the failure
or misperformance of key third parties.
Mitigation
Saga’s ocean cruise ships were built relatively
recently to a high specification in terms of
minimisation of harmful emissions. A Head
of ESG was appointed who developed Saga’s
ESG strategy, and will work to embed ESG
and ESG risk identification and management
within the business. Saga has undertaken a
stakeholder engagement exercise and
materiality assessment to identify priority
future activities.
Mitigation
Third-party risk management ensures
an appropriate risk-based approach
for selecting third-party partners and
overseeing their performance and
operational and financial resilience.
Description
Increased risk of internal or external fraud
and financial crime driven by remote
working and macroeconomic conditions.
Mitigation
2nd and 3rd line assurance reviews conducted
with no significant issues identified. Ongoing
monitoring of claims fraud in place, with
colleague awareness communications.
Operation of effective internal controls
subject to regular testing and oversight.
Description
Errors in data modelling lead to material
pricing, reserving or underwriting issues
that have significant financial impact and/or
customer harm.
Mitigation
Market study related controls and
other insurance modelling controls
incorporated into the internal control
assurance programme.
Description
Failure to maintain compliance with data
privacy requirements in line with growing
customer expectations in relation to
how they want their personal data to
be managed.
Mitigation
Prioritisation of projects to improve effective
data management, coupled with simplification
of our technology estate and strengthening of
our Data Privacy team to ensure we continue
to put the customer first in how we manage
their personal information.
Description
The more challenging macroeconomic
environment, in tandem with the impact
of COVID-19, has increased Saga’s
liquidity risk in relation to repayment
of its debt liabilities.
Mitigation
The Group intends to sell the Insurance
Underwriting business and has also entered
into an unsecured £50m loan facility with
Sir Roger De Haan. As a result, the Group
expects to repay the 2024 bonds from
Available Cash2.
Description
Saga’s culture does not transform in line
with the purpose, values, and strategy to
deliver the financial results expected per
the five-year plan.
Mitigation
Ongoing measurement and monitoring
of culture using colleague surveys.
2 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 67
Based on an assessment of these planned
actions, and on the assumption that the
£250m senior bonds maturing in 2026
can be refinanced, the Directors have a
reasonable expectation that the Group will
be able to continue in operation and meet
its liabilities as they fall due over the next
five years. However, the Directors note
that successful execution of the planned
actions necessary to enable refinancing
of the July 2026 bonds are not fully within
their control. The Directors further
recognise that uncertainty increases
over time and therefore future outcomes
cannot be guaranteed.
STRATEGIC REPORT
Viability Statement
The Directors have considered the viability
of the Group over the five years to January
2028. The five-year period has been
selected as the most appropriate as this
time frame:
a) is consistent with the planning horizon
over which the Directors normally
consider the future performance,
capital and solvency requirements of
the business;
b) includes the maturity of both unsecured
bonds in 2024 and 2026; and
c) includes fuller consideration of a range
of potential risks, including demand risk
in a challenging operating environment
and the impact of rising cost inflation.
Both the travel and insurance markets are
expected to remain challenging in the next
12 to 18 months, in part due to a high level
of ongoing economic uncertainty. The
Directors and Executive Leadership Team
remain focused on protecting the Group,
and have taken actions to strengthen its
financial position to help it mitigate the
continued uncertainty. Further information
is included in the Chief Financial Officer’s
report on pages 60-61.
In making this statement, the Directors
have considered the resilience of the
Group, taking account of its current
position, the principal risks facing the
business in severe, but plausible, scenarios
and the effect of any mitigating actions.
The Directors have considered each of the
Group’s principal risks and uncertainties
(PRUs) detailed on pages 65-67 and
the potential impact of these risks on the
business model, future performance,
solvency and liquidity over the period.
The list of PRUs was reviewed by risk
owners, finance and the risk function to
consider which risks might threaten the
Group’s ongoing viability. These include an
assessment of the future impact of climate
change on the business, including the
possible introduction of Emission Trading
System requirements. The PRUs have been
considered and severe, but plausible,
outcomes for each have been identified,
with an estimate of the potential financial
impact of each quantified. Assessments
of the potential financial impact were
derived from both internal calculations
and examples of similar incidents in the
public domain.
The three largest sensitivities, in terms
of financial impact, were identified as
the following:
1.
The impact of lower-than-expected
demand on the Cruise and
Travel businesses.
2. The impact of further regulation across
the business, incorporating climate
change considerations.
3. A failure to deliver on the Insurance
Broking strategy as the business
continues to navigate a period of
significant change.
In assessing the viability of the Group, the
Directors have considered appropriate
management actions that may be taken
to manage the solvency of the Group in
the event of severe, but plausible, downside
scenarios. These include the range of steps
identified in the going concern assessment
on pages 60-61 that are expected to
increase liquidity over the short to medium
term, and include the preferred route of
a potential sale of the Group’s Insurance
Underwriting operations, as well as further
contingency plans including the option to
draw down on the £50m working capital
facility agreed with Sir Roger De Haan.
68 Saga plc Annual Report and Accounts 2023
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Key disclosure statements
Non-financial information statement
An overview of our approach to environmental, colleague, social, human rights, anti-corruption and anti-bribery matters can be found in the
table below. Details of our business model can be found on pages 18-19, and our principal risks and uncertainties are on pages 65-67. Our key
policies can be found on our corporate website.
Our approach and key policies
Environmental matters
Our Environmental Social and Governance (ESG) Policy
sets out our intention to minimise the impact of our
operations on the environment, comply with relevant
environmental legislation and monitor and, where
applicable, report our usage of all types of energy.
Outcomes of policies
and impacts of activities
More information
• Our Seaham facility installed
LED lighting, achieving a
power-efficiency saving
of over 50%.
• 60 e-bikes were added to
our ocean cruise ships.
• Began installation of
shoreside power and
fuel-efficiency measures
on Spirit of Discovery.
See pages 26-36 for more information
on environmental matters.
Read more about environmental
matters on our corporate website
(www.corporate.saga.co.uk/about-us/
environmental-social-and-governance/).
Colleagues
Our colleagues are core to our business and their
wellbeing is of utmost importance to us. We have an
Equal Opportunities Policy committing us to creating
a truly inclusive culture, where all colleagues can bring
their authentic selves to work.
Our Dignity and Diversity Policy sets out how we
raise awareness of fairness and equality in our
working environment.
• We aim to be ‘Champions
of Age’ at work in the UK.
• 47% of our colleagues
are female.
• We reduced our gender
pay gap during 2022.
• We launched our Be Well
strategy for all colleagues.
Colleagues are one of our key
stakeholders, as set out on page 20.
Our culture is described on page 37.
Read more about our colleagues within
the ESG section of our corporate website
(www.corporate.saga.co.uk/about-us/
environmental-social-and-governance/).
Our Health and Safety Policy contains a clear set of
principles and commitments which apply to all colleagues,
contractors and members of the public.
We are inclusive of age through our robust Grandparents’
Leave and Menopause policies.
Social matters
We seek to understand and carefully consider the impact
of every decision we make within our communities.
We ensure we have an open dialogue with the community
and they are aware of our strategy, as well as any impact
to them.
We promote our colleagues’ involvement in the
community through our Public Duties Policy, Reservist
Policy and our robust volunteering strategy, which
gives all colleagues paid time off to volunteer within
the community.
Respect for human rights
Saga supports the rights of all people as set out in the
Universal Declaration of Human Rights. Our Labour
Standards Policy sets out our human rights principles
which are adopted across the Group alongside our
commitments to working responsibly and with integrity.
Our Modern Slavery Statement also provides further
detail on risk, due diligence, policies, training and audit
in that area.
Anti-bribery and anti-corruption
Saga takes a zero-tolerance approach to bribery and
corruption. There is an Anti-Bribery and Corruption
Policy in place which lays out clear guidance for the
appropriate assessment of any risk of bribery and
corruption across all businesses. This is enforced
by mandatory training for all colleagues.
• Over £200k charitable
donations made by Saga.
• 1,078 colleagues used their
volunteer day.
Read more about our engagement with
our communities on page 21 of this
report and on our corporate website
(www.corporate.saga.co.uk/about-us/
environmental-social-and-governance/).
• No incidents of human rights
violations or modern slavery
were identified in 2022/23.
Our Labour Standards and Human Rights
Policy can be found on our corporate
website (www.corporate.saga.co.uk/media/
1507/labour-standards-policy-final.pdf)
alongside our Modern Slavery Statement
(www.corporate.saga.co.uk/modern-
slavery-statement/).
• There were no fines, penalties
or settlements for corruption
reported in 2022/23.
• 98% completion of
mandatory training.
Read more about anti-bribery and
corruption on page 43.
Further information, including our
Anti-bribery and Corruption Policy can
be found on our corporate website
(www.corporate.saga.co.uk/about-us/
environmental-social-and-governance/).
Saga plc Annual Report and Accounts 2023 69
STRATEGIC REPORT
Section 172(1) statement
Duty to promote the success of the Company
The Directors have had regard for the matters set out in Section 172(1)(a)–(f) of the Companies Act 2006 (S172(1)) when performing their
duty under Section 172. The Directors consider that they have acted in good faith in the way that would be most likely to promote the success
of the Company for the benefit of its members as a whole, while also having regard to the S172(1) matters referred to below.
A description of how the Board engages with its key stakeholders can be found on pages 20-21 and the principal decisions made by the Board
during 2022/23, how stakeholders were considered and the likely consequences of these decisions over the longer term are set out on
pages 78-80. Further information on how S172(1) has been applied by the Board can be found in the table below.
S172(1) matter
Further information incorporated into this statement by reference
Likely consequences of any
decision in the long term
Our strategy
Pages 22-25
Nomination Committee Report
Pages 84-85
Environmental, Social and Governance
Audit Committee Report
Pages 26-43
Principal risks and uncertainties
Pages 65-67
Chairman’s introduction to governance
Page 72-73
Board activities
Page 78-80
Pages 86-89
Risk Committee Report
Pages 90-91
Annual Statement
Pages 92-95
Directors’ Remuneration Policy
Pages 111-123
Group Chief Executive Officer’s Statement
Environmental, Social and Governance
The interests of the
Company’s employees
Pages 10-13
Market review
Pages 16-17
Engaging with stakeholders
Pages 20-21
Our strategy
Pages 22-25
The need to foster the
Company’s business
relationships with suppliers,
customers and others
Purpose and business model
Pages 18-19
Engaging with stakeholders
Pages 20-21
Environmental, Social and Governance
Pages 26-43
Impact of the Company’s
operations on the
community and environment
Chairman’s Statement
Pages 8-9
Engaging with stakeholders
Pages 20-21
Environmental, Social and Governance
Pages 26-43
The Company’s reputation
for high standards of
business conduct
Pages 10-13
Our strategy
Pages 22-25
The need to act fairly
as between members
of the Company
Engaging with stakeholders
Pages 20-21
Chairman’s introduction to governance
Page 72-73
Pages 26-43
Chairman’s introduction to governance
Page 72-73
Board activities
Pages 78-80
Annual Statement
Pages 92-95
Board activities
Pages 78-80
Risk Committee Report
Pages 90-91
Board activities
Pages 78-80
Pages 26-43
Board activities
Pages 78-80
Board leadership and Company purpose
Page 81
Group Chief Executive Officer’s Statement
Environmental, Social and Governance
This Strategic Report is presented to inform members of the Company and help them assess how the Directors have performed
their duty under Section 172. It has been approved by the Board and signed on its behalf by
Euan Sutherland
Group Chief Executive Officer
17 April 2023
70 Saga plc Annual Report and Accounts 2023
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GOVERNANCE
Corporate Governance Statement
Chairman’s introduction to governance
72
74
Board of Directors
76 Governance at a glance
Board activities
78
81
Board leadership and Company purpose
82 Division of responsibilities
83 Composition, succession and evaluation
84 Nomination Committee Report
86
Audit Committee Report
90 Risk Committee Report
Directors’ Remuneration Report
92
96
98
111
Annual Statement
Remuneration at a glance
Annual Report on Remuneration
Directors’ Remuneration Policy
124 Directors’ Report
128 Statements of responsibilities
129
Independent Auditor’s Report
to the Members of Saga plc
Application of UK Corporate Governance Code
Saga plc (the Company) seeks to comply with the Principles set out in the UK
Corporate Governance Code (the Code), promoting good corporate governance
to support the long-term sustainable success of the Group.
Details of how Saga has applied the Principles and Provisions of the Code throughout
the year are set out on the following pages in the Corporate Governance Statement,
with additional information contained in the Strategic Report. A full explanation of
how Saga has applied the Code can be found in our compliance schedule on our
corporate website (www.corporate.saga.co.uk/about-us/governance).
Board leadership and company purpose
A. Board effectiveness
B. Purpose, values, strategy and culture
C. Board decision-making
D. Engagement with stakeholders
E. Oversight of workplace policies and practices
Division of responsibilities
F. Role of the Chair
G. Independence and division of responsibilities
H. External commitments and conflicts of interest
I. Board resources
Composition, succession and evaluation
J. Appointments to the Board and succession planning
K. Board composition and length of tenure
L. Board and individual evaluation
Audit, risk and internal control
M. Financial reporting
83
1-43 and 81
73 and 78-80
18-21, 70 and 78-80
33, 43, 69, 81-82, 85 and 88
76 and 83
76 and 83
74-75
78 and 82-83
72-73 and 84-85
74-75, 77 and 83
83 and 85
External audit and internal audit – independence and effectiveness
N. Fair, balanced and understandable assessment
O. Risk management and internal controls
86-89
77 and 88
32-36, 62-67, 77 and 90-91
Remuneration
P. Remuneration philosophy
Q. Remuneration policy
R. Annual report on remuneration
92-123
111-123
98-110
The Board believes that, during the whole reporting period, the Company was in full
compliance with all applicable Principles and Provisions of the Code, save that:
• Provision 3: While the Non-Executive Chairman did meet with some shareholders
during the year, as he is a significant shareholder in the business, it was determined
that it would be more appropriate for the Group Chief Executive Officer (CEO) and
Group Chief Financial Officer (CFO) to engage with major shareholders.
• Provision 9 (taking the circumstances set out in Provision 10 into account)
and Provision 34: Due to his shareholding in the Company, the Non-Executive
Chairman was not considered independent on appointment. Taking into account
Roger De Haan’s history with the Saga brand and business, his proposed time
commitment, the terms of the Relationship Agreement between him and the
Company, and his letter of appointment, the appointment was deemed to be in the
best interests of the Company. Shareholders supported this when they voted in
favour of his appointment at the 2021 and 2022 Annual General Meetings (AGMs).
Roger has waived his fee since becoming Non-Executive Chairman in 2020.
• Provision 23: Whilst the Code defines ‘senior management’ as the layer below
the Board and the Company Secretary and their direct reports, we think that it
is more appropriate to disclose the gender balance of the Executive and Senior
Leadership Teams.
Saga plc Annual Report and Accounts 2023 71
CORPORATE GOVERNANCE STATEMENT
Chairman’s introduction to governance
WELL PLACED TO RETURN
THE BUSINESS TO GROWTH
We appointed three new Non-Executive Directors to our Board,
all of whom are entrepreneurs with experience that will help us
with our ambition to broaden the range of products and services
we offer and the frequency of our customer interactions and the
understanding we have of them.”
Sir Roger De Haan
Non-Executive Chairman
72 Saga plc Annual Report and Accounts 2023
Dear shareholder,
During our 2022/23 financial year we made
good progress in relation to the strategy we
set 12 months ago.
Changes to Board and Committee
structure/composition
We appointed three new Non-Executive
Directors to our Board, all of whom are
entrepreneurs with experience that will help
us with our ambition to broaden the range
of products and services we offer and the
frequency of our customer interactions and
the understanding we have of them.
Peter Bazalgette, Anand Aithal and
Gemma Godfrey have all built successful
businesses and have relevant expertise in
corporate finance, financial services, media,
e-commerce and public company governance.
Peter took over the position of Senior
Independent Director when Orna NiChionna
retired from the Board on 30 September.
I would like to thank Orna for her valuable
contribution over the years.
Gareth Hoskin was reappointed for a
further three-year term. Gareth chairs
Acromas Insurance Company Limited,
Saga’s Insurance Underwriting business.
He is Chair of our Audit Committee and also
acts as the Group’s Speak Up Champion.
Steve Kingshott, Saga’s CEO of Insurance,
was appointed a Board Director with effect
from 3 January 2023.
Following the changes to the Board, the
Nomination Committee reviewed
membership of the Board committees.
The Board agreed with the Committee’s
proposal that Anand Aithal should become
a member of the Audit Committee, Gemma
Godfrey should join the Risk Committee,
Gemma and Peter should join the
Remuneration Committee and that Julie
Hopes and Gareth Hoskin should step down
from the Nomination Committee. Gemma
Godfrey became Chair of Saga Money.
I was very pleased that a new and increasingly
important committee, the Innovation and
Enterprise Committee, chaired by Anand,
was established. It was agreed that Gemma,
Peter and I should also be members.
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Board focus and decisions
Over the year, considerable time was spent
discussing a strategy that would allow us to
build on the progress we have been making
in returning to a more normal Cruise and
Travel operation post the COVID-19
pandemic and adapting to changes in the
insurance industry.
The Board was conscious that our
stakeholders were being impacted by the
rising cost of living. It was also recognised
that there was a need to strengthen our
balance sheet and further reduce our debt.
Following two years of agreed payment
deferrals in relation to our ocean cruise ship
facilities, repayments recommenced and we
concluded discussions with our lending banks
to amend the covenants associated with our
revolving credit facility.
Since the year end, we have concluded
discussions with our ship debt lenders who
have agreed to waive the EBITDA to
debt repayment covenant in July 2023.
The Board spent a significant amount of time
discussing our Insurance businesses and
made the decision to initiate the sale of our
Underwriting business, which will allow us to
further reduce debt. With this in mind, I have
recently provided a £50m facility to give the
Company additional flexibility.
After taking account of the popularity of
working from home, we took the decision to
close a number of our large offices in favour
of smaller hubs, which will result in reduced
operating expenses.
Additional meetings were held to review our
strategy during the period. At our main Board
meetings, we heard from all of our business
CEOs and, more recently, from the CEO of
our new business, Saga Media.
Risk management
Our financial reporting processes, internal
controls and overall risk strategy continued
to be overseen by our Audit and Risk
Committees. This was particularly important
this year as the Group redesigned its risk
and internal audit structure.
People and remuneration
Eva Eisenschimmel, our Remuneration
Committee Chair, attended People
Committee meetings periodically
throughout the year and continued to
represent colleagues at Board meetings.
The Board continued to monitor the
Company culture and the Group’s values.
While under the normal three-year cycle,
shareholder approval would have been
sought at this year’s Annual General Meeting
(AGM) for our Remuneration Policy, the
Committee consulted with shareholders in
the early part of 2022 and presented a new
Policy at the 2022 AGM. This introduced a
new Saga Transformation Plan to provide
an increased focus on retention and
incentivisation for the most influential leaders
and support the turnaround of the business
with the goal of sustained performance and
share price growth following the period of
market uncertainty and the strategic
challenges the business has faced.
Environmental, Social and
Governance (ESG)
A Head of ESG was appointed to lead
analysis and to develop and implement our
ESG strategy and, in due course, the Board
will consider key performance indicators
and associated metrics that we will use to
track progress.
Board and Committee evaluation
During the year, Peter Bazalgette, our
Senior Independent Director, led an
evaluation of the Board and its Committees,
with support from our Group Company
Secretary. It concluded that there was an
open and transparent Board culture with a
collaborative and solutions-based approach.
Shareholder engagement and
our 2023 AGM
I was delighted that, in July last year, we
were able to hold our first AGM in person
since 2019.
This year, our AGM will be held at 11.00am
on 20 June 2023, at the offices of Numis
Securities Limited, 45 Gresham Street,
London EC2V 7BF. Full details will be set
out in the Notice of AGM in due course. I am
looking forward to seeing shareholders there.
Sir Roger De Haan
Non-Executive Chairman
17 April 2023
How the Board monitors culture
The Board regularly reviews a range of information to actively monitor culture.
The table below shows the key sources of data the Board tracks, with a view to take
action, where adjustments or remedial action are needed.
Cultural priorities
Being
responsive to
the views of
stakeholders
Valuing
DE&I
Culture
aligned to
purpose,
values and
strategy
Promoting
integrity and
openness
Cultural identifier
Colleague surveys
Speak Up reports
Progress on diversity, equity and
inclusion (DE&I)
Health and safety performance
Internal Audit reports and findings
Environmental targets
Saga plc Annual Report and Accounts 2023 73
Roger De Haan
Non-Executive Chairman
Appointed 5 October 2020
Key strengths and experience
• Experienced business leader and board
director with extensive experience in travel
and financial services industries.
•
• Significant history with Saga having worked
in the business for 40 years, including over
20 years as Chairman and Chief Executive.
Instrumental in transforming Saga from a
specialist tour operator to one that offered
its own cruises and expanding the business
to cover publishing, insurance and financial
services, creating the Saga brand.
• Knighted in the 2014 New Year Honours List
for services to education and to charity in
Kent and overseas.
Other roles
Director of Folkestone Harbour companies,
Creative Folkestone and Friends of Folkestone
Academy; and Trustee of Roger De Haan
Charitable Trust.
Euan Sutherland
Group Chief Executive Officer
Appointed 6 January 2020
Key strengths and experience
• Significant experience in leading major
consumer-facing businesses through
periods of change to deliver a more
efficient organisation.
• Leadership, senior operational experience
and marketing specialist.
• Corporate strategy creation, branding,
•
large workforce direction and motivation.
Implementing strategy focused on
customer insight, digital innovation and
wholesale expansion.
• Previous senior roles include: CEO of
Superdry plc, the global digital brand, and
The Co-op Group; Group COO & CEO UK
at Kingfisher plc; and background in global
fast-moving consumer goods brands including
Mars and Coca-Cola.
Other roles
Non-Executive Director and member of the
Audit and Nomination Committees of Britvic plc
(appointed February 2016).
CORPORATE GOVERNANCE STATEMENT
Board of Directors
DIVERSITY, BALANCE AND
EXPERIENCE
Roger De Haan
Euan Sutherland
James Quin
Steve Kingshott
Peter Bazalgette
Anand Aithal
Eva Eisenschimmel
Gemma Godfrey
Julie Hopes
Key
Committee Chair
Audit Committee
Executive Leadership Team Committee
Innovation and Enterprise Committee
Nomination Committee
Remuneration Committee
Risk Committee
Gareth Hoskin
74 Saga plc Annual Report and Accounts 2023
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James Quin
Group Chief Financial Officer
Anand Aithal
Independent Non-Executive Director
Appointed 1 January 2019
Appointed 1 September 2022
Key strengths and experience
• Fellow of the Institute of Chartered
Accountants in England and Wales.
• Seasoned insurance executive with over
30 years of senior leadership experience.
• Experience in delivering corporate
strategy, investor communications and
internal/external analysis and reporting.
• Extensive strategic, investor and
operational finance experience within
the insurance industry.
• Previous senior roles include: UK CFO, Global
Life CFO and Head of Investor Relations at
Zurich Insurance Group; Partner at PwC
and Managing Director at Citigroup
Global Markets.
Steve Kingshott
Chief Executive Officer for Insurance
Key strengths and experience
• Extensive non-executive experience from
fintech, insurance broking, asset management
and accountancy.
• Entrepreneurial perspective, having
co-founded his own data analytics business.
• Previous roles include: Managing Director
at Goldman Sachs.
Other roles
Lead Non-Executive board member for the
UK Cabinet Office.
Eva Eisenschimmel
Independent Non-Executive Director and
People Champion
Appointed 1 January 2019
Key strengths and experience
• Over 30 years of experience as a brand and
Appointed 3 January 2023
marketing professional.
Key strengths and experience
• Highly experienced insurance executive
with over 30 years’ experience in the
UK insurance market.
• Previous senior roles include: CEO of
Tesco Bank’s Insurance business and
Chief Insurance Officer for Tesco Bank.
Peter Bazalgette
Senior Independent Director
Appointed 1 September 2022
Key strengths and experience
• Wealth of experience from the media and
wider creative industries.
• Multi-industry knowledge in broadcasting,
television, advertising, media, digital media
and venture capital.
• Previous roles include: Chairman of ITV plc;
Chairman of Endemol UK; Chair of the Arts
Council for England; Non-Executive Director
of YouGov; and Non-Executive Director of
Channel Four.
Other roles
Chair of LoveCrafts Group Limited.
• Extensive experience in customer relations
and all aspects of human resources and
people strategy.
• Previous roles include: Non-Executive Director
(and a member of the Audit, Nomination,
Remuneration and Risk Committees) of Virgin
Money plc; Managing Director of Marketing,
Brands and Culture at Lloyds Banking Group plc;
Chief Customer Officer at Regus plc; Chief
People and Brand Officer at EDF Energy;
and senior positions at Allied Domecq and
British Airways.
Other roles
Group Chief Risk Officer (from May 2021)
at Lowell (previously Chief of Staff, appointed
in February 2016).
Gemma Godfrey
Independent Non-Executive Director and
Chair of Saga Personal Finance Limited
Appointed 1 September 2022
Key strengths and experience
• Founder of two successful digital businesses.
• Specialist in digital transformation, innovation,
and de-risking the delivery of new services.
• Previous roles include: Boardroom adviser on
the Apprentice USA.
Other roles
Non-Executive Director of Eight Capital
Partners plc, Kingswood Holdings Limited,
Oberon Investments Group plc and Vivopower
International plc; and business and money expert
on ITV’s Good Morning Britain and Sky News.
Julie Hopes
Independent Non-Executive Director,
Chair of Saga Services Limited
Appointed 1 October 2018
Key strengths and experience
• Associate with the Chartered Institute
of Bankers.
• Wealth of insurance experience coupled with
over 20 years in a variety of roles, specialising
in general insurance and predominantly in
personal lines.
• Highly customer-focused, with a breadth of
functional, membership and affinity experience
and a track record of driving growth.
• Previous roles include: Chair of Police Mutual
and its Remuneration Committee; Non-
Executive Director and Chair of the Risk
Committee of Co-operative Insurance; a
variety of roles at RSA and Tesco Bank; and
CEO of The Conservation Volunteers, a UK
community volunteering charity.
Other roles
Deputy Chair, Senior Independent Non-Executive
Director and Remuneration Committee Chair
of West Bromwich Building Society (appointed
April 2016); and Non-Executive Director
(appointed August 2021) and Chair of the
Risk Committee (appointed December 2021)
of MS Amlin Underwriting Limited.
Gareth Hoskin
Independent Non-Executive Director,
Chair of Acromas Insurance Company
Limited and Speak Up Champion
Appointed 11 March 2019
Key strengths and experience
• Over 20 years’ experience in insurance,
in a variety of roles.
• Chartered Accountant with recent and
relevant financial experience and competence
in accounting (Institute of Chartered
Accountants in England and Wales).
• Previous roles include: main Board Director
and CEO International, and finance, retail
marketing and HR roles in Legal & General;
accountant at PwC; and Trustee, Non-Executive
Director and Chair of the Audit and Risk
Committee at Diabetes UK.
Other roles
Audit Chair and Senior Independent Director
at Leeds Building Society (appointed
November 2015).
Saga plc Annual Report and Accounts 2023 75
CORPORATE GOVERNANCE STATEMENT
Governance at a glance
A CONTINUOUS IMPROVEMENT APPROACH
TO GOVERNANCE
We constantly assess and adapt our governance structure to ensure we have the
optimum framework to support our strategy.
During the year, the business structure changed to move more accountability and independence into the
individual business units and our governance structure was reviewed and simplified.
Governance framework
Board activities
To align with the decentralised model, our governance
structure was simplified.
Board
Board
Committees
Includes new
Innovation and
Enterprise
Committee
Executive
Leadership Team
Committee
Data
Management
Committee
Find out more in division of responsibilities
on page 82
Board roles
• Maximising our existing businesses and creating
‘The Superbrand’ for older people
– Restructured to give businesses more independence.
– Combined our Ocean and River Cruise businesses.
– Merged Titan Travel and Saga Holidays.
– Discussed the future of Insurance, including a possible sale
of our Insurance Underwriting business, Acromas Insurance
Company Limited (AICL).
– Reviewed the plans for Saga Money.
– Launched Saga Media.
– Responded to the cost of living crisis.
• Step-changing our ability to scale while reducing debt
– Discussed strategies for debt reduction, short-term liquidity
needs, hedging and property portfolio management.
– Amendment to revolving credit facility agreement to support
short-term liquidity needs. Since the year end, concluded
discussions with our ship debt lenders to waive the EBITDA
to debt repayment covenant in July 2023 and approved entry
into a loan facility with Roger De Haan.
Find out more in our Board activities section on pages 78-80
The Board comprises 10 Directors with a broad set of complementary skills and with varied experiences and each bringing
a different perspective.
During the year, the Board reviewed a document detailing the division of responsibilities and roles of the Chairman, Group CEO,
Senior Independent Director, all Committee Chairs and the Non-Executive Director nominated ‘People Champion’. This was last
reviewed and approved on 23 January 2023 and is available on our corporate website (www.corporate.saga.co.uk/about-us/governance).
All Directors, as persons discharging managerial responsibilities, receive updates on regulatory matters affecting the Group and
briefings relating to their duties on an ongoing basis.
Member
Role
Roger De Haan
Euan Sutherland
James Quin
Steve Kingshott
Non-Executive Chairman (leadership, Board governance, sets the agenda and facilitates open
Board discussions, performance and shareholder engagement)
Group CEO (Group performance and develops strategy for Board approval)
Group CFO (Group financial performance, including creation of the budget and five-year plans for
recommendation to the Board)
CEO of Insurance (Insurance strategy, optimising sales, delivering excellent customer service and
broadening the range of new products)
Independent Non-Executive Directors
Role
Peter Bazalgette
(Senior Independent Director)
Anand Aithal
Eva Eisenschimmel (People Champion)
Gemma Godfrey
Julie Hopes
Gareth Hoskin (Speak Up Champion)
Participate in, assess, challenge and monitor Executive Directors’ delivery of the strategy
(within risk and governance structures), financial controls and integrity of financial statements,
and Board diversity. Evaluate and appraise the performance of the Non-Executive Chairman,
Executive Directors and senior management.
Find out more in composition, succession and evaluation on page 83
76 Saga plc Annual Report and Accounts 2023
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Board allocation of time
Board composition
Board tenure
People and culture
c.10%
Maximising our
existing businesses
Step-changing our
ability to scale while
reducing debt
Creating ‘The Superbrand’
for older people
Oversight of risk
management
Environmental, Social
and Governance (ESG)
c.30%
c.25%
c.25%
c.5%
c.5%
The Board’s experience
Insurance
Travel
Personal finance
Board experience and corporate governance
Strategy and innovation
Consumer-facing businesses
Brand management
Stakeholder management and culture
Finance and audit
Digital and media
Risk management
Number of
Directors
5
1
1
10
8
6
5
10
4
5
3
Gender diversity
on the Board
Gender diversity in
senior management1
Gender
Actual
%
Gender
Actual
%
Female
Male
Total
3
7
30%
70%
10 100%
Female
Male
Total
23
33
41%
59%
56 100%
Board age
10%
50%
30%
10%
Non-Executive Directors 6
3
Executive Directors
1
Non-Executive Chairman
Under 1 year
1 to 3 years
Over 3 years
4
1
5
Key statements
Compliance Statement The Board is committed to
high standards of corporate governance and manages
Saga’s operations in accordance with the UK Corporate
Governance Code 2018 (the Code). A full version of the
Code can be found on the Financial Reporting Council’s
website (www.frc.org.uk). The Company applied the
Principles and complied with the relevant Provisions of the
Code throughout the year (with two exceptions) as set out
and explained on page 71.
Viability Statement The Viability Statement can be found
in the Strategic Report on page 68.
Going concern The going concern basis of preparation
can be found in Note 2.1 of the financial statements on
pages 143-144.
Fair, balanced and understandable In accordance with the
Code, the Board has established arrangements to evaluate
whether the information presented in the Annual Report and
Accounts is fair, balanced and understandable. Having taken
advice from the Audit Committee, the Board considers that
the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Assessment of risk Through the risk management process
detailed on pages 62-64, the Board can confirm that it has
carried out a robust assessment of the emerging and
principal risks facing the Company, including those which
would threaten our business model, future performance,
solvency or liquidity and reputation.
Statement of review The risk management process
detailed on pages 62-64 was in place for the year under
review and up to the date of approval of this report.
The Board recognises the importance of appropriate
systems of internal control and risk management.
The Group operates a three lines of defence risk
management framework overseen and monitored by the
Risk Committee (see pages 90-91) and Audit Committee
(see pages 86-89). Work conducted by 2nd and 3rd lines,
while identifying some areas for improvement, provided
reasonable assurance that the systems of risk management
and internal control were broadly effective.
Section 172(1) The Section 172(1) statement can be found
in the Strategic Report on page 70.
Under 50
50–60
60–70
Over 70
1 Senior management includes the Executive Leadership Team (ELT)
(first layer below Board level) and the Senior Leadership Team which
includes the Group Company Secretary
Saga plc Annual Report and Accounts 2023 77
01020304050607080901000102030405060708090100
CORPORATE GOVERNANCE STATEMENT
Board activities
BOARD ACTIVITIES DURING THE YEAR
SUPPORTED DELIVERY OF OUR STRATEGY
The Board considered progress against
long-term strategy at each Board meeting
and, in addition, two detailed strategic
sessions were held. This year saw a return
to holding meetings in person which was
highlighted in the Board evaluation as a
welcome return to normality. Board meeting
agendas are carefully structured and include
an update by the chair of each committee,
including any matters for escalation.
During the year, the Board held six scheduled
meetings and eight ad hoc meetings, for
which individual attendance is set out to
the right. The additional meetings were
necessary due to the challenging external
conditions, and it was not always possible
to have all Directors in attendance.
Director
Roger De Haan
Peter Bazalgette1
Anand Aithal1
Eva Eisenschimmel
Gemma Godfrey1
Julie Hopes
Gareth Hoskin
Steve Kingshott2
Orna NiChionna3
James Quin
Euan Sutherland
Scheduled
meetings
Ad hoc
meetings
6/6
3/3
3/3
6/6
3/3
6/6
6/6
1/1
4/4
6/6
6/6
8/8
5/5
5/5
8/8
4/5
7/8
7/8
2/2
2/3
8/8
8/8
The Board recognises the need to consider
the needs of, and impact on, all stakeholder
groups. As always, there was a need to ensure
that the consequences of decisions were the
right thing for promoting the long-term
success of the Company, as well as having
regard to maintaining a reputation for high
standards of business conduct.
This section contains some examples of
principal decisions that were taken during the
year and how stakeholder views were taken
into account and impacted the outcomes of
those decisions.
Find out more about stakeholder
engagement on pages 20-21
Key stakeholder groups
Strategic pillars
Customers
Colleagues
Partners and suppliers
Shareholders and investors
Communities
Regulators
1
2
3
Maximising our existing
businesses
Step-changing our ability to
scale while reducing debt
Creating ‘The Superbrand’
for older people
Key Board decision
Restructure and decentralisation of the businesses
Connection to
strategic pillars
1
3
How the Board reached
its decision and
considered matters
set out in Section 172(1)
(S172(1)) of the Companies
Act 2006 (the Act)
Considered the proposed changes to the enterprise governance structure and delegated authority limits
following the restructure of the businesses.
Discussion centred around the importance of having transparency across all business areas, how to use data to
drive the development of products and services and how the Group CEO’s role was likely to change to become
‘guardian of the brand’ as business units became more autonomous.
Revised Remuneration Policy/Saga Transformation Plan reviewed and recommended for approval by our
shareholders. This involved a shareholder consultation, production of an advisory report from external advisers
and an independent legal review.
Stakeholder management
The Remuneration Committee and Board considered the impact of the proposed changes on various groups
of stakeholders, including shareholders, customers, colleagues, regulators and suppliers.
Challenges faced
Defining enterprise responsibilities and how governance needed to change to support autonomy of businesses.
Seeking approval for a revised Remuneration Policy a year earlier than planned, in a challenging environment.
Outcome and impact
of the decision
Governance structure was reviewed. The Cyber Security Forum and ESG Task Force continued to meet
as management meetings but duties for these, and risk management, were rolled up into the ELT Committee.
New Innovation and Enterprise Committee established.
Remuneration Policy approved by shareholders at the 2022 AGM.
ESG strategy was developed, led by new Head of ESG.
1 Appointed as Directors on 1 September 2022
2 Appointed as a Director on 3 January 2023
3 Retired as a Director on 30 September 2022
78 Saga plc Annual Report and Accounts 2023
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Key Board decision
Considered how to grow our businesses and establish Saga as ‘The Superbrand’ for older people:
Connection to
strategic pillars
How the Board reached
its decision and
considered matters
set out in S172(1) of
the Act
• Combined our Ocean and River Cruise businesses to ensure consistently high standards were delivered.
• Merged the operations of Titan Travel and Saga Holidays to create the UK’s largest and market-leading
touring business.
• Considered the transformation plan for Insurance and Money.
•
• Launched Saga Media.
Initiated a sale process for AICL, the Group’s Insurance Underwriting business.
1
3
Significant time spent discussing the future of the Insurance business within the Group.
Discussed Saga’s competitive advantage and agreed that it was its brand, data and growing reputation for
providing exceptional services, its strategy to grow its product range, its strong customer relationship
management capability and the potential it had to grow direct business and the opportunity it had to lower
costs through digitalisation.
CEO of businesses attended each Board meeting to discuss current trading, strategy, opportunities and risks.
Chief Data Officer, CEO of Insight and Brand Development and CEO of Saga Media attended Board meetings
to present their strategies and share customer feedback.
Reviewed the content and tone of the materials for the Capital Markets Event held in January 2023.
Considered the plan to position Saga as a ‘one stop shop’ for insurance for older people and how data and
insight could be used to extend our product range to cater for customers’ needs and ensure that customer
service levels were exceptional.
Heard how detailed customer segmentation would help identify significant growth opportunities.
Stakeholder management
The Board discussed how to create exceptional experiences for, and deepen our understanding of, our
customers and create value for our shareholders.
Impact on suppliers and colleagues was considered e.g. how combining business operations would affect them.
It was important to keep regulators informed and work with them to demonstrate how customers would
be protected.
Challenges faced
Saga is a brand that has exceptionally high awareness amongst people over 50, however, historically too many
have seen Saga as something that ‘isn’t for them’.
An extended period of geopolitical and macroeconomic uncertainty.
Potential for the cost of living crisis to impact levels of spending by customers.
Contact centres were impacted by ongoing challenges with recruitment.
Regulatory changes arising from the Financial Conduct Authority (FCA) review into general insurance pricing
practices (GIPP) causing volatility in the market.
Inflationary increases on the cost of settling insurance claims causing short-term pressure on earnings.
Risk of interest rate fluctuations causing market uncertainty and lower demand for our Money products.
Outcome and impact
of the decision
Acquisition of The Big Window Consulting Limited led to development of detailed customer segmentation and
creation of our Experienced Voices panel.
Launch of Saga Exceptional, a new website providing best-in-class consumer advice and inspirational stories.
In the first half of the year, the operations of Saga Holidays and Titan Travel were combined to create the UK’s
largest and market-leading touring business offering an enhanced website and booking experience.
Strong Ocean Cruise bookings into 2023/24 with load factor of 72% and per diem of £339 at 26 March 2023.
Achieved excellent guest satisfaction scores, at 9.0 out of 10 in Ocean and 8.2 in River Cruise at 31 January 2023.
Delivered revenue and customer growth within Saga Money.
Successful implementation of new regulatory requirements arising from the FCA’s review of GIPP and
introduced a range of new motor products to meet customer needs.
Initiation of a sales process for AICL.
Saga plc Annual Report and Accounts 2023 79
CORPORATE GOVERNANCE STATEMENT
Board activities continued
Key Board decision
Connection to
strategic pillars
How the Board reached
its decision and
considered matters
set out in S172(1) of
the Act
Management of debt – bond arrangements, amendment to revolving credit facility, hedging and
property strategies.
2
Considered at every Board meeting and as part of budget and five-year plan approval process.
Significant discussion regarding how to reduce debt and increase liquidity ahead of the maturity of our £150m
bond in May 2024.
Escalated conversations around the options in relation to our Insurance Underwriting business including
initiation of a sales process, consistent with our ambition to pivot towards a more capital-light model.
Detailed consideration of the going concern and Viability Statement by Audit Committee and Board members.
Investor Relations report reviewed at every meeting.
Discussed hedging policy and whether to lock in prices for the ships’ fuel.
Continuously reviewed property strategy in conjunction with ways of working and how best to support
our colleagues.
Decision made to close Enbrook Park headquarters in Folkestone and operate smaller hubs which will reduce
operating expenditure.
Stakeholder management
The impact on all stakeholders was considered. Saga Pension scheme trustees were consulted and
kept informed.
Colleagues and local communities were impacted by the decision to close offices and their needs were
considered at each step.
Challenges faced
Balancing the level of investment required to scale our operations with maximising cash generation and
accelerating debt reduction.
Outcome and impact
of the decision
Judgement required around trading conditions which were difficult to predict.
Going concern and Viability Statements made.
Management of cash flow and debt repayment in line with existing arrangements. Net Debt4 at 31 January 2023
of £711.7m, £17.3m lower than 31 January 2022.
Repayments in relation to our ocean cruise ship facilities recommenced in June 2022 and a total of £46.4m
was repaid during the year. Since the year end, discussions concluded with Cruise lenders in respect of
covenant restrictions attaching to two ship debt facilities, to waive the EBITDA to debt repayment covenant
ratio for the 31 July testing date.
Discussions concluded with our lending banks to amend the covenants in relation to our revolving credit facility,
providing us with greater flexibility in relation to liquidity used for short-term working capital purposes.
Reduced operating expenses as a result of office closures.
Since the year end, agreed a £50m loan facility with Roger De Haan that will enable the business to draw down
up to £50m from 1 January 2024, if required, to fund any liquidity needs, including repayment of the 2024 bond.
Interim and preliminary results and Annual Report and Accounts were published.
Key Board decision
Connection to
strategic pillars
How the Board reached
its decision and
considered matters
set out in S172(1) of the Act
Response to cost of living crisis for colleagues and inflation on suppliers. Colleagues supported by salary
increase earlier than planned, two one-off payments and establishment of a hardship fund.
1
3
Discussed the proposal to bring forward the February 2023 pay review to December 2022 and award a 5%
salary increase and two one-off payments of £500 to colleagues with lower earnings.
Chief People Officer attended Board meetings and explained how the Company’s purpose and values
(precision pace, empathy, curiosity, and collaboration) could be embedded, how culture should be measured
and how to interpret colleague surveys.
People Committee and Colleague Forums provided valuable insight into the views of, and challenges faced by,
the wider workforce.
Stakeholder management
Essential to deliver the best experiences for our colleagues, and monitor supplier reaction to inflation, so that
we provide an exceptional experience for our customers.
Challenges faced
Difficult to find a solution which would suit all colleagues – had to adopt a fair and reasonable approach.
Outcome and impact
of the decision
Financial impact of increased cost of supplies, salary increases and one-off payments to colleagues.
Colleagues provided with support when needed.
Colleagues given access to a new reward platform and enhanced financial support available through
acceleration of our annual pay review cycle, two additional cost of living support payments for our colleagues
with lower earnings and a hardship fund.
Engagement remained high at 8.0 out of 10.
4 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
80 Saga plc Annual Report and Accounts 2023
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Board leadership and Company purpose
Our Board
A document summarising the matters which
are reserved for the Board was last
considered on 27 January 2023. These
include the following:
Contracts and business transactions
• Approving capital projects which are
material strategically, are not in the usual
course of business or are outside of
financial limits in place.
Strategy and management
• Setting the Group’s purpose, values,
strategy and standards ensuring these,
and our culture, are aligned.
• Approving objectives, budgets, forecasts
and strategic direction, as well as their
successful implementation.
• Overseeing our operations,
including regulatory, financial and
operational policies.
• Any decision which may have a material
impact on the Group. For example,
new business activity, significant
expansion or diversification/cessation
of existing businesses.
Structure and capital
• Approving changes relating to our capital,
corporate, management or control
structures and borrowings; and
guarantees other than in the normal
course of business.
Financial items, risk management and
internal controls
• Approving the interim and preliminary
results and Annual Report and Accounts,
alongside material capital or operating
expenditure outside pre-determined
tolerances or beyond agreed
delegated authorities.
• Ensuring maintenance of a sound system
of internal controls, including risk appetite
and policies.
• Conducting post-investment reviews
which were not considered in detail by the
Audit or Risk Committees or where the
Board decides a full review is required.
• Joint ventures, material arrangements
with customers or suppliers and
major investments.
Communication and engagement
with stakeholders
• Considering the balance of interests
between stakeholders including
shareholders, customers, colleagues and
the communities in which we operate.
• Ensuring that independent channels are
available for colleagues to engage and
raise any matters of concern.
See pages 20-21 for details of the Board’s
role in stakeholder engagement, which
supports Directors’ duties under S172(1)
of the Act.
Shareholder engagement
The Board seeks feedback from our
shareholders on the Company’s
performance against strategy and actively
monitors their views. Full details of how we
engage with our shareholders can be found
in the Strategic Report on page 21. In addition,
an Investor Relations report is tabled at each
Board meeting.
We recognise that we have a significant
number of retail shareholders, a number of
which are also our customers. We engage
with this group by sending them a summary
of our results and arranging for presentations
via the Investor Meet Company platform
which provides an opportunity for our
Group CEO and Group CFO to answer any
questions they may have. We were also
delighted to hold our 2022 AGM in person at
our office in Folkestone where shareholders
had the opportunity to meet all Directors.
During the year, we arranged a Capital
Markets Event for institutional investors and
analysts which was then made available on
our corporate website. This focused on the
opportunities we see to create and grow a
new media business, leveraging our
proprietary insights and commercialising
and growing our database.
AGM
The AGM will be held on 20 June 2023 at
11.00am at the offices of Numis Securities
Limited, 45 Gresham Street, London
EC2V 7BF. Full details, and an explanation
of business to be considered at the meeting,
will be provided in the Notice of AGM. A copy
will be available on Saga’s corporate website
in due course (www.corporate.saga.co.uk).
Saga plc Annual Report and Accounts 2023 81
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
Division of responsibilities
Our governance framework
During the year, as the business structure changed to move more accountability and independence into the individual business units, the
governance framework was revised to suit the changing business needs. As a result, the ELT Committee assumed the responsibilities of the
Executive Leadership Risk Committee and the ESG Task Force. The Data Management Committee continues to consider and support our
data strategy, a fundamental underpin to creating ‘The Superbrand’ for older people, and the Cyber Security Forum continues to operate as
a management committee. Our Group CEO is the ESG representative on the Board and our newly appointed Head of ESG attends Board
meetings to discuss ESG strategy. In addition, an Innovation and Enterprise Committee was established to assist the Board in assessing
whether proposals to expand the range of products and services offered are aligned with the Company’s purpose.
Board
• Approval of strategic direction and ensuring its successful implementation.
• Overall leadership and management of the Group, including setting the Group’s values
and standards.
• Approval of the Group’s Speak Up Policy and discussing an annual report presented by
the Non-Executive Director nominated as Speak Up Champion.
• Encouraging innovation to meet the needs of our stakeholders, including colleagues,
customers and shareholders.
• Ensuring compliance with statutory and regulatory obligations.
• Maintaining sound systems of internal controls and risk management.
• Assessing potential impact of decisions.
Audit Committee
Purpose: To work
closely with the
Risk Committee
to monitor the
integrity of the
financial
statements and
the effectiveness
of the systems of
internal control
and to monitor
the effectiveness,
performance and
objectivity of the
internal and
external auditors.
Find out more
in our Audit
Committee
Report
on pages
86-89
Nomination
Committee
Purpose: To
review and monitor
the leadership
needs of the Board
and senior
management
and support the
Company’s
continued ability
to recruit and
develop the level
and balance of
skills, experience
and knowledge
required to ensure
its long-term
success.
Find out more
in our
Nomination
Committee
Report
on pages
84-85
Risk Committee
Purpose: To assist
the Board with
articulating and
developing its risk
management
strategy, to
provide oversight
of risk across the
Group, including
the identification of
new and emerging
risks, and to deal
with any material
breaches.
Find out more
in our Risk
Committee
Report on
pages 90-91
Remuneration
Committee
Purpose: To
determine the
policy and terms
and conditions of
employment,
remuneration/
compensation and
benefits of senior
executives and to
review workforce
remuneration
and incentive
programmes to
ensure alignment
with culture and
strategy and
determine
share-based
arrangements.
Find out more
in our Directors’
Remuneration
Report on
pages 92-123
New Innovation and Enterprise Committee
Purpose: To assist the Board in assessing whether proposals to expand the range of
products and services offered are aligned with the Company’s purpose and that the
recommended action plan is in the best interests of the Group. The Committee ensures
that there is a balance of appropriate levels of governance with entrepreneurship and that
the proposal will not incur unacceptable risk or undervalue the Group’s own assets.
Duties:
Review proposals to:
• set up, or purchase, new businesses or commence new business activity that is
materially different to the existing or is in a new geographical area;
• purchase stakes in other businesses, or form partnerships or collaborations that are
material strategically, or due to size, or go beyond normal supplier relationships;
• create new legal entities or other structures outside of agreed strategy, or take other
actions intended to take existing or new operations off-balance sheet; and
• sell businesses or significant assets or cease to operate all, or any material part, of the
Group’s business.
ELT Committee
(reports to the Board via the Group CEO,
Group CFO and CEO of Insurance)
Purpose: To support the Group CEO in
the performance of their duties in relation
to the management and day-to-day
running of the Group.
Duties:
•
Implementation of the Group’s
strategy, cultural leadership and
people strategy.
• Review of principal risks and
uncertainties across the Group.
• Ensure effective implementation of
Group risk policy and internal controls
framework in a consistent manner
across all business areas.
• Ensure customers are treated fairly,
in line with the Saga brand values.
• Review and monitor brand and
customer key performance indicators,
trading and marketing performance.
• Review financial forecasts and
performance of the Group.
• Review and discuss talent
management and succession planning
(prior to consideration by the
Nomination Committee).
• Review and monitor culture, diversity,
equity and inclusion (DE&I) and
colleague engagement metrics.
• Manage risk and conduct, review
Group Risk and Internal Audit and
Assurance plans, and report potential
or actual breaches of regulation or
policy to the Board.
• Oversee Data Management
Committee.
Data Management Committee
Purpose: To ensure that Saga’s data
is actively managed, controlled and
monitored, oversee the associated risks
and provide oversight and sponsorship
to the work plans and projects
commissioned to address data
management risks.
This committee is also responsible for
rolling out and embedding the data
governance framework and associated
processes and policies and for providing
clear guidance on how Saga uses data and
support initiatives to improve data quality.
82 Saga plc Annual Report and Accounts 2023
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Composition, succession and evaluation
The members of the Board
The Board considers the overall size and
composition of the Board to be appropriate,
taking into account the independence of
character, integrity, differences of approach
and experience of all the Directors.
Our Directors have a range of skills and
experience in a variety of markets and
sectors, particularly in the areas of insurance,
financial services, cruise and travel, customer
service, media, digital, brand management,
strategy and asset and risk management,
all of which are invaluable to Saga and
fundamental to the pursuit of our objectives.
Our Non-Executive Directors met regularly
during the year without Executive Directors
present and provided objective, rigorous and
constructive challenge to management.
The Senior Independent Director
acts as a sounding board for the
Non-Executive Chairman.
Independent Non-Executive
Directors and Board composition
We continue to comply with the Code
recommendation that at least half of our
Board, excluding the Chairman, are
Non-Executive Directors whom the Board
considers to be independent.
The Board considers Anand Aithal, Peter
Bazalgette, Eva Eisenschimmel, Gemma
Godfrey, Julie Hopes and Gareth Hoskin to
be independent Non-Executive Directors,
free from any business or other relationships
that could materially interfere with the
exercise of their independent judgement or
objective challenge of management.
We recognised that our Non-Executive
Chairman was not considered independent
on appointment. Taking into account Roger
De Haan’s history with the Saga brand and
business, his proposed time commitment,
and the terms of the Relationship Agreement
and his letter of appointment, the Directors
supported his appointment at the time,
concluding that it was in the best interests of
the Company. This was supported by
shareholders, who voted to appoint Roger at
our AGMs held since his appointment.
Annual re-election
All Directors are required to stand for
annual re-election at the Company’s AGM.
The Board’s view is that each of the
Directors standing for re-election
(or election in the case of Peter Bazalgette,
Anand Aithal, Gemma Godfrey and
Steve Kingshott) should be re-appointed.
We believe that they have the skills required
for the Board to discharge its responsibilities,
as outlined in each of their biographies set out
on pages 74-75.
The details of the specific reasons why each
Director’s contribution continues to be
important to the Company’s long-term
sustainable success will be included in our
Notice of AGM.
DE&I
The Group has a Dignity and Diversity Policy
and, during the year, forums were held on
topics relating to DE&I which provided
valuable insight around how colleagues felt
relating to matters such as age, ethnicity
and gender. The Board recognises that it
is important to consider the need to have
an inclusive approach for all colleagues.
For details of our current gender split of
our Board and Senior Management,
see page 77.
Find out more in:
Environmental, Social and Governance
on pages 26-43
Governance at a glance on pages 76-77
Nomination Committee Report on
pages 84-85
Evaluation of the Board, Committees and Directors
The Board effectiveness and developmental review consisted of interviews with all Directors, conducted by our Senior Independent Director,
with support from the Group Company Secretary. Areas of focus included strategy; Board dynamics; quality of data and management
information; interests of stakeholders, including customers and shareholders; and approach to risk management.
We also used the interviews to seek views on the effectiveness of the Board Committees and the performance of the Non-Executive Chairman.
The Senior Independent Director and the other Non-Executive Directors also appraised the Non-Executive Chairman’s performance and the
Non-Executive Directors had regular meetings with the Non-Executive Chairman at which their performance was discussed.
Action taken as a result of the 2021/22 evaluation
The review concluded that the Board had effectively tracked
progress against the turnaround strategy and that there was
an improved focus on understanding our customers.
Actions taken included:
•
increased monitoring of delivery of the growth strategy in
all businesses;
• discussion regarding how to deliver an exceptional experience
for all stakeholders;
• more frequent and in-depth discussion around data insight
to deepen our understanding of our customers and ensure
that new products and services were designed to meet
their needs; and
• reviewed the new target operating model and discussed
the resource required and talent and capability
needed in management.
Conclusions from 2022/23 evaluation and next steps:
• Board dynamics: there was an open and transparent Board
culture with a collaborative and solutions-based approach.
• Strategic focus: the complexity of running different businesses
in a challenging environment meant that it was vital to have
carefully thought-out agendas, which ensured that strategically
important matters were given priority.
• Stakeholder management: customers were at the heart of
all Board discussions and their needs are at the forefront of
strategic decisions. Colleague views are regularly discussed and
acted upon and the relationship with various regulators was
factored into discussions.
• Risk management: this has improved as a result of the
restructure which occurred during the year, allowing the
Risk Committee to focus on the right things, with escalation
to the Board as appropriate.
• Innovation: the new Innovation and Enterprise Committee
was a useful addition to the governance structure and created
a safe space for management to explore innovative and
entrepreneurial ideas.
Areas of focus for 2023/24:
• Data and management information: the use of scorecards
for each business and for customers and data will help provide
essential insight, show trends and identify key areas for discussion.
• Shareholders: consideration will be given in relation to how
we can better understand and engage with retail shareholders,
recognising that many are also customers.
• Strategic focus: the Board will continue to ensure that agenda
items are focused on how to grow existing businesses and will
identify innovative points of difference, consider how to leverage
available data and the unique insight Saga has to create
exceptional experiences for all stakeholders.
Saga plc Annual Report and Accounts 2023 83
CORPORATE GOVERNANCE STATEMENT
Nomination Committee Report
This year, the Committee’s primary
focus was to ensure that the Board
and its Committees had the right
balance of skills, experience
and diversity in a changing company.”
Sir Peter Bazalgette
Chair, Nomination Committee
The Committee’s responsibilities
• Review the structure, size and
composition of the Board needed to
ensure the right balance of skills,
experience and knowledge are in place.
Committee evaluation
An evaluation of the Committee’s
effectiveness took place during the year,
as part of the Board effectiveness review
(for details see page 83).
• Consider how to develop a diverse
pipeline in succession planning and
talent development of Executive
Directors and senior executives.
The review indicated that the Committee
had fulfilled its purpose over the year and
should continue to focus on improving
ethnic diversity at Saga.
• Evaluate the independence, experience,
diversity and knowledge of the Board.
• Identify and nominate candidates to fill
Board and Committee vacancies.
• Review Board performance evaluation
results in relation to Board composition.
The Committee’s Terms of Reference
were reviewed during the year (approved
by the Board on 27 January 2023) and
are available on our corporate website
(www.corporate.saga.co.uk/about-us/
governance).
Committee composition and attendance
Member
Members (majority are independent
since
Non-Executive Directors)
Max. possible
meetings
Attendance
Peter Bazalgette (Chair)1
Roger De Haan
Eva Eisenschimmel
Julie Hopes2
Gareth Hoskin2
Orna NiChionna1
30 Sep 22
5 Oct 20
4 Apr 19
10 Sep 20
10 Sep 20
29 May 14
2
6
6
5
5
4
2
4
6
5
5
4
What we did during the year
Time spent on matters
Board composition
c.65%
Succession planning and
talent management
c.15%
Diversity, equity and
inclusion (DE&I)
Board evaluation
c.15%
c.5%
1 Peter Bazalgette assumed the role of Chair when Orna NiChionna retired on 30 September 2022
2 Julie Hopes and Gareth Hoskin ceased to be members of the Committee on 17 November 2022
84 Saga plc Annual Report and Accounts 2023
Dear shareholder,
This is my first statement as Chair of the
Nomination Committee since assuming the
role from Orna NiChionna when she retired
from the Board on 30 September 2022.
I would like to thank Orna for her valuable
contribution as Committee Chair.
This year, the Committee’s primary focus was
to ensure that the Board and its Committees
had the right balance of skills, experience and
diversity in a changing company.
Saga Media is now launched and the
Company is looking at ways to innovate.
This resulted in a significant contribution from
the Committee. Three new Non- Executive
Directors and an Executive Director were
added to the Board and new appointments
included a Chief Data Officer, CEOs of the
Saga Money and Saga Media businesses and
a new independent Chair of Saga Cruise.
The Committee also continued to focus
on succession planning and talent
development of our Executive and Senior
Leadership Teams.
Board composition
In last year’s report, we outlined how the
Committee had concluded that the
Board would benefit from members
who would bring deep entrepreneurial
expertise and experience of digital content
management and distribution in
consumer-facing businesses.
Our Terms of Reference set out how we
recruit and appoint Directors to the Board.
They stipulate that we will use open
advertising, or the services of external
advisers, to facilitate a search for the best
possible candidates.
Job specifications were carefully crafted
to reflect the requirements for each
role, including the time commitment
and experience.
Ridgeway Consulting was involved in
appointing the Directors and has no other
connection with the Company. A shortlist
was considered for each role and a series of
interviews with members of the Committee
and the Group CEO followed for preferred
candidates. References were obtained and
terms of appointment were considered.
Candidates were assessed against their
strategic skill set, experience, personality
and fit. Consideration was also given to
diversity and whether individuals met the
independence criteria set out in the UK
Corporate Governance Code (the Code).
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CORPORATE GOVERNANCE STATEMENT
The Committee recommended the
appointment of Anand Aithal, Gemma
Godfrey and I as Non-Executive Directors
and this was subsequently approved by the
Board. This added entrepreneurial skills,
expertise in managing money and in the
media and wider creative industries as well
as experience in data analytics, fintech,
insurance broking and asset management.
The Board also approved the Committee’s
recommendation that I should assume the
role of Senior Independent Director and
Chair of this Committee when Orna stepped
down. I was delighted to do so.
Subsequently, the Committee considered
and recommended that Steve Kingshott, the
CEO of Insurance, responsible for driving
Saga’s Insurance strategy, join the Board.
This was approved by Board members and
he became a Director on 3 January 2023.
Following the changes to the Board, the
Committee discussed how to streamline
membership of the committees while
remaining compliant with the Code. The
Board agreed with the Committee’s proposal
that Anand should become a member of the
Audit Committee, Gemma should join the
Risk Committee and Gemma and I should
join the Remuneration Committee. Also that
Julie and Gareth should step down from the
Nomination Committee. This ensured that
Non-Executive Directors’ skills were carefully
matched to Committee membership and
that no individual was overloaded.
During the year, a new committee, the
Innovation and Enterprise Committee,
was also established with the purpose of
reviewing material strategic matters.
The Board approved our recommendation
that Anand should chair this committee and
that Roger De Haan, Gemma and I should
be members.
Independence and election
of Directors
During the year, the Committee undertook a
detailed review of the proposal to re-appoint
Gareth Hoskin as Non-Executive Director
when he was proposed for re-appointment
after serving his initial three-year term.
Gareth did not participate in the discussion
when his re-appointment was being
considered.
After the year end, but prior to publication
of this Annual Report and Accounts, the
Committee considered the profiles of the
Directors, each Director’s independence,
contribution and time commitment
necessary to perform their duties and
recommended to the Board that all
should be put forward for election at the
2023 Annual General Meeting.
The Code requires that at least half of the
Board, excluding the Chairman, are
considered to be independent Non- Executive
Directors. As of 31 January 2023, six of ten
(60%) Board members were independent
Non-Executive Directors, with other
members being the Non-Executive Chairman
and three Executive Directors.
Succession planning and
talent development
During the year, the Committee received
an update from the Group Chief Executive
Officer (CEO) and the Chief People Officer
(CPO) on how talent management was
approached, with a particular focus on the
Executive Leadership Team.
The Committee heard about the steps taken
to strengthen capability in the Senior
Leadership Team, with those colleagues
attending a leadership event and drafting
personal growth plans. These were signed off
by the Group CEO and CPO.
In addition, the Committee considered the
approach to evaluate performance, talent
and succession and how a diverse and
high-quality pipeline would be created.
The Committee is committed to monitoring
how management is developing its future
leaders and driving greater ethnic
representation at more senior levels.
DE&I
Both the Board and Committee continued
to focus on DE&I across the Group. It was
recognised that diversity is wider than
gender and ethnicity and encompasses many
cultural differences. Committee members
considered a detailed report which informed
the strategy to achieve a diverse and
equitable environment and create a culture
which was more inclusive. We heard about
the benefits of colleagues having a sense of
belonging, including staff retention and
improved job performance.
The Board considered how Saga could
continue to be a driver for positive change,
taking action to be the champions of age at
work in the UK.
The Company has a Dignity and Diversity
Policy in place, which highlights how everyone
is responsible for treating others with dignity,
without unfair discrimination, and promoting
equality and diversity in all matters. This
policy applies to the Group, including the
Board of Directors, and is linked to Company
strategy. All colleagues must report any
breaches, whether actual or perceived, to
their line manager or to the People team.
There is also the option to report on an
anonymous basis via the Company’s
Speak Up process.
While the policy does not currently set
specific targets, the Committee heard how
management was committed to set data
driven targets. These would be a clear driver
of improvements in diverse and equitable
representation across the Group. Targets
for 2027/28 in the areas of age, gender,
ethnicity, disability and sexual orientation,
and the steps necessary to embed them,
were discussed.
Diversity is considered as part of the
appointment process, with reference to
diversity of perspective, including gender,
social and ethnic backgrounds; the need
for gender balance in senior management;
and the need to develop a diverse pipeline
in succession planning. The Committee
focused on a detailed analysis of responses
from ethnic groups in colleague surveys and
discussed how the recruitment process
supported a diverse pool of candidates.
The Board currently has a 30% gender
balance of women and 41% in the executive
and senior layers of management below
Board level. Details of gender balance of
those in the senior management and their
direct reports can be found on page 77.
One member of the Board is from a minority
ethnic background.
Board evaluation
It was decided that the best way to stimulate
the Board’s thinking on how they can carry
out their role and focus on continually
improving their effectiveness was for me
to conduct interviews with each of the
Directors, with the support of the Group
Company Secretary.
The interviews were based around Board
dynamics, quality of data and management
information, whether sufficient attention was
given to customers, shareholders and other
stakeholders and whether the approach to
risk was adequate. Consideration was also
given as to whether the Board was setting
the right cultural tone, in line with the
Group’s values.
The evaluation report was discussed by the
Board and this confirmed that the addition of
the new Non-Executive Directors during the
year had reinvigorated the Board and had led
to fresh thinking, high-quality discussion and
continued appropriate levels of challenge.
More details can be found on page 83.
My thanks to my colleagues for their support
as we all drive change.
Sir Peter Bazalgette
Chair, Nomination Committee
Saga plc Annual Report and Accounts 2023 85
CORPORATE GOVERNANCE STATEMENT
Audit Committee Report
The Committee continued to provide support to the Board,
alongside independent scrutiny of the Group’s financial
reporting and internal controls as colleagues continued
to work largely from home, maintaining colleague safety
with minimum interruption to business for customers.”
Gareth Hoskin
Chair, Audit Committee
The Committee’s responsibilities
• Consider the integrity of the
financial statements.
• Approve the remuneration and terms
of engagement, and determine the
independence of the external auditor.
• Review the adequacy and effectiveness
of the Company’s internal financial
controls and other internal
control systems.
• Monitor the effectiveness of the
Company’s Internal Audit and
Assurance (IAA) function, Finance
function and the external auditor.
• Review the IAA work plan.
• Review the Group’s interim and
preliminary financial statements
and accounting policies.
• Review and approve key judgements
and estimates used as a basis
for preparing the Group’s
financial statements.
• Monitor the scope of the annual audit and
the extent of non-audit work undertaken
by the external auditor.
• Provide recommendations on the fair,
balanced and understandable
assessment, going concern basis of
preparation and viability statements.
• Ensure that whistleblowing (Speak Up)
and anti-fraud systems are in place and
are monitored.
The Committee’s Terms of Reference were
reviewed during the year (approved by the
Board on 27 January 2023) and are available
on our corporate website (www.corporate.
saga.co.uk/about-us/governance).
Committee evaluation
Action taken as a result of the evaluation
undertaken in the previous year resulted
in a review of the flow of information
between subsidiary audit and risk
committees and the Committee. An
effectiveness evaluation of the Committee
took place during the year, as part of the
Board effectiveness review (for details,
see page 83). The review concluded that
the Committee had supported the
business well, provided appropriate
challenge and had applied due rigour to
testing internal controls and assessing
the effectiveness of risk management.
The focus for 2023/24 will be on
continuing to strengthen financial
systems and processes.
Committee composition and attendance
Member
Members (all are independent
since
Non-Executive Directors)
Max. possible
meetings
Attendance
What we did during the year
Time spent on matters
Gareth Hoskin (Chair)
Anand Aithal1
Julie Hopes
Orna NiChionna2
4 Apr 19
17 Nov 22
31 Dec 20
29 May 14
6
1
6
5
5
1
4
5
The Board is satisfied that Gareth Hoskin has recent and relevant financial experience
and competency in accounting, reflected by his professional qualification as a chartered
accountant and relevant experience throughout his career. The Board is also satisfied
that the Committee members possess an appropriate level of independence and offer
a depth of financial and commercial experience across various industries, including
the sectors in which the Company operates. The Board of Directors’ biographies on
pages 74-75 contain details of Committee members’ skills and experience.
1 Anand Aithal became a member of the Committee on 17 November 2022
2 Orna NiChionna retired as a Director on 30 September 2022
86 Saga plc Annual Report and Accounts 2023
Financial statements
(including key judgements
and estimates)
c.25%
c.25%
c.25%
c.15%
c.10%
Internal financial
controls
Internal audit
External audit
Speak Up
Financial statements
(including key judgements
and estimates)
c.25%
Internal financial
controls
Internal audit
External audit
Speak Up
c.25%
c.25%
c.15%
c.10%
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Dear shareholder,
The Committee continued to provide
support to the Board, alongside independent
scrutiny of the Group’s financial reporting
and internal controls as colleagues continued
to work largely from home, maintaining
colleague safety with minimum interruption
to business for customers. Focus also
remained on maintaining the financial
flexibility of the Group by improving liquidity.
We continued to work closely with the Risk
Committee. For more detail of how the risk
to our business strategy was assessed, see
the Risk Committee report on pages 90-91.
Reporting
Interim and preliminary results
The interim and preliminary results were
reviewed and challenged, together with the
appropriateness and application of key
accounting policies and areas of significant
judgement and how these were made.
KPMG provided reports throughout the
year, with focus on areas identified as having
significant audit risk.
Significant issues
Consideration of the financial implications,
and ongoing impact, of COVID-19 and
uncertain economic conditions on
liquidity, going concern and viability
As set out in detail later in this report, the
Committee reviewed and challenged the
assessment that management made,
including the appropriateness of the
underlying forecast assumptions used in
the modelling for going concern and viability.
During the year, the Committee discussed
the uncertainty around demand in a post
COVID-19 operating environment for Cruise
and Travel, combined with the effect of high
costs and claims inflation in a competitive,
post Financial Conduct Authority review
into general insurance pricing practices
environment and the impact of a possible
sale of the Group’s Underwriting business.
Committee members also considered
the loan facility from Roger De Haan and
other potential mitigating actions open to
management, in the context of the Group’s
expected liquidity and the implications for
the going concern assessment and the
Group’s ability to repay, in full, the £150m
bond maturing in May 2024.
Find out more in:
Note 2.1 of the financial statements on
pages 143-144
Viability Statement on page 68
Independent Auditor’s Report to the
Members of Saga plc on pages 129-137
Valuation of insurance contract liabilities
The analysis and justification prepared by
management in support of the reserves for
outstanding claims, including consideration
of an independent valuation prepared by
PricewaterhouseCoopers and analysis
prepared by the Group’s external auditor,
was reviewed. The analysis and justification
were reviewed and challenged initially by the
Acromas Insurance Company Limited (AICL)
reserving and audit committees, following
which, it was also then reviewed and
challenged by the Committee.
Find out more in:
Note 28 of the financial statements on
pages 189-192
Independent Auditor’s Report to the
Members of Saga plc on pages 129-137
Valuation of goodwill
The Committee reviewed the impairment
assessments of the Insurance goodwill
balance as at 31 July 2022 and 31 January
2023 and considered the assumptions made
by management in relation to the calculation
of the discount and terminal growth rates.
They challenged the robustness of the
underlying cash flow forecasts and the
stresses considered in determining the
impairment of £269.0m recognised in July
and the decision not to impair further at
31 January 2023.
Find out more in:
Note 14 of the financial statements on
page 168
Independent Auditor’s Report to the
Members of Saga plc on pages 129-137
Valuation of the parent company’s
investment in subsidiaries
The Committee evaluated the recoverability
of the carrying value of the investment in
subsidiaries held on the balance sheet of the
Company in light of the Company’s reduced
market capitalisation as at 31 January 2023.
They considered the cash flow forecasts,
discount rates, valuation methodology and
stresses considered in determining the
impairment of £385.0m recognised during
the year.
Find out more in:
Note 2 of the Company financial
statements on page 207
Independent Auditor’s Report to the
Members of Saga plc on pages 129-137
Valuation of ocean cruise ships
The Committee reviewed indicators of
impairment of the Group’s ocean cruise ships
at 31 July 2022 and at 31 January 2023.
At 31 July 2022, the resultant impairment
reviews of the Group’s ocean cruise ships
indicated no impairment was required.
No additional indicators of impairment were
identified at 31 January 2023 and therefore
no impairment reviews were conducted at
this date. The key items considered in the
review were the appropriateness of
underlying forecast cash flows and potential
stresses to those cash flows, including, in
particular, the continued possible impact
of COVID-19 on the resumption of cruising,
their useful economic lives and residual
values, and the appropriateness of these in
light of climate change regulations, and the
selection of an appropriate discount rate.
The Committee also considered the
sensitivity of the assessment to changes
in that rate within a reasonable range.
Find out more in:
Note 17 of the financial statements on
pages 171-173
Independent Auditor’s Report to the
Members of Saga plc on pages 129-137
Carrying value of other material assets
The Committee reviewed indicators of
impairment and resultant impairment
reviews of the Group’s other items of
property, plant and equipment, river cruise
ships and software intangibles. For land and
buildings, the Committee considered
whether any buildings recognised as held
for sale at the balance sheet date still met
the necessary criteria as per International
Financial Reporting Standard (IFRS) 5,
and for those that did, challenged the basis
of the updated valuations obtained.
Defined benefit pension scheme
Following the launch of a new defined
contribution scheme for all colleagues last
year, the defined benefit pension scheme
was closed to future accruals. This move to
a Master Trust operated by Aviva further
reduced the risk of future deficits developing
and provided a fairer scheme for all
colleagues. The Group continued to make the
agreed payments of £5.8m (2022: £4.2m)
to the defined benefit pension fund as part
of the deficit recovery plan.
The Committee reviewed and ratified the
assumptions made by the Group’s pension
scheme advisors in determining the valuation
of the scheme in accordance with International
Accounting Standard 19 ‘Employee Benefits’
at 31 July 2022 and 31 January 2023.
Find out more in Note 27 of the financial
statements on pages 186-189
Saga plc Annual Report and Accounts 2023 87
CORPORATE GOVERNANCE STATEMENT
Audit Committee Report continued
Internal control observations of the
external auditor
The Committee considered the internal
control observations identified by the
Group’s external auditor as part of the audit
and management attended Committee
meetings to provide context and assurance
regarding appropriate actions.
Accounting policies
The Committee was satisfied that the key
accounting policy choices and judgements
were appropriate and provided a true and fair
view of the Company’s financial performance
and position.
Fair, balanced and understandable
We advised the Board that we supported
the statement (see page 77) that this Annual
Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides
the information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy.
This was following consideration of whether:
• the report was clear and presented a
balanced view of successes, challenges,
opportunities and risks;
• key messages were prominent and an
appropriate level of key performance
indicators (KPIs) were disclosed;
• business segments, significant issues
and key judgements reporting was
consistent with disclosures in the financial
statements; and
• definitions provided were explained and
Alternative Performance Measures were
reconciled with the closest IFRS measure
in the financial statements.
Going concern and viability
The going concern basis of preparation
disclosure note is set out on pages 143-144
and the Viability Statement, and the
methodology for assessing the Group’s
ongoing viability, are set out on page 68.
Our review took account of the Group’s
current position and principal risks and
uncertainties (PRUs) (as reviewed and
refreshed by the Risk Committee and
detailed on pages 65-67) and the
methodology used to provide an assessment
of ongoing viability over the five-year period
of review. We considered the relevant
assessment time horizon, severe, but
plausible, potential outcomes and the
appropriateness of the higher and lower
case trading scenarios modelled.
88 Saga plc Annual Report and Accounts 2023
In particular, we considered the possible
impact of lower than expected demand on
the Travel business in an uncertain post
COVID-19 operating environment, further
regulations across the business and the
impact a failure to deliver our Insurance
Broking strategy could have on the Group’s
financial performance and position, and how
this could affect both the viability of the
Group and the going concern basis of
preparation that underpins the Group’s
financial statements. We also considered
management actions that may be taken to
manage the solvency of the Group in the
event of lower case trading scenarios and
other risks materialising, including the
potential sale of the Group’s Underwriting
business or a draw down of the £50m loan
facility from Roger De Haan. Based on this
review, we confirmed to the Board that we
considered that it was reasonable for the
Directors to continue to prepare the financial
statements on a going concern basis and to
make the Viability Statement on page 68.
Audit and control
Internal controls
The Committee reviewed the outcome of the
audits of key financial controls included in the
Internal Audit work plan. The Group Financial
Controller provided an update on accounting
issues and key aspects of financial controls at
each meeting. The Committee continued to
receive updates on the implications of IFRS 17,
regulatory update sessions with KPMG and
to be briefed on progress made with the
Group’s preparatory work on its adoption,
ahead of its application in the financial year
ending 31 January 2024.
Financial crime and Speak Up reporting
Since the year end, policies covering financial
crime (including anti-bribery, anti-corruption,
anti-fraud, anti-money laundering and
treasury sanctions and asset freezing) were
reviewed and approved. Existing Speak Up
processes and policy were reviewed against
best practice to ensure continued integrity
and effectiveness and to encourage colleague
engagement. It is my responsibility to ensure
the integrity, independence and effectiveness
of the Company’s Speak Up Policy and
procedures. The Committee also reviewed
all reported incidents and concluded that
these had been handled appropriately,
with no material issues identified.
IAA
During the year, the Internal Audit and Risk
functions were combined in the non-financial
services businesses to allow for greater
alignment between these areas to improve
risk maturity within the Group and to support
delivery of the strategy. Insurance maintains
its own independent Risk function. This
framework enables the Company to attract
subject matter experts combined under one
leadership structure to support synergies
and combined assurance, while maintaining
operational independence of 2nd and 3rd line.
The Committee considered the roadmap
to achieve this from an internal controls
perspective and challenged the IAA Director
regarding the rationale for the change.
We approved the Internal Audit work plan
and considered the internal audits
conducted throughout the year. The audit
plan was refreshed for the second half of the
year, with progress being appropriately
reported by the IAA Director and
amendments to the audit plan being
approved by the Committee. We were
satisfied that the IAA function, a team of
15 people with a broad range of skills, when
combined with the use of external resource
for specialised audits, had appropriate
resources. The IAA Director attended
Committee meetings and provided regular
reports on the progress of the Internal Audit
plan. Two private meetings were held with the
IAA Director throughout the year.
The Committee monitored whether the
Internal Audit function was independent of
management and so able to exercise
independent judgement throughout the year
and was satisfied that this was the case.
A quality assurance and improvement
programme, as required by the Chartered
Institute of Internal Auditors (CIIA) was
considered. The Committee concluded that
the Internal Audit function complied with the
CIIA’s definition of internal auditing, the core
principles of the Professional Practice of
Internal Auditing and the Code of Ethics.
The Committee (in co-operation with the
Risk Committee), monitored the work of the
Risk, Compliance and Internal Audit functions
to ensure that their activities complemented
each other appropriately. KPIs included
whether actions were closed within agreed
timeframes and feedback survey response
rates. We approved the Internal Audit
Charter, which is available on our corporate
website (www.corporate.saga.co.uk/
about-us/governance).
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Audit planning
KPMG presented an audit plan for the
financial year, together with an outline of its
risk assessments, materiality thresholds and
planned approach. The key aspects of the
plan are set out in the Independent Auditor’s
Report to the Members of Saga plc on
pages 129-137.
The Committee considered the audit scope,
materiality and coverage, areas of audit focus
and KPMG’s planned response to identified
significant audit risks, taking size, complexity
and susceptibility to fraud and error into
account. We also considered and approved
KPMG’s engagement terms and fee proposal
for 2022/23.
Auditor independence and non-audit
services
During the year, the Committee met twice
with the external auditor without members
of management being present.
The challenge, independence and objectivity
of KPMG was monitored continuously by the
Committee and independence was
confirmed by the auditor throughout the year
in letters addressed to the Committee.
In accordance with the Revised Ethical
Standard issued by the Financial Reporting
Council (FRC) in 2019, the Committee has
adopted a robust Auditor Independence
Policy on non-audit fees and employment of
former employees of the external auditor.
The policy includes a list of non-audit services
which we are satisfied that the external
auditor can carry out without affecting its
independence as external auditor. There are
clear approval levels where the Committee
Chair (or the whole Committee) is required
to authorise assignments. The Auditor
Independence Policy was reviewed on
1 August 2022.
The audit fees payable to KPMG in respect of
the year ended 31 January 2023 were £1.9m
(2022: £1.9m) and non-audit service fees
incurred were £0.2m (2022: £0.2m), the
latter being incurred for work to review the
Group’s interim results and essential
reporting to our banks and travel industry
regulators. This equates to a non-audit to
audit fee ratio of 0.1 (2022: 0.1). A summary
of fees paid to the external auditor is set out
in Note 4 to the consolidated financial
statements on page 163.
Audit quality and effectiveness
of external auditor
The following were considered when
assessing the effectiveness of KPMG:
• Our perception of KPMG’s understanding
and insight into the Group’s business model.
• How key areas of judgement were
approached by KPMG, the extent of
challenge and the quality of reporting.
• The content of, and management’s
responsiveness to, KPMG’s
management letter.
• Feedback from management following
completion of an evaluation survey on
the audit process (including audit scope,
audit communication, independence
and objectivity).
The evaluation concluded that the external
auditor had run the audit process well,
retained a high level of independence and
had thoroughly and fairly challenged the
key accounting judgements and estimates.
The conclusion was that the audit was judged
to be good quality.
Audit Quality Review (AQR)
The FRC carried out an AQR of the overall
quality of the Company’s external audit for
the year ended 31 January 2022. There were
no ‘key findings’ reported in the inspection
and one ‘other finding’ was reported in
relation to the work undertaken on the
valuation of ocean cruise ships. KPMG has
addressed the feedback from the AQR in
the planning for the 2022/23 audit.
The Committee was pleased to note that
the AQR identified areas of good practice
in relation to work around the recoverability
of Insurance goodwill.
The Committee is satisfied that the audit
continues to be effective and provides
independent and objective challenge to
management. A recommendation was made
to the Board for the re-appointment of
KPMG as the Company’s auditor at the
forthcoming Annual General Meeting.
Gareth Hoskin
Chair, Audit Committee
Work conducted over the year was
risk-based and covered both financial
and non-financial controls. A selection
is shown below:
• Infrastructure and legacy systems
(Group-wide): Review of the IT
infrastructure including legacy systems
and the strategy for replacement.
• Conduct risk (Insurance): Review of
the Conduct Risk function including
stakeholder management, communication
with the regulator, and guidance and
monitoring of the business, including
delivery of the Consumer Duty project
which was considered by the Risk
Committee in more detail (see page 91).
• Critical suppliers, outsourcing and
partnerships (Group-wide): Audit scope
included key dependencies, technology
and operational and financial resilience.
• Operations, including health and safety
(Cruise): End-to-end review of the
customer experience before travel and
on board, including health and safety and
the third-party service provided.
Where improvements were identified, an
action plan was agreed with management and
appropriately tracked. Internal Audit also
presented their annual year-end review of the
effectiveness of the risk management and
controls framework. They found it reasonable
for the Committee to conclude that, while
areas for improvement were identified, the
internal risk and control environment is
broadly effective.
Find out more in:
Risk management on pages 62-64
Risk Committee Report on pages 90-91
Subsidiary audit committees
The Non-Executive Directors who Chair
the Saga Services Limited, Saga Personal
Finance Limited, AICL and Saga Cruise audit,
risk and compliance committees ensure that
there is an adequate level of oversight and
that matters are escalated to the Committee
as appropriate.
External audit
KPMG was appointed as the Company’s
external auditor for the financial year ended
31 January 2018 (following a competitive
tender process in 2016/17) and has been
re-appointed annually since then. After
completing five years as the audit partner,
Stuart Crisp rotated from his role at the
completion of the January 2022 year end
reporting process and was replaced with
Timothy Butchart.
Saga plc Annual Report and Accounts 2023 89
CORPORATE GOVERNANCE STATEMENT
Risk Committee Report
The Committee considered detailed
reviews of key factors in the external
regulatory and macroeconomic landscape,
conducting a review of topics including
climate change risk, operational resilience
and the impact of the Russian invasion
of Ukraine.”
Julie Hopes
Chair, Risk Committee
The Committee’s Terms of Reference
were reviewed during the year (approved
by the Board on 27 January 2023) and
are available on our corporate website
(www.corporate.saga.co.uk/about-us/
governance).
Committee evaluation
An evaluation of the Committee’s
effectiveness took place during the year,
as part of the Board effectiveness review
(for details, see page 83).
The review indicated that there had been
some improvement in risk management
and controls and that matters were being
escalated from subsidiaries in an intelligent
and thoughtful way. It was agreed that
robust and thorough discussion took place
at the Committee with an appropriate level
of challenge. The focus for 2023/24 will be
on strengthening and embedding risk
appetite statements and further
improving the level of risk maturity within
the Group.
The Committee’s responsibilities
• Review and advise the Board on the
Group’s overall risk appetite, tolerance,
strategy and risk assessment processes.
• Oversee and advise the Board on current
risk exposure and future risk strategy.
• Monitor the effectiveness of the
Group’s risk management and internal
control systems and conduct risk
management procedures.
• Monitor principal risks and
uncertainties (PRUs).
• Consider the Group’s capability to
identify and manage new and
emerging risk.
• Provide qualitative and quantitative
advice to the Remuneration Committee
on risk weightings.
• Review material breaches of risk limits
and adequacy of action.
Committee composition and attendance
Member
Members (all are independent
since
Non-Executive Directors
Max. possible
meetings
Attendance
Julie Hopes (Chair)
Gemma Godfrey1
Gareth Hoskin
Orna NiChionna2
4 Apr 19
17 Nov 22
29 May 14
4 Apr 19
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1
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4
4
What we did during the year
Time spent on matters
Management and
reporting
Risk strategy, policy
and appetites
Compliance
In-depth reviews
c.40%
c.30%
c.10%
c.20%
1 Gemma Godfrey became a member of the Committee on 17 November 2022
2 Orna NiChionna retired as a Director on 30 September 2022
90 Saga plc Annual Report and Accounts 2023
Dear shareholder,
During the year, the Risk Committee
considered the risks within the Group,
including a review of emerging and principal
risks and uncertainties, ensuring these
remain at the forefront of our strategy.
We oversaw a re-design of the Group’s risk
and internal audit function, including the
appointment of an Internal Audit and
Assurance (IAA) Director, approval of a new
Risk Charter, and a review of risk effectiveness
and the risk target operating model. We held
robust discussions on the macroeconomic
landscape and the expectations of our
regulators, including climate change risk,
operational resilience, consumer duty and
the impact of the Russian invasion of Ukraine.
The Committee considered detailed reviews
of key factors in the external regulatory and
macroeconomic landscape, including climate
change risk, operational resilience and the
impact of the Russian invasion of Ukraine.
Management and reporting
The Committee considered the rationale
behind the selection of the Group’s PRUs.
The PRUs were reviewed at each meeting
and refreshed regularly during the year,
ensuring that new and emerging risks and
opportunities were captured and remained
at the forefront of the Group’s strategic
planning. Particular focus was given to data
protection and cyber security, and the
Committee continued to provide oversight
of climate change risk.
The more challenging macroeconomic
environment and impact of COVID-19, in
combination with the maturity of the 2024
bond, have elevated the liquidity risk to a
PRU as outlined on page 67. The intended sale
of the Insurance Underwriting business and
entry into a loan facility agreement with
Roger De Haan mitigate this risk.
Risks relevant to our business transformation
programme, including culture and colleague
capability were also considered. This included
the organisational design of the Group’s Risk
function and a refocusing of the risk
management model to ensure it was fit for
purpose across the whole Group in
recognition of the different risk profiles
and obligations of our subsidiaries.
The Committee supported the
strengthening of the Risk and Assurance
functions through recruitment and
internal promotions to develop subject
matter expertise.
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We discussed cost inflation as the most
significant short-term impact to the Group,
which exacerbated the cost of living crisis
affecting the UK, and therefore influenced
behavioural habits of our existing, and
potential, customers and colleagues.
The Committee considered impacts such
as increasing fuel costs and enforced
changes to Cruise and Travel itineraries.
Climate change
The Committee reviewed the risks relating to
climate change, including both physical risks
associated with the direct impacts of climate
change, and the transition risks arising from
the adjustment to a low-carbon, sustainable
economy. We considered the high level of
uncertainty around climate change risk,
and the associated impacts to operations,
business sustainability and reputation.
We discussed the regulatory requirements
around climate risk management faced by
Saga, including compliance with the
recommendations of the Task Force on
Climate-Related Financial Disclosures.
We also considered the embedding of
climate-related risk management across
the Group going forward.
Since the year end, the Committee reviewed
the Group’s five-year plan through a risk
management lens, including the strategic
risks associated with the plan. We considered
customer impacts and our reputation among
stakeholders, including our shareholders and
regulators. Business actions were reviewed
against risk appetite and tolerance, and we
concluded that, where scenarios were
outside of risk appetite, the mitigating actions
were appropriate.
Julie Hopes
Chair, Risk Committee
We approved a Risk Charter for the Group,
setting out the purpose, authority and
responsibility of the risk management and
control function and its role within the Group.
The Committee remains focused on
mitigation of data and cyber security risk,
through overseeing the retirement of legacy
systems, review of data retention processes
and a general improvement of bench
strength across these areas. We are also
satisfied that the subsidiaries have adequate
controls to ensure compliance with regulation
such as the general insurance pricing
practices market study, Consumer Duty,
and operational resilience requirements
set by the FCA.
In-depth reviews
During the year, the Committee conducted
in-depth reviews into key topics relevant to
the Group’s strategy.
Operational resilience
The Committee considered the timeline for
implementation of robust operational
resilience controls as required by the Group’s
regulators. We reviewed key deliverables, the
involvement of third parties, and assurance
efforts by IAA following implementation.
The focus of the Committee was on
readiness for implementation of new rules
from March 2022 onwards. We considered
the various dimensions of operational
resilience readiness, including strategy,
governance, the need for a transformation
programme and implementation of an
appropriate operating model.
A new Consumer Duty
The Committee received an update on the
Consumer Duty rules set out by the FCA
which will come into force on 31 July 2023,
including the key expectations of firms. We
listened to the planned outcomes of Saga’s
Consumer Duty programme, reviewed the
governance structure for the project, and
discussed the timeline for implementation.
The Committee supported the Group
Consumer Duty plan.
Invasion of Ukraine
Following the invasion of Ukraine by Russia in
February 2022, the Committee devoted
time to identifying the impacts of this conflict
on the Group, including cost inflation,
elevated cybercrime threat, operational
disruption and compliance with international
sanctions against the Russian state and its
co-operators.
The Committee reviewed the risks relating to
the performance of each business and those
arising from incidents in relation to control
failures or weaknesses. Materially significant
risk matters were escalated from
subsidiaries to the Committee where
appropriate. We discussed these incidents in
the context of the risk framework to identify
causes, necessary actions, lessons learnt
and monitoring requirements. All business
Chief Executive Officers have taken action to
embed and comply with the new framework
in their businesses.
Risk management, compliance and
internal controls
In co-ordination with the Audit Committee,
we discussed the effectiveness of the Group
risk management framework and internal
control systems, including reference to all
material financial, operational and compliance
controls. The Committee concluded that
the internal risk and control environment
was effective, with appropriate controls to
mitigate key risks operating effectively. The
Group will continue to take action to enhance
the customer experience, strengthen
supplier risk management processes, embed
management actions and improve capability
and capacity across its businesses.
We recommended to the Board that the
appropriate statements could be made
confirming that a robust assessment of
emerging and principal risks facing the Group
and a review of the effectiveness of the risk
management process had been carried out
(see pages 62-64).
Risk strategy, policy and appetite
Changes and additions to the PRUs were
scrutinised in line with the agreed strategy
and business model and the results of this
review are shown in the Strategic Report on
pages 65-67. These formed the basis of the
scenario testing used to produce the Viability
Statement (see page 68).
Our risk management processes are
described on pages 62-64. These are
designed to manage, rather than eliminate,
the risk of failure to achieve business
objectives and can only provide reasonable,
and not absolute, assurance against material
misstatement or loss.
We reviewed the Group risk appetites and
risk framework during the year. The
Committee also reviewed the effectiveness
of the risk function and considered the risk
target operating model and future roadmap.
We benchmarked progress in risk maturity
against the principles set by the Risk Coalition
and discussed the findings of an external
quality assessment conducted in partnership
with Deloitte.
Saga plc Annual Report and Accounts 2023 91
DIRECTORS’ REMUNERATION REPORT
Annual Statement
The Committee continued to focus on retention and
incentivisation of our leaders to support the turnaround
of the business, with the goal of sustained performance,
as well as endorsing recommendations to support
colleagues with cost of living pressures.”
Eva Eisenschimmel
Chair, Remuneration Committee
• Determine all aspects of share-based
incentive arrangements.
• Review and administer colleague
share schemes.
• Set key performance indicators (KPIs)
for the Annual Bonus Plan and
long-term incentives.
• Prepare a Directors’ Remuneration
Report annually.
The Remuneration Committee’s Terms
of Reference were reviewed during the
year (approved by the Board on
27 January 2023) and are available on
our corporate website (www.corporate.
saga.co.uk/about-us/governance).
The Committee’s responsibilities
• Set and monitor the Remuneration
Policy (the Policy) for senior executives,
considering relevant legal and regulatory
requirements and all relevant factors to
ensure alignment with delivery of value
over the long term.
• Determine and monitor remuneration
packages for Executive Directors, the
Chairman and senior management.
• Work with the Nomination Committee
regarding workforce structure, reward
incentives and conditions.
• Review workforce remuneration and
incentive programmes to encourage
desirable culture, behaviour and
responsible risk taking.
Committee evaluation
An evaluation of the Committee’s
effectiveness took place during the year,
as part of the Board effectiveness review
(for details, see page 83).
The review indicated that there had been
structured and focused discussion which
had resulted in a revised Policy which was
seen as a significant achievement in a
challenging environment. The focus for
2023/24 will be on ensuring that the policy
is monitored effectively.
Committee composition and attendance
Members (all are independent
Non-Executive Directors)
Eva Eisenschimmel (Chair)
Julie Hopes
Orna NiChionna1
Gemma Godfrey2
Peter Bazalgette2
Member
since
4 Apr 19
4 Apr 19
29 May 14
17 Nov 22
17 Nov 22
Max. possible
meetings
Attendance
8
8
6
2
2
8
8
6
2
2
What we did during the year
Time spent on matters
Remuneration Policy
c.15%
Regulatory
developments
Senior management
remuneration
Share schemes
c.10%
c.25%
c.30%
Colleague compensation
and benefits structure c.20%
1 Orna NiChionna retired as a Director on 30 September 2022
2 Gemma Godfrey and Peter Bazalgette both joined the Remuneration Committee on 17 November 2022
92 Saga plc Annual Report and Accounts 2023
Remuneration at a glance
Contents
92 Annual Statement
96
98 Annual Report on Remuneration
Single total figure of remuneration
98
99
Annual bonus outcomes
103 Scheme interests awarded
104 Directors’ shareholdings
105 Wider workforce pay policies
110
Shareholder voting at the Annual
General Meeting (AGM)
111 Directors’ Remuneration Policy
122
Compliance with UK Corporate
Governance Code
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DIRECTORS’ REMUNERATION REPORT
Dear shareholder,
I am pleased to present to you the Directors’
Remuneration Report for the year ended
31 January 2023 which has been approved
by both the Remuneration Committee
(the Committee) and the Board.
In 2022/23, the Committee continued
to focus on retention and incentivisation
of our leaders to support the turnaround
of the business, with the goal of sustained
performance, as well as endorsing
recommendations to support colleagues
with cost of living pressures.
Rising to the challenges
This year, the external environment has
continued to pose challenges given the
effects of the pandemic, the Russian invasion
of Ukraine and the subsequent sharp rise in
fuel prices. Despite this, I am pleased to
report that Saga returned to an Underlying
Profit Before Tax1, as we were able to resume
more normal Cruise and Travel operations in
the second half of the year. This resilient
performance demonstrates that our Cruise
and Travel businesses have emerged well
from this challenging environment.
Our ocean cruise ships delivered our target
load factor and per diem and forward sales
for 2023/24 are strong.
Looking ahead, more of our customers are
beginning to book their holidays again and
our Travel businesses are gearing up their
operations. Our Insurance business has had
to adapt to significant regulatory changes
and high levels of inflation in the cost of
insurance claims, both of which continue
to impact the entire industry. We have
maintained our pricing discipline and have
recently begun expanding our product range
to meet a wider range of customer needs.
As well as growing our Cruise and Travel
businesses again, the Leadership Team will
also focus on developing Saga’s personal
finance and wealth management services
in a newly formed business unit called Saga
Money. We are investing in a new digital media
business as well as in online digital community
platforms that will encourage our customers
to join a range of new Saga activities several
times a week.
In summary, there have been many pressures
that we have faced in 2022/23 and continue
to face as we progress into 2023/24, but with
our drive and breadth of skills, we have the
capability to overcome these challenges and
progress towards a successful future.
Company performance for the
2022/23 financial year
The implementation of our strategy
(as outlined on pages 22-25) has been
measured against the KPIs set out below:
• Underlying Profit Before Tax1 increased
by £28.2m to £21.5m.
• Net Debt1, at 31 January 2023, of £711.7m,
£17.3m lower than 31 January 2022.
• Motor and home insurance retention of
83.8%, 1.0 ppt ahead of 2021/22.
• Cruise load factor of 75% for 2022/23,
compared with 68% in the prior year.
• Cruise per diem of £318 for 2022/23,
compared with £299 in 2021/22.
• Colleague engagement increased to
8.0 out of 10, compared to 7.7 in 2021/22.
Changes to the Board
On 3 January 2023, Steve Kingshott joined
the Board as the Chief Executive Officer
(CEO) of Insurance, following the significant
contribution he has made since joining Saga
in November 2021. The remuneration
arrangements for Steve are in line with
the Policy.
The Board was additionally pleased to
welcome Peter Bazalgette, Gemma Godfrey
and Anand Aithal, all of whom joined on
1 September 2022 as Non-Executive
Directors bringing relevant experience
and fresh perspective. They will be paid fees
in line with the current approach for all
Non-Executive Directors.
On 30 September 2022, Orna NiChionna
stepped down from the Saga Board. Orna
had served as a Non-Executive Director on
the Board since May 2014. I would personally
like to thank Orna for her significant
contribution to Saga over this period.
Peter Bazalgette was appointed
Senior Independent Director to succeed
Orna NiChionna.
2022 Policy review
While under the normal three-year Policy
cycle, shareholder approval for a binding
policy would have been sought at the 2023
AGM, the Committee consulted with
shareholders in the early part of 2022 and
presented a new Policy at the AGM held in
July 2022. Full details of this Policy were set
out in the Notice of AGM, but I am including
these here for ease of reference. In summary,
we introduced a new Saga Transformation
Plan (STP) and, at the same time, reduced the
value of awards under the existing Restricted
Share Plan (RSP) by 20%. The rest of the
Policy was broadly unchanged from that
which had operated previously.
The key reasons for the change were:
• to provide an increased focus on
retention and incentivisation for the
most influential leaders;
• to support the turnaround of the business
with the goal of sustained performance and
share price growth following the period
of market uncertainty and the strategic
challenges the business has faced; and
• to maintain a link to the delivery of the
core strategic imperatives and financial
KPIs of the business.
The key changes to the Policy were:
Introduction of the STP
• Five-year performance period and
five-year vesting period with 50% released
immediately, 25% released after a
one-year holding period and 25% released
after a two-year holding period. The award
therefore has a seven-year term overall.
• Qualifying hurdle (the Hurdle) of £6.00
shareholder value (including dividends)
over the period of the plan. Participants
will only share in any value once that
threshold has been exceeded.
• If the Hurdle is achieved, participants will
be allocated 12.5% of this excess value
(STP Pool) up to a limit of 10% of the
issued share capital of the Company
(including other share plans).
• 17.5% of the STP Pool will be allocated to
the Group CEO, 10.5% will be allocated to
the Group Chief Financial Officer (CFO)
and 8.0% to the CEO of Insurance. The
remainder of the pool will be allocated
in a company-wide plan between
other key executives and the wider
colleague population.
• A cap will apply to the value of the total
amount vesting under the STP of £15.0m
for the Group CEO, £9.2m for the Group
CFO and £6.9m for the CEO of Insurance.
The total STP Pool is capped at £83m.
These levels are only achievable in the
event that the shareholder value exceeds
c.£10.70, which would mean a market
capitalisation in excess of £1.5bn.
• A strong governance framework will
operate for the awards, which will include:
– Committee application of discretion to
adjust the vesting outcome to reflect
underlying performance;
– specific malus and clawback provisions,
which together apply over a
seven-year period;
– regular monitoring of the progress
of the plan by the Committee; and
– annual review by the Internal Audit
and Assurance Director.
1 Refer to the Alternative Performance Measures glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 93
DIRECTORS’ REMUNERATION REPORT
Annual Statement continued
Changes to the RSP
• The RSP will continue to be granted
annually, vesting after three years with an
additional two-year holding period after
vesting of each tranche.
• There will, however, be a 20% reduction
at award level to reflect the introduction
of the STP.
Salary increases for 2022/23
Both Euan Sutherland and James Quin were
awarded salary increases of 2.5% for the
financial year 2022/23, aligned with the
all-colleague increase at the start of the year.
During the year, the impact of the cost of living
crisis on the all-colleague group led us to also
award a 5.0% pay increase on 1 December
2022 which was brought forward from
February 2023, for all colleagues below our
Senior Leadership Team. In addition, we made
a lump sum payment in September 2022 to
colleagues below the Senior Management
Team as well as a further lump sum payment
in February 2023. These steps were not
extended to the Executive Directors.
2022/23 bonus
The assessment of annual performance for
the Executive Directors is 70% based on
business performance against a scorecard
of financial targets and the remaining 30%
is based on their achievement of personal
objectives which are central to our delivery
of the new strategy and operating model.
The specific targets set are shown on
pages 100-102, together with the degree
of achievement of each.
Performance under the financial measures
resulted in a formulaic outcome of 7.7% out
of the maximum of 70% under the financial
element for both Euan Sutherland and
James Quin, and 5.4% for Steve Kingshott.
With regards to individual performance,
the Board reviewed Euan Sutherland’s
contribution to, and leadership of the
business, and agreed that he has performed
very strongly throughout 2022/23.
Highlights include future-proofing the Cruise
business, significantly developing the talent
within the Senior Leadership Team (SLT),
commercialising and growing our database
and maintaining strong colleague engagement
scores across Saga. The Committee
determined that an outcome of above target,
at 27.6% out of the maximum of 30%,
under this element of the annual bonus
was appropriate.
94 Saga plc Annual Report and Accounts 2023
For James Quin, the Committee determined
that an outcome of 28.6% out of the
maximum of 30% under this element of the
annual bonus was appropriate based on his
performance in the year. Highlights of his
performance include significantly improved
planning from both a strategic and financial
perspective for the next five years, the reset
of overall risk and internal audit framework
to support the Saga transformation and
maintaining strong colleague engagement
scores across Saga.
Where time was allocated during
the year – matters discussed,
decisions made, and actions taken
• Approved Executive Director and
Executive Leadership Team (ELT) salary
increases for 2022/23.
• Approved the business and personal
metrics for the 2022/23 annual bonus.
Details of the personal objectives for the
Executive Directors can be found on
pages 100-102.
• Completed the Policy review and
subsequently introduced the STP.
• Made grants under the STP.
• Made grants under the RSP for the
ELT and SLT.
• Reviewed and agreed the compensation
package for the new Executive Director,
the CEO of Insurance, Steve Kingshott.
• Reviewed progress against the actions to
reduce our gender pay gap and discussed
the Company’s wider diversity, equity and
inclusion strategy.
• Noted the voting results on our
Remuneration Report and Policy at the
2022 AGM and continued our
constructive dialogue with shareholders.
• Determined the level of bonus awards
for 2022/23.
• Discussed how the Committee would
review wider workforce pay and ensure
alignment of incentives throughout the
Company with its culture and strategy.
For Steve Kingshott, the Committee noted
his performance in relation to key aspects
such as delivering an exceptional insurance
offering to our customers, the development
and communication of the Insurance
Transformation Plan and contribution
towards the Group-wide Environmental,
Social and Governance strategy. Taking this
into account, the Committee determined
that an award of 28.0% out of the maximum
30% under this element of the annual bonus
was appropriate.
Page 99 sets out the calculation for the
2022/23 bonus which paid out at between
33% and 36% of maximum for the Executive
Directors. The Committee carefully
considered the level of bonuses achieved in
respect of the targets set for 2022/23 and
determined that no discretion would be
applied to bonus outcomes noting that these
awards represent a significantly reduced
outcome in comparison to the previous year.
In particular, the Committee noted that there
had been a material downturn in the external
environment, which had not been visible at
the time the targets had been agreed. The
Committee felt that, although the financial
targets had become extremely challenging to
achieve, the re-setting of the targets and/or
the exercise of upwards discretion was not
appropriate. The Committee considered
that the performance of the management
team had been very strong, notwithstanding
the additional challenges faced during the
year, and that the payment of bonuses at the
level derived from the formulaic out-turn
remained appropriate.
Euan Sutherland will receive a bonus of
£385,587. James Quin will receive a bonus
of £200,045. Steve Kingshott will receive a
bonus of £13,937 to reflect the one month
of the financial year since he was appointed
to the Board.
In line with our approved Policy, all bonus
awards are paid one-third in deferred shares
and two-thirds in cash.
The Committee considers the full internal
and external context when determining how
to implement the Policy. Following this
valuable exchange with shareholders, the
Committee acknowledges the disappointing
shareholder experience, while balancing this
with the vital need to retain and motivate key
executives in order to deliver the planned
multi-year transformation. We believe that
the positioning of salaries, the deployment of
short-term incentives (bonuses paid part in
cash and part in shares) and the RSP
(awarded in Saga shares), reflects the level of
leadership talent required, complexity of the
business and responsibility of the roles.
With respect to the introduction of the STP,
the Committee feels that the reward
approach is fully aligned to the delivery of
Saga’s sizeable transformation strategy. In
particular, the STP will only deliver reward to
executives following a very significant
improvement in our share price, with a
commensurate return to our shareholders.
The Committee appreciates the valuable
feedback from shareholders and will continue
its constructive dialogue with them and seek
to incorporate this feedback into its future
remuneration decisions.
Conclusion
I hope you find the information contained
in this report helpful, thoughtful and clear.
I am always happy to hear from the
Company’s shareholders, and you
can contact me at any time at
eva.eisenschimmel@saga.co.uk if you have
any questions or comments on this report.
Eva Eisenschimmel
Chair, Remuneration Committee
Wider workforce considerations
In making decisions on executive pay, the
Committee considers wider workforce
remuneration and conditions, as outlined
on pages 105-106.
We continue to be as focused on our
colleagues as we are on our customers, and
we review our reward, benefits and careers
package to ensure we remain competitive in
the market. We continue to engage with
colleagues on executive reward matters
through our People Committee, which
I attend regularly. Details of our People
Committee can be found on page 41.
We believe that colleagues throughout the
Company should be able to share in the
success of the Company and to enable this,
a proportion of the STP Pool will be available
for distribution to all colleagues.
As part of our commitment to fairness,
this report contains details of the pay and
conditions of our wider workforce, the
cascade of incentives throughout our
business and our Group CEO to colleague
pay ratio. Details of Saga’s gender pay
report can be found on our website
(www.saga.co.uk/gender-pay-review).
Shareholder consultation and
looking ahead
As noted above, the Committee undertook
extensive consultation with shareholders in
the lead up to the 2022 AGM and ahead of
the adoption of the new Policy.
At the 2022 AGM, shareholders supported
both the Directors’ Remuneration Report
and the Directors’ Remuneration Policy with
a voting outcome of 79.96% and 79.74%
respectively. While I am pleased that the
majority of shareholders supported the
resolutions, we believe it is important to
understand the reasons behind the
votes against.
Prior to the AGM, I wrote to our 20 largest
shareholders in order to gain an
understanding of their views on the proposed
Policy. I was able to enter into a dialogue with
six of these in order to clarify the rationale
and design principles of our proposed
approach. The Committee appreciates,
and values, the time taken by shareholders
who expressed their views. We recognise
that the negative views expressed in relation
to the Remuneration Report largely centred
on the alignment of bonus payouts to the
Company’s overall performance and broader
shareholder experience and also to the salary
positioning for Executive Directors. With
respect to the Policy, views were primarily
connected to the introduction of the STP
alongside the RSP, despite the RSP being
scaled back by 20%.
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Saga plc Annual Report and Accounts 2023 95
DIRECTORS’ REMUNERATION REPORT
Remuneration at a glance
Remuneration in the Group
Total spend
on pay
£132.0m
2021/22 – £118.3m
2020/21 – £130.3m
2019/20 – £125.6m
Group CEO pay ratio
to the median colleague
56:1
2021/22 – 76:1
2020/21 – 76:1
2019/20 – 41:1
General increase
for all colleagues
7.5%1
2021/22 – 1.5%
2020/21 – 1.5%
2019/20 – 2.0%
2022/23 Total single figure remuneration
Euan Sutherland
Group Chief Executive
Officer (CEO) (£)
James Quin
Group Chief Financial
Officer (CFO) (£)
Steve Kingshott⁴
CEO of Insurance (£)
1,753,093
2,401,273
980,142
1,322,094
50,360
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
Salary
Benefits
Pension
728,262
710,500
440,750
430,000
12,938
12,889
13,192
13,143
43,696
42,630
26,445
25,800
Bonus paid in cash
257,058
606,625
133,364
310,424
Bonus deferred in shares2
128,529
303,312
66,681
155,212
Long-term Incentive Plan (LTIP)3
–
14,817
–
22,015
Restricted Share Plan (RSP)2
582,610
710,500
299,710
365,500
33,333
1,090
2,000
9,291
4,646
n/a
n/a
Total
1,753,093 2,401,2733
980,142
1,322,0943
50,360
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2022 RSP awards granted
On 13 July 2022, the third RSP award was granted to the Group CEO and Group CFO. Details of the award are set out below.
Director
Basis of award
Date of grant
Number of
shares granted
Face value
per share5
Total face value
of award
Group CEO Euan Sutherland
80% of salary
Group CFO James Quin
68% of salary
13 July 2022
13 July 2022
333,300
171,458
£1.748
£1.748
£582,610
£299,710
Shareholding of the Executive Directors
The table sets out the shareholdings of the Executive Directors at 31 January 2023. Further detail is set out on page 104.
Director
Group CEO Euan Sutherland
Group CFO James Quin
CEO of Insurance Steve Kingshott
Shareholding
requirement
(% of salary)
Shares owned
outright
(% of salary)6,7
Shares subject to continued
employment holding periods
(% of salary)7,8
250%
200%
200%
20%
6%
–
147%
122%
47%
1 All colleagues received a 2.5% increase in base pay in February 2022 with colleagues below senior leadership receiving a further increase of 5.0% in December 2022
2 Deferred bonus and RSP awards both vest after three years
3 The final value of the 2019 LTIP award had not been confirmed at the time the 2022 report was drafted and therefore was not included in the 2021/22 single figure
last year. The final vesting of the 2019 LTIP was confirmed as 10% of maximum and therefore the 2021/22 single figure has been restated
4 For Steve Kingshott, remuneration shown is pro-rated for one month, since joining the Board on 3 January 2023
5 Represents the share price on the day prior to grant
6 Represents actual shares owned at 31 January 2023
7 Based on a closing share price of 186.3p at 31 January 2023 and the year-end salaries of the Executive Directors
8 Represents unvested RSP awards and annual bonus deferred share awards, as well as LTIP awards in the two-year holding period (included on a net of tax basis)
96 Saga plc Annual Report and Accounts 2023
2022/23 Annual bonus outcome for the Group CEO and Group CFO
For 2022/23, the Group CEO and Group CFO had a maximum bonus opportunity of 150% of salary and 125% of salary respectively.
The overall bonus outcome is set out in the table below. No discretion was applied to the formulaic outcome. Further details are set out
on pages 99-101 in the Annual Report on Remuneration.
Performance condition
Underlying Profit Before Tax9
Net Debt9
Insurance motor and home retention
2022/23 Ocean Cruise load factor
2022/23 Ocean Cruise per diem
Personal objectives
Total
Weighting
Threshold
(20% payout)
Target
(50% payout)
Maximum
(100% payout)
Outcome achieved
(% of award)
35%
21%
7%
3.5%
3.5%
30%
100%
–
–
52%
32%
83%
Group CEO: 92%
Group CFO: 96%
Group CEO: 35%
Group CFO: 36%
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2022/23 Annual bonus outcome for CEO of Insurance
For 2022/23, the CEO of Insurance had a maximum bonus opportunity of 125% for his time as an Executive Director. The overall bonus
outcome is set out in the table below. Further details are set out on pages 99 and 102 in the Annual Report on Remuneration.
Performance condition
Total Underlying Profit Before Tax9
Weighting
10.5%
Total Insurance Underlying Profit Before Tax9
24.5%
Insurance Available Operating Cash Flow9
Private medical insurance policy sales
Motor and home retention
Motor and home new business profit per policy
Motor and home renewal profit per policy
Direct share of new motor and home business
Personal objectives
Total
17.5%
3.5%
3.5%
3.5%
3.5%
3.5%
30%
100%
Threshold
(20% payout)
Target
(50% payout)
Maximum
(100% payout)
Outcome achieved
(% of award)
–
–
–
72%
52%
–
30%
–
94%
CEO of Insurance:
33%
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9 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 97
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration
2022/23 Actual performance and remuneration outcomes
Single total figure of remuneration for Executive Directors for the 2022/23 financial year (audited)
The table below sets out the single total figure of remuneration and breakdown for each Director in respect of the 2022/23 financial year.
Comparative figures for the 2021/22 financial year have also been provided. Figures provided have been calculated in accordance with
Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended in 2013.
Salary
£
Taxable
benefits
£
Period
Pension
£
Other
£
Total
fixed
£
Bonus1
£
Restricted
Share
Plan
(RSP)2
£
Long-term
Incentive
Plan
(LTIP)3
£
Total
variable
£
Single
figure
£
Euan Sutherland
(Group CEO)
James Quin
(Group CFO)
Steve Kingshott4
(CEO of Insurance)
Roger De Haan
(Non-Executive
Chairman)
Eva Eisenschimmel
(Non-Executive Director,
Remuneration
Committee Chair)
Julie Hopes5
(Non-Executive Director,
Risk Committee Chair,
Chair of Saga Services
Limited (SSL) and Saga
Personal Finance (SPF)
Limited)
Gareth Hoskin
(Non-Executive Director,
Audit Committee Chair,
Chair of Acromas
Insurance Company
Limited (AICL))
Orna NiChionna6
(Senior Independent
Non-Executive Director,
Nomination Committee
Chair)
Gemma Godfrey7,8
(Non-Executive Director,
Chair of SPF)
Peter Bazalgette7
(Senior Independent
Non-Executive Director,
Nomination Committee
Chair)
Anand Aithal7
(Non-Executive Director,
Innovation and Enterprise
Committee Chair)
2022/23
728,262
12,938
43,696
2021/22
710,500
12,889
42,630
2022/23
440,750
13,192
26,445
2021/22 430,000
13,143
25,800
2022/23
33,333
1,090
2,000
2021/22
2022/23
2021/22
n/a
Nil
Nil
2022/23
73,672
2021/22
73,672
2022/23
175,088
2021/22
176,511
2022/23
137,344
2021/22
137,344
2022/23
75,781
2021/22
113,672
2022/23
43,948
2021/22
n/a
2022/23
43,389
2021/22
n/a
2022/23
29,030
2021/22
n/a
n/a
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
784,896
385,587
582,610
–
968,197
1,753,093
766,019
909,937
710,500
14,817
1,635,254 2,401,273
480,387
200,045
299,710
–
499,755
980,142
468,943
465,636
365,500
22,015
853,151
1,322,094
36,423
13,937
n/a
Nil
Nil
73,672
73,672
175,088
176,511
137,344
137,344
75,781
113,672
43,948
n/a
43,389
n/a
29,030
n/a
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13,937
50,360
n/a
Nil
Nil
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
Nil
Nil
73,672
73,672
175,088
176,511
137,344
137,344
75,781
113,672
43,948
n/a
43,389
n/a
29,030
n/a
1 A third of the bonus award is deferred into shares vesting after three years
2 The face value on grant of the RSP awards is shown in the table above as there are no performance conditions other than underpins tested on vesting. The RSP
award vests after three years
3 The final value of the 2019 LTIP award had not been confirmed at the time the 2022 Annual Report and Accounts was drafted and therefore was not included in the
2021/22 single figure. The final vesting of the 2019 LTIP was confirmed as 10% of maximum and therefore the 2021/22 single figure has been restated in this year’s
single figure table. No value of the 2019 LTIP was attributable to share price growth. The award for James Quin vested on 12 August 2022 and the Saga middle market
quotation (MMQ) for that date was 181.1p per share giving a vested value of £22,015. The award for Euan Sutherland vested on 6 January 2023 and the Saga MMQ
for that date was 149.5p per share giving a vesting value of £14,817. In 2022/23, none of the Executive Directors had an LTIP award which was eligible to vest in the year
4 Steve Kingshott became a plc director on 3 January 2023
5 Julie Hopes held the position of Chair of SPF until 10 January 2023
6 Orna NiChionna resigned from her position as Senior Independent Non-Executive Director on 30 September 2022 with Peter Bazalgette appointed to Senior
Independent Non-Executive Director on the same date
7 Gemma Godfrey, Peter Bazalgette and Anand Aithal joined on 1 September 2022
8 Fee paid for Gemma Godfrey included significant additional time commitment during the period in respect of the transition to the role of Chair of SPF
98 Saga plc Annual Report and Accounts 2023
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How we performed in 2022/23
Bonus (audited in conjunction with details on page 165)
The details of the performance conditions and outcomes against the targets for the annual bonus in respect of the 2022/23 financial year are
shown in the table below. No discretion was applied to the formulaic outcome.
Saga plc bonus scorecard
Weighting
(based on
100% max)
Threshold
performance
required
50% Target
performance
required
Maximum
performance
required
Actual
performance
35%
£50m
£57.5m
£70m
£21.5m
21%
£710m
£684m
£635m
£711.7m
7%
83.0%
83.8%
85.0%
83.8%
3.5%
74%
77%
82%
75%
3.5%
£305
£312
£321
£318
30%
100%
Performance condition
Underlying Profit
Before Tax10
Net Debt10
Insurance motor and
home retention
2022/23 Ocean cruise
load factor
2022/23 Ocean cruise
per diem
Personal objectives
Total
Total calculated (£)
Total payable (£)
Insurance bonus scorecard
Performance condition
Underlying Profit
Before Tax10
Insurance Underlying
Profit Before Tax10
Insurance Available
Operating Cash Flow10
Private medical insurance
policy sales
Weighting
(based on
100% max)
Threshold
performance
required
50% Target
performance
required
Maximum
performance
required
Actual
performance
10.5%
£50m
£57.5m
£70m
£21.5m
24.5%
£99m
£104m
£108m
£88.2m
17.5%
£94m
£98.5m
£103m
£85.6m
3.5%
30,000
31,875
37,500
33,981
Motor and home retention
3.5%
83.0%
83.8%
85.0%
83.8%
Motor and home new
business profit per policy
Motor and home renewal
profit per policy
Direct share of new motor
and home business
Personal objectives
Total
Total calculated (£)
Total payable (£)
3.5%
£38.0
£41.3
£47.0
£34.8
3.5%
£83.0
£86.8
£93.0
£84.3
3.5%
55%
59%
65%
49%
30%
100%
Annual bonus
value for
threshold and
maximum
performance
(% of max)
Percentage
of maximum
performance
achieved
Actual annual bonus value
achieved (% of salary)9
Euan
Sutherland
James Quin
20%
100%
20%
100%
20%
100%
20%
100%
20%
100%
0%
100%
–
–
–
–
–
–
52%
5.4%
4.6%
32%
1.7%
1.4%
83%
4.3%
3.6%
41.5%
35.8%
52.9%
45.4%
£385,587
£200,045
£385,587
£200,045
Annual bonus
value for
threshold and
maximum
performance
(% of max)
Percentage
of maximum
performance
achieved
Actual annual bonus value
achieved (% of salary)9
Steve
Kingshott11
–
–
–
72%
52%
–
30%
–
20%
100%
20%
100%
20%
100%
20%
100%
20%
100%
20%
100%
20%
100%
20%
100%
0%
100%
–
–
–
3.1%
2.3%
–
1.3%
–
35.1%
41.8%
£13,937
£13,937
9 The annual bonus percentage achieved for each Executive Director is based on their maximum bonus potential and shown as a percentage of annual salary
10 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
11 Steve Kingshott became a Director on 3 January 2023 and therefore the bonus shown is pro-rated for one month
Saga plc Annual Report and Accounts 2023 99
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration continued
Individual performance assessment
The Committee assessed Executive Directors on their individual performance in the year against four key areas: culture and colleagues;
Environmental, Social and Governance (ESG); data and insight; and growth projects.
Details of the individuals’ achievements are set out in the tables below.
Objectives overview
Committee assessment and basis of achievement for 2022/23
Euan Sutherland – Maximum: 30% of overall bonus. Achievement: 27.64% of overall bonus.
Culture and colleagues
• Maintained strong colleague engagement across Saga, 94% participation in our most recent colleague engagement
survey, scoring 8.0 out of 10, maintained levels from February 2022 and 0.3 higher than November 2021.
• Successfully embedded new ways of working model for all colleagues.
• Leadership team strengthened through the recruitment of CEOs for Media, Money and Insight alongside a Chief
Data Officer and Chief Operating Officer.
• Significantly developed talent within the Senior Leadership Team (SLT) with recruitment into Insurance, Cruise and
Travel businesses.
• Plans in place to shape our Cruise business for the next five years in line with industry regulation.
• Group-wide ESG strategy developed.
• Diversity, equity and inclusion (DE&I) strategy implemented in year.
• The most recent colleague survey showed a strong response to our DE&I activity with a score of 8.6 out of 10.
• Reset of overall risk and internal audit framework to support the Saga transformation. Strengthened talent within the
Risk and Internal Audit teams with new hires.
• Maintain colleague
engagement
• Launch new ways
of working model
• Strengthen
leadership capability
ESG
• Future-proof
Cruise business
• Embed ESG into
Group strategy
• Create a diverse and
inclusive workplace
• Role model and
promote a risk
culture and control
framework
Data and insight
• Significant work undertaken on our data infrastructure with the launch of a new Group marketing database platform
due in the first half of 2023/24.
• Acquisition of the Big Window to embed ageing insights into product and service design in all business units.
• Saga Media launched.
Integrated Ocean and Rivers teams to bring alignment.
•
• Combined Saga Holidays and Titan Touring businesses under one Saga Travel Group.
• New product development delivered for touring, including our private jet tours.
• Hosted stays programme relaunched along with a new ‘Tailor-Made by Saga’ proposition, offering worldwide choice
with the Saga brand promise.
• CEO of Saga Money recruited and joined in September 2022.
• Commercialise and
grow our database
• Modernise data
infrastructure
• Build ageing insights
into new product
design
• Establish a new
content business
Growth projects
• Align Ocean and
River Cruise
• Create new Travel
proposition
• Recruit a new CEO
of Saga Money
• Establish pipeline
of new products
• Deliver in-year
cost targets
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Objectives overview
Committee assessment and basis of achievement for 2022/23
James Quin – Maximum: 30% of overall bonus. Achievement: 28.65% of overall bonus.
Culture and colleagues
• Maintained strong colleague engagement across Saga: 94% participation in our most recent colleague engagement
• Maintain colleague
engagement
• Launch new ways
of working model
• Strengthen
leadership model
ESG
• Future-proof
Cruise business
• Embed ESG into
Group strategy
• Create a diverse and
inclusive workplace
• Role model and
promote a risk
culture and control
framework
Data and insight
• Performance
monitoring for
strategic and financial
plans
• Creating financial
resilience
• Building out strategic
plans for Insurance,
Travel, Money and
Innovation
Growth projects
• Embed a new
operating model
• Deliver in-year cost
savings targets
survey, scoring 8.0 out of 10, maintained levels from February 2022 and 0.3 higher than November 2021.
• Successfully embedded new ways of working model for all colleagues.
• Leadership team strengthened through the recruitment of CEOs for Media, Money and Insight alongside a Chief
Data Officer and Chief Operating Officer.
• Significantly developed talent within the SLT with recruitment into Insurance, Cruise and Travel businesses.
• Plans in place to shape our Cruise business for the next five years in line with industry regulation.
• Group-wide ESG strategy developed.
• DE&I strategy implemented in year.
• The most recent colleague survey showed a strong response to our DE&I activity with a score of 8.6 out of 10.
• Reset of overall risk and internal audit framework to support the Saga transformation. Strengthened talent within the
Risk and Internal Audit teams with new hires.
•
Implemented performance monitoring with each business unit, resulting in the ability to swiftly identify any areas
of underperformance and potential emerging issues and downside risks.
• Effective stress testing and development of financial ‘early warning’ systems; constantly refining financial
preparedness and risk analysis.
• Much improved planning from both a strategic and financial perspective for the next five years for each business unit.
• New operating model fully embedded for Finance.
•
• Work is underway to create efficiencies in future years.
In-year costs savings target achieved.
Saga plc Annual Report and Accounts 2023 101
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration continued
Objectives overview
Committee assessment and basis of achievement for 2022/23
Steve Kingshott – Maximum: 30% of overall bonus. Achievement: 28.05% of overall bonus.
• Maintained strong colleague engagement across Saga: 94% participation in our most recent colleague engagement
survey, scoring 8.0 out of 10, maintained levels from February 2022 and 0.3 higher than November 2021. Within the
Insurance business, colleague engagement scored 7.9 out of 10.
• Successfully embedded new ways of working model for all colleagues.
• Embedded new operating model for Insurance with a customer, growth, forward-looking and outward-focused mindset.
• Significantly developed talent within the Insurance SLT.
• ESG activity mapped and aligned to Group-wide ESG strategy.
• DE&I strategy implemented in year, including colleague diversity forums. The most recent colleague survey showed
a strong response to our DE&I activity with a score of 8.6 out of 10 across Saga and 8.8 out of 10 within Insurance.
• Strengthened talent within the Risk team with recruitment of Insurance Risk Director.
Culture and colleagues
• Maintain colleague
engagement
• Launch new ways
of working model
Integrate Insurance
businesses (AICL,
SSL and CHMC)
•
• Strengthen
leadership capability
ESG
• Future-proofing
Insurance business
• Embedding ESG into
Insurance strategy
• Creating a diverse
and inclusive
workplace
• Role model and
promote a risk
culture and control
framework
Data and insight
• Developed a culture which puts insight into older people at the heart of the Insurance business and delivers an
exceptional Insurance offering to Saga customers true to that insight.
• Using ageing insights from the Big Window to inform product and service design.
• CRM activity and infrastructure developed, driving an increased marketable database and enabling use of data
sources and analytics capability across Pricing, Product, Marketing and Servicing. Quotes increased by 38%,
with the cost per quote reducing by 24%.
• Data and analytics operating model defined to maximise Insurance capabilities.
• Short-term measures delivered including cross sell, pricing, marketing and service delivery improvements.
• Product sourcing progressed.
•
Insurance Transformation Plan developed and communicated.
• Build ageing insights
into Insurance
business
• Optimising current
customer relationship
marketing (CRM)
capabilities
• Establish effective
data and analytics
operating model
Growth projects
• Deliver measures
to attain 2022/23
financial plan
• Progress product
sourcing direction
• Achieve in-year
cost targets
• Develop future
operating model
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Scheme interests awarded during the financial year (audited)
RSP
On 13 July 2022, the third RSP award was granted to the Group CEO and Group CFO. Details of the award are set out below.
Director
Award type
Basis of award
Date of grant Date of vesting
Number of
shares granted
Face value
per share12
Total face value
of award
Group CEO
Euan Sutherland
Group CFO
James Quin
Nil-cost options
80% of salary
13 July 2022
13 July 2025
333,300
£1.748
£582,610
Nil-cost options
68% of salary
13 July 2022
13 July 2025
171,458
£1.748
£299,710
Deferred Bonus Plan (DBP)
On 28 April 2022, the deferred element of the executive annual bonus award was granted to the Group CEO and Group CFO. Details of the
award are set out below.
Director
Award type
Award
(% of salary)
Number of
shares granted
Face value
per share12
Total face value
of award
End of
deferral period
Group CEO
Euan Sutherland
Group CFO
James Quin
Deferred shares
42.7%
124,717
243.20p
303,312
28 April 2025
Deferred shares
36.1%
63,820
243.20p
155,212
28 April 2025
Saga Transformation Plan (STP)
STP awards were granted to Executive Directors in July 2022. The award gives Executive Directors the opportunity to share in a proportion
of the total value created for shareholders above a qualifying hurdle (the Hurdle) of £6.00 shareholder value (including dividends) over the
period of the plan (equivalent to a market capitalisation of £842m). Participants will only share in value once that threshold has been exceeded.
The total value created above the Hurdle refers to the increase in market capitalisation above £842m.
The Executive Directors will receive the right, at the end of the performance period, to share awards with a value representing a portion of the
level of the Company’s shareholder value above the Hurdle. The Executives will share in the value and be allocated 12.5% of this excess value
(STP Pool) up to a limit of 10% of the issued share capital of the Company (including awards under other share plans).
The percentage of the STP Pool that each Executive Director is entitled to is set out in the table below. Note that a cap will apply to the value of
the total amount vesting under the STP of £15.0m for the Group CEO, £9.2m for the Group CFO and £6.9m for the CEO of Insurance but this
will only be relevant in the event that the Company share price exceeds c.£10.90.
Name
Group CEO
Euan Sutherland
Group CFO
James Quin
CEO of Insurance
Steve Kingshott
Award type
Conditional
Share of
STP Pool
Date of grant
Performance
period
17.5%
7 July 2022
Five years
Conditional
10.5%
7 July 2022
Five years
Conditional
8.0%
7 July 2022
Five years
Value of
award at
grant
Minimum level of
performance
–
–
–
For performance in line
with the Hurdle
(i.e. threshold performance),
no value will be shared with
participants, i.e. participants
will only share in the value
created where performance
exceeds the Hurdle
The performance period of the STP is five years, at which point performance will be tested against the stretching Hurdle. If the Hurdle is met,
and the risk review confirms that no inappropriate behaviour or decision-making has occurred, any shares awarded will vest and 50% of them
will be released immediately. After a one-year holding period, a further 25% will be released and after a two-year holding period, the final 25%
will be released.
For the full terms of the STP, refer to the Notice of the 2022 Annual General Meeting which can be found on our corporate website
(www.corporate.saga.co.uk/media/1573/saga-plc-agm_notice_of_meeting.pdf).
12 Represents the share price on the day prior to grant
Saga plc Annual Report and Accounts 2023 103
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration continued
Directors’ share interests (audited)
The following table and chart set out the equity interests held by the Executive and Non-Executive Directors:
Director
Shareholding
requirement
(% salary)13
Current
shareholding
(% salary)
Shares
counting
towards
shareholder
requirements14
Beneficially
owned
Unvested nil-cost options held
LTIP
nil-cost
options
subject to
performance
conditions
RSP
nil-cost
options not
subject to
continued
service
Deferred
bonus
nil-cost
options
subject to
continued
service
Vested but
unexercised
nil-cost
options held
Unvested SIP
shares not
subject to
performance
conditions
Other
awards
Shareholding
requirement
met?
Executive Directors
Euan Sutherland
James Quin
Steve Kingshott
250%
200%
200%
Non-Executive Directors15
Roger De Haan
Eva Eisenschimmel
Julie Hopes
Gareth Hoskin
Orna NiChionna
Gemma Godfrey
Peter Bazalgette
Anand Aithal
–
–
–
–
–
–
–
–
147%
122%
47%
573,844
77,598
–
716,389 209,613
288,279
14,825
– 363,834
138,993
100,636
–
–
137,299
52,580
–
–
–
–
–
–
–
–
– 37,196,970
–
–
–
–
–
–
–
4,288
4,419
19,018
3,027
12,438
212,249
24,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,911
12,723
212
212
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
No
No
No
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Executive Directors are required to build up their shareholdings over a reasonable amount of time, which would normally be five years, and
then subsequently hold a shareholding equivalent to a percentage of base salary. The number of shares in which current Directors had a
beneficial interest, and details of long-term incentive interests at 31 January 2023 are set out below:
Euan Sutherland
(% of salary)
Shareholding
requirement
Current shareholding13
(as per table above)
Value of/gain on interests over shares
(i.e. unvested awards subject to
performance conditions)
0 shares
977,271 shares
573,844 shares
0%
50%
100%
150%
200%
250%
300%
James Quin
(% of salary)
Shareholding
requirement
Current shareholding13
(as per table above)
Value of/gain on interests over shares
(i.e. unvested awards subject to
performance conditions)
0 shares
473,162 shares
288,279 shares
0%
50%
100%
150%
200%
250%
300%
Steve Kingshott
(% of salary)
Shareholding
requirement
429,415 shares
Current shareholding13
(as per table above)
100,636 shares
Value of/gain on interests over shares
(i.e. unvested awards subject to
performance conditions)
0 shares
0%
50%
100%
150%
200%
250%
300%
13 Shareholding requirements are those that were in existence throughout the course of the year and at 31 January 2023
14 The number of shares counting towards the shareholding requirement is calculated by summing beneficially owned shares with unvested nil-cost options which
are not subject to performance conditions, on a net of tax basis as well as any vested but unexercised options on a net of tax basis. The MMQ share price of 186.3p
at 31 January 2023 has been used for the purpose of calculating the current shareholding (i.e. value of beneficially owned shares and value of/gain on interests over
shares) as a percentage of salary. Unvested LTIP shares and options do not count towards satisfaction of the shareholding guidelines
15 Values not calculated for Non-Executive Directors as they are not subject to shareholding requirements
104 Saga plc Annual Report and Accounts 2023
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Taxable benefits
The taxable benefits for all Executive Directors are in line with our wider workforce policies. Euan Sutherland, James Quin and Steve Kingshott
receive private medical insurance and a company car.
Pension entitlements
Pension contributions for all Executive Directors are aligned with those of the majority of colleagues (6% of salary). No Executive Director
receives an entitlement under a defined benefit plan.
Payments for loss of office (audited)
There were no payments for loss of office in 2022/23.
Payments to past directors (audited)
As previously disclosed in the 2021 and 2022 Annual Report and Accounts, Cheryl Agius, the former CEO of Insurance, stepped down from
the Board of Directors for personal reasons. Her leaving arrangements, which were fully disclosed in the 2021 Annual Report and Accounts,
included buyout awards in respect of long-term incentives forfeited from her previous employer. These awards, which were granted on
1 June 2020 and pro-rated to reflect the period from the award date to the termination date, vested at their normal vesting dates subject
to the terms of the buyout agreement.
During the period ending 31 January 2023, element 2 of the buyout award vested on 16 April 2022. The table below sets out the number of
shares vested for the former CEO of Insurance.
Award
Buyout element 2
Awarded
Maximum
Pro-rated number of
Saga shares subject
to the option
18,797
30,319
Legal & General
Performance
Share Plan
performance
Number of Saga
shares vesting
82.9%
25,134
Value of
Saga shares
vesting (£)16
43,859
Fees retained for external non-executive directorships
Executive Directors may hold positions in other companies as non-executive directors and retain the fees.
Euan Sutherland is a non-executive director of Britvic plc for which he received a fee of £60,025 in 2022/23. James Quin and Steve Kingshott
do not hold any external directorships.
Governance of remuneration
Wider workforce
For the Committee to review the wider workforce pay, policies and incentives, reports are regularly considered at Committee meetings,
setting out key details of remuneration throughout the Company. Alongside its review of the wider workforce remuneration, the Committee
considers the approach applied to the Executive Directors and senior management. In particular, the Committee is focused on ensuring the
approach to the remuneration of the Executive Directors and senior management is consistent with that applied to the wider workforce.
The table summarises some of the key workforce reward elements that are regularly discussed by the Committee:
Bonus
Other incentive
schemes
Base pay
Bonus schemes contain both financial and personal measures. A financial scorecard is used for all colleagues at Saga
linked to their business unit, including Executive Directors. Malus and clawback are in place for the colleagues in our SLT.
Incentive arrangements that are paid more frequently are also operated in our contact centres. These incentive
schemes are reviewed regularly to ensure best practice and market alignment. The method of calculation and
frequency of payment varies, depending on business area and product.
All colleagues received an increase of 2.5% of base pay in February 2022 with all colleagues below SLT receiving an
additional increase of 5.0% in December 2022, brought forward from February 2023 to support colleagues with the
rising cost of living.
National living wage
Saga continues to be committed to paying above national living wage for all UK colleagues and, in 2022, tracked above
this at the voluntary real living wage.
RSP
RSP awards are granted across senior leadership at Saga. Eligible colleagues received an RSP grant in 2022, ranging
from 20% to 50% of salary.
Share Incentive Plan
(SIP)
We continue to promote our SIP, so that all colleagues can invest in the Company’s success. The plan enables colleagues
to purchase shares through payroll.
Pension
Saga operates a single defined contribution Master Trust arrangement with Aviva following the closure of both the
defined benefit scheme and the previous defined contribution scheme on 31 October 2021. At 31 January 2023, there
were 2,578 colleagues in this scheme.
The Committee Chair engages regularly with the People Committee, gaining regular feedback and outlining executive remuneration.
Feedback from this engagement is then shared with the Committee. Further details of the People Committee can be found on page 41.
16 The value for element 2 of the buyout award is based on the Company’s share price of 174.5p, being the share price on 11 August 2022
Saga plc Annual Report and Accounts 2023 105
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration continued
Competitive pay and cascades of incentives
Number of
colleagues17
Range of
bonus
(% of salary)
Maximum
proportion of
bonus payable
in cash
Minimum
proportion
of bonus
deferrable
in shares
Range of
RSP award
(% of salary)
1
1
1
10
46
200
1,730
2,075
150%
125%
125%
100%
40-80%
10-40%
2.5-7.5%
n/a
67%
67%
67%
67%
100%
100%
100%
n/a
33%
33%
33%
33%
–18
–
–
n/a
80%
68%
60%
40%
20-40%
n/a
n/a
n/a
SIP
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Organisational level
Group CEO
Group CFO
CEO of Insurance
Executive Leadership Team
Senior Leadership Team
Senior Management Team
Other bonused colleagues
Other non-bonused colleagues
Pay comparisons
Group CEO ratio
Our Group CEO to average colleague pay ratio for 2022/23 is 56:1. To give context to this ratio, we included a chart below which tracks the
CEO to average colleague pay ratio since 2014/15 alongside Saga’s total shareholder return (TSR) performance since the Company was listed
in 2014. We also show this against the performance of the FTSE 250 during the same time span.
200
)
Saga TSR
FTSE 250 TSR
Group CEO average employee pay ratio
O
P
I
(
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n
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ff
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I
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0
0
1
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d
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s
a
b
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r
R
S
T
258:1
150
100
50
0
116:1
78:1
40:1
48:1
41:1
76:1
76:1
56:1
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
The Committee considers that the FTSE 250 is the appropriate index because the Company was a long-standing member of this index since
the IPO and has strong aspirations to re-join in the future. This graph has been calculated in accordance with the Financial Conduct Authority
Listing Rules.
It should be noted that the Company listed on 23 May 2014 and therefore only has a listed share price for the period of 23 May 2014 to
31 January 2023.
In summary, there has been significant volatility in Group CEO pay, and we believe that this is caused by the factors set out below. Please note
that, before 2020/21, pay for Lance Batchelor (former Group CEO) has been used for this calculation.
• Our Group CEO’s pay is made up of a higher proportion of incentive pay than that of our colleagues, in line with the expectations of our
shareholders and accepted market practice for senior executive roles. This introduces a higher degree of variability in pay each year,
which, in turn, affects the ratio.
• The value of long-term incentives, which measure performance over three years, is disclosed in the year they vest, which increases the
Group CEO’s pay in that year, again impacting the ratio.
• Long-term incentives are provided in shares, and therefore any movement in share price over the three years magnifies the impact
of a long-term incentive award vesting.
• We recognise that the ratio is driven by the different structure of pay for our Group CEO versus that of our colleagues, as well as the
make-up of our workforce. This ratio varies between businesses in the same sector. What is important from our perspective is that this
ratio is influenced only by the differences in structure, and not by divergence in fixed pay between the Group CEO and wider workforce.
Where the structure of remuneration is similar, as for the ELT and the Group CEO, the ratio is much more stable over time.
17 Colleagues at 31 January 2023
18 Colleagues in the SLT within Insurance also receive one-third of their bonus in deferrable shares
106 Saga plc Annual Report and Accounts 2023
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Colleague and Executive Committee ratios
The table below sets out the total remuneration received by the Group CEO using the methodology applied to the single total figure of
remuneration. The Committee believes that the remuneration payable in its earlier years, as a private company, to the Executive Chairman
does not bear comparative value to that which has been, and will be paid to, the Group CEO and has therefore chosen only to disclose
remuneration for the Group CEO:
Group Chief Executive Officer
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23
Total single figure
£1,600,287 £2,490,617 £1,025,14619
£1,191,743 £1,062,887
£2,118,471 £2,401,27320 £1,753,093
Annual bonus payment
level achieved
(percentage of maximum
opportunity)
LTIP vesting level
achieved (percentage of
maximum opportunity)
Ratio of Group CEO
single total remuneration
figure to all colleagues22,23
Ratio of single total
remuneration figure
shown to executive
members
78.6%
67.5%
–
35.1%
33.6%
83.1%
85.4%
35.3%
n/a21
65.6%
26.0%
–
–
n/a21
10%
n/a21
Option used
25th percentile
Median
75th percentile
Option B22 Option B22 Option B22 Option B22
Option B22 Option B22
n/a
78:1
n/a
2:1
n/a
116:1
n/a
4:1
8:1
40:124
33:1
3:1
59:1
48.125
36.1
3:1
46:1
41:126
29:1
2:1
97:1
76:127
55:1
4:1
104:1
76:128
55:1
3:1
66:1
56:129
42:1
3:1
The colleague pay figures used to calculate the ratio are as follows:
2022/23
Salary
Total pay
25th percentile
£21,175
£26,689
Median
£25,839
£31,125
75th percentile
£38,102
£42,127
19 For 2017/18, the final value of the 2015 LTIP award at vesting date is shown and has been restated from the 2017/18 Annual Report and Accounts. The share price
at vesting date of 30 June 2018 was 125.6p
20 The final value of the 2019 LTIP award had not been confirmed at the time the 2022 Annual Report and Accounts was drafted and therefore was not included in the
2021/22 single figure
The final vesting of the 2019 LTIP was confirmed as 10% of maximum and therefore the 2021/22 single figure has been restated
21 No LTIP awards were eligible to vest for the Group CEO in post during 2015/16, 2020/21 and 2022/23
22 For the colleague ratio, Saga has chosen to use Option B, identifying colleagues using our gender pay gap data. This was the preferred option due to the availability
of data for our many UK-based, overseas and part-time colleagues for whom single total figure data is difficult to calculate. Figures have been completed for 2017/18
to 2022/23 using the April gender pay gap data for that year. In order to mitigate any anomalies, 11 individuals have been identified at each percentile point from the
gender pay gap data, and the median of pay in the year up to 31 January 2018 to 2023 for these colleagues calculated in line with the single total figure methodology
23 The median ratios shown for 2015/16 and 2016/17 have been recalculated to allow a comparison with the 2017/18, 2018/19, 2019/20, 2020/21, 2021/22 and 2022/23
figures which have been calculated in line with the methodology prescribed by the regulations
24 The fall in ratio in 2017/18 is due to the forfeiture of bonus by the Group CEO and the relatively low payout on the LTIP. This reflects the fact that shareholders want
executives to have a higher proportion of pay at risk and this is reflected in the volatility in the chart. The percentage change in Group CEO remuneration set out in
the table on page 108 shows that year-on-year, when the volatility of payouts from equity-based awards is excluded, the changes in remuneration for the Group CEO
and average colleague are broadly in line. This demonstrates that the underlying compensation ratio is not increasing year-on-year
25 The increase in ratio for 2018/19 is due to the Group CEO receiving a bonus in 2018/19. This increase has remained low due to a relatively low bonus and LTIP payout
26 The fall in ratio for 2019/20 is due to the rebalancing of base pay and commission in our contact centres
27 The increase in ratio in 2020/21 is due to the relatively high bonus payout in 2020/21 and RSP award granted to the Group CEO in 2020/21
28 No change in ratio in 2021/22 due to similar payout in bonus
29 The fall in ratio in 2022/23 is due to the lower bonus payout
Saga plc Annual Report and Accounts 2023 107
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration continued
Annual percentage change in remuneration of Directors and other colleagues
The following table sets out the change in the remuneration paid to each Director from 2019/20 to 2022/23, compared with the average
percentage change for other colleagues.
The percentage change for each Director’s remuneration in the table below is based on the figures in the single total figure table on page 98.
Average colleague pay has been calculated using the following elements:
• Annual salary: base salary and standard monthly allowances.
• Taxable benefits: car allowance and private medical insurance premiums.
• Annual bonus: company bonus, management bonus, commission and incentive payments.
% increase/(decrease) in
remuneration in 2020/21 compared
with previous year (2019/20)
% increase/(decrease) in
remuneration in 2021/22 compared
with previous year (2020/21)
% increase/(decrease) in
remuneration in 2022/23 compared
with previous year (2021/22)
Salary/fees
Taxable
benefits
Annual
bonus
Salary/fees
Taxable
benefits
Annual
bonus
Salary/fees
Taxable
Euan Sutherland
0%
9.3%
25.2%
1.5%
(5.5%)30
James Quin
Steve Kingshott32
Roger De Haan33
Eva Eisenschimmel
Julie Hopes
Gareth Hoskin
Orna NiChionna37
Gemma Godfrey38
Peter Bazalgette38
Anand Aithal38
1.2%
(48.9%)31
48.7%
14.8%
4.7%
n/a
n/a
15.7%34
41.7%35
9.3%36
9.6%37
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
–
(1.0%)35
2.9%36
10.7%37
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
4.3%
1.4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2.5%
2.5%
n/a
n/a
–
(0.8%)35
–
–
n/a
n/a
n/a
0.4%
0.4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Annual
bonus
(52.2%)
(57.0%)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Average per colleague
3.2%39
2.7%
67.8%
4.1%39
6.6%
5.4%
13.3%39
3.6%
(49.9%)
Relative importance of the spend on pay
The table below sets out the relative importance of spend on pay in the 2022/23 and 2021/22 financial years, compared with other
disbursements. All figures provided are taken from the relevant Company accounts.
Profit distributed by way of dividend
Total tax contributions40
Overall spend on pay including Executive Directors
Disbursements from
profit in 2022/23
financial year £m
Disbursements from
profit in 2021/22
financial year £m
Percentage change
–
26.6
132.0
–
22.9
118.3
–
16.2%
11.6%
30 The decrease in taxable benefits for Euan Sutherland is due to his move to a reduced cost electric vehicle for which he also pays a capital contribution
31 The decrease in taxable benefits for James Quin is due to his move to a reduced cost electric vehicle
32 Steve Kingshott became a plc Director on 3 January 2023
33 Roger De Haan has waived his fee since becoming Chairman in 2020
34 Increase in fees for Eva Eisenschimmel in 2020/21 is due to her becoming Chair of the Remuneration Committee on 1 February 2020
35 Increase in fees for Julie Hopes in 2020/21 is due to her becoming Chair of the SPF Board on 1 February 2020 and assuming the position of Risk Committee Chair
on 31 December 2020. Decrease in fees in 2021/22 is due to the reduction in the fee for the Chair of SPF role on 1 January 2021 following a review of the role.
Decrease in fees in 2022/23 is due to her stepping down from the role as Chair of SPF on 10 January 2023
36 Increase in fees for Gareth Hoskin in 2020/21 and 2021/22 is due to him becoming Chair of the Audit Committee on 22 June 2020
37 Increase in fees for Orna NiChionna in 2020/21 and 2021/22 is due to her increasing responsibilities as Senior Independent Director on 5 October 2020.
Orna stepped down from the Board on 30 September 2022
38 No comparison for Gemma Godfrey, Peter Bazalgette and Anand Aithal due to them joining in September 2022
39 Average salary per colleague increased in 2020/21 and 2021/22 due to a combination of the annual salary increase, Company restructuring which altered our
colleague base and the impacts of the COVID-19 pandemic. The increase in salary 2022/23 was due to a combination of two pay increases for the wider workforce
and further investment in base pay
40 Total tax contributions include corporation tax, national insurance contributions, VAT and air passenger duty
108 Saga plc Annual Report and Accounts 2023
Implementation of the Policy in 2022/23
The below table sets out a summary of the key elements of the Policy along with their operation in 2022/23 and proposed operation in 2023/24.
Policy element
Summary of the Policy
Operation in 2022/23
Proposed operation in 2023/24
Base salary
Provides a base level of
remuneration to support
recruitment and retention of
Executive Directors with the
necessary experience and
expertise to deliver the
Group’s strategy.
Benefits
Provides a market-standard level
of benefits.
Pension
Provides a fair level of pension
provision for all colleagues.
Bonus
The Annual Bonus Plan provides a
significant incentive to the
Executive Directors, linked to
achievement in delivering goals
that are closely aligned with the
Company’s strategy and the
creation of value for shareholders.
In particular, the Annual Bonus Plan
supports the Company’s
objectives, allowing the setting of
annual targets based on the
business’ strategic objectives at
that time, meaning that a wider
range of performance metrics can
be used that are relevant.
Salaries are set on appointment
and reviewed annually. When
determining an appropriate level of
salary, the Committee considers:
• pay increases to other colleagues;
• remuneration practices within
the Group;
• any change in scope, role or
responsibilities;
• the general performance of the
Group and each individual;
• the experience of the relevant
Director; and
• the economic environment.
Benefits may include family private
health cover, death in service life
assurance, a car allowance,
subsistence expenses and
discounts in line with other
colleagues.
Directors may participate in a
defined contribution scheme.
Maximum pension contributions
for Executive Directors are aligned
with those of the wider workforce
(6% of salary).
Awards are granted annually with
performance measured over one
financial year.
The Committee will determine the
maximum participation in the
Annual Bonus Plan for each year,
which will not exceed 150% of
salary.
70% of awards will be linked to
financial measures. Specific
measures, targets and weightings
may vary from year to year.
At least one-third of the bonus will
be deferred into shares vesting
after three years.
Payout range is as follows (% of
maximum payout):
• Threshold: up to 20%
• Target: 50%
• Maximum: 100%
Malus and clawback arrangements
apply.
Good/bad leaver provisions apply.
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Executive Directors received a
2.5% increase in salary in February
2022 in line with the wider
workforce. Colleagues below SLT
received a further 5.0% increase
in December 2022 which was
brought forward from February
2023 to support colleagues with
the rising cost of living.
As a result, the salaries for the
Executive Directors are:
• Euan Sutherland: £728,262
• James Quin: £440,750
• Steve Kingshott: £400,000
Executive Directors received a
3.0% increase in salary in February
2023, a lower increase to the
scheduled 5.0% awarded to the
wider workforce which was
brought forward to December
2022 as part of the cost of living
support.
As a result, the salaries for the
Executive Directors are:
• Euan Sutherland: £750,110
• James Quin: £453,972
• Steve Kingshott: £412,000
Standard benefits provided.
No change.
Executive Directors received the
following:
No change.
• Euan Sutherland: 6% of salary
• James Quin: 6% of salary
• Steve Kingshott: 6% of salary
Maximum bonus opportunities
were:
• Euan Sutherland: 150% of salary
• James Quin: 125% of salary
• Steve Kingshott: 125% of salary
Performance measures and
weightings for the bonus for Euan
and James were as follows:
• Underlying Profit Before Tax41:
35%
• Net Debt41: 21%
• Motor and home retention: 7%
• Ocean Cruise load factor and
per diem: 7%
• Personal objectives: 30%
Performance measures and
weightings for the bonus for Steve
were as follows:
• Underlying Profit Before Tax41:
•
•
10.5%
Insurance Underlying Profit
Before Tax41: 24.5%
Insurance Available Operating
Cash Flow41: 17.5%
• Other Insurance measures:
17.5%
• Personal objectives: 30%
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The maximum opportunities for
Executive Directors are
unchanged and are as follows:
• Euan Sutherland: 150% of salary
• James Quin: 125% of salary
• Steve Kingshott: 125% of salary
The current intention is to set
performance measures and
weightings for the 2023/24 bonus
as follows:
• Underlying Profit Before Tax41
(substituted with Insurance
Underlying Profit Before Tax41
for CEO of Insurance): 55%
• Total Net Debt41: 15%
• Personal objectives: 30%
The Committee is of the view that
targets for the 2023/24 annual
bonus are currently commercially
sensitive and these targets will be
disclosed retrospectively in the
2024 Directors’ Remuneration
Report.
No change. To remain at reduced
levels during the STP.
RSP
Awards are designed to incentivise
the Executive Directors over the
longer term to successfully
implement the Company’s
strategy.
Awards of nil-cost options are
granted annually up to a maximum
of 100% of salary.
The RSP awards were made at
reduced levels following the
announcement of the STP:
RSP awards do not have any
performance conditions but are
subject to an underpin on vesting.
• Euan Sutherland: 80% of salary
• James Quin: 68% of salary
• Steve Kingshott: 60% of salary
Awards vest after three years and
are subject to a further two-year
holding period, during which time
shares may not be sold other than
for tax.
The Committee will review share
price performance on vesting to
determine whether any windfall
gains were made.
41 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 109
DIRECTORS’ REMUNERATION REPORT
Annual Report on Remuneration continued
Implementation of the Policy in 2022/23 (continued)
Policy element
Summary of the Policy
Operation in 2022/23
Proposed operation in 2023/24
Shareholding requirement
To ensure Executive Directors’
interests are aligned with
shareholders over the long term.
All-colleague share plan
The Company operates an HM
Revenue and Customs SIP.
Chairman and Non-Executive
Director fees
Monetary incentives for the
Chairman and Non-Executive
Directors.
The Committee sets formal
shareholding guidelines that will
encourage the Executive Directors
to build up over a five-year period,
and then subsequently hold, a
shareholding equivalent to a
percentage of salary.
Shares that are kept in the plan for
five years will be exempt from
income tax and national insurance
on their value.
• Euan Sutherland: 250% of salary
• James Quin: 200% of salary
• Steve Kingshott: 200% of salary
No change.
Saga continued to operate the
SIP for all colleagues in 2022/23.
The fees for Non-Executive
Directors are set at broadly the
median of the comparator group.
In general, the level of fee increase
for the Non-Executive Directors
will be set, taking account of any
change in responsibility and
considering the general rise in
salaries across the UK workforce.
Fees for 2022/23 were as follows
(Roger De Haan waived his fee
for 2022):
• Roger De Haan: Nil
• Board member fee: £63,672
• Committee Chair fee: £10,000
• Senior Independent Director
fee: £40,000
Saga will continue to provide all
colleagues with the opportunity to
participate in colleague equity
arrangements.
Fees for 2023/24 are as follows:
• Roger De Haan: Nil
• Board member fee: £65,500
• Committee Chair fee: £10,000
• Senior Independent Director
fee: £40,000
Advisers to the Committee
Following a selection process carried out by the Board prior to the IPO of the Company, the Remuneration Committee engaged the services
of PricewaterhouseCoopers (PwC) as independent remuneration advisors.
During the financial year, PwC advised the Committee on all aspects of the Policy for Executive Directors and members of the ELT.
PwC is a member of the Remuneration Consultants Group and the voluntary code of conduct of that body is designed to ensure objective and
independent advice is given to remuneration committees. Other PwC teams provide certain non-audit services to the Company in areas of
tax and consulting. The Committee is satisfied that no conflicts of interest exist in the provision of these services and that the advice provided
is independent and objective. Fees of £112,316 (2022: £83,750) were provided to PwC during the year in respect of remuneration advice
received. The increase from the prior year is due to the additional support in relation to the implementation of the STP.
The Committee receives support from the Chief People Officer and Group Company Secretary.
Shareholder voting
The current Policy was approved by shareholders at the AGM held on 5 July 2022. Outlined below are the voting outcomes for this, and in
respect of, approving the Directors’ Remuneration Report.
Resolution
Votes for
% of
votes cast
Votes
against
% of
votes cast
Votes
cast
% of issued
share capital
voted
Votes
withheld
To approve the Directors’
Remuneration Report
To approve the Directors’
Remuneration Policy
58,281,335
79.96%
14,607,241
20.04%
72,983,167
52.01%
94,591
58,132,761
79.74%
14,770,366
20.26%
72,982,813
52.01%
79,686
110 Saga plc Annual Report and Accounts 2023
Directors’ Remuneration Policy
This document sets out the Saga plc (the Company) Policy on remuneration for Executive and Non-Executive Directors (the Policy) which
was approved by shareholders at the 2022 Annual General Meeting (AGM) and took effect immediately afterwards. The Policy has been
prepared in accordance with the requirements of the UK Companies Act 2006 (the Act), Schedule 8 of the Large and Medium-Sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (the Regulations) and the Listing Rules. The Remuneration
Committee (the Committee) has built in a degree of flexibility to ensure the practical application of the Policy. Where such discretion is
reserved, the extent to which it may be applied is described. The Company’s Policy retains, as its primary goal, the ability to attract, retain and
motivate its leaders and to ensure they are focused on delivering business priorities within a framework designed to promote the long-term
success of Saga, aligned with shareholder interests.
The Board delegated its responsibility to the Committee to establish the Policy on the remuneration of the Executive Directors and the Chair.
The Board has established the Policy on the remuneration of the other Non-Executive Directors.
Summary of the Policy approved at the 2022 AGM
Remuneration elements
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
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Fixed pay
Salary
Fixed pay
Benefits and pension
Annual bonus
(Malus and clawback
provisions apply)
Restricted Share
Plan (RSP)
(Malus and clawback
provisions apply)
Saga Transformation
Plan (STP)
(Malus and clawback
provisions apply)
Shareholding
requirements
Salary
Benefits
and
pension
Maximum
two-thirds
cash
Minimum one-third shares
Three-year deferral period subject to
continued service
Up to 80% of salary
Three-year performance
Two-year holding period
Cap of £15.0m on the value of vesting for the Group Chief Executive
Officer (CEO) and £9.2m for the Group Chief Financial Officer (CFO)
Five-year performance period
Two-year holding period
Executive Directors build and maintain a 200% of salary (250% of salary
for Group CEO) minimum shareholding requirement while in-employment
and post-employment
Changes made to the previous Policy
Element
Changes to Policy
Rationale
Long-term incentives – STP
Addition of an STP which provides participants with
a portion of the value created above a stretching
hurdle over a five-year period.
Long-term incentives – RSP
A 20% reduction to the RSP award level during the
term of the STP.
To drive and reward exceptional levels of growth.
Only once significant shareholder value has been
delivered, will any rewards become payable under
the STP.
To retain the current stability and retention
provided by the RSP but rebalance the package and
recognise the introduction of the STP. The RSP
rewards and retains for moderate to strong
performance and delivery of shareholder value.
Saga plc Annual Report and Accounts 2023 111
DIRECTORS’ REMUNERATION REPORT
Directors’ Remuneration Policy continued
Directors’ Remuneration Policy table
Base salary
Element and link to strategy
Operation
Provides a base level of remuneration to support recruitment and retention of Executive Directors with
the necessary experience and expertise to deliver the Group’s strategy.
An Executive Director’s basic salary is set on appointment and reviewed annually, or when there is a
change in position or responsibility. When determining an appropriate level of salary, the Committee
considers:
Maximum potential value
• pay increases to other colleagues;
• remuneration practices within the Group;
• any change in scope, role and responsibilities;
• the general performance of the Group and each individual;
• the experience of the relevant Director; and
• the economic environment.
Individuals who are recruited or promoted to the Board may, on occasion, have their salaries set below the
targeted policy level until they become established in their role. In such cases, subsequent increases in
salary may be higher than the general rises for colleagues until the target positioning is achieved.
The Committee ensures that maximum salary levels are positioned in line with companies of a similar size
and complexity to Saga and validated against an appropriate comparator group so that they are
competitive against the market.
The Committee continues to review the comparators each year and will add or remove companies from
the comparator group as it considers appropriate.
In general, salary increases for Executive Directors will be in line with the increase for colleagues. However,
larger increases may be offered if there is a material change in the size and responsibilities of the role
(which covers significant changes in Group size and/or complexity).
The Company will set out the Executive Directors’ salaries for the following financial year in each Directors’
Remuneration Report, in the section headed ‘Implementation of the Policy’.
Performance conditions and
recovery provisions
A broad assessment of individual and business performance is used as part of the salary review. No
recovery provisions apply.
Changes to previous Policy
No changes.
Pension
Element and link to strategy
Provides a fair level of pension provision for all colleagues.
Operation
The Company provides a pension contribution allowance that is fair, competitive and in line with
governance best practice.
Maximum potential value
The maximum value of the pension contribution allowance for both current and newly appointed Executive
Directors is aligned with that of the wider workforce, currently 6% of salary.
Pension contributions will be a non-consolidated allowance and will not impact any incentive calculations.
Performance conditions and
recovery provisions
No performance or recovery provisions apply.
Changes to previous Policy
No changes.
Benefits
Element and link to strategy
Provides a market-standard level of benefits.
Operation
Benefits may include family private health cover, death in service life assurance, car allowance, subsistence
expenses and discounts, in line with other colleagues.
The Committee recognises the need to maintain suitable flexibility in the benefits provided to ensure it is
able to support the objective of attracting, and retaining, colleagues in order to deliver the Group strategy.
Additional benefits which are available to other colleagues on broadly similar terms may therefore be
offered, such as relocation allowances on recruitment.
Maximum potential value
The maximum is the cost of providing the relevant benefits.
Performance conditions and
recovery provisions
No performance or recovery provisions apply.
Changes to previous Policy
No changes.
112 Saga plc Annual Report and Accounts 2023
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Annual bonus
Element and link to strategy
The Annual Bonus Plan provides a significant incentive to the Executive Directors, linked to achievement
of goals that are closely aligned with the Company’s strategy and the creation of value for shareholders.
In particular, the Annual Bonus Plan supports the Company’s objectives, allowing the setting of annual
targets based on the business’ strategic objectives at that time, meaning that a wider range of
performance metrics can be used that are relevant and achievable.
Operation
The Committee will determine the maximum annual participation in the Annual Bonus Plan for each year,
which will not exceed 150% of salary.
The Company will set out in the section headed ‘Implementation of the Policy’ within the Directors’
Remuneration Report, in the following financial year, the nature of the targets and their weighting for
each year.
Details of the performance conditions, targets and their level of satisfaction for the year being reported
will be set out in the Annual Report on Remuneration.
The Committee can determine that part of the bonus earned under the Annual Bonus Plan is provided as
an award of shares under the Deferred Bonus Plan (DBP) element. The minimum level of deferral is
one-third of the bonus; however, the Committee may determine that a greater portion, or in some cases
the entire bonus, be paid in deferred shares. The main terms of these awards are:
• minimum deferral period of three years; and
• the participant’s continued employment at the end of the deferral period, unless they are a good leaver.
The Committee may award dividend equivalents on those shares to plan participants to the extent that
they vest. The Committee has the discretion to apply a holding period of two years post-vesting for
DBP shares.
Maximum potential value
The Committee will determine the maximum annual participation in the Annual Bonus Plan for each year,
which will not exceed 150% of salary. Percentage of bonus maximum earned for levels of performance:
• Threshold: up to 20%
• Target: 50%
• Maximum: 100%
Performance conditions and
recovery provisions
The Annual Bonus Plan is based on a mix of financial and strategic/operational conditions and is
measured over a period of one financial year. The financial measures will account for no less than 50%
of the bonus opportunity.
The Committee retains discretion, in exceptional circumstances, to change performance measures and
targets and the weightings attached to performance measures part-way through a performance year
if there is a significant and material event which causes the Committee to believe the original measures,
weightings and targets are no longer appropriate. Discretion may also be exercised in cases where the
Committee believes that the bonus outcome is not a fair and accurate reflection of business, individual
or wider Company performance. The exercise of this discretion may result in a downward, or upward,
movement in the amount of bonus earned resulting from the application of the performance measures.
Any adjustments or discretion applied by the Committee will be fully disclosed in the following year’s
Directors’ Remuneration Report. The Committee is of the opinion that, given the commercial sensitivity
arising in relation to the detailed financial targets used for the annual bonus, disclosing precise targets for
the Annual Bonus Plan in advance would not be in shareholder interests. Actual targets, performance
achieved, and awards made will be published at the end of the performance period so shareholders can
fully assess the basis for any payouts under the Annual Bonus Plan.
Both the Annual Bonus Plan and the DBP contain malus and clawback provisions.
Changes to previous Policy
No changes.
Saga plc Annual Report and Accounts 2023 113
DIRECTORS’ REMUNERATION REPORT
Directors’ Remuneration Policy continued
RSP
Element and link to strategy
Awards are designed to incentivise the Executive Directors over the longer term to successfully
implement the Company’s strategy.
Operation
Awards are granted annually to Executive Directors in the form of Restricted Shares. Restricted Shares
vest at the end of a three-year period subject to:
• the Executive Director’s continued employment at the date of vesting; and
• the satisfaction of an underpin as determined by the Committee, whereby the Committee can adjust
vesting for business, individual and wider Company performance.
A two-year holding period will apply following the three-year vesting period for all awards granted to the
Executive Directors.
Upon vesting, sufficient shares may be sold to pay tax on the shares.
The Committee may award dividend equivalents on awards to the extent that they vest.
Maximum potential value
Maximum value of 100% of salary per annum based on the market value at the date of grant set in
accordance with the rules of the plan.
For Executives participating in the STP, this maximum will be reduced by 20% for the period of participation.
Performance conditions and
recovery provisions
No specific performance conditions are required for the vesting of Restricted Shares but there will be
an underpin in that the Committee will have the discretion to adjust vesting taking into account business,
individual and wider Company performance.
The Committee will take into account the following factors (among others) when determining whether
to exercise its discretion to adjust the number of shares vesting:
• Whether threshold performance levels have been achieved for the performance conditions for the
Annual Bonus Plan for each of the three years covered by the vesting period for the Restricted Shares.
• Whether there have been any sanctions or fines issued by a regulatory body; participant responsibility
may be allocated collectively or individually.
• Whether there has been material damage to the reputation of the Company; participant responsibility
may be allocated collectively or individually.
• The potential for windfall gains.
• The level of colleague and customer engagement over the period.
The RSP is subject to malus and clawback provisions.
Changes to previous Policy
20% reduction to the maximum opportunity level to rebalance the package and recognise the
introduction of the additional incentive provided by the STP.
STP
Element and link to strategy
Operation
Awards are designed to add an additional opportunity to drive, and reward, exceptional levels of growth
over the longer term.
A one-off award that gives Executive Directors the opportunity to earn share awards over a five-year
performance and vesting period.
The STP allows participants to share in up to 12.5% of the total value created for shareholders above a
specified hurdle (defined below) measured on a date shortly after the end of the five-year performance
period (the Measurement Date).
On the Measurement Date, 50% of the number of share awards earned will vest immediately. 25% of the
award earned will be released one year after the Measurement Date with the final 25% earned being
released two years after the Measurement Date.
No shares are capable of sale until the fifth anniversary of grant.
If the shareholder value of £6.00, including share price and dividends (the Hurdle) has not been achieved
at the Measurement Date (inclusive), no share awards will vest.
Maximum potential value
The maximum number of share awards which may vest under the STP is 12.5% of the value created above
the Hurdle (the STP Pool).
The maximum allocation for the Group CEO is 18.0%1 of the STP Pool and 11.0%1 of the STP Pool for the
Group CFO.
Awards are subject to a cap on the value on vesting of £15.0m for the Group CEO and £9.2m for the
Group CFO.
Performance conditions and
recovery provisions
The Committee may vary the level of vesting of a share award if it determines that the formulaic vesting level
would not reflect business or personal performance, or such other factors as it may consider appropriate.
An annual review of continued participation will be undertaken by the Committee to ensure appropriate
conduct and risk leadership conditions are satisfied.
Malus and clawback provisions will apply to STP awards. Malus will operate throughout the performance period.
The clawback period will be two years (or longer, if the Committee determines) from the date of vesting.
Changes to previous Policy
New element of the Policy.
Further details are set out on page 117.
1 The participation proportion for the Group CEO and CFO as stated in the Directors’ Remuneration Policy has been reduced by 0.5% each, following a request from
the CEO and CFO to ensure there is sufficient capacity for the other participants to share in the STP. Additionally, the CEO of Insurance was awarded an 8.0% share
of the STP Pool prior to, and not in anticipation of, his appointment to the main Board
114 Saga plc Annual Report and Accounts 2023
Shareholding requirement
The Committee already had in place strong shareholding requirements (as a percentage of base salary) that encourage Executive Directors
to build up their holdings over a five-year period. Adherence to these guidelines is a condition of continued participation in the equity incentive
arrangements. This policy ensures that the interests of Executive Directors and those of shareholders are closely aligned.
In addition, Executive Directors will be required to retain 50% of the post-tax amount of vested shares from the Company incentive plans until
the minimum shareholding requirement is met and maintained. The following table sets out the minimum shareholding requirements:
Role
Group CEO
Other Executive Directors
Shareholding requirement (percentage of salary)
250%
200%
The Committee retains the discretion to increase the shareholding requirements.
The Committee has introduced a post-cessation shareholding requirement of the full in-employment requirement as listed above
(or the Executive’s actual shareholding on cessation, if lower) for two years following cessation.
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Chair and Non-Executive Director fees
Purpose
Operation
Provides a level of fees to support recruitment and retention of a Non-Executive Chairman and
Non-Executive Directors with the necessary experience to advise and assist with establishing and
monitoring the Group’s strategic objectives.
The Board is responsible for setting the remuneration of the Non-Executive Directors. The Committee is
responsible for setting the Non-Executive Chairman’s fees.
Non-Executive Directors are paid an annual fee and additional fees for chairing committees. The Company
retains the flexibility to pay fees for the membership of committees. Non-Executive Directors will be
entitled to an additional fee if they are required to perform any specific and additional services.
Chair and membership fees may be introduced for any new committees.
The Non-Executive Chairman does not receive any additional fees for membership of committees.
Fees are reviewed annually, taking into account time commitment, responsibilities and equivalent roles in
the comparator group used to review salaries paid to the Executive Directors. Non-Executive Directors
and the Non-Executive Chairman do not participate in any variable remuneration or benefits
arrangements.
Maximum potential value
The fees for Non-Executive Directors are broadly set at a competitive level against the comparator group.
In general, the level of fee increase for the Non-Executive Directors and the Non-Executive Chairman will
be set taking account of any change in responsibility and the general rise in salaries across the UK
workforce. The aggregate fee for the Non-Executive Directors and the Non-Executive Chairman will not
exceed £2.0m.
The Company will pay reasonable expenses incurred by the Non-Executive Directors and Non-Executive
Chairman and may settle any tax incurred.
Performance metrics
No performance or recovery provisions apply.
Changes to previous policy
Additional flexibility to award further fees where specific incremental services are required to be performed.
Legacy elements of the Policy that were in-flight at the time of Policy approval.
Element and link to strategy
Operation
Performance metrics
Legacy Long-term Incentive Plan (LTIP)
was designed to incentivise the Executive
Directors over the longer term to successfully
implement the Company’s strategy.
Awards granted in 2019 vest at the end of a
three-year period subject to the Executive
Director’s continued employment at the
date of vesting and satisfaction of the
performance conditions.
Further details of the terms were included in
the relevant Annual Report on Remuneration
at the time of grant.
Vesting of the 2019 LTIP award is subject to
relative total shareholder return and return
on capital employed performance, as well as
a strategic and operational element.
Saga plc Annual Report and Accounts 2023 115
DIRECTORS’ REMUNERATION REPORT
Directors’ Remuneration Policy continued
Illustration of application of the Policy
The chart below shows an estimate of the remuneration that could be received by Executive Directors under the first year of the operation
of the Policy set out in this report.
Figures shown (£’000)
Fixed
Bonus
RSP
STP
Share price growth
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
£5,460
£5,751
5%
55%
52%
£1,968
3%
29%
28%
40%
£1,367
43%
57%
11%
20%
10%
19%
14%
14%
Minimum
Target
Maximum
Maximum
(with 50%
share price
growth)
£3,315
4%
£3,165
£2,549
£2,669
4%
£1,089
3%
28%
25%
44%
£781
38%
62%
58%
10%
17%
15%
Minimum
Target
Maximum
55%
9%
17%
15%
Maximum
(with 50%
share price
growth)
£1,032
10%
23%
24%
43%
£677
35%
65%
54%
9%
20%
17%
Minimum
Target
Maximum
51%
9%
19%
17%
Maximum
(with 50%
share price
growth)
Euan Sutherland
Group CEO
James Quin
Group CFO
Steve Kingshott
CEO of Insurance
Element
Minimum
Target
Maximum
Fixed elements
Base salary for 2022/23.
Benefits paid for 2021/22 annualised for full year equivalent figures.
Pension in line with policy at 6% of salary.
Maximum with 50%
share price growth
Annual bonus
Nil.
50% of the maximum
opportunity.
100% of the maximum
opportunity.
100% of the maximum
opportunity.
Restricted Shares
100% vesting of
Restricted Shares.
100% vesting of
Restricted Shares.
100% vesting of
Restricted Shares.
Award levels are 80% of
salary for the Group CEO,
68% of salary for the
Group CFO and 60% for
the CEO of Insurance.
Award levels are 80% of
salary for the Group CEO,
68% of salary for the
Group CFO and 60% for
the CEO of Insurance.
Award levels are 80% of
salary for the Group CEO,
68% of salary for the
Group CFO and 60% for
the CEO of Insurance.
100% vesting of
Restricted Shares plus
50% share price growth.
Award levels are 80% of
salary for the Group CEO,
68% of salary for the
Group CFO and 60% for
the CEO of Insurance.
STP (shown in the chart on
an annualised basis)
Nil.
Estimate of accounting
fair value.
£15.0m for the Group
CEO, £9.2m for the Group
CFO and £6.9m for the
CEO of Insurance.
£15.0m for the Group
CEO, £9.2m for the Group
CFO and £6.9m for the
CEO of Insurance.
Scenario charts show minimum, target and maximum scenarios in accordance with the Regulations, as well as the impact of a 50% share
price growth on the long-term incentives for the maximum scenario. All scenarios do not account for dividend equivalents on DBP shares
or RSP shares.
116 Saga plc Annual Report and Accounts 2023
Discretion within the Policy
The Committee has discretion in several areas of policy as set out in this report. The Committee may also exercise operational and
administrative discretions under relevant plan rules as set out in those rules. In addition, the Committee has the discretion to amend the Policy
with regard to minor or administrative matters where it would be, in the opinion of the Committee, disproportionate to seek or await
shareholder approval.
Malus and clawback
Malus is the adjustment of the annual bonus payments or unvested long-term incentive awards (including RSP and STP) because of the
occurrence of one or more of the circumstances listed below. The adjustment may result in the value being reduced to nil.
Clawback is the recovery of payments made under the Annual Bonus Plan or vested long-term incentive awards (including RSP and STP)
as a result of the occurrence of one or more of the circumstances listed below. Clawback may apply to all, or part, of a participant’s payment
under the Annual Bonus Plan, RSP or STP award and may be affected, among other means, by requiring the transfer of shares, payment of
cash or reduction of awards or bonuses. The circumstances in which malus and clawback could apply are as follows:
• Discovery of a material misstatement resulting in an adjustment in the audited accounts of the Group, or any Group company.
• The discovery that any information used to determine the award was based on error, or inaccurate or misleading information.
• Action or conduct of a participant which amounts to fraud or gross misconduct.
• Events, or the behaviour of a participant, which have led to the censure of a Group company by a regulatory authority or have had a
significant detrimental impact on the reputation of any Group company, provided that the Committee is satisfied that the relevant
participant was responsible for the censure or reputational damage and that the censure or reputational damage is attributable to
the participant.
• Failure of risk management including, but not limited to, a material breach of risk appetite and regulatory standards.
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• Corporate failure.
Element
Malus
Clawback
Annual bonus (cash)
Annual bonus
(deferred shares)
Restricted Shares
STP
Up to the date of the
cash payment.
To the end of the
three-year vesting period.
To the end of the
three-year vesting period.
To the end of the
five-year vesting period.
Two years post the date
of any cash payment.
n/a
Two years post vesting.
Two years post vesting.
The Committee believes that the rules of the plans provide sufficient powers to enforce malus and clawback where required and undertakes
an annual review to assess if there are reasonable grounds for the malus and clawback provisions to be enforced.
Loss of office policy
When considering compensation for loss of office, the Committee will always seek to minimise the cost to the Company while applying the
following philosophy:
Remuneration element
Treatment on cessation of employment
General
The Committee will honour Executive Directors’ contractual entitlements. Service contracts do not
contain liquidated damages clauses. If a contract is to be terminated, the Committee will determine such
mitigation as it considers fair and reasonable in each case. There are no contractual arrangements that
would guarantee a pension with limited, or no, abatement on severance or early retirement. There is no
agreement between the Company and its Directors, or other colleagues, providing for compensation for
loss of office or employment that occurs because of a takeover bid.
The Committee reserves the right to make additional payments, where such payments are made in good
faith, in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or
by way of settlement or compromise of any claim arising in connection with the termination of an Executive
Director’s office or employment.
Salary, benefits and pension
These will be paid over the notice period. The Company has discretion to make a lump sum payment in lieu.
Saga plc Annual Report and Accounts 2023 117
DIRECTORS’ REMUNERATION REPORT
Directors’ Remuneration Policy continued
Element
Good leaver reason
Other reason
Discretion
The Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the
Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained
in full to shareholders.
• To determine whether to pro-rate the bonus to time. The Committee’s
normal policy is that it will pro-rate bonus for time. It is the Committee’s
intention to use discretion to not pro-rate in circumstances where
there is an appropriate business case which will be explained
in full to shareholders.
The Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the
Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained
in full to shareholders.
• To vest deferred shares at the end of the original deferral period or at
the date of cessation.
The Committee will make this determination depending on the type of
good leaver reason resulting in the cessation.
• To determine whether to pro-rate the maximum number of shares to the
time from the date of grant to the date of cessation. The Committee’s
normal policy is that it will not pro-rate awards for time. The Committee
will determine whether or not to pro-rate based on the circumstances
of the Executive Director’s departure.
The Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the
Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained
in full to shareholders.
• To determine whether to pro-rate the Company award to time.
The Committee’s normal policy is that it will pro-rate for time. It is the
Committee’s intention to use discretion to not pro-rate in circumstances
where there is an appropriate business case which will be explained
in full to shareholders.
• To determine whether the award will vest on the date of cessation or the
original vesting date. The Committee will make its determination based,
among other factors, on the reason for the cessation of employment.
The Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the
Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained
in full to shareholders.
• To determine whether to pro-rate the award to the date of cessation.
The Committee’s normal policy is that it will pro-rate. The Committee
will determine whether to pro-rate based on the circumstances of the
Executive Director’s departure.
• To determine whether the awards vest on the date of cessation or the
original vesting date. The Committee will make its determination based,
among other factors, on the reason for the cessation of employment.
• To determine whether the holding period for awards applies in part or
in full. The Committee will make its determination based, among other
factors, on the reason for the cessation of employment.
In respect of the STP, good leaver treatment will be solely at the discretion
of the Committee, taking into account the circumstances and factors which
it considers to be relevant.
No bonus payable for
year of cessation.
Bonus cash
Performance
conditions will be
measured at the bonus
measurement date.
Bonus will normally be
pro-rated for the
period worked during
the financial year.
Bonus
deferred
share
awards
All subsisting deferred
share awards will vest.
Lapse of any unvested
deferred share awards.
RSP for the
year of
cessation
The award will normally
be pro-rated for the
period worked during
the financial year.
No award for year
of cessation.
RSP
STP
Awards will be
pro-rated to time and
will vest on their original
vesting dates and
remain subject to the
holding period.
Unvested awards will be
forfeited on cessation
of employment.
Vested awards will
remain subject to
the holding period.
Awards which have
vested remain
exercisable at the
normal dates, subject to
the relevant holding
periods/release dates.
Awards which have
vested remain
exercisable at the
normal dates, subject
to the relevant holding
periods/release dates.
Awards which have
not yet vested lapse.
The Committee retains
discretion to allow
awards which have not
yet vested to continue
to vest subject to
achievement of the
Hurdle and pro-rated
to time.
Other
contractual
obligations
There are no other contractual provisions other than those set out above agreed prior to 27 June 2012.
118 Saga plc Annual Report and Accounts 2023
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The following definition of leavers will apply to all of the above incentive plans, except the STP. A good leaver reason is defined as cessation
in the following circumstances:
• Death.
• Ill-health.
• Injury or disability.
• Retirement.
• Employing company ceasing to be a Group company.
• Transfer of employment to a company which is not a Group company.
• At the discretion of the Committee (as described above). The Committee retains the authority to exercise its discretion to determine
good leaver treatment separately in respect of each element of remuneration.
In respect of the STP, good leaver treatment will be solely at the discretion of the Committee, taking into account the circumstances and
factors which it considers to be relevant.
Cessation of employment in circumstances other than those set out above is cessation for other reasons.
Change of control policy
Name of incentive plan
Change of control
Discretion
Cash bonus
Pro-rated to time and performance to the date
of the change of control.
Bonus deferred share awards
Subsisting deferred share awards will vest on a
change of control.
RSP
STP
The number of shares subject to subsisting RSPs
will vest on a change of control pro-rated for time
and performance against any underpins.
There will be a Measurement Date on the change
of control and the value of the STP Pool and share
awards will be calculated accordingly.
The share price used to calculate the total
shareholder return will be the offer price for
the Company.
Accrued share awards will immediately vest
(and be released from any holding periods)
on the date of the change of control.
The Committee has discretion regarding whether
to pro-rate the bonus to time. The Committee’s
normal policy is that it will pro-rate the bonus for
time. It is the Committee’s intention to use its
discretion to not pro-rate in circumstances only
where there is an appropriate business case which
will be explained in full to shareholders.
The Committee has discretion regarding whether
to pro-rate the award to time. The Committee’s
normal policy is that it will not pro-rate awards for
time. The Committee will make this determination
depending on the circumstances of the change
of control.
The Committee has discretion regarding whether
to pro-rate the RSPs for time. The Committee’s
normal policy is that it will pro-rate the RSPs for
time. It is the Committee’s intention to use its
discretion to not pro-rate in circumstances only
where there is an appropriate business case which
will be explained in full to shareholders. The
Committee also has discretion to consider
attainment of any underpins.
The Committee has discretion regarding whether
to pro-rate the STP for time. The Committee’s
normal policy is that it will not pro-rate the STP
for time.
Saga plc Annual Report and Accounts 2023 119
DIRECTORS’ REMUNERATION REPORT
Directors’ Remuneration Policy continued
Recruitment and promotion policy
The Company’s principle is that the remuneration of any new recruit will be assessed in line with the same principles as for the Executive
Directors, as set out in the Policy table. The Committee is mindful that it wishes to avoid paying more than it considers necessary to secure
a preferred candidate with the appropriate calibre and experience needed for the role. In setting the remuneration for new recruits, the
Committee will have regard to guidelines and shareholder sentiment regarding one-off or enhanced short-term or long-term incentive
payments, as well as giving consideration for the appropriateness of any performance measures associated with an award. The Company’s
policy when setting remuneration for the appointment of new Directors is summarised in the table below:
Remuneration element
Policy
Salary, benefits and pension
Salary and benefits will be set in line with the policy for existing Executive Directors. Maximum pension
contribution will be aligned with that of the majority of colleagues.
Annual bonus
RSP
STP
Maximum annual participation will be set in line with the Company’s policy for existing Executive Directors
and will not exceed 150% of salary.
Maximum annual participation will be set in line with the Company’s policy for existing Executive Directors
and will not exceed 80% of salary.
Eligible to participate with award size to reflect expected contribution and timing of joining the plan.
Maximum variable remuneration
The maximum variable remuneration which may be granted is the sum of the annual bonus, RSP and STP
(excluding the value of any buyouts).
Buyout of incentives forfeited on
cessation of employment
Relocation policies
Forfeited on cessation of employment.
Where the Committee determines that the individual circumstances of recruitment justify the provision
of a buyout, the equivalent value of any incentives that will be forfeited on cessation of an Executive
Director’s previous employment will be calculated taking into account the following:
• The proportion of the performance period completed on the date of the Executive Director’s cessation
of employment.
• The performance conditions attached to the vesting of these incentives and the likelihood of them
being satisfied.
• Any other terms and conditions having a material effect on their value (lapsed value). The Committee
may then grant up to the same value as the lapsed value, where possible, under the Company’s incentive
plans. To the extent that it was not possible, or practical, to provide the buyout within the terms of the
Company’s existing incentive plans, a bespoke arrangement would be used.
In instances where the new Executive Director is required to relocate or spend significant time away from
their normal residence, the Company may provide one-off compensation to reflect the cost of relocation
for the Executive Director. The level of the relocation package will be assessed on a case-by-case basis but
will take into consideration any cost of living differences/housing allowance and schooling, and will not
exceed a period of two years from recruitment.
Where an existing colleague is promoted to the Board, the policy set out above would apply from the date of promotion but there would be
no retrospective application of the policy in relation to subsisting incentive awards or remuneration arrangements. Accordingly, prevailing
elements of the remuneration package for an existing colleague would be honoured and form part of the ongoing remuneration of the person
concerned. These would be disclosed to shareholders in the Directors’ Remuneration Report for the relevant financial year.
The Company’s policy, when setting fees for the appointment of a new Chairman or Non-Executive Director, is to apply the policy which applies
to current Non-Executive Directors.
120 Saga plc Annual Report and Accounts 2023
Service contracts and letters of appointment
The Committee’s policy for setting notice periods is that normally they will be a maximum of 12 months. The Committee may, in exceptional
circumstances arising on recruitment, allow a longer period, which would in any event reduce to 12 months following the first year of
employment. The Non-Executive Directors of the Company do not have service contracts and are appointed by letters of appointment.
Each independent Non-Executive Director’s term of office runs for a three-year period.
The Company follows the UK Corporate Governance Code 2018 (the Code) recommendation that all Directors be subject to annual
re-appointment by shareholders.
Executive Director
Name
Date appointed
Nature of contract
From Company
From Director
Compensation provisions for
early termination
Euan Sutherland
6 January 2020
James Quin
1 January 2019
Steve Kingshott
3 January 2023
Rolling
Rolling
Rolling
12 months
12 months
12 months
12 months
12 months
12 months
None
None
None
Notice periods
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Non-Executive Director
Name
Original appointment
Julie Hopes
1 October 2018
Eva Eisenschimmel
1 January 2019
Gareth Hoskin
11 March 2019
Appointment of
current term
1 October 2021
1 January 2022
11 March 2022
Arrangement
Notice period/unexpired term
at AGM
Letter of appointment
3 months/15 months
Letter of appointment
3 months/18 months
Letter of appointment
3 months/21 months
Gemma Godfrey
1 September 2022
1 September 2022
Letter of appointment
3 months/33 months
Peter Bazalgette
1 September 2022
1 September 2022
Letter of appointment
3 months/33 months
Anand Aithal
1 September 2022
1 September 2022
Letter of appointment
3 months/33 months
The Board allows Executive Directors to accept appropriate outside non-executive director appointments provided the aggregate
commitment is compatible with their duties as Executive Directors. The Executive Directors concerned may retain fees paid for these
services, which will be subject to approval by the Board.
Choice of performance measures and targets
Annual bonus
Performance for the Annual Bonus Plan will be measured against financial and non-financial measures with respective targets for each
measure set by the Committee each financial year. The Policy provides the Committee with the flexibility to choose measures that are
strongly linked to the specific strategic and financial priorities in any given financial year.
For financial measures, the targets are set with reference to internal forecasts, external forecasts, and other circumstances, as appropriate,
to ensure that targets are suitably stretching and motivational to Executives.
Non-financial targets are set each financial year with reference to the key strategic objectives of the Company and are linked to the long-term
success of the business.
RSP
No specific performance conditions are required for the vesting of Restricted Shares but there will be an underpin in that the Committee will
have the discretion to adjust vesting taking into account business, individual and wider Company performance.
STP
The STP will be based on the Hurdle of £6.00 per share including dividends paid during the performance period. If this minimum Hurdle is not
met, no payout will be awarded. The measure has been set for alignment with longer-term shareholder value, with the Hurdle being set at a level
that is considered stretching in the context of the business strategy and market conditions.
Saga plc Annual Report and Accounts 2023 121
DIRECTORS’ REMUNERATION REPORT
Directors’ Remuneration Policy continued
Consideration of employment conditions elsewhere in the Group
Each year, prior to reviewing the remuneration of the Executive Directors and the members of the Executive Leadership Team, the
Committee considers a report prepared by the Chief People Officer detailing base pay and share scheme practices across the Company.
The report provides an overview of how colleague pay compares with the market, alongside any material changes during the year and includes
detailed analysis of basic pay and variable pay changes within the UK.
While the Company does not directly consult with colleagues as part of the process of reviewing executive pay and formulating the Policy, the
Company engages with colleagues via its People Committee, where the approach to Executive remuneration is also discussed. The Chair of
the Remuneration Committee is the Non-Executive Director nominated as ‘People Champion’. In addition, the Committee receives an update
and feedback from the broader colleague population on an annual basis using an engagement survey which includes a number of questions
relating to remuneration. The Company does not use remuneration comparison measurements.
The Group aims to provide a remuneration package for all colleagues that is market competitive and operates the same core structure as
for the Executive Directors. The Group operates colleague share and variable pay plans, with pension provisions provided for all Executive
Directors and colleagues. In addition, a proportion of the STP Pool is also reserved for all colleagues. Any salary increases for Executive
Directors are expected to be generally in line with those for UK-based colleagues. The Committee annually publishes a section on fairness,
diversity and wider workforce considerations as part of the Directors’ Remuneration Report.
Consideration of shareholder views
The Committee takes the views of the shareholders seriously and these views are taken into account in shaping remuneration policy and
practice. Shareholder views are considered when evaluating and setting remuneration strategy and the Committee welcomes an open
dialogue with its shareholders on all aspects of remuneration. The Committee consulted its major shareholders and the main shareholder
representative bodies prior to proposing this Policy. The Committee is grateful for the time taken to consider the Committee proposals and
provide feedback. At the end of the consultation, the majority of shareholders consulted indicated they were supportive of this Policy.
Compliance with the Code
The following table sets out how the Policy aligns with the Code whose objective is to ensure the remuneration operated by the Company
is aligned with all stakeholder interests, including those of shareholders:
Key remuneration element of the Code
Alignment with the Policy
Five-year period between the
date of grant and realisation for
equity incentives
Phased release of equity awards
Discretion to override formulaic
outcomes
Post-cessation shareholding
requirement
The RSP and STP meet this requirement through the implementation of the two-year vesting holding
period for the RSP and five-year vesting period for the STP.
The RSP meets this requirement as awards are made in an annual cycle. The STP has a phased release
in years five, six and seven.
Included in the terms and conditions of the Annual Bonus Plan, the RSP and the STP.
The full in-employment requirement for two years following cessation of employment.
Pension alignment
The pension contribution for all Executive Directors is aligned with the majority of colleagues at 6%.
Extended malus and clawback
The malus and clawback provisions align with the Financial Reporting Council’s Board
Effectiveness Guidance.
122 Saga plc Annual Report and Accounts 2023
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Provision 40 element
How the Policy aligns
Clarity
Remuneration arrangements should
be transparent and promote
effective engagement with
shareholders and the workforce
The Annual Bonus Plan performance conditions are based on the core strategic objectives and therefore,
there is a clear link to all stakeholders between their delivery and reward provided to management.
The RSP provides annual grants of shares which have to be retained for the longer term to ensure a focus
on sustainable performance. This provides complete clarity of the alignment of the interests of
management and shareholders.
Payout of the STP is directly linked to shareholder value through the Hurdle.
Simplicity
Remuneration structures should
avoid complexity and their rationale
and operation should be easy
to understand
The performance conditions for the Annual Bonus Plan are based on the Company’s strategic objectives.
This alignment of reward with the delivery of key markers of the success of the implementation of the
strategy ensures simplicity.
RSPs are a simple mechanism and avoid the setting of long-term performance conditions which tend to
inherently make remuneration more complex.
The STP is based on growth in total shareholder returns and therefore is a simple to understand incentive.
Risk
The Policy includes:
Remuneration arrangements should
ensure reputational and other risks
from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated
Predictability
The range of possible values of
rewards to individual Directors and
any other limits or discretions
should be identified and explained at
the time of approving the Policy
Proportionality
The link between individual awards,
the delivery of strategy and the
long-term performance of the
Company should be clear.
Outcomes should not reward
poor performance
• setting defined limits on the maximum awards which can be earned, including an earnings cap on the STP;
• requiring the deferral of a substantial proportion of the incentives in shares for a material period of time;
• aligning the performance conditions with the strategy of the Company;
• ensuring a focus on long-term sustainable performance through the RSP and STP; and
• ensuring there is sufficient flexibility to adjust payments through malus and clawback and an overriding
discretion to depart from formulaic outcomes.
These elements mitigate against the risk of target-based incentives by:
limiting the maximum value that can be earned;
•
• deferring the value in shares for the long-term which helps ensure that the performance earning the
award was sustainable and thereby discourages short-term behaviours;
• aligning any reward to the agreed strategy of the Company; the use of an RSP and STP which support
a focus on the sustainability of the performance over the longer term;
• reducing the awards, or cancelling them, if the behaviours giving rise to the awards are inappropriate; and
• reducing the awards, or cancelling them, if it appears that the criteria on which the award was based
do not reflect the underlying performance of the Company.
The Policy sets out clearly the range of values, limits and discretions in respect of the remuneration
of management.
The RSP, in particular, ensures the predictability of the rewards received by management.
The Policy sets out clearly the range of values and discretions in respect of the remuneration
of management.
The RSP, in particular, ensures the predictability of the rewards received by Executive Directors and the
bonus plan, being based on annual targets, operates over a more predictable time cycle compared with
traditional LTIP schemes, thereby allowing the Committee to more effectively ensure desirable
remuneration outcomes.
The STP is measured against stretching targets and therefore does not reward poor performance.
In addition, the Committee’s overriding discretion to depart from formulaic outcomes ensures there
is no reward for poor performance.
Alignment to culture
The bonus plan drives behaviours consistent with the Company’s strategy.
Incentive schemes should drive
behaviours consistent with the
Company’s purpose, values,
and strategy
The RSP and STP drive behaviours consistent with the Company’s purpose and values which are focused
on the long-term future of the business throughout the business cycle.
Eva Eisenschimmel
Chair, Remuneration Committee
17 April 2023
This report has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 as amended in 2013, 2018 and 2019, the Provisions of the current Code and the Listing Rules.
Saga plc Annual Report and Accounts 2023 123
Directors’ Report
Management Report
The Directors’ Report, together with the Strategic Report, set out on pages 1-70 form the Management Report for the purposes of
Disclosure Guidance and Transparency Rule (DTR) 4.1.5 R (the Management Report).
Statutory information contained elsewhere in the Annual Report
Information required to be part of this Directors’ Report can be found elsewhere in the Annual Report and Accounts as indicated in the table
below and is incorporated into this report by reference.
Information
Location in Annual Report and Accounts
Likely future developments in the business of the Company or its subsidiaries
Environmental, Social and Governance including Task Force on Climate-Related Financial Disclosures
Greenhouse gas emissions
Suppliers, customers and others in a business relationship engagement
Colleagues (employment of disabled persons, workforce engagement and policies)
Corporate Governance Statement
Directors’ details (including changes made during the year)
Related-party transactions
Diversity
Share capital
Employee share schemes (including long-term incentive schemes)
Pages 1-70
Pages 26-43
Pages 30-31
Pages 20-21
Pages 37-41, 69
Pages 71-91
Pages 72, 74-75 and 83-85
Not applicable
Pages 39-40, 77, 83-85
Note 33 on page 196
Note 36 on pages 197-199
Financial instruments: information on the Group’s financial instruments and risk management objectives
and policies, including our policy for hedging
Notes 2, 3, 7, 8, 19 and 20
on pages 143-163, 164 and 175-184
Statements of responsibilities
Additional information
Page 128
Pages 209-214
Disclosure table pursuant to Listing Rule (LR) 9.8.4C
The following table provides references to where the information required by LR 9.8.4C R is disclosed:
Listing Rule
Listing Rule requirement
Disclosure
9.8.4(1)
9.8.4(2)
9.8.4(4)
9.8.4(5)
9.8.4(6)
9.8.4(7)
9.8.4(8)
Interest capitalised by the Group and any related tax relief
Note 17 on pages 171-173
Unaudited financial information (LR 9.2.18 R)
Group Chief Financial Officer’s Review, pages 44-61
Long-term incentive schemes (LR 9.4.3 R)
Directors’ Remuneration Report, pages 92-123
Directors’ waivers of emoluments
Directors’ Remuneration Report, pages 92-123
Directors’ waivers of future emoluments
Directors’ Remuneration Report, pages 92-123
Non-pre-emptive issues of equity for cash
Directors’ Report on page 126
Non-pre-emptive issues of equity for cash by any unlisted major
subsidiary undertaking
Not applicable
9.8.4(9)
Parent company participation in a placing by a listed subsidiary
Not applicable
9.8.4(10)
9.8.4(11)
Contract of significance in which a Director is, or was,
materially interested
Contract of significance between the Company
(or one of its subsidiaries) and a controlling shareholder
9.8.4(12)
Waiver of dividends by a shareholder
9.8.4(13)
Waiver of future dividends by a shareholder
Not applicable
Not applicable
Directors’ Report on page 126
(under paragraph ‘Rights attaching to shares’)
Directors’ Report on page 126
(under paragraph ‘Rights attaching to shares’)
9.8.4(14)
Board statement in respect of relationship agreement with
a controlling shareholder
Not applicable. See Directors’ Report on page 125
(under ‘Relationship agreement with Director shareholder’)
124 Saga plc Annual Report and Accounts 2023
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Results and dividends
The Group made a loss after taxation of £259.2m for the financial
year ended 31 January 2023. The Board did not pay an interim
dividend. The Board of Directors is not in a position to recommend
the payment of a final dividend for the 2022/23 financial year.
The Directors intend to resume dividend payments in the future,
when further progress has been made with deleveraging and when
current limitations, particularly in relation to ship debt, have been
removed. Any decision to declare and pay dividends is made at the
discretion of the Directors and depends on, among other things,
applicable law, regulation, restrictions, the Group’s financial position,
regulatory capital requirements, working capital requirements,
finance costs, general economic conditions and other factors the
Directors deem significant from time to time.
Political donations
No political donations were made during the year.
Directors’ interests
A list of the Directors, their interests in the long-term performance
share plan, contracts and ordinary share capital of the Company are
given in the Directors’ Remuneration Report on pages 92-123.
Relationship agreement with Director shareholder
Any person who exercises or controls, on their own or together with
any person with whom they are acting in concert, 30% or more of the
votes able to be cast at general meetings of a company are known as a
‘controlling shareholder’ under the Listing Rules. The Listing Rules
require companies with controlling shareholders to enter into an
agreement which is intended to ensure that the controlling
shareholders comply with certain independence provisions stated
in the Listing Rules.
The Board confirms that, in accordance with the Listing Rules,
there are no controlling shareholders in the Company. However,
the Company entered into a relationship agreement with Roger De
Haan on 10 September 2020 (the Relationship Agreement) as
Roger De Haan holds 37,196,970 shares of 15p each (constituting
26.5% of issued share capital as of 31 January 2023). The
Relationship Agreement regulates the relationship between the
Company and Roger De Haan and contains undertakings that
transactions and arrangements will be conducted on an arm’s-length
basis and on normal commercial terms. It also provides that dilutions
caused by new issuances of shares shall be disregarded when
determining investor rights under its terms.
The Group entered into an unsecured loan facility with Roger De
Haan on 3 April 2023. This was provided on an arm’s length basis and
on normal commercial terms.
Rules on appointment and replacement of Directors
A Director may be appointed by ordinary resolution of the
shareholders in a general meeting following nomination by the Board
or a member (or members) entitled to vote at such a meeting. In
addition, the Directors may appoint a Director to fill a vacancy, or as
an additional Director, provided that the individual retires at the next
Annual General Meeting (AGM). A Director may be removed by the
Company in certain circumstances set out in the Company’s Articles
of Association or by an ordinary resolution of the Company. The
Relationship Agreement between the Company and Roger De Haan
provides for the nomination for appointment (and removal or
re-nomination) to the Board of one Non-Executive Director for as
long as he holds at least the higher of (i) 10% or more of the issued
ordinary share capital of the Company and (ii) the percentage of the
issued ordinary share capital of the Company represented by 60%
of the investor’s holding of ordinary shares immediately following the
capital raise which took place in October 2020.
All Directors will seek re-election (or election) at the AGM in
accordance with the Company’s Articles of Association and the
recommendations of the UK Corporate Governance Code.
Directors’ indemnities
At the date of this report, indemnities are in force under which the
Company has agreed to indemnify the Directors, to the extent
permitted by law and the Company’s Articles of Association, in
respect of all losses arising out of, or in connection with, the execution
of their powers, duties and responsibilities, as Directors of the
Company or any of its subsidiaries. No amount was paid under any
of these indemnities during the year.
Change of control – significant agreements
There are some arrangements which give rights to third parties to
terminate agreements upon a change of control of the Company,
including following a takeover bid; for example, insurance, commercial
contracts and distribution agreements. There are a number of
contracts and arrangements throughout the Group for which the
legal risk arising out of a change of control is managed as part of the
contractual governance process.
The Group’s corporate debt is unsecured and in place for general
purposes. It consists of a £150m seven-year public listed bond at
3.375%, due to expire in May 2024, and a £250m five-year public
listed bond at 5.50%, due to expire in July 2026. The Group also has
a £50m revolving credit facility, expiring in May 2025.
Twelve-year Export Credit Agency backed funding is in place to
finance 80% of the cost of the Group’s two ocean cruise ships at a
fixed interest rate. The first of these facilities was drawn on
completion of the build of Spirit of Discovery and is secured by way of
a charge over the asset. The second facility was drawn on completion
of the build of Spirit of Adventure and is also secured by way of a
charge over the asset. The Company has provided a guarantee for
the ship debt. The Group also secured a debt holiday and covenant
waiver for the ship debt for the two years ending 31 March 2022.
Repayments recommenced in June 2022.
In the event of a change of control, the facilities would either require
repayment or renegotiation. If the ship financing is terminated,
significant break fees may be incurred. Further details on banking
facilities are shown in Note 30 to the consolidated financial
statements on pages 193-194.
The rules of the Company’s employee share plans generally provide
for the accelerated vesting and/or release of share awards in the
event of a change of control of the Company.
The Company does not have any agreements with colleagues
(including Directors) which would pay compensation in the event
of a change of control.
Conflict of interest
Each Director is obliged to disclose any potential, or actual, conflict
of interest in accordance with the Company’s Conflict of Interest
Policy. The policy is subject to review and declarations are made on
an annual basis. Directors are also required to update any changes
to declarations as they occur. Internal controls are in place to
ensure that any related-party transactions are conducted on an
arm’s-length basis. Roger De Haan did not participate in discussions
around the loan facility agreement.
Share capital and interests in voting rights
The Company’s share capital (including movements during the year)
is set out on page 196. At the date of this report, the Company’s issued
share capital comprised a single class of share capital which is divided
into ordinary shares of 15p each. At 31 January 2023, 140,337,271
ordinary shares of 15p each had been issued, fully paid up and quoted
on the London Stock Exchange (LSE).
Saga plc Annual Report and Accounts 2023 125
Directors’ Report continued
In accordance with DTR 5.1, the Company must disclose where it
has been notified of the interests in the Company’s total voting rights.
The obligation to notify sits with the shareholder, and the Company
must report on the notifications received, between the end of the
reporting year and a date not more than one month prior to the
date of the notice of AGM. As the date of signing of the Annual Report
and Accounts is prior to this we will include an updated position in
our AGM notice.
Since the date of disclosure to the Company, the interest of any
person may have increased or decreased. There is no requirement
to notify the Company of any increase or decrease unless the holding
passes a notifiable threshold in accordance with DTR 5.1.
Information regarding other interests in voting rights provided to
the Company pursuant to the Financial Conduct Authority DTRs is
published on the Company’s corporate website and via a Regulatory
Information Service.
The Company has not been notified of any interests in the Company’s
total voting rights between 31 January 2023 and the date of signing
the Annual Report and Accounts. During the year, the following
notifications were received:
Percentage
of capital as
disclosed
to the
Company
Ordinary
shares of
15p each
4,557,630
3.25%
Name
Norges Bank
Kernow Asset
Management Limited
4,238,107
3.02%
Nature of
holding
Direct
(2.19%)
Indirect
(1.06%)
Direct
Authority to allot/purchase own shares
A shareholders’ resolution was passed at the AGM on 5 July 2022
authorising the Company to make market purchases within the
meaning of Section 693(4) of the Companies Act 2006 (the Act)
(up to £2,105,059, representing 10% of the aggregate nominal share
capital of the Company following admission). This is subject to a
minimum price of 15p and a maximum price of the higher of 105% of
the average mid-market quotations for five business days prior to
purchase or the price of the last individual trade and highest current
individual bid as derived from the LSE trading system.
The Company did not exercise this authority during the year, and it will
expire at the forthcoming AGM. A special resolution to authorise the
Company to make market purchases representing 10% of current
nominal share capital will be proposed at the 2023 AGM.
The Directors of the Company were also granted authority at the
2022 AGM to allot relevant securities up to a nominal amount of
£7,009,847. This authority was not exercised during the year. This
authority will apply until the conclusion of the 2023 AGM, at which
shareholders will be asked to grant the Directors authority (for the
purposes of Section 551 of the Act) to allot relevant securities: (i) up
to an aggregate nominal amount of 33.3% of the Company’s issued
ordinary share capital; and (ii) comprising equity securities (as defined
in the Act) up to an aggregate nominal amount of 66.6% of the
Company’s issued ordinary share capital (after deducting from such
limit any relevant securities issued under (i) in connection with a rights
issue). These amounts will apply until the conclusion of the AGM to be
held in 2024, or, if earlier, 31 July 2024.
Special resolutions will also be proposed to give the Directors
authority to make non-pre-emptive issues wholly for cash in
connection with rights issues and otherwise up to an aggregate
nominal amount of 10% of the Company’s issued ordinary share
capital and to make non-pre-emptive issues wholly for cash in
connection with acquisitions or specified capital investments up to
an aggregate amount of 10% of the Company’s issued ordinary share
capital. This is consistent with the Pre-Emption Group’s published
Statement of Principles.
Rights attaching to shares
The Company has a single class of ordinary shares in issue. The rights
attached to the shares are governed by applicable law and the
Company’s Articles of Association which are available on our
corporate website (www.corporate.saga.co.uk/about-us/governance).
Ordinary shareholders have the right to receive notice, attend and
vote at general meetings; and to receive a copy of the Company’s
Annual Report and Accounts and a dividend when approved and paid.
On a show of hands, each shareholder present in person, or by proxy
(or an authorised representative of a corporate shareholder), shall
have one vote. In the event of a poll, one vote is attached to each share
held. No shareholder owns shares with special rights as to control.
The Notice of AGM (Notice) states deadlines for exercising voting
rights and for appointing a proxy or proxies.
The Saga Employee Benefit Trust (the Trust) is an Employee Benefit
Trust which holds property (the Trust Fund) including inter-alia
money, and ordinary shares in the Company, in trust in favour or
for the benefit of colleagues of the Saga Group. The Trustee of the
Trust has the power to exercise the rights and powers incidental to,
and to act in relation to, the Trust Fund in such manner as the Trustee
in its absolute discretion thinks fit. The Trustee has waived its rights
to dividends on ordinary shares held by the Trust. Details of
employee share schemes are set out in Note 36 to the consolidated
financial statements.
126 Saga plc Annual Report and Accounts 2023
Restrictions on the transfer of shares
The Company is not aware of any agreement which would result in
a restriction on the transfer of shares or voting rights.
Articles of Association
Any amendment to the Company’s Articles of Association may only
be made by passing a special resolution of the shareholders of the
Company. The Company last approved its Articles of Association
by special resolution at the AGM held on 14 June 2021.
Research and development
The Group does not undertake any material activities in the field
of research and development.
Branches outside the UK
The Company does not have any branches outside the UK.
Post-balance sheet events
After the year end, the Group concluded discussions with its Cruise
lenders in respect of the covenant restrictions attaching to its two
ship debt facilities (Note 30 on pages 193-194). Lenders have agreed
to a waiver of the EBITDA to debt repayment covenant ratio for the
31 July 2023 testing date.
Also since 31 January, the Company has agreed a £50m loan facility
with Roger De Haan, to commence on 1 January 2024, details of which
are set out in Note 40 on page 202.
Auditor
KPMG LLP has confirmed its willingness to continue in office as
auditor of the Company and resolutions for its re-appointment and
for the Audit Committee to determine its remuneration will be
proposed at the forthcoming AGM.
Annual General Meeting
The AGM will be held on 20 June at 11.00am at the offices of
Numis Securities Limited, 45 Gresham Street, London EC2V 7BF.
The Notice of AGM will be available on our corporate website
(www.corporate.saga.co.uk) in due course.
By order of the Board
Victoria Haynes
Group Company Secretary
17 April 2023
Saga plc (Company no. 08804263)
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Saga plc Annual Report and Accounts 2023 127
Statements of responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and
Accounts and the Group and parent company financial statements in
accordance with applicable laws and regulations.
Company law requires the Directors to prepare Group and parent
company financial statements for each financial year. Under that law,
they are required to prepare the Group financial statements in
accordance with UK-adopted international accounting standards
and in conformity with the requirements of the Companies Act 2006
(the Act) and have elected to prepare the parent company financial
statements in accordance with UK accounting standards,
including Financial Reporting Standard (FRS) 101 (Reduced
Disclosure Framework).
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and parent company and of their
profit or loss for that period (see Governance statements on page 71).
In preparing each of the Group and parent company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable, relevant,
reliable and prudent;
• for the Group financial statements, state whether they have been
prepared in accordance with UK-adopted international
accounting standards;
• for the parent company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the parent
company financial statements;
• assess the Group and parent company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
• use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent company or to cease
operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the parent company and enable them to ensure
that its financial statements comply with the Act. They are also
responsible for such internal controls as they determine are
necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that comply with that law and those regulations.
Disclosure of information to the auditor
Having made the requisite enquiries, so far as each of the Directors
is aware, there is no relevant audit information (as defined by Section
418(3) of the Act) of which the Company’s auditor is unaware and the
Directors have taken all the steps they ought to have taken as
Directors to make themselves aware of any relevant audit information
and to ensure that the Company’s auditor is aware of that information.
Maintenance of website and single electronic
reporting
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R, the financial statements will form part of the annual financial
report prepared using the single electronic reporting format under
the Transparency Directive European Single Electronic Format
(ESEF) Regulation. The auditor’s report on these financial statements
provides no assurance over the ESEF format.
Directors’ responsibility statement
Each of the Directors, who were in office at the date of this report,
whose names and responsibilities are listed on pages 74-75,
confirm that, to the best of their knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation
taken as a whole; and
• the Management Report includes a fair review of the development
and performance of the business and the position of the issuer,
and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face.
The Directors consider the Annual Report and Accounts, taken
as a whole, to be fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
By order of the Board
Victoria Haynes
Group Company Secretary
17 April 2023
Saga plc (Company no. 08804263)
128 Saga plc Annual Report and Accounts 2023
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Independent Auditor’s Report to the Members of Saga plc
1 Our opinion is unmodified
We have audited the financial statements of Saga plc (“the Company”)
for the year ended 31 January 2023 which comprise the Consolidated
income statement, Consolidated statement of comprehensive
income, Consolidated statement of financial position, Consolidated
statement of changes in equity and Consolidated statement of cash
flows, the Company Balance sheet, Company Statement of changes
in equity, and the related notes, including the accounting policies
in note 2 to the financial statements and note 1 to the Company
financial statements.
In our opinion:
• the financial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
31 January 2023 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
• the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our
audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on
22 June 2017. The period of total uninterrupted engagement is
for the six financial years ended 31 January 2023. We have fulfilled
our ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the
FRC Ethical Standard as applied to listed public interest entities.
No non-audit services prohibited by that standard were provided.
Overview
Materiality: Group
financial statements
as a whole
£4.8m (2022: £3.5m)
0.85% of 2023 revenue (2022: 4.7%
of normalised profit before tax)
Coverage
96% (2022: 97%) of total revenues
Key audit matter
Recurring risks
vs 2022
Recoverability of Goodwill and
the parent Company’s investment
in subsidiaries
Valuation of claims outstanding –
IBNR (gross and net)
Recoverability of the carrying value
of cruise ships
New risk
Going concern
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of the most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
Going concern is a key audit matter and is described in section 2 of our report. We summarise below the key audit matters (unchanged from
2022 other than the inclusion of a key audit matter relating to going concern), in decreasing order of audit significance, in arriving at our audit
opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our findings from
those procedures in order that the Company’s members, as a body, may better understand the process by which we arrived at our audit
opinion. These matters were addressed, and our findings are based on procedures undertaken, in the context of, and solely for the purpose of,
our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do
not provide a separate opinion on these matters.
Area
The risk
Our response
Going concern
Disclosure quality
See Note 2.1 to the group
financial statements
Refer to pages 86-89
(Audit Committee Report)
The financial statements explain
how the Board has formed a
judgement that it is appropriate
to adopt the going concern basis
of preparation for the Group
and Company.
That judgement is based on an
evaluation of the inherent risks
to the Group’s and Company’s
business model and how those
risks might affect the Group’s and
Company’s financial resources
or ability to continue operations
over a period of at least 14 months
from the date of approval of the
financial statements.
We considered whether these risks could plausibly affect the liquidity
or covenant compliance in the going concern period by assessing the
directors’ sensitivities over the level of available financial resources and
covenant compliance indicated by the Group’s financial forecasts taking
account of severe, but plausible, adverse effects that could arise from
these risks individually and collectively.
Our procedures also included:
Funding assessment:
• We agreed the Group’s committed level of financing, the availability
of facilities and related covenant requirements to signed agreements
including covenant waivers;
• We critically evaluated management’s assessment of compliance with
debt covenants and sources of funding for repayment of the bonds.
We assessed the ability of the Group to meet the terms including
repayment timelines and financial covenants within reasonably
foreseeable downside scenarios; and
• Through inquiry and inspection of correspondence, we considered
the likelihood of the Group’s financial services and travel regulators
(Financial Conduct Authority (‘FCA’), the Gibraltar Financial Services
Commission (‘GFSC’) and the Civil Aviation Authority (‘CAA’)), imposing
additional financial or operational constraints on the Group and how
such risks had been factored into the stress testing performed.
Saga plc Annual Report and Accounts 2023 129
Independent Auditor’s Report to the Members of Saga plc continued
2 Key audit matters: our assessment of risks of material misstatement (continued)
Area
The risk
Our response
The risks most likely to adversely
affect the Group’s and Company’s
available financial resources over this
period include but are not limited to,
the following:
• The ability of the Group
to repay £150m bonds (‘bonds’)
in May 2024 upon maturity.
The Group has agreed an
unsecured loan facility of £50m.
Under this agreement, if the sale
of the insurance business is not
completed, the Group will be
able to draw down on this loan
to support liquidity needs and
the repayment of the bonds.
• Any unexpected downturn in
performance of the Insurance
Broking business due to worsening
competitive market pressures;
• High costs and claims inflation
may have an adverse impact on
Insurance Underwriting margins;
• The inability to achieve load factors
for Ocean Cruise, lower demand
for River Cruise and slower growth
in the Travel business; and
• The timing of, and extent to which
management are able to achieve
the identified discretionary
cost savings.
There are also less predictable
but realistic second order impacts,
such as adverse changes in UK
Government policy and the economic
environment , which could result in
a rapid reduction of available
financial resources.
The risk for our audit was whether
or not those risks were such that
they amounted to a material
uncertainty that may have cast
significant doubt about the ability
to continue as a going concern.
Had they been such, then that
fact would have been required
to have been disclosed.
Historical comparisons:
• We evaluated the appropriateness of management’s cashflow
forecasting process by comparing historic forecasts and the related
underlying assumptions considered in the prior period with the actual
and forecasted cashflows.
Key dependency assessment:
• We gained an understanding of and assessed the Group’s plans and
progress to maintain the continued operation of the business in the
face of the recent economic challenges, and the assessment of the
likely impact of regulatory change in the insurance industry on its
business plan; and
• We challenged and evaluated the degree to which reasonably
foreseeable downside scenarios that would impact the Group’s
business were factored into the financial resilience modelling that
the Group has performed.
Benchmarking assumptions and our sector experience:
• We evaluated and challenged the assumptions used in the Directors’
base and reasonably foreseeable downside scenarios utilising external
data points where available alongside our knowledge of the business
and our cruise, travel and insurance sector experience, and assessed
the potential risk of management bias.
Sensitivity analysis:
• We considered additional sensitivities to the Directors’ reasonably
foreseeable downside scenario, including challenging the extent to
which discretionary cost savings were plausible and the expected level
of restricted or collateralised funds required to be held within the
business, in order to challenge the directors’ assessment. This included
an assessment of the Group’s ability to continue to meet its debt
covenants in this scenario.
Evaluating directors’ intent:
• We evaluated the achievability of the actions the directors consider
they would take to improve the position should the risks materialize.
This included selling the Group’s Insurance Underwriting operations
or drawing down on the recently agreed £50m unsecured loan facility
and reductions in discretionary spend and capital expenditure, taking
into account the extent to which the directors can control the timing
and outcome of these actions.
Assessing transparency:
• Considering whether the going concern disclosure in note 2.1 to
the financial statements gives a full and accurate description of the
directors’ assessment of going concern, including the identified risks,
dependencies, and related sensitivities.
Our results: We found the going concern disclosure in note 2.1 without
any material uncertainty to be proportionate (2022 result: proportionate).
130 Saga plc Annual Report and Accounts 2023
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Area
The risk
Our response
Recoverability of goodwill
and the parent Company’s
investment in subsidiaries
Goodwill: £449.6 million,
2022: £718.6 million; parent
Company’s investment in
subsidiaries: £167.3 million,
2022: £552.3 million)
Refer to pages 86-89
(Audit Committee Report),
note 2.3h on page 148
(accounting policies),
note 2.6 on pages 155-158
(significant accounting
judgements, estimates
and assumptions) and
note 16 on pages 170-171
(financial disclosures).
Forecast-based valuation:
Our procedures included:
• Control design and implementation: We evaluated the design and
implementation of the Group’s impairment assessment procedures,
including those controls over the approvals of business plans.
• Historical comparisons: We assessed the reasonableness of cash flow
projections against historical performance.
• Our sector experience: We evaluated and challenged the assumptions
used in cash flow forecasts using our sector knowledge and experience.
• Benchmarking assumptions: We compared the Group’s and the
parent Company’s assumptions to externally derived data in relation to
key inputs such as WACC and terminal growth rates, with the support
of our valuation specialists.
• Comparing valuations: For goodwill we compared the recoverable
amount of the insurance business Cash Generating Unit (‘CGU‘)
by reference to VIU relative to the carrying value and evaluated the
outcome against comparator industry multiples; and, for the parent
Company’s investment in subsidiaries, we compared the sum of the
VIUs for all of the Group’s CGUs to the carrying value, market
capitalisation and implied multiples of the Group’s businesses; and
evaluated reasons for any significant differences.
• Sensitivity analysis: We used our analytical tools to assess the
sensitivity of the headroom on goodwill and the parent Company’s
investment in subsidiaries and concluded on the appropriateness of
the impairment recognised on these. This was performed considering
reasonable possible changes in key assumptions underlying the
business plans.
• Assessing transparency: We assessed whether the Group
disclosures about the sensitivity of the outcome of the impairment
assessment to changes in key assumptions reflects the risks inherent
in the valuation of goodwill and in the carrying value of the parent
Company’s investment in subsidiaries.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the estimation uncertainty involved in
the nature of the balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures described.
Our findings: We found that the resulting estimates over the recoverable
amount of Group goodwill and of the parent Company’s investment
in subsidiaries to be balanced (2022 finding: balanced). We found the
disclosures of the drivers of impairment and sensitivities of goodwill
headroom and the carrying value of the parent Company’s investment
in subsidiaries to changes in key assumptions, to be proportionate
(2022: proportionate).
Insurance goodwill in the Group and
the carrying amount of the parent
Company’s investment in subsidiaries
are significant and at risk of
irrecoverability if forecast business
performance for the Group’s
Insurance, Cruise and Travel
businesses, in particular, were to fall
significantly short of business plans.
The estimated recoverable amount
of goodwill in relation to the Insurance
business and the parent Company’s
investment in subsidiaries are
subjective due to the inherent
uncertainty involved in forecasting
and discounting future cash flows
and auditor judgement is required
to assess whether the directors’
overall estimate, taking into account
the below assumptions, falls within an
acceptable range. Current economic
conditions and the outlook for
geo-political uncertainty and the
impact that this has on the speed at
which the Group’s Travel businesses
can recover also have a significant
impact on estimation uncertainty.
The assessment of the recoverability
of these assets involves a high degree
of subjectivity around assumptions
due to the supporting calculations
of Value in Use (‘VIU‘) being reliant on
expectations of future performance.
Multiple inputs into the VIU
calculations, such as weighted
average cost of capital (‘WACC‘) and
terminal growth rates are at risk of
manipulation in order to demonstrate
that the value of the underlying
intangible assets is not impaired.
The risk premium in relation to these
assets is impacted by uncertainty in
the economic outlook and therefore
there is risk of impairments to
insurance goodwill and investments
in subsidiaries at the parent Company
level if the share price does not
recover; and particularly if the Group
is not able to deliver at or ahead of
plan in 2023/24, and years to come.
The effect of these matters is that,
as part of our risk assessment,
we determined that the valuation
of goodwill and the parent Company’s
investment in subsidiaries has a
high degree of estimation
uncertainty, with a potential range
of reasonable outcomes greater
than our materiality for the
financial statements as a whole, and
possibly many times that amount.
Saga plc Annual Report and Accounts 2023 131
Independent Auditor’s Report to the Members of Saga plc continued
2 Key audit matters: our assessment of risks of material misstatement (continued)
Area
The risk
Our response
Valuation of claims
outstanding – IBNR
(gross and net)
(Gross £285.2 million,
2022: £292.8 million;
Net £100.0 million,
2022: £100.7 million)
Refer to pages 86-89
(Audit Committee Report),
note 2.3r on page 152
(accounting policies);
note 2.6 on pages 155-158
(significant accounting
judgements, estimates
and assumptions) and
note 28 on page 189-192
(financial disclosures).
Subjective valuation:
Our procedures included:
• Control design and implementation: Tested the design and
implementation of manual controls over the completeness and
accuracy of data used in the calculation of the IBNR. The controls
included reconciliations between data in the actuarial reserving
systems and data in the policy administration systems.
We involved our actuarial specialists to perform the following procedures:
• Evaluating the work of the internal actuaries: We evaluated the
work of the internal actuaries by analysing and evaluating the results
of reserving reports issued by them and further assessed the
competence and capabilities based on our knowledge of the actuaries’
qualifications and the professional standards that their work is subject
to, and the appropriateness of the methodology and the conclusions
through the procedures below;
• Diagnostics: We performed risk assessment procedures over all
material perils as well as considering the reasonableness of prior year
changes in ultimate reserves and current year loss ratios in light of
experience over the year;
• Independent re-projection in respect of the actuarial best
estimate: Using the Company’s own data, we carried out independent
re-projections to form our own view of the insurance contract liabilities
– IBNR. We did this for 98% of the ultimate gross contract liabilities.
We have used an inflation loading based on our internal inflation tool
in addition to our reprojection work and have challenged the
Company’s assumption with respect to the inflation loading;
• Historical comparisons: We compared prior year actual
versus expected claims experience by class of business and
accident/underwriting year and considered the entity’s selected
underwriting loss ratios in the context of the actual versus expected;
• Margin evaluation: We evaluated the appropriateness of the Group
recommended margin held at year end. In order to do this, we assessed
the directors’ approach, and supporting analysis for margin to be held,
having regard to the heightened risk of future inflation, the change in
repair network supplier and the recoverability of salvage and
subrogation scenarios which are the key risks affecting business.
We further evaluated the directors’ assumption and judgement in
the unwinding of the latent COVID-19 margin in the current year.
We considered the relative strength of margin held against peers
and versus prior period in order to be satisfied that no additional
prudence had been recognised in the level of overall reserves held,
including margin.
• Data comparisons: We agreed the relevant financial and
non-financial claims and premiums data recorded in the claims
and premiums administration systems to the data used in the
actuarial reserving calculations, to assess the integrity of the data
used by the internal actuaries in their actuarial reserving process
and in our own reprojections and assessed that the output of the
actuarial re-projections reconciled with the reported balance in
the financial statements.
• Reinsurance: We assessed the risk transfer elements of reinsurance
contracts, and the accuracy of a sample of reinsurance recoveries
recorded, including reinsurance recoveries related to IBNR, against
the terms of relevant reinsurance agreements.
• Assessing transparency: We assessed whether the Group’s
disclosures about the degree of estimation uncertainty and the
sensitivity of the balance to changes in key assumptions reflected
the risks inherent in the valuation of claims outstanding.
Valuation of claims outstanding –
incurred but not reported (‘IBNR‘)
estimates is highly judgemental and
requires a number of assumptions
to be made that have high estimation
uncertainty and can have material
impacts on the valuation. Further,
valuation of these liabilities involves
selection of appropriate methods,
which are highly subjective, and
involves complex calculations.
This judgement is applied to a number
of key assumptions, such as the
frequency and severity of incurred
bodily injury, accidental damage and
third-party property damage losses,
the choice of development pattern,
and the choice of discount rate at
which periodical payment orders
are valued.
The inherent risk of material
misstatement relating to the valuation
of claims outstanding – IBNR has been
impacted by the current economic
conditions including the rising inflation
levels, which has led to our
assessment of risk increasing from
the prior year. We expect that data
used to determine the assumptions
used in setting reserves estimates will
be affected by inflation and therefore
management will need to consider the
extent to which this influences the
choice of the assumptions.
Certain areas of claims outstanding
– IBNR balance contain greater
uncertainty, for example, the third
party bodily injury (‘TPBI‘) claims
exhibit greater variability and are
more long-tailed than the
damage classes.
In particular, the allowance made for
settlement of claims as a Periodic
Payment Order (‘PPO‘) rather than
a lump sum is uncertain and has a
high reserving risk. Additionally,
the allowance made for inflation for
future claims development is highly
uncertain and associated with a
heightened reserving risk.
Similar estimates are required in
establishing the reinsurers’ share
of claims outstanding, in particular
the share of IBNR claims.
A margin is added to the actuarial
best estimate (‘ABE‘) of claims
outstanding – IBNR to make
allowance for risks and uncertainties
that are not specifically allowed for in
establishing the ABE. The appropriate
margin to recognise is a subjective
judgement and is an estimate taken by
the directors, based on the perceived
uncertainty and potential for volatility
in the underlying claims.
132 Saga plc Annual Report and Accounts 2023
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Area
The risk
Our response
We performed the tests above rather than seeking to rely on any of the
Group’s controls because the inherent uncertainties and nature of the
balance are such that we would expect to obtain audit evidence primarily
through the detailed procedures described.
Our findings:
Overall we found that the resulting estimate of the amount recognised
for claims outstanding – IBNR to be balanced (2022 finding: mildly
cautious). We found the disclosures of the sensitivities to changes in key
assumptions and estimate as inputs to the valuation to be proportionate
(2022: proportionate).
Valuation of claims
outstanding – IBNR
(gross and net)
(continued)
Data capture
The valuation of insurance contract
liabilities depends on complete and
accurate data about the volume,
amount and pattern of current and
historical claims since they are used
to form expectations about future
claims. If the data used in calculating
IBNR, or for forming judgements over
key assumptions, is not complete and
accurate, then material impacts on
the valuation of insurance contract
liabilities may arise.
This is particularly true in establishing
the types of claims within IBNR upon
which to base actuarial projections
given the assumptions and reserving
methodology varies considerably
by peril. Whilst data remains a key
input for reserving, its risk in isolation
is not classed as a significant risk
for our audit.
The effect of these matters is that,
as part of our risk assessment,
we determined that the valuation
of claims outstanding has a high
degree of estimation uncertainty,
with a potential range of reasonable
outcomes greater than our
materiality for the financial
statements as a whole, and
possibly many times that amount.
Recoverability of the
carrying value of
cruise ships
(Cruise ships: £607.0 million,
2022: £621.3 million)
Refer to pages 86-89
(Audit Committee Report),
note 2.3h and 2.3i on page 148
(accounting policies),
note 2.6 on pages 155-158
(significant accounting
judgements, estimates
and assumptions) and
note 17 on pages 171-173
(financial disclosures).
Forecast-based valuation:
Our procedures included:
The estimated recoverable amount
of the Group’s cruise ships is
subjective due to the inherent
uncertainty involved in forecasting
and discounting future cash flows.
• Control design and implementation: We evaluated the design and
implementation of the Group’s controls over the impairment
assessment procedures, including those over the assumptions within
cash flow forecasts applied to the cruise ships.
• Historical comparisons: We assessed the reasonableness of cash flow
Whilst the risk has reduced from
last year given COVID 19 restrictions
were lifted for cruise passengers
and trading of the cruise ships in the
current year was in line with forecast,
the carrying amount of the cruise
ships is subject to risk of
irrecoverability if the trading in the
cruise business was to be significantly
impacted beyond that assumed in the
Group’s business plan forecasts,
or if the speed at which the business
recovers fell short of expectations.
Further, there are multiple inputs
into the estimate of VIU, such as the
cash flows (based on key assumptions
including annual load factors, per
diem, price of fuel), estimated useful
life and residual value of the cruise
ships, WACC and the annual growth
rate, that are at risk of manipulation in
order to demonstrate that the value
of cruise ships assets is not impaired.
The effect of these matters is that
we determined that the recoverability
of the carrying value of cruise ships
has a high degree of estimation
uncertainty, with a potential range
of reasonable outcomes greater
than our materiality for the financial
statements as a whole, and possibly
many times that amount.
projections against historical performance.
• Valuation expertise: We worked with our valuation specialists to
independently develop a discount rate range considered appropriate
using market data for comparable assets, adjusted by risk factors
specific to the asset;
• Benchmarking assumptions: We challenged the forecast cash flow
and growth assumptions for the cruise ship assets, including
comparison of the estimated useful life, residual values and annual
growth rates to external sources;
• Comparing valuations: We considered the appropriateness of the
VIU models applied by the Group for impairment testing by performing
recalculations of the model;
We compared the forecast cash flows and capital expenditure
contained in the VIU models to the board-approved five-year plan.
• Sensitivity analysis: We assessed the sensitivity of the recoverability
of the carrying value of cruise ships and concluded on the
appropriateness of no impairment being recognised by considering
the sensitivity of assumptions including annual load factors, per diem,
discount rates and price of fuel.
• Assessing transparency: We assessed whether the Group
disclosures relating to the valuation of cruise ships and the sensitivity
to changes in key assumptions reflects the risks inherent in the
valuation of cruise ship assets.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the estimation uncertainty involved in
the nature of the balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures described.
Our findings: We found the resulting estimates over the recoverable
amount of the cruise ships to be balanced (2022: mildly optimistic).
We found the disclosures of the management judgements and the
sensitivities of headroom to changes in key assumptions, to be
proportionate (2022: proportionate).
Saga plc Annual Report and Accounts 2023 133
Independent Auditor’s Report to the Members of Saga plc continued
3 Our application of materiality and an overview
of the scope of our audit
Materiality for the Group financial statements as a whole was set at
£4.8m (2022: £3.5m), determined with reference to a benchmark of
total revenue, of which it represents 0.8% (2022: 4.7% of normalised
profit before tax). In the current year, we changed the benchmark
from normalized profit before tax to total revenue due to the level of
volatility experienced within profit before tax caused by the impact
of COVID-19-related restrictions in prior periods.
Total Revenue
Group Materiality
£581.1m (2022: £377.2m)
£4.8m (2022: £3.5m)
£4.8m
Whole financial statements materiality
(2022: £3.5m)
Whole financial statements
performance materiality
£3.1m (2022: £2.3m)
Range of materiality at 6 components
(2022: 9 components) £0.6m-£4.2m
(2022: £0.4m to £2.8m)
£0.2m
Misstatements reported to the
Audit Committee (2022: £0.2m)
Total Revenue
Group materiality
Materiality for the Company financial statements as a whole was
set at £1.5m (2022: £2.2m), which represents 0.5% of net assets
of £291.8m (2022: 0.3% of net assets of £695m).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial
statements as a whole.
Performance materiality for both the Group and parent Company
was set at 65% (2022: 65%) of materiality for the financial
statements as a whole, which equates to £3.1m (2022: £2.3m)
and £1.0m (2022: £1.4m). We applied this percentage in our
determination of performance materiality based on the level
of control deficiencies during the prior period and changes in
key senior management during the year.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.2m
(2022: £0.2m), in addition to other identified misstatements
that warranted reporting on qualitative grounds.
The scope of the audit work performed was predominately
substantive as we placed limited reliance upon the Group’s internal
control over financial reporting.
Of the Group’s 6 (2022: 9) reporting components, we subjected 4
(2022: 4) to full scope audits for Group purposes and 2 (2022: 5)
to specified risk-focused audit procedures. The latter were not
individually financially significant enough to require a full scope audit
for Group purposes but did present specific individual risks that
needed to be addressed. For the residual components, we conducted
reviews of financial information (including enquiry) at an aggregated
Group level to re-examine our assessment that there were no
significant risks of material misstatement within these.
The Group audit team instructed component auditors as to the
significant areas to be covered, including the relevant risks detailed
above and the information to be reported back. The Group audit
team approved the component materiality, which ranged from
£0.6m to £4.2m (2022: £0.4m to £2.8m), having regard to the mix of
size and risk profile of the Group across the components. The work on
2 of the 6 components (2022: 2 of the 9 components) was performed
by component auditors and the rest, including the audit of the parent
Company, was performed by the Group audit team.
During the year, we held a combination of in person, video and
telephone conference meetings with all component auditors.
During these meetings, an assessment was made of audit risk and
strategy, the findings reported to the Group audit team were
discussed in more detail, key working papers were inspected, and any
further work identified by the Group audit team as a result of these
meetings was subsequently performed by the component auditor.
These components within the scope of our work accounted for the
following percentages of the Group’s results:
Group revenue
0%
2%
Group profits and losses that
made up the Group loss before tax
96%
(2022: 97%)
93%
96%
Group Total Assets
5%
7%
99%
(2022: 99%)
94%
92%
16%
13%
97%
(2022: 98%)
85%
81%
Full scope for Group audit
purposes 2023
Specified risk-focused audit
procedures 2023
Full scope for Group audit
purposes 2022
Specified risk-focused audit
procedures 2022
Residual components
4 Going concern basis of preparation
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least 14 months from the date
of approval of the financial statements (“the going concern period”).
An explanation of how we evaluated management’s assessment of
going concern is set out in the related key audit matter in section 2
of this report.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;
• we have not identified, and concur with the directors’ assessment
that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant
doubt on the Group’s or Company’s ability to continue as a going
concern for the going concern period; and
134 Saga plc Annual Report and Accounts 2023
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• we have nothing material to add or draw attention to in relation to
the directors’ statement in note 2.1 to the financial statements on
the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and
Company’s use of that basis for the going concern period; and
• the related statement under the Listing Rules set out on page 77
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
5 The impact of climate change on our audit
In planning our audit, we performed a risk assessment, including
enquiries of management, to determine how the impact of
commitments made by the Group in respect of reducing carbon
emissions, as well as the physical risks of climate change, and
transition risks faced by the Group’s customer base, could impact on
the financial statements and our audit. We held discussions with our
own climate change professionals to challenge our risk assessment.
Through the procedures we performed, we did not identify any
material impact of climate change on the Group’s material accounting
estimates and there was no significant impact of this assessment on
our key audit matters for the year ended 31 January 2023.
The Insurance business within the Group predominantly brokers
and underwrites motor and home insurance risks. Climate change
may result in an increase in the frequency and severity of climate
related events, leading to higher insurance pay-outs. However,
the short-term nature of the Group’s insurance contracts means
that the impact of losses from such events for the year ended
31 January 2023 is already recorded within the Group’s insurance
contract liabilities at the balance sheet date. The Group considers
this loss experience in evaluating individual risk exposures, and the
setting of insurance premium rates for both new policies and the
periodic renewal of its existing insurance underwriting portfolio.
The Group expects any increase in the frequency and severity
of climate-related events to be reflected in future market
premium rates.
Also, in relation to the insurance business, climate risk is an issue
which is expected to evolve further over the medium to long term,
rather than have instant incremental impacts on the insurance
outlook, and therefore we assessed no significant impact at
year-end on insurance goodwill.
The Cruise business within the Group owns cruise ship assets which
meet all current regulatory standards regarding emissions and
climate change targets. While there will likely be technology advances
in years to come that, when developed, will require the Group to look
to incur incremental costs to modify the engines on these cruise ships
to meet lower emissions standards, the cost to incur such changes
would likely extend the operating life of these vessels. Given this and
the fact that this technology is yet to be developed, we assessed the
risk of climate change to the carrying amount of the cruise ship assets
at the balance sheet date to be not significant.
We have also read the disclosures of climate related information
in the front half of the annual report and accounts as set out on
pages 30-36 and considered consistency with the financial
statements and our audit knowledge. We have not been engaged
to provide assurance over the accuracy of these disclosures.
6 Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (’fraud risks’)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• enquiring of directors, the audit committee and the Internal Audit
and Assurance Director, and inspection of key policies and papers
provided to those charged with governance as to the Group’s
high-level policies and procedures to prevent and detect fraud,
including the Group’s channel for “whistleblowing” and the process
for engaging local management to identify fraud risks specific to
their business units, as well as whether they have knowledge of
any actual, suspected, or alleged fraud;
• reading board, audit and risk committee minutes and in the case
of audit and risk committee meetings for the Group, attendance
of the external audit partner at these meetings;
• considering remuneration incentive schemes and performance
targets for directors and senior management;
• using analytical procedures to identify any usual or unexpected
relationships; and
• reading broker reports and other public information to identify
third-party expectations and concerns.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
This included communication from the group to component audit
teams of relevant fraud risks identified at the Group level and request
to component audit teams to report to the Group audit team any
instances of fraud that could give rise to a material misstatement
at Group.
As required by auditing standards and taking into account possible
pressures to meet profit targets, we perform procedures to address
the risk of management override of controls, in particular the risk
that Group and component management may be in a position to
make inappropriate accounting entries. On this audit we do not
believe there is a fraud risk related to revenue recognition because
revenue is not complex in nature and there is no significant
management judgement or estimation involved in recording the
revenue transactions.
We also identified fraud risks related to inappropriate assessment
of the recoverability of Group goodwill and the carrying amount of the
parent Company’s investment in subsidiaries, the valuation of claims
outstanding - IBNR and the recoverability of the carrying value of
cruise ships, in response to possible pressures to meet profit targets.
In determining the audit procedures to address the identified fraud
risks, we took into account the results of our evaluation and testing
of the operating effectiveness of the Group-wide fraud risk
management controls. Further detail in respect of the procedures
performed over the recoverability of Group goodwill and the carrying
amount of the parent Company’s investment in subsidiaries, the
valuation of claims outstanding – IBNR and the recoverability of the
carrying value of cruise ships, including how we have used specialists
to assist in our challenge of management is set out in the key audit
matter disclosures in section 2 of this report.
Saga plc Annual Report and Accounts 2023 135
Independent Auditor’s Report to the Members of Saga plc continued
6 Fraud and breaches of laws and regulations –
ability to detect (continued)
To address the pervasive risk as it relates to management override,
we also performed procedures including:
•
identifying journal entries to test for all in scope components,
based on risk criteria and comparing the identified entries to
supporting documentation. These included those posted by
senior management, those including specific words based on our
risk criteria, those journals which were unbalanced, those posted
to unusual accounts, those posted at the end of the period and/or
post-closing entries with little or no description and unusual
journal entries posted to either cash or borrowings; and
• assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, and through
discussion with the directors and other management (as required by
auditing standards), and from inspection of the Group’s regulatory
and legal correspondence and discussed with the directors and other
members of management the policies and procedures regarding
compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the
group to full-scope component audit teams of relevant laws and
regulations identified at the Group level, and a request for full scope
component auditors to report to the group team any instances of
non-compliance with laws and regulations that could give rise to a
material misstatement at Group.
The potential effect of these laws and regulations on the financial
statements varies considerably.
These are well-recognised UK trade bodies with codes of conduct
to which members are required to adhere. All parts of the Group
operate procedures to comply with other key regulations and
legislation including but not limited to the Data Protection Act 2018,
UK General Data Protection Regulation, the Bribery Act 2010, the
Equality Act 2010 and Health and Safety legislation. Auditing
standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance
or fraud and cannot be expected to detect non-compliance with all
laws and regulations.
7 We have nothing to report on the other information
in the annual report
The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any form of assurance
conclusion thereon.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting legislation
(including related companies’ legislation), distributable profits
legislation, taxation legislation and pension legislation and we
assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement items.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent
with the financial statements or our audit knowledge. Based solely
on that work we have not identified material misstatements in the
other information.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation or the loss of
the Group’s license to operate. We identified the following areas as
those most likely to have such an effect: regulatory capital, regulatory
compliance and liquidity, and certain aspects of company legislation
recognising the financial and regulated nature of the Group’s
activities and its legal form, with the Insurance business regulated
primarily by the Financial Conduct Authority and the Gibraltar
Financial Services Commission, with the Travel business regulated
by the Civil Aviation Authority. The Travel businesses are members
of the Association of British Travel Agents, the International Air
Transport Association and the Federation of Tour Operators.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic
report and the directors’ report;
•
•
in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and
longer-term viability
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ disclosures in
respect of emerging and principal risks and the viability statement,
and the financial statements and our audit knowledge.
136 Saga plc Annual Report and Accounts 2023
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Based on those procedures, we have nothing further material
Based on those procedures, we have nothing further material
to add or draw attention to in relation to:
to add or draw attention to in relation to:
• the directors’ confirmation within the viability statement on
• the directors’ confirmation within the viability statement on
page 68 that they have carried out a robust assessment of the
page 68 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
that would threaten its business model, future performance,
solvency and liquidity;
solvency and liquidity;
• the principal risks and uncertainties disclosures describing
• the principal risks and uncertainties disclosures describing
these risks and how emerging risks are identified, and explaining
these risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
how they are being managed and mitigated; and
• the directors’ explanation in the viability statement of how they
• the directors’ explanation in the viability statement of how they
have assessed the prospects of the Group, over what period
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period
in operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
attention to any necessary qualifications or assumptions.
We are also required to review the viability statement set out on
We are also required to review the viability statement set out on
page 77 under the Listing Rules. Based on the above procedures,
page 77 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially
we have concluded that the above disclosures are materially
consistent with the financial statements and our audit knowledge.
consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements audit.
only the knowledge acquired during our financial statements audit.
As we cannot predict all future events or conditions and as
As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
with judgements that were reasonable at the time they were made,
the absence of anything to report on these statements is not a
the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.
guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
following is materially consistent with the financial statements and
our audit knowledge:
our audit knowledge:
• the directors’ statement that they consider that the annual report
• the directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
shareholders to assess the Group’s position and performance,
business model and strategy;
business model and strategy;
• the section of the annual report describing the work of the audit
• the section of the annual report describing the work of the audit
committee, including the significant issues that the audit
committee, including the significant issues that the audit
committee considered in relation to the financial statements,
committee considered in relation to the financial statements,
and how these issues were addressed; and
and how these issues were addressed; and
• the section of the annual report that describes the review of
• the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and internal
the effectiveness of the Group’s risk management and internal
control systems.
control systems.
We are required to review the part of the corporate governance
We are required to review the part of the corporate governance
statement relating to the Group’s compliance with the provisions of
statement relating to the Group’s compliance with the provisions of
the UK Corporate Governance Code specified by the Listing Rules
the UK Corporate Governance Code specified by the Listing Rules
for our review. We have nothing to report in this respect.
for our review. We have nothing to report in this respect.
8 We have nothing to report on the other matters
8 We have nothing to report on the other matters
on which we are required to report by exception
on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
in our opinion:
• adequate accounting records have not been kept by the parent
• adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
received from branches not visited by us; or
• the parent Company financial statements and the part of
• the parent Company financial statements and the part of
the directors’ remuneration report to be audited are not in
the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law
• certain disclosures of directors’ remuneration specified by law
are not made; or
are not made; or
• we have not received all the information and explanations we
• we have not received all the information and explanations we
require for our audit.
require for our audit.
We have nothing to report in these respects.
We have nothing to report in these respects.
9 Respective responsibilities
9 Respective responsibilities
Directors’ responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 128,
As explained more fully in their statement set out on page 128,
the directors are responsible for: the preparation of the financial
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view;
statements including being satisfied that they give a true and fair view;
such internal control as they determine is necessary to enable the
such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as a going concern,
and parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and using
disclosing, as applicable, matters related to going concern; and using
the going concern basis of accounting unless they either intend to
the going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company or to cease operations,
liquidate the Group or the parent Company or to cease operations,
or have no realistic alternative but to do so.
or have no realistic alternative but to do so.
Auditor’s responsibilities
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s
whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does
report. Reasonable assurance is a high level of assurance, but does
not guarantee that an audit conducted in accordance with ISAs (UK)
not guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists.
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
expected to influence the economic decisions of users taken on the
basis of the financial statements.
basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an
The Company is required to include these financial statements in an
annual financial report prepared using the single electronic reporting
annual financial report prepared using the single electronic reporting
format specified in the Transparency Directive European Single
format specified in the Transparency Directive European Single
Electronic Format (‘TD ESEF’) Regulation. This auditor’s report
Electronic Format (‘TD ESEF’) Regulation. This auditor’s report
provides no assurance over whether the annual financial report has
provides no assurance over whether the annual financial report has
been prepared in accordance with that format.
been prepared in accordance with that format.
10 The purpose of our audit work and to whom
10 The purpose of our audit work and to whom
we owe our responsibilities
we owe our responsibilities
This report is made solely to the Company’s members, as a body, in
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006
accordance with Chapter 3 of Part 16 of the Companies Act 2006
and the terms of our engagement by the company. Our audit work has
and the terms of our engagement by the company. Our audit work has
been undertaken so that we might state to the Company’s members
been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report,
those matters we are required to state to them in an auditor’s report,
and further matters we are required to state to them in accordance
and further matters we are required to state to them in accordance
with the terms agreed with the company and for no other purpose.
with the terms agreed with the company and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s
responsibility to anyone other than the company and the company’s
members, as a body, for our audit work, for this report, or for the
members, as a body, for our audit work, for this report, or for the
opinions we have formed.
opinions we have formed.
Timothy Butchart (Senior Statutory Auditor)
Timothy Butchart (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Chartered Accountants
15 Canada Square, London, E14 5GL
15 Canada Square, London, E14 5GL
17 April 2023
17 April 2023
Saga plc Annual Report and Accounts 2023 137
Saga plc Annual Report and Accounts 2023 137
FINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 January 2023
Gross earned premiums
Earned premiums ceded to reinsurers
Net earned premiums
Other revenue
Total revenue
Gross claims incurred
Reinsurers’ share of claims incurred
Net claims incurred
Decrease in credit loss allowance
Other cost of sales
Total cost of sales
Gross profit
Administrative and selling expenses
Increase in credit loss allowance
Impairment of assets
Gain on lease modification
Net profit on disposal of assets held for sale
Note
3
3
3
3
3
28
28
28
3
4
5
18
38
Net profit/(loss) on disposal of property, plant and equipment, right-of-use assets and software
15, 17, 18
Investment income
Finance costs
Finance income
Loss before tax
Tax expense
Loss for the year
Attributable to:
Equity holders of the parent
Loss per share:
Basic
Diluted
The Notes on pages 143-202 form an integral part of these consolidated financial statements.
2023
£m
189.5
(111.3)
78.2
502.9
581.1
(157.2)
99.1
(58.1)
1.3
(250.4)
(307.2)
273.9
(216.9)
(0.9)
(271.2)
–
–
0.1
1.5
(42.2)
1.5
(254.2)
(5.0)
(259.2)
2022
£m
203.0
(123.8)
79.2
298.0
377.2
(94.6)
63.3
(31.3)
1.61
(113.6)1
(143.3)
233.9
(212.1)1
(0.7)1
(11.2)
0.3
7.2
(0.4)
0.3
(40.8)
–
(23.5)
(4.5)
(28.0)
6
7
8
10
(259.2)
(28.0)
12
12
(185.8p)
(185.8p)
(20.1p)
(20.1p)
1 Movements in the credit loss allowance for the year ended 31 January 2022 have been restated due to an incorrect allocation between amounts written off during
the year and changes in the provision recognised in the income statement (see Note 20b)
138 Saga plc Annual Report and Accounts 2023
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Consolidated statement of comprehensive income
for the year ended 31 January 2023
Loss for the year
Other comprehensive income
Note
2023
£m
(259.2)
2022
£m
(28.0)
Other comprehensive income to be reclassified to income statement in subsequent years
Net (losses)/gains on hedging instruments during the year
Recycling of previous losses/(gains) to income statement on matured hedges
19
19
Total net (losses)/gains on cash flow hedges
Associated tax effect
Net losses on fair value financial assets during the year
Recycling of previous losses to income statement on fair value financial assets during the year
Total net losses on fair value financial assets during the year
Associated tax effect
(2.0)
0.3
(1.7)
(0.8)
(15.1)
–
(15.1)
3.8
2.1
(1.2)
0.9
0.3
(10.3)
0.1
(10.2)
2.1
Total other comprehensive losses with recycling to income statement
(13.8)
(6.9)
Other comprehensive income not to be reclassified to income statement in subsequent years
Remeasurement (losses)/gains on defined benefit plan
27
Associated tax effect
Total other comprehensive (losses)/gains without recycling to income statement
Total other comprehensive losses
Total comprehensive losses for the year
Attributable to:
Equity holders of the parent
The Notes on pages 143-202 form an integral part of these consolidated financial statements.
(19.1)
4.8
(14.3)
4.8
(1.2)
3.6
(28.1)
(3.3)
(287.3)
(31.3)
(287.3)
(31.3)
Saga plc Annual Report and Accounts 2023 139
Note
2023
£m
2022
£m
14
15
27
17
18
19
10
28
22
23
24
25
38
27
28
31
19
10
29
26
33
449.6
51.3
–
611.0
30.7
282.4
4.4
16.1
68.8
7.0
212.5
36.2
176.5
31.2
718.6
47.1
1.1
646.5
36.0
332.1
4.3
12.3
65.4
6.3
169.5
23.4
226.9
12.9
1,977.7
2,302.4
12.1
368.3
5.2
896.8
5.9
122.2
197.7
–
386.7
6.7
936.2
5.6
114.6
199.7
1,608.2
1,649.5
21.1
648.3
(293.5)
8.9
(12.1)
(3.2)
21.1
648.3
(22.4)
7.4
(0.8)
(0.7)
369.5
1,977.7
652.9
2,302.4
FINANCIAL STATEMENTS
Consolidated statement of financial position
as at 31 January 2023
Assets
Goodwill
Intangible assets
Retirement benefit scheme surplus
Property, plant and equipment
Right-of-use assets
Financial assets
Current tax assets
Deferred tax assets
Reinsurance assets
Inventories
Trade and other receivables
Trust accounts
Cash and short-term deposits
Assets held for sale
Total assets
Liabilities
Retirement benefit scheme liability
Gross insurance contract liabilities
Provisions
Financial liabilities
Deferred tax liabilities
Contract liabilities
Trade and other payables
Total liabilities
Equity
Issued capital
Share premium
Retained deficit
Share-based payment reserve
Fair value reserve
Hedging reserve
Total equity
Total equity and liabilities
The Notes on pages 143-202 form an integral part of these consolidated financial statements.
Signed for and on behalf of the Board on 17 April 2023 by
E A Sutherland
Group Chief Executive Officer
J B Quin
Group Chief Financial Officer
140 Saga plc Annual Report and Accounts 2023
Consolidated statement of changes in equity
for the year ended 31 January 2023
Attributable to the equity holders of the parent
Retained
(deficit)/
earnings
£m
Share-based
payment
reserve
£m
Fair value
reserve
£m
Hedging
reserve
£m
At 1 February 2022
Loss for the year
Other comprehensive losses
excluding recycling
Recycling of previous losses to
income statement
Total comprehensive losses
Share-based payment charge (Note 36)
Transfer upon vesting of share options
Issued
capital
£m
Share
premium
£m
21.1
648.3
–
–
–
–
–
–
–
–
–
–
–
–
(22.4)
(259.2)
(14.3)
–
(273.5)
–
2.4
At 31 January 2023
21.1
648.3
(293.5)
At 1 February 2021
Loss for the year
Other comprehensive income/(losses)
excluding recycling
Recycling of previous losses/(gains) to
income statement
Total comprehensive (losses)/income
Issue of share capital (Note 33)
Share-based payment charge (Note 36)
Transfer upon vesting of share options
21.0
648.3
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
0.2
(28.0)
3.6
–
(24.4)
–
–
1.8
At 31 January 2022
21.1
648.3
(22.4)
The Notes on pages 143-202 form an integral part of these consolidated financial statements.
7.4
–
–
–
–
3.9
(2.4)
8.9
5.8
–
–
–
–
–
3.4
(1.8)
7.4
Total
£m
652.9
(259.2)
(28.5)
0.4
(0.7)
–
(2.9)
0.4
(2.5)
(287.3)
–
–
3.9
–
(0.8)
–
(11.3)
–
(11.3)
–
–
(12.1)
(3.2)
369.5
7.3
–
(8.2)
0.1
(8.1)
–
–
–
(1.9)
–
3.3
(2.1)
1.2
–
–
–
680.7
(28.0)
(1.3)
(2.0)
(31.3)
0.1
3.4
–
(0.8)
(0.7)
652.9
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Saga plc Annual Report and Accounts 2023 141
FINANCIAL STATEMENTS
Consolidated statement of cash flows
for the year ended 31 January 2023
Loss before tax
Depreciation, impairment and loss on disposal, of property, plant and equipment, and right-of-use assets
Amortisation and impairment of intangible assets and goodwill, and (profit)/loss on disposal of software
Impairment of assets held for sale
Gain on lease modification
Share-based payment transactions
Profit on disposal of assets held for sale
Finance costs
Finance income
Interest income from investments
Increase in trust accounts
Movements in other assets and liabilities
Investment income interest received
Interest paid
Income tax paid
Net cash flows (used in)/from operating activities
Investing activities
Proceeds from sale of property, plant and equipment, intangible assets and right-of-use assets
Net proceeds from disposal of assets held for sale
Purchase of and payments for the construction of property, plant and equipment and intangible assets
Net disposal/(purchase) of financial assets
Acquisition of subsidiary
Net cash flows from/(used in) investing activities
Financing activities
Payment of principal portion of lease liabilities
Proceeds from borrowings
Repayment of borrowings
Debt issue costs
Net cash flows (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
The Notes on pages 143-202 form an integral part of these consolidated financial statements.
Note
38
38
7
8
38
13
32
32
32
32
25
2023
£m
(254.2)
32.9
278.6
1.2
–
3.9
–
42.2
(1.5)
(1.5)
(12.8)
(65.7)
23.1
1.5
(37.6)
(0.9)
(13.9)
0.2
–
(20.8)
25.6
(0.9)
4.1
(7.8)
–
(46.4)
–
(54.2)
(64.0)
255.7
191.7
2022
£m
(23.5)
22.2
20.6
1.0
(0.3)
3.4
(7.2)
40.8
–
(0.3)
(1.0)
29.3
85.0
0.3
(34.2)
(4.6)
46.5
0.3
10.2
(18.9)
(18.9)
–
(27.3)
(3.6)
250.0
(170.0)
(6.8)
69.6
88.8
166.9
255.7
142 Saga plc Annual Report and Accounts 2023
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Notes to the consolidated 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 08804263). The Company is registered in
England and its registered office is located at Enbrook Park,
Folkestone, Kent CT20 3SE.
Saga offers a wide range of products and services to its customer
base, which includes package and cruise holidays, general insurance
products, personal finance products and a range of media content
including a monthly subscription magazine.
2.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with UK-adopted international
accounting standards.
The consolidated financial statements have been prepared on a
going concern basis and on a historical cost basis except as otherwise
stated. The Group has reviewed the appropriateness of the going
concern basis in preparing the financial statements, details of which
are included below. Based on those assumptions, the Directors have
concluded that it remains appropriate to adopt the going concern
basis in preparing the financial statements.
The Group’s consolidated financial statements are presented in
pounds sterling, which is also the parent company’s functional
currency, and all values are rounded to the nearest hundred thousand
(£m), except when otherwise indicated. Each company in the Group
determines its own functional currency and items included in the
financial statements of each entity are measured using that
functional currency.
The preparation of financial statements in compliance with
UK-adopted international accounting standards requires the use
of certain critical accounting estimates. It also requires Group
management to exercise judgement in applying the Group’s
accounting policies. The areas where significant judgements and
estimates have been made in preparing the financial statements
and their effect are disclosed in Note 2.6.
The principal accounting policies adopted, which have been applied
consistently, unless otherwise stated, are set out in Note 2.3 below.
Going concern
The Directors have performed an assessment of going concern
to determine the adequacy of the Group and Company’s financial
resources over a period of 14 months from the date of signing these
financial statements, a period which includes the maturity of £150m
of senior bonds in May 2024.
This assessment is based on higher and lower case financial
projections which incorporate scenario analysis and stress tests
on expected business performance.
The Group’s higher case modelling assumes good performance in
the Cruise division in 2023/24, on the back of strong booked load
factors and per diems. Travel is also expected to achieve continued
growth in revenues with encouraging bookings for 2023/24 as at
the end of March 2023. As previously indicated, the outlook for
Insurance is likely to be challenging over the next 12 to 18 months,
with high cost and claims inflation in a competitive market expected
to squeeze margins.
The Group’s lower case scenario incorporates lower load factors
for Ocean Cruise, lower levels of demand in River Cruise, and slower
growth in the Travel business across the going concern period.
Downside risks modelled for the Insurance business include the
impact of worsening competitive market pressures on the Insurance
Broking business, continued high cost and claims inflation putting
pressure on margins, among other stress tests. These stresses are
partially offset by discretionary cost savings and the deferral of
investment expenditure that would be achieved in the event of
downside trading risks materialising.
To increase liquidity and consistent also with a strategy of reducing
capital intensity, in the autumn of 2022, the Group commenced a sale
process for its Underwriting business, Acromas Insurance Company
Limited (AICL). The Group aims for this sale process to be concluded
in the second half of 2023.
However, given that there is no certainty that a sale of AICL will be
concluded in the next 14 months, the Group has agreed a loan facility
with Sir Roger De Haan. Under the terms of this facility, if the sale of
AICL is not completed prior to the end of 2023, the Group will, from
1 January 2024, be able to borrow up to £50m to fund any liquidity
needs, including repayment of the 2024 bonds. This facility is
unsecured, on arms-length terms and can be drawn at the option of
the Group on 30 days’ notice. The facility matures on 30 June 2025,
at which point any outstanding amounts, including interest, must be
repaid. Availability of funds under the facility is not contingent on
financial performance or on compliance with any financial covenants.
Under both higher and lower case scenarios the Group expects to
meet scheduled Ocean Cruise debt principal repayments as they fall
due over the next 14 months, and to also meet the financial covenants
relating to its secured cruise debt facilities (see Note 30) throughout
the assessment period, except for the July 2023 testing date where
lenders have agreed to a waiver of the EBITDA to debt repayment
covenant ratio (see Note 41).
In addition, in both higher and lower case scenarios and incorporating
either the expected net proceeds from a sale of the Insurance
Underwriting business or a draw down of the £50m loan facility with
Sir Roger De Haan, the Group expects to have sufficient resources to
continue operations for at least the next 14 months and to repay the
£150m senior bonds on maturity in May 2024 from Available Cash2
resources.
Over the same timeframe and on the same basis, the Group also
expects to remain within the renegotiated financial covenants and
other terms relating to its £50m revolving credit facility (RCF), as
set out in Note 30, enabling it to draw down on this currently undrawn
facility in 2024/25 to meet short-term working capital requirements
should the need arise.
Noting that it is not possible to predict accurately all possible future
risks to the Group’s future trading, based on this analysis and the
scenarios modelled, the Directors are confident that the Group will
have sufficient funds to continue to meet its liabilities as they fall due
for a period of at least 14 months from the date of approval of these
financial statements. They have therefore deemed it appropriate
to prepare the financial statements to 31 January 2023 on a going
concern basis.
2 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 143
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 January each year. Control is
achieved when the Group is exposed, or has rights, to variable returns
from its involvement with an investee entity and has the ability to
affect those returns through its power over the investee entity.
The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiary companies are consolidated using the acquisition method.
Subsidiaries are fully consolidated from the date of acquisition, being
the date on which the Group obtained control, and continue to be
consolidated until the date when such control ceases.
In preparing these consolidated financial statements, any intra-group
receivables, payables, income and expenses arising from intra-group
trading are eliminated. Where accounting policies used in individual
financial statements of a subsidiary company differ from Group
policies, adjustments are made to bring these policies in line with
Group policies.
The results of subsidiaries acquired, or disposed of, during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal,
as appropriate. Where a subsidiary which constituted a separate
major line of business is disposed of, it is disclosed as a discontinued
operation.
A change in the ownership interest of a subsidiary, without a loss
of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the
related assets (including goodwill), liabilities, non-controlling interest
and other components of equity while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised
at fair value.
144 Saga plc Annual Report and Accounts 2023
2.3 Summary of significant accounting policies
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 to the extent that it is probable that
the future economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when payment is received.
The recognition policies for the Group’s various revenue streams
by segment are as follows:
i) Insurance
The amounts received from customers for insurance policies
comprise three main elements: the premium charged to the
customer in respect of the insurance cover (gross premium);
insurance premium tax (IPT); and an arrangement fee where
applicable (only applied to policies that are brokered via a panel).
The gross premium itself comprises two elements: the premium
charged by the underwriter of each policy (net premium), which
may be provided by the Group’s in-house underwriter or by a
third-party underwriter, plus any adjustment to the net premium
that is applied by the Group’s broker during the broking service
(street pricing adjustment).
In addition, where the customer pays in instalments, the Group
may charge interest on the outstanding balance. The Group may
also charge additional fee income for mid-term cancellations and
adjustments made to policies mid-term.
IPT is excluded from all revenue recognised by the Group.
For 12-month insurance policies with no option to fix the
premium at renewal (annual policies):
For insurance policies underwritten by the Group, the gross
insurance premium is recognised on a straight-line time-apportioned
basis over the period of cover. The portion of the premium ceded to
reinsurers is also recognised on a straight-line time-apportioned
basis over the period of cover as a reduction to revenue. This
recognition basis is in line with the requirements of International
Financial Reporting Standard (IFRS) 4.
For insurance policies not underwritten by the Group, the portion of
the gross premium that is retained by the Group, otherwise referred
to as the street pricing adjustment, is recognised on the cover start
date of each policy. The portion of the gross premium charged by the
third-party underwriter, otherwise referred to as the net premium, is
not recognised as revenue in the income statement. This recognition
basis is in line with the requirements of IFRS 15.
For 12-month insurance policies with the option to fix the
premium over three years (three-year fixed-price policies):
For three-year fixed-price policies, the option to fix the premium
at the first and second renewal points is deemed to be a separate
performance obligation as defined by IFRS 15. The Group therefore
defers a portion of the gross premium received in the first year of
cover into years two and three, and a portion of the gross premium
received in the second year of cover into year three, to coincide
with when the option has been exercised by the customer and so
deemed to be fulfilled by the Group. The carrying value of the revenue
deferred is recognised within contract liabilities in the statement of
financial position.
If a customer cancels a three-year fixed-price policy mid-term or
chooses not to renew in the second or third years, any brought
forward income deferral is recognised in the income statement at
the point the cover ends, being the point that the Group is released
from the obligation to fix the price at renewal.
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The Group uses a cost-plus methodology to approximate a
standalone selling price of the option to fix the customer price at
renewal, by reference to an actuarial estimate of the premium that it
would cost the Group to transfer the obligation to fix to a third party,
plus an appropriate profit margin.
Profit commissions due under coinsurance or reinsurance
arrangements are recognised and valued in accordance with the
contractual terms to which they are subject, when it is highly probable
that a significant reversal of revenue will not occur, and on the same
basis, where appropriate, as the related reinsured liabilities.
The gross premium that is allocated to each of the three policy years
is then measured as the gross premium charged in each year, less any
income deferred to subsequent policy years for the option to fix, plus
any brought forward income deferred from earlier policy years. The
accounting in each policy year then follows the same principles as
described above for annual policies.
Where there is a switch of underwriter between the Group and a
third-party underwriter at either of the renewal points within the
three-year price-fix, the Group applies the relevant accounting policy
for the subsequent policy year in line with either of the two methods
as described for annual policies.
Management considers the definition of performance obligations for
three-year fixed-price policies to be a significant area of judgement.
All insurance policies (both three-year fixed-price policies and
annual policies):
For all insurance policies, the arrangement fee that is charged in
respect of the broking service is recognised on, or before, the cover
start date of each policy on the date that each policy is arranged,
being the point at which the performance obligation to broker the
policy is fulfilled. It is measured by reference to the explicit price
charged to customers for this service. Management considers the
revenue recognition treatment of the arrangement fee to be a
significant area of judgement.
Gross premiums received in advance of the cover start date of a
policy are treated as advance receipts and included as contract
liabilities in the statement of financial position.
Premiums in respect of insurance policies underwritten by the Group
that have a period of unexpired risk at the reporting date, and which
relate to the period after the reporting date, are treated as unearned
and included in gross insurance contract liabilities in the statement of
financial position. The portion of those unearned premiums ceded to
excess of loss reinsurers is recognised as a reinsurance asset on
the face of the statement of financial position. The portion of those
unearned premiums ceded to quota share reinsurers is recognised
as an asset netted off against reinsurance premiums withheld within
trade payables, since there is a right of set-off within the contract.
Subsequent changes to premiums mid-term are recognised on
the effective date of the mid-term adjustment. For those policies
that are underwritten by the Group, these changes are recognised
on a straight-line time-apportioned basis over the period of cover
remaining on the policy. Reduction in premiums from mid-term
cancellations are recognised on the effective date of the cancellation.
Any fee income charged for a mid-term cancellation or adjustment is
recognised on the date the adjustment is made, being the point that
the mid-term service is fulfilled.
Income from credit provided to customers to facilitate payment of
their insurance premiums by instalments 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.
For revenue earned from credit hire and repair services for non-fault
claims (credit hire and credit repair), the Group initially recognises
the revenue at fair value, which is based on a historical assessment of
debt recovery and discount levels. Credit hire revenue is recognised
from the date that 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 Association of
British Insurers General Terms of Agreement are recognised as they
become payable by the insurance company.
ii) Cruise and Travel
Revenue from Cruise and Travel, 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,
which is deemed to be when each service to the customer takes
place. The standalone selling price of each performance obligation is
estimated as the cost to provide each obligation plus a profit margin
appropriate to the nature of each service. The price charged to each
customer is then apportioned to each performance obligation based
on the relative estimated standalone selling prices, in line with the
requirements of IFRS 15.
For Travel, revenue in relation to flights and flight upgrades is
recognised on the date of each flight; revenue in relation to
accommodation is recognised over the duration of the holiday;
revenue in relation to transfers is recognised on the date that the
transfers occur before and after each holiday; and revenue in respect
of travel insurance (which is underwritten by a third-party
underwriter) is recognised on the cover start date of the insurance.
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 and/or rail journeys (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 flights and flight upgrades
(where applicable) and transfers is recognised on the date that each
trip is fulfilled, which is consistent with the approach adopted by the
Travel business.
Revenue from travel insurance for cruising holidays is recognised at
the cover start date of the policy, which is usually at the point the
customer makes a booking.
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 cancellations.
Revenue from sales in resort, for example for optional excursions, or
on board a cruise ship operated by the Group, for example bar sales
or optional excursions, is recognised as it is earned.
Revenue from Cruise and Travel received in advance of when each
performance obligation is satisfied is included as deferred revenue
within contract liabilities in the statement of financial position.
Saga plc Annual Report and Accounts 2023 145
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.3 Summary of significant accounting policies
continued
iii) Other Businesses and Central Costs
Saga Money
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, and it is highly
probable that a significant reversal of revenue recognised will
not occur.
For the Saga savings product, commissions are earned over the
duration of the contract in line with the contractual amount due
to the Group.
For Saga equity release products, commissions are earned initially
and over the lifetime of the product. Additionally, further
commissions, where applicable are earned at each subsequent stage
of the drawdown if any more of the advance is taken by the customer.
Initial commission relating to new business is recognised as revenue
at the point the performance obligation with the Group’s contracted
business partners is satisfied, and the customer has taken out the
product. Where applicable, trail commission is recognised as the
discounted future cash flows expected to be received over the
estimated life of the product and likewise for further commissions
on additional drawdowns undertaken by the customer.
Saga Media
Magazine subscription revenue is recognised on a straight-line
basis over the period of the subscription. Revenue generated from
advertising within the magazine is recognised when the magazine
is provided to the customer.
The element of subscriptions and advertising revenue relating to the
period after the reporting date is recognised as deferred revenue
within contract liabilities in the statement of financial position.
Printing and mailing
Revenue from printing and mailing services is recognised in line
with the performance obligations within customer contracts.
Market research
Revenue from market research services is recognised when a
performance obligation is satisfied. Revenue recognised over time
is based on the proportion of the level of service performed.
b. Cost recognition
i) Insurance 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 within trade and other receivables on the
face of the statement of financial position. Such costs are amortised
in line with the pattern of revenue for the related insurance contract,
which incorporates the propensity for that contract to renew in
future periods 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.
ii) Claims costs
Claims costs incurred in respect of insurance policies underwritten
by the Group include estimates for claims made for losses reported
as occurring during the period together with the related handling
costs, any adjustments to claims outstanding from previous periods,
and an estimate for the cost of claims incurred during the period but
not reported as at the reporting date. The portion of costs recovered
from reinsurance is recognised as a reduction to those costs in the
same period in which the costs are recognised. Further detail is
provided in Note 28.
iii) Finance costs
Finance costs comprise interest paid and payable that is calculated
using the effective interest rate (EIR) method, and it is recognised in
the income statement as it accrues. Accrued interest is included
within the carrying value of the interest-bearing financial liability in
the statement of financial position. Finance costs also include debt
issue costs that were initially recognised in the statement of financial
position and amortised over the life of the debt, debt issue costs
in respect of renegotiating existing facilities that are immediately
recognised in the income statement and net fair value losses on
derivative financial instruments.
iv) All other expenses
All other expenses are recognised in the income statement as they
are incurred.
c. Recognition of other income statement items
i) Interest income
Investment income in the form of interest is recognised in the income
statement as it accrues and is calculated using the EIR method.
Interest income is earned by the Group on both assets held at fair
value through profit or loss (FVTPL), and assets held at fair value
through other comprehensive income (FVOCI). Fees and
commissions which are an integral part of the effective yield of the
financial asset or liability are recognised as an adjustment to the EIR
of the instrument.
ii) Dividend income
Income in the form of dividends is recognised when the right to
receive payment is established. For listed securities, this is the date
that the security is listed as ex-dividend.
iii) Gains and losses on financial investments at fair value
Realised and unrealised gains and losses on financial investments
are recorded as investment income in the income statement, and
represent net fair value gains and losses arising from changes in
fair value during the year.
146 Saga plc Annual Report and Accounts 2023
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d. Taxes
i) Current income tax
Income tax assets and liabilities for the current period are measured
at the amount expected to be recovered from, or paid to, taxation
authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the reporting
date. Current income tax assets and liabilities also include adjustments
in respect of tax expected to be payable or recoverable in respect of
previous periods. Current income tax relating to items recognised
in other comprehensive income (OCI) and directly in equity is
recognised in OCI or equity and not in the income statement.
ii) Deferred tax
Deferred tax is provided on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against which the
deductible temporary differences and the carry forward of unused
tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all, or part of, the
deferred tax asset to be utilised. Unrecognised deferred tax assets
are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date. Deferred
tax is charged or credited in the income statement, except when it
relates to items charged or credited in OCI or equity, in which case
the deferred tax is recognised in OCI or equity as appropriate.
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set-off current tax assets against current
tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.
e. Foreign currencies
Transactions in foreign currencies are initially recorded by the Group
at their respective functional currency spot rate at the date that the
transaction first qualifies for recognition. Monetary assets and
liabilities denominated in foreign currencies are retranslated at
the functional currency spot rate of exchange prevalent at the
reporting date.
f. Intangible assets
Intangible assets acquired are measured on initial recognition at
cost and subsequent to initial recognition, are carried at cost less
any accumulated amortisation and accumulated impairment losses.
The cost of intangible assets acquired in a business combination
is their fair value at the date of acquisition. Internally generated
intangibles, excluding internally developed software, are not
capitalised and the related expenditure is reflected in the income
statement in the period in which the expenditure is incurred.
The useful lives of intangible assets and goodwill are assessed as
either finite or indefinite. Estimated useful lives are as follows:
Goodwill
Software
Indefinite
3-10 years
Intangible assets with finite lives are amortised over their useful
economic life on a basis appropriate to the consumption of the asset
and are assessed for impairment whenever there is an indication that
the intangible asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a finite useful life
are reviewed at least at the end of each reporting period. Changes in
the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are
treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in the
income statement in the expense category that is consistent with
the function of the intangible assets.
Goodwill is not amortised but is tested for impairment at least
annually, at the cash generating unit (CGU) level. Where the carrying
value of the asset exceeds the recoverable amount, an impairment
loss is recognised in the income statement immediately.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognised in the income
statement when the asset is derecognised.
g. Business combinations and goodwill
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred measured at acquisition date at fair
value and the amount of any non-controlling interests in the acquiree.
For each business combination, the Group elects whether to
measure the non-controlling interests in the acquiree at fair value or
at the proportionate share of the acquiree’s identifiable net assets.
When the Group acquires a business, it assesses the financial
and non-financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual
terms, economic circumstances and pertinent conditions as at
the acquisition date.
Saga plc Annual Report and Accounts 2023 147
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.3 Summary of significant accounting policies
continued
Any contingent consideration to be transferred by the acquirer will
be recognised at fair value at the acquisition date. Contingent
consideration classified as an asset or liability that is a financial
instrument within the scope of IFRS 9 ‘Financial Instruments’ is
measured at fair value with the changes in fair value recognised in
the income statement.
Any excess of the cost of acquisition over the fair values of the
identifiable assets and liabilities is recognised as goodwill. If the cost
of acquisition is less than the fair values of the identifiable assets
and liabilities of the acquired business, the difference is recognised
directly in the income statement in the year of acquisition.
Acquisition-related costs are expensed as incurred and included
in administrative expenses.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is allocated to CGUs at the
point of acquisition and is reviewed at least annually for impairment.
h. Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for
impairment, or more frequently if events or changes in circumstances
indicate that it might be impaired. If such an indication exists, the
recoverable amount is estimated and compared with the carrying
amount. If the recoverable amount is less than the carrying amount,
the asset is considered impaired and is written down to its
recoverable amount and the impairment loss is recognised
immediately in the income statement.
Other assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. If there is any indication that an asset may be impaired,
a recoverable amount is estimated for the individual asset. If it is not
possible to estimate the recoverable amount of the individual asset,
the recoverable amount is determined according to the CGU to
which the asset belongs.
For impairment testing, assets are grouped together into the
smallest group of assets that generate cash inflows from continuing
use that are largely independent of the cash inflows of other assets or
CGUs. Goodwill arising from a business combination is allocated to
CGUs, or groups of CGUs that are expected to benefit from the
synergies of the combination.
The recoverable amount is calculated as the higher of fair value less
costs to sell, and value-in-use. In assessing value-in-use, where
appropriate, estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific
to the asset. In determining fair value less costs of disposal, recent
market transactions are taken into account. If no such transactions
can be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share
prices for publicly traded companies or other available fair value
indicators. The Group bases its value-in-use calculations on detailed
budgets, plans and long-term growth assumptions, which are
prepared separately for each of the Group’s CGUs to which individual
assets are allocated.
i. Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated
depreciation and impairment losses. Where an item of property, plant
and equipment comprises major components having different useful
lives, they are accounted for separately.
Assets in the course of construction at the statement of financial
position date are classified separately. These assets are transferred
to other asset categories when they become available for their
intended use.
148 Saga plc Annual Report and Accounts 2023
Depreciation is charged to the income statement on a straight-line
basis so as to write-off the depreciable amount of property, plant and
equipment over their estimated useful lives. The depreciable amount
is the cost of an asset less its residual value. Land and assets in the
course of construction are not depreciated. Estimated useful lives
are as follows:
Buildings, properties and related fixtures:
Buildings
Fixtures and fittings
Ocean cruise ships
Computers
Plant, vehicles and other equipment
50 years
3-20 years
30 years
3-6 years
3-10 years
Costs relating to ocean cruise ship mandatory dry-dockings are
capitalised and depreciated over the period up to the next
dry-docking, where appropriate. The International Convention for
the Safety of Life at Sea regulations stipulate that ships have to be
dry-docked twice in an interval of five years, with the interval between
consecutive dry-dockings being not less than two years and not more
than three years. All other repairs and maintenance costs are
recognised in the income statement as incurred.
An item of property, plant and equipment is derecognised upon
disposal, or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of an asset
(calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the income statement
when the asset is derecognised.
Estimated residual values and useful lives are reviewed annually.
In relation to the annual review of estimated residual values and
useful lives of ocean cruise ships, potential environmental regulatory
changes are also considered. The shipping industry has made a
commitment to reduce CO2 emissions by 40% by 2030 (from a
2008 baseline), and the UK Government has made commitments to
reach net zero emissions by 2050. The EEXI (carbon design/technical
efficiency indicator) and CII (in-service/operational carbon intensity
efficiency indicator) regulations were introduced internationally
during the year to enable the industry to meet the 2030 target, and
the Group’s ocean cruise ships meet the requirements of these
regulations. The end of their useful economic lives of 30 years will have
been reached by 2049 in the case of Spirit of Discovery and 2051 in
the case of Spirit of Adventure.
j. Non-current assets held for sale
The Group classifies non-current assets as held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use. To be classified as
held for sale, an asset must be available for immediate sale in its
present condition subject only to terms that are usual and customary
for the sale of such assets, and the sale must be highly probable. A sale
is considered to be highly probable when management is committed
to a plan to sell an asset and an active programme to locate a buyer
and complete the plan has been initiated at a price that is reasonable
in relation to its current fair value, and there is an expectation that the
sale will be completed within one year from the date of classification.
Non-current assets classified as held for sale are carried on the
Group’s statement of financial position at the lower of their carrying
amount and fair value less costs to sell.
Property, plant and equipment and intangible assets, once classified
as held for sale, are not depreciated or amortised.
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k. Financial instruments
i) Financial assets
On initial recognition, a financial asset is classified as either amortised cost, FVOCI or FVTPL. The classification of financial assets 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.
Initial recognition
Subsequent measurement
Amortised cost A financial asset is measured at amortised cost (plus any
directly attributable transaction costs) if it meets both of
the following conditions and is not elected to be designated
as FVTPL:
FVOCI
FVTPL
• It is held within a business model whose objective is to
hold assets to collect contractual cash flows.
• Its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
The Group classifies trade receivables, other receivables and
deposits with financial institutions as held at amortised cost.
A debt investment is measured at FVOCI (plus any directly
attributable transaction costs) 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.
• 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.
The Group classifies debt securities as FVOCI.
All financial assets not classified as amortised cost or
FVOCI as described above are classified as FVTPL and
held at fair value. 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 individual instrument basis.
The Group classifies loan funds, money market funds and
foreign exchange forward contracts not designated in a
hedging relationship, as FVTPL.
These assets are subsequently measured at amortised
cost using the EIR method. The amortised cost is reduced
by any impairment losses (see (ii) below). Interest income,
foreign exchange gains and losses and impairments
are recognised in profit or loss as they are incurred.
Any gain or loss on derecognition is recognised in profit
or loss immediately.
Debt instruments are subsequently measured at fair value.
Interest income calculated using the EIR method, foreign
exchange gains and losses and impairments 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.
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
(see (vi) overleaf).
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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.
Saga plc Annual Report and Accounts 2023 149
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.3 Summary of significant accounting policies
continued
ii) Impairment of financial assets
The expected credit loss (ECL) impairment model applies to financial
assets measured at amortised cost and debt investments at FVOCI.
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.
• Other debt securities and bank balances for which credit risk
has increased significantly since initial recognition.
• Trade receivables and contract assets that result from
transactions within the scope of IFRS 15.
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, 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 credit
rating scales.
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. Loss
allowances for ECLs on financial assets measured at amortised
cost are deducted from the gross carrying amount of the assets,
with a corresponding charge to the income statement. For debt
instruments measured at FVOCI, the loss allowance for debt
investments at FVOCI is recognised in profit or loss and reduces
the fair value loss, or increases the fair value gain, otherwise
recognised in the statement of other comprehensive income.
iii) Financial liabilities
Initial recognition and measurement
All financial liabilities are classified as financial liabilities at amortised
cost on initial recognition except for derivatives, which are classified
at FVTPL, the gains or losses for which are recognised through OCI
if the instrument is designated as a hedging instrument in an effective
cash flow hedge.
With the exception of lease liabilities, 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, derivative financial instruments and lease liabilities.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings and
other payables are subsequently measured at amortised cost using
the EIR method. 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, 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 subsequently
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 cash flow hedges are
initially recognised in OCI until such a point that they are recycled to
profit or loss in the same period as the hedged item is recognised in
profit or loss, or immediately if the hedged item is no longer expected
to occur.
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.
v) Fair values
The Group measures all financial instruments at fair value at each
reporting date, other than those instruments measured at
amortised cost.
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 bid 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.
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 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 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.
150 Saga plc Annual Report and Accounts 2023
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The Group uses forward foreign exchange and commodity swap
contracts to hedge the variability in cash flows arising from changes
in foreign currency rates and oil prices respectively. 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 oil 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 hedged forecast
transaction occurs. If the hedged forecast transaction is no longer
expected to occur, the cumulative unrealised gain or loss is
recognised in the income statement immediately.
l. Leases
The Group leases various river cruise ships, buildings, equipment
and vehicles. The contract length of the lease varies considerably and
may include extension or termination options as described below.
At the inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset,
the Group assesses whether: the contract involves the use of an
identified asset; the Group has the right to obtain substantially all of
the economic benefits from use of the asset throughout the period
of use and the Group has the right to direct the use of the asset.
Leases are initially recognised as a right-of-use asset and a
corresponding lease liability at the date at which the leased asset is
available for use by the Group. The lease liability is initially measured
at the present value of the lease payments that are not paid at the
commencement date. Where it is reasonably certain that an
extension option will be triggered in a contract, lease payments to
be made in respect of the option will be included in the measurement
of the lease liability.
The lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is generally
the case for leases in the Group, the Group’s incremental borrowing
rate is used. This is the rate that the Group would have to pay to
borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset, in a similar economic environment, with similar
terms, security and conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to the income statement over the lease
period using the EIR method and the lease liability is measured at
amortised cost using the EIR method.
Right-of-use assets are initially measured at cost, comprising the
present value of future lease payments plus any initial direct costs and
restoration costs. Right-of-use assets are depreciated over the lease
term on a straight-line basis except for the Group’s river cruise ships.
The unit of production method is used to depreciate river cruise ships
in order to accurately reflect the usage of the asset, which is seasonal.
Payments associated with short-term leases of equipment and all
leases of low-value assets are expensed in profit or loss as incurred
in line with the exemption allowed under paragraph 6 of IFRS 16.
Short-term leases are leases with a lease term of 12 months or less
without a purchase option. Low-value assets comprise IT equipment
and small items of office furniture.
Extension and termination options are included in a number of
property and river cruise ship leases across the Group. These are
used to maximise operational flexibility in terms of managing the
assets used in the Group’s operations. The majority of extension and
termination options held are exercisable only by the Group and not by
the respective lessor.
The Group remeasures the lease liability (and makes a corresponding
adjustment to the related right-of-use asset) whenever:
• the lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment
of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate; or
• a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability
is remeasured based on the lease term of the modified lease by
discounting the revised lease payments using a revised discount
rate at the effective date of the modification.
m. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as part
of the cost of the respective asset. All other borrowing costs are
expensed in the period in which they occur.
Borrowing costs consist of interest and fees that an entity incurs in
connection with the borrowing of funds.
n. Cash and short-term deposits
Cash and short-term deposits in the statement of financial position
comprise cash at bank and in hand, and short-term deposits with a
maturity of three months or less from their inception date.
For the purpose of the consolidated statement of cash flows, cash
and cash equivalents consist of cash, short-term deposits as defined
above and short-term highly liquid investments (including money
market funds) with original maturities of three months or less that are
subject to an insignificant risk of change in value, net of outstanding
bank overdrafts.
o. Trust accounts
All customer monies received in advance in relation to Air Travel
Organiser’s Licence (ATOL) licensable bookings are held in trust
accounts until after the customer has travelled, when the Group
has fulfilled all its performance obligations with customers.
The trust arrangement is governed by a deed between the Group,
the Civil Aviation Authority Air Travel Trustees and an independent
Trustee, PT Trustees Limited, which determines the inflows and
outflows from the accounts. The Group does not use advance
receipts from customers in its Travel and River Cruise businesses
to fund its business operations.
p. Trade and other receivables
Trade and other receivables are initially recognised at fair value and
subsequently measured at amortised cost. Loss allowances are
measured as lifetime ECLs.
Saga plc Annual Report and Accounts 2023 151
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.3 Summary of significant accounting policies
continued
q. Inventories
Inventories are stated at the lower of cost and net realisable value.
Costs include all costs incurred in bringing each product to its
present location and condition. Net realisable value is based on
estimated selling price less any further costs expected to be
incurred prior to completion and disposal.
r. Insurance contract liabilities
Insurance contract liabilities include an outstanding claims provision,
a provision for unearned premiums and, if required, a provision for
premium deficiency.
Outstanding claims provision
The provision for outstanding claims is set on an individual claim basis
and is based on the ultimate cost of all claims notified but not settled,
less amounts already paid by the reporting date, together with a
provision for related claims handling costs. The provision also includes
the estimated cost of claims incurred but not reported (IBNR) at the
statement of financial position date, which is estimated using actuarial
methods. The outstanding claims provision is not discounted for the
time value of money, with the exception of claims settled as periodical
payment orders (PPOs).
The amount of any anticipated reinsurance, salvage or subrogation
recoveries is separately identified and reported within reinsurance
assets and insurance contract liabilities respectively.
Differences between the provisions at the reporting date and
settlements and provisions in the following year (known as run-off
deviations) are recognised in the income statement as they arise.
Provision for unearned premiums
The provision for unearned premiums represents the portion of
premiums received, or receivable, that relates to risks that have not
yet expired at the reporting date. The provision is recognised when
contracts are entered into and premiums are charged, and is
recognised in the income statement as premium income over the
term of the contract on a straight-line basis.
Provision for premium deficiency
At each reporting date, the Group reviews its unexpired risks and a
liability adequacy test is performed to determine whether there is
any overall excess of expected claims and deferred acquisition costs
over unearned premiums. This calculation uses current estimates of
future contractual cash flows after taking account of the investment
return expected to arise on assets relating to the relevant insurance
technical provisions. If these estimates show that the carrying
amount of the unearned premiums (less related deferred acquisition
costs) is inadequate, the deficiency is recognised in the income
statement by setting up a provision for premium deficiency.
The deferred acquisition costs are written off before any provision
is made.
s. Reinsurance assets
Contracts entered into by the Group with reinsurers under which the
Group is compensated for losses on insurance contracts issued, are
classified as reinsurance contracts. A contract is only accounted for
as a reinsurance contract where there is significant insurance risk
transfer between the insurer and reinsurer.
Reinsurance assets include balances due from reinsurance
companies for ceded insurance liabilities under excess of loss cover.
Amounts recoverable from reinsurers are estimated in a consistent
manner with the outstanding claims provisions in accordance with
the relevant reinsurance contract.
152 Saga plc Annual Report and Accounts 2023
The Group assesses its reinsurance assets for impairment at each
statement of financial position date. For assets that are directly
exposed to long-tail PPO liabilities, a general provision for impairment
is provided, calculated on a wholesale basis by reference to published
credit rating default curves. For all other reinsurance assets, the
carrying value is written down to its recoverable amount only if there
is objective evidence of impairment.
For the funds-withheld quota share agreement in motor insurance,
the obligation to pay funds and the right to receive reimbursement for
incurred claims are presented on a net basis because there is a legally
enforceable right to offset these amounts and there is an intention to
settle on a net basis or realise both the asset and settle the liability
simultaneously. The reinsurance assets recognised under these
agreements are therefore recognised as an offset against premium
ceded under the same agreement, within trade and other payables.
t. Share-based payments
The Group provides benefits to employees (including Executive
Directors) in the form of share-based payment transactions, whereby
employees render services as consideration for equity instruments
(equity-settled transactions). The cost of equity-settled
transactions is measured by reference to the fair value on the grant
date and is recognised as an expense over the relevant vesting period,
ending on the date on which the employee becomes fully entitled to
the award.
Fair values of share-based payment transactions are calculated using
Black-Scholes and Monte-Carlo modelling techniques. In valuing
equity-settled transactions, assessment is made of any vesting
conditions to categorise these into market performance conditions,
non-market performance conditions and service conditions.
Where the equity-settled transactions have market performance
conditions (that is, performance which is directly or indirectly linked
to the share price), the fair value of the award is assessed at the time
of grant and is not changed, regardless of the actual level of vesting
achieved, except where the employee ceases to be employed prior
to the vesting date.
For service conditions and non-market performance conditions, the
fair value of the award is assessed at the time of grant and is
reassessed at each reporting date to reflect updated expectations
for the level of vesting. No expense is recognised for awards that
ultimately do not vest.
At each reporting date prior to vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has
expired and, in the case of non-market conditions, the best estimate
of the number of equity instruments that will ultimately vest or, in the
case of instruments subject to market conditions, the fair value on
grant adjusted only for leavers. The movement in the cumulative
expense since the previous reporting date is recognised in the
income statement, with the corresponding increase being
recognised in the share-based payments reserve.
Upon vesting of an equity instrument, the cumulative cost in the
share-based payments reserve is reclassified to retained earnings
in equity.
The dilutive effect of outstanding options is reflected as additional
share dilution in the computation of diluted (loss)/earnings per share.
u. Retirement benefit schemes
During the year, the Group operated a defined benefit pension plan
that requires contributions to be made to separately administered
funds. The cost of providing benefits under the defined benefit plan
is determined separately using the projected unit credit valuation
method. The defined plan was closed to future accrual on
31 October 2021. From 1 November 2021, members moved from
active to deferred status.
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Actuarial gains and losses arising in the year are credited/charged
to OCI and comprise the effects of changes in actuarial assumptions
and experience adjustments due to differences between the previous
actuarial assumptions and what has actually occurred. In particular,
the difference between the interest income and the actual return
on plan assets is recognised in OCI.
2.4 Standards issued but not yet effective
The following is a list of standards, and amendments to standards,
that are in issue but are not effective or adopted as at 31 January
2023. Except where separately disclosed, these standards are
endorsed by the UK Endorsement Board.
Other movements in the net surplus or deficit, which include the
current service cost, any past service cost and the effect of any
curtailment or settlements, are recognised in the income statement.
Past service costs are recognised in the income statement on the
earlier of the date of plan curtailment and the date that the Group
recognises restructuring-related costs. The Group no longer incurs
any service costs or curtailment costs relating to the defined benefit
pension plan as the scheme is closed to future accrual. The interest
cost, less interest income on assets held in the plans, is also charged
to the income statement.
The defined benefit schemes are funded, with assets of the schemes
held separately from those of the Group, in separate Trustee-
administered funds. Scheme assets are measured using market
values and scheme liabilities are measured using the projected unit
actuarial method and are discounted at the current rate of return on
a high-quality corporate bond of equivalent term and currency to the
liability. Full actuarial valuations are obtained at least triennially and
are updated at each reporting date. The resulting defined benefit
asset or liability is presented separately on the face of the statement
of financial position. The value of a pension benefit asset is restricted
to the amount that may be recovered, either through reduced
contributions, or agreed refunds from the scheme.
For defined contribution schemes, the amounts charged to the
income statement are the contributions payable in the year.
v. Provisions
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, and it is probable
that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made
of the amount of the obligation. The expense relating to any provision
is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects the risks specific
to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
A provision is recognised for onerous contracts in which the
unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under it.
The unavoidable costs reflect the least net cost of exiting the
contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it. The costs
of fulfilling a contract comprise both the incremental costs and an
allocation of other direct costs.
w. Trade and other payables
Trade and other payables are initially recognised at fair value and
subsequently measured at amortised cost. They represent liabilities
to pay for goods or services that have been received or supplied in
the normal course of business, invoiced by the supplier before the
year end, but for which payment has not yet been made.
x. Equity
The Group has ordinary shares that are classified as equity.
Incremental external costs that are directly attributable to the
issue of these shares are recognised in equity, net of tax.
a. IFRS 17 ‘Insurance Contracts’
IFRS 17 ‘Insurance Contracts’ is a comprehensive new accounting
standard that applies to all insurance and reinsurance contracts
covering the principles of recognition, measurement, presentation
and disclosure.
IFRS 17 only applies to insurance contracts that are underwritten by
the Group and related reinsurance contracts held. It does not affect
the accounting for the Group’s Insurance Broking activities.
IFRS 17 is effective for annual reporting periods beginning on, or after,
1 January 2023. The Group will initially apply IFRS 17 in its consolidated
financial statements for the year ending 31 January 2024, with the
date of initial application being 1 February 2023 and the transition
date being 1 February 2022. The Group’s consolidated financial
statements for the year ending 31 January 2024 will include
comparatives for the year ending 31 January 2023 restated onto
an IFRS 17 basis.
The Group expects to apply IFRS 17’s simplified premium allocation
approach (PAA ) to all insurance contracts issued and reinsurance
contracts held. All insurance contracts issued by the Group are
eligible for the PAA as they have a one-year coverage period. The
Group has a small number of reinsurance contracts held that have
a coverage period of more than one year which are expected to be
eligible for the PAA as, at inception, the PAA is expected to produce a
measurement of the liability for remaining coverage of the relevant
group of reinsurance contracts that would not differ materially from
the one that would be produced by applying the standard’s more
complex general measurement model.
Applying the PAA simplifies the measurement of the IFRS 17 liability
for remaining coverage, which will continue to be based on a deferred
premium approach as under current IFRS. However, the IFRS 17
liability for remaining coverage will differ from current IFRS in relation
to the following:
• The IFRS 17 requirement to identify any contracts that are
expected to be onerous at initial recognition. The expected
losses are recognised immediately in profit or loss, with a liability
established on the balance sheet. Under current IFRS, these
losses would be recognised in profit or loss over the coverage
period of the insurance contracts.
• The Group intends to take the PAA option to expense insurance
acquisition costs immediately in profit or loss, meaning the IFRS 4
deferred insurance acquisition cost asset will effectively be
written off.
The measurement of insurance contract liabilities in relation to
coverage provided before the statement of financial position date,
referred to as the liability for incurred claims under IFRS 17,
and reinsurance contract assets will change.
The IFRS 17 liability for incurred claims will be measured as the sum
of the following components (collectively referred to as the fulfilment
cash flows):
• The expected future cash flows, all of which will be discounted
using the risk-free rate at the statement of financial position
date, adjusted to reflect the illiquid characteristics of the
insurance contracts.
Saga plc Annual Report and Accounts 2023 153
e. Definition of accounting estimates
(amendments to IAS 8)
The amendments replace the definition of a change in accounting
estimates with a definition of accounting estimates. Under the new
definition, accounting estimates are “monetary amounts in financial
statements that are subject to measurement uncertainty”. The
amendments clarify that a change in accounting estimate that results
from new information, or new developments, is not the correction of
an error. The amendments are effective for annual reporting periods
beginning on, or after, 1 January 2023. The amendments are not
expected to have a material impact on the Group’s financial
statements.
f. Definition of lease liability in a sale and leaseback
(amendment to IFRS 16)
The amendment clarifies how a seller-lessee subsequently measures
sale and leaseback transactions that satisfy the requirements in
IFRS 15 to be accounted for as a sale. The amendment is effective
for annual reporting periods beginning on, or after, 1 January 2024.
The amendment is not expected to have a material impact on the
Group’s financial statements. This amendment is not currently
endorsed by the UK Endorsement Board.
2.5 First time adoption of new standards and
amendments
The following is a list of standards, and amendments to standards,
that became effective, or were adopted, for the first time during the
year ended 31 January 2023.
a. COVID-19-related rent concessions beyond
30 June 2021 (amendment to IFRS 16)
The amendment extends, by one year, the May 2020 amendment
that provides lessees with an exemption from assessing whether
a COVID-19-related rent concession is a lease modification.
The amendment was effective for annual reporting periods beginning
on, or after, 1 April 2021. The Group did not take advantage of the
exemption available under this amendment. The amendment has had
no effect on the Group’s financial statements.
b. Property, plant and equipment – proceeds before
intended use (amendments to IAS 16)
The amendments prohibit deducting from the cost of an item of
property, plant and equipment, any proceeds from selling items
produced while bringing that asset to the location and condition
necessary for it to be capable of operating in the manner intended by
management. Instead, an entity recognises the proceeds from selling
such items, and the cost of producing those items, in profit or loss.
The amendments are effective for annual reporting periods beginning
on, or after, 1 January 2022. The amendments have had no effect on
the Group’s financial statements.
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.4 Standards issued but not yet effective
continued
• A ‘risk adjustment for non-financial risk’ (risk adjustment), being
an explicit margin above the expected future cash flows that
represents the compensation required for bearing non-financial
uncertainty. The Group will derive the risk adjustment by selecting
an appropriate confidence interval using the expected loss
distribution for incurred claims.
This differs from current IFRS under which:
• only certain long-tail claim liabilities are discounted. This discounting
uses a discount rate that doesn’t typically move in line with market
interest rates; and
• the reserve margin is not explicit or linked to a target
confidence level.
The cumulative impact of adopting IFRS 17 on the Group’s reported
net assets at the 1 February 2022 transition date is currently
expected to be in the range of a £14m decrease to an £8m increase.
This estimated impact is preliminary and may change as the Group’s
implementation work is completed.
The impact of IFRS 17 on profit or loss compared to current IFRS
will be driven by the statement of financial position measurement
differences described above. The only exception will be if the Group
takes the IFRS 17 option to present the impact of changes in the
IFRS 17 discount rate on the measurement of the liability for incurred
claims within other comprehensive income rather than within profit
or loss. The Group has not yet made a final decision on whether this
option will be taken.
b. Classification of liabilities as current or
non-current (amendments to IAS 1)
The amendments aim to promote consistency in applying the
requirements by helping companies determine whether, in the
statement of financial position, debt and other liabilities with an
uncertain settlement date should be classified as current (due,
or potentially due, to be settled within one year) or non-current.
The amendments are effective for annual periods beginning on,
or after, 1 January 2024 and are not likely to have a material effect
on the Group’s financial statements. These amendments are not
currently endorsed by the UK Endorsement Board.
c. Deferred tax related to assets and liabilities arising
from a single transaction (amendments to IAS 12)
The amendments clarify that the initial recognition exemption does
not apply to transactions in which equal amounts of deductible and
taxable temporary differences arise on initial recognition. They will
typically apply to transactions such as leases of lessees and will
require the recognition of additional deferred tax assets and liabilities.
The amendments are effective for annual reporting periods beginning
on, or after, 1 January 2023. The amendments are not expected to
have a material impact on the Group’s financial statements.
d. Disclosure of accounting policies (amendments
to IAS 1 and IFRS Practice Statement 2)
The amendments require that an entity discloses its material
accounting policies, instead of its significant accounting policies.
Further amendments explain how an entity can identify a material
accounting policy. The amendments are effective for annual
reporting periods beginning on, or after, 1 January 2023.
The amendments are not expected to have a material impact
on the Group’s financial statements.
154 Saga plc Annual Report and Accounts 2023
c. Onerous contracts – cost of fulfilling a contract (amendments to IAS 37)
The amendments specify that the “cost of fulfilling” a contract comprises the “costs that relate directly to the contract”. Costs that relate
directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour and materials) or an allocation
of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property,
plant and equipment used in fulfilling the contract). The amendments are effective for annual reporting periods beginning on, or after, 1 January
2022. The amendments have had no effect on the Group’s financial statements.
d. Annual improvements to IFRS 2018-2020
The improvements make minor amendments to the following standards: IFRS 1, IFRS 9, IFRS 16 and IAS 41. The amendments are effective for
annual reporting periods beginning on, or after, 1 January 2022. The amendments have had no effect on the Group’s financial statements.
e. Reference to the Conceptual Framework (amendments to IFRS 3)
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without significantly changing the requirements
in the standard. The amendment is effective for annual reporting periods beginning on, or after, 1 January 2022 and apply prospectively.
The amendment has had no effect on the Group’s financial statements.
2.6 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires the Group to select accounting policies and make estimates and assumptions that affect
items reported in the primary consolidated financial statements and Notes to the consolidated financial statements.
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The major areas of judgement used as part of accounting policy application are summarised below:
Significant judgements
Acc. policy
Items involving judgement
Critical accounting judgement
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2.3a
Revenue recognition –
identification of performance
obligations within insurance
contracts not underwritten
by the Group
2.3ai, 2.3r
and 2.3s
Classification of insurance
contracts
Identification of performance obligations within insurance contracts with customers. In
particular, management has exercised judgement in defining separate performance obligations
as part of the Group’s Insurance Broking services, namely:
• the option to fix the customer’s premium at renewal for three-year fixed-price insurance
policies, which results in the deferral of a portion of revenue from policy years one and two
to policy years two and three; and
• the arrangement of each insurance policy at the point the insurance cover is arranged,
as separate from the premium charged in respect of the insurance cover, which occurs on,
or before, the cover start date of each policy and results in a portion of revenue being
recognised a number of days in advance of the cover start date.
Please refer to Note 2.3a for further information on the Group’s performance obligations relating
to revenue recognition.
Management has exercised judgement in defining which insurance policies that it arranges and
underwrites constitute an insurance policy that is subject to the accounting principles of IFRS 4.
This assessment is based on whether significant insurance risk is transferred under each
insurance contract and also includes the assessment of reinsurance contracts that the Group
enters into.
Policies that are arranged, and not underwritten, by the Group, primarily a portion of the motor
and home insurance panels, private medical insurance (PMI) and travel insurance, are not
deemed to constitute insurance policies as defined by IFRS 4, and so they are accounted for in
line with the principles of IFRS 15.
Policies that are both arranged and underwritten by the Group, primarily a portion of the motor
and home insurance panels, are deemed to constitute insurance policies as defined by IFRS 4 and
so are accounted for in line with the requirements of that standard.
The Group’s excess of loss and funds-withheld quota share reinsurance arrangements relating
to its motor underwriting line of business are deemed to transfer significant insurance risk to the
reinsurer, and so they are also accounted for in line with the requirements of IFRS 4.
Saga plc Annual Report and Accounts 2023 155
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.6 Significant accounting judgements, estimates and assumptions continued
Acc. policy
Items involving judgement
Critical accounting judgement
2.3h
Impairment testing of
goodwill and other major
classes of assets
2.3r
Insurance contract liabilities
156 Saga plc Annual Report and Accounts 2023
The Group determines whether goodwill needs to be impaired on an annual basis, or more
frequently as required.
New pricing rules set by the FCA came into effect on 1 January 2022, following the conclusion
of the General Insurance Pricing Practices market study (GIPP). As a result of the impact of the
GIPP changes on customer pricing, especially in the highly competitive motor insurance market,
there has been a fall in policy volumes in the period to 31 July 2022 and the year to 31 January
2023, with a consequential adverse impact on the profitability of the Insurance business.
Management have considered this to be an indicator of impairment and have therefore
conducted full impairment reviews of the Insurance CGU as at 31 July 2022 and 31 January
2023. As a result of these reviews, management deemed it necessary to impair the goodwill
allocated to the Insurance CGU by £269.0m at 31 July 2022. No further impairment was
deemed necessary in the six months to 31 January 2023.
In the year to 31 January 2022, management did not deem it necessary to impair goodwill. Please
refer to Note 16a for further detail.
Since acquisition, the addition of the Big Window insights and capabilities has added significant
value to all Saga business units, in line with pre-acquisition expectations. However, because these
benefits are largely associated with the continued employment of a small number of individuals,
which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts
in question, the Group decided to write-off in full the £0.5m goodwill arising on acquisition in the
period to 31 July 2022.
Following the continued impact of the COVID-19 pandemic on the Group’s Cruise and Travel
operations, management concluded that potential indicators of impairment existed and
conducted impairment reviews at 31 July 2022 and 31 January 2022 of the Group’s two ocean
cruise ships, Spirit of Discovery and Spirit of Adventure. Management considered a range of
scenarios and used its judgement to conclude that no impairment was necessary.
As at 31 January 2023, management did not consider it necessary to conduct an impairment
review of the Group’s two ocean cruise ships since no new indicators of impairment were
identified. Please refer to Note 17 for further detail.
In the prior year, given the delay in taking delivery of the river cruise ship, Spirit of the Rhine,
along with the ongoing adverse impacts of the COVID-19 pandemic on the wider travel industry,
management concluded that indicators of impairment existed and deemed it necessary to
conduct an impairment review of the vessel at 31 January 2022. Management considered a
range of scenarios and used its judgement to conclude that no impairment was necessary.
Please refer to Note 18a for further detail.
In the year to 31 January 2023, management did not consider it necessary to conduct an
impairment review of right-of-use river cruise ship assets, since no new indicators of impairment
were identified.
In year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on
the travel industry, management decided to restructure the Group’s Tour Operations CGU
(now River Cruise and Travel). In light of this exercise, management exercised its judgement in
relation to the impairment of software assets and performed an impairment review of software
assets used by the Tour Operations business. As a result of this review, management deemed
it necessary to impair these software assets by £9.4m and the software assets in the Central
Costs division by £0.5m. No further impairment was deemed necessary in the period to
31 January 2023. Please refer to Note 16b for further detail.
In the years to 31 January 2023 and 31 January 2022, in light of the Group obtaining freehold
property market valuation reports, management exercised judgement in relation to the
impairment of property assets held for sale. A net impairment charge of £1.2m (2022: £1.0m)
was accordingly recognised. Please refer to Note 38 for further detail.
Judgement is required in relation to the areas of uncertainty that may give rise to claims costs in
excess of the actuarial best estimate of claims incurred, and the level of additional reserve margin
to recognise in the financial statements above that estimate.
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost
development caused by the impact of the COVID-19 pandemic and recognised an additional
claims reserve above actuarial best estimate to cover this specific risk. The latency risk provision
in relation to the COVID-19 pandemic was released over the year to 31 January 2023, reflective
of the improvement in the COVID-19 outlook. Please refer to Note 20d for further detail.
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Significant estimates
All estimates are based on management’s knowledge of current facts and circumstances, assumptions based on that knowledge and
predictions of future events and actions. Actual results may therefore differ from those estimates.
The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the
relevant accounting policy.
Acc. policy
Items involving estimation
Sources of estimation uncertainty
2.3ai
Revenue recognition –
three-year fixed-price
insurance policies
The standalone selling price of the option to fix within the Group’s three-year fixed-price
insurance policies has been estimated using the expected cost plus a margin approach as set
out in paragraph 79 (b) of IFRS 15.
An allowance has also been made for the likelihood that the option will be exercised by factoring
in the expected rate of renewal at the first and second renewal dates. The amount of revenue
deferred upon initial recognition is therefore reduced to the extent that it is estimated that
customers will not exercise the option because they either decide not to renew, or they make a
claim that releases the Group from its obligation to fix the customer price.
2.3f and
2.3i
2.3h
Useful economic lives and
residual values of software,
intangible assets and ocean
cruise ships
The useful economic lives and residual values of software assets classified as intangible assets
(Note 15), and ocean cruise ship assets classified as property, plant and equipment (Note 17) are
assessed upon the capitalisation of each asset, and at each reporting date, and are based upon
the expected consumption of future economic benefits of the asset.
Goodwill impairment testing The Group determines whether goodwill needs to be impaired on an annual basis, or more
frequently as required. This requires an estimation of the value-in-use of the CGUs to which
goodwill is allocated. The value-in-use calculation requires the Group to estimate the future cash
flows expected to arise from the CGUs, discounted at a suitably risk-adjusted rate to calculate
present value.
2.3h
Impairment of ocean and river
cruise ships
The impact of changes to pricing rules set by the FCA following the completion of the GIPP
market study, especially the highly competitive motor insurance market, and the adverse
impact on profit before tax for the current year, has increased the estimation uncertainty
in the Insurance CGU. The outcome of the impairment reviews conducted concluded that
an impairment charge of £269.0m be recognised against the Group’s Insurance CGU
as at 31 July 2022. No further impairment was deemed necessary in the six months to
31 January 2023.
Sensitivity analysis was undertaken to determine the effect of changing the discount rate,
the terminal value and future cash flows on the present value calculation, as shown in Note 16a.
Following the continued impact of the COVID-19 pandemic on the Group’s operations,
management conducted impairment reviews at 31 July 2022 and 31 January 2022 of the
Group’s two ocean cruise ships, Spirit of Discovery and Spirit of Adventure. Based on these
impairment reviews, and looking at the probability of a range of outcomes, the Group remains
comfortable that there is headroom over and above the carrying value of the two ocean cruise
ship assets, and therefore concluded that no impairment charges were necessary. No additional
impairment indicators were identified as at 31 January 2023, and therefore no further
impairment review was conducted at this date.
Sensitivity analysis was undertaken to determine the effect of changing the residual value, load
factor and useful economic life on the present value calculation, as shown in Note 17.
At 31 January 2022, management conducted an impairment review of its river cruise ship,
Spirit of the Rhine. Based on this review, the Group was comfortable that there was sufficient
headroom over and above the carrying value of the river cruise ship asset, and therefore
concluded that no impairment charge was necessary. No additional impairment indicators
were identified in relation to river cruise ships as at 31 January 2023, and therefore no further
impairment review was conducted at this date.
Saga plc Annual Report and Accounts 2023 157
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
2.6 Significant accounting judgements, estimates and assumptions continued
Acc. policy
Items involving estimation
Sources of estimation uncertainty
2.3r
Valuation of insurance
contract liabilities
2.3u
Valuation of pension
benefit obligation
For insurance contracts, estimates have to be made for the expected cost of claims known
but not yet settled (case reserves) and for the expected cost of claims IBNR, as at the reporting
date. It can take a significant period of time before the ultimate claims cost can be established
with certainty.
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims
projection techniques, such as the Chain-Ladder and Bornhuetter-Ferguson methods. The main
assumption underlying these techniques is that past claims development experience can be used
to project future claims development and hence ultimate claims costs. As such, these methods
extrapolate the development of paid and incurred losses, average costs per claim and claim
numbers based on the observed development of earlier years. Historical claims development is
primarily analysed by accident year, geographical area, significant business line and peril.
Additional qualitative judgement is used to assess the extent to which past trends may not apply
in the future (e.g. to reflect one-off occurrences, changes in external or market factors such as
public attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and
legislation, as well as internal factors such as portfolio mix, policy features and claims handling
procedures) in order to arrive at the best estimate of the ultimate cost of claims.
The ultimate cost of claims is not discounted, except for those in respect of PPOs, which have
been discounted at -1.5% for the year ended 31 January 2023 (2022: -1.5%). The valuation of
these claims involves making assumptions about the rate of inflation and the expected rate of
return on assets to determine the discount rate. Due to the size of PPO claims, the ultimate cost
is highly sensitive to changes in these assumptions. The assumptions are reviewed at each
reporting date, and the sensitivity of this assumption is shown in Note 20d.
In calculating the level of reserve margin to recognise above the actuarial best estimate of
incurred claims, the Group considered an array of risks (including cost inflation) to future
claims experience, and estimated the financial impact that those risks could have, to derive an
appropriate level of margin to hold.
The cost of defined benefit pension plans and the present value of the pension obligation are
determined using actuarial valuations. Actuarial valuations involve making assumptions about
discount rates, expected rates of return on assets, future salary increases, mortality rates and
future pension increases. Due to the complexity of the valuation, the underlying assumptions and
its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date.
All significant assumptions and estimates involved in arriving at the valuation of the pension
scheme obligation are set out in Note 27.
158 Saga plc Annual Report and Accounts 2023
3 Segmental information
For management purposes, the Group is organised into business units based on their products and services. The Group has three reportable
operating segments as follows:
• Cruise and Travel: comprises the operation and delivery of ocean and river cruise holidays as well as package tour and other holiday
products. The Group owns and operates two ocean cruise ships. All other holiday and river cruise products are packaged together with
third-party supplied accommodation, flights and other transport arrangements.
• Insurance: comprises the provision of general insurance products. Revenue is derived primarily from insurance premiums and broking
revenues. The segment is further analysed into four product sub-segments:
• Insurance Broking, consisting of:
– Motor broking
– Home broking
– Other broking
• Insurance Underwriting
• Other Businesses and Central Costs: comprises the Group’s other businesses and its central cost base. The other businesses include
Saga Money (the personal finance product offering), Saga Media and the Group’s mailing and printing business.
Segment performance is evaluated using the Group’s key performance measure of Underlying Profit /(Loss) Before Tax3. Items not included
within a specific segment relate to transactions that do not form part of the ongoing segment performance or which are managed at a
Group level.
Transfer prices between operating segments are set on an arm’s-length basis in a manner similar to transactions with third parties.
Segment income, expenses and results include transfers between business segments which are then eliminated on consolidation.
Goodwill, corporate bonds and bank loans are not included within segments as they are managed on a Group basis.
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3 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 159
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
3 Segmental information continued
Insurance
Cruise and
Travel
£m
Motor
broking
£m
Home
broking
£m
Other
broking
£m
Under-
writing
£m
305.5
(242.5)
63.0
77.7
(2.7)
75.0
57.6
–
57.6
45.3
3.2
48.5
(57.5)
(55.6)
(35.1)
(21.4)
–
–
–
(20.2)
1.4
(13.3)
–
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
75.2
(56.1)
19.1
(3.1)
(1.2)
–
3.7
–
–
Other
Businesses
and Central
Costs
£m
Adjustments
£m
24.3
(9.1)
15.2
(4.5)
–
(4.5)
(49.6)
4.5
(0.5)
(269.5)
–
(2.2)
(22.0)
0.1
–
–
–
–
Total
£m
255.8
(55.6)
200.2
(115.2)
(1.2)
0.1
3.7
–
–
Total
£m
581.1
(307.2)
273.9
(217.8)
(271.2)
0.1
1.5
(42.2)
1.5
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
2023
Revenue
Cost of sales
Gross profit/(loss)
Administrative and selling
expenses
Impairment of assets
Net profit on disposal
of software
Investment income/(loss)
Finance costs
Finance income
(Loss)/profit before tax
Reconciliation to
Underlying
(Loss)/Profit Before Tax4
(Loss)/profit before tax
(13.3)
19.5
22.5
27.1
18.5
87.6
(59.0)
(269.5)
(254.2)
Net fair value gain on
derivative financial
instruments
Impairment of goodwill
Impairment of assets
Restructuring costs
Acquisition costs relating
to the Big Window
Foreign exchange
movement on
lease liabilities
IFRS 16 adjustment on
river cruise vessels
Underlying (Loss)/
Profit Before Tax4
Total assets less
liabilities
(1.4)
–
–
2.2
–
2.0
0.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.6
–
–
–
–
–
–
0.6
–
–
–
–
–
–
0.5
1.5
0.2
–
–
(9.9)
19.5
22.5
27.1
19.1
88.2
(56.8)
–
(1.4)
269.5
269.5
–
–
–
–
–
–
1.1
3.7
0.2
2.0
0.6
21.5
93.7
57.7
167.9
50.2
369.5
All revenue is generated solely in the UK.
4 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
160 Saga plc Annual Report and Accounts 2023
Insurance
Motor
broking
£m
85.0
(2.6)
82.4
Home
broking
£m
60.2
–
60.2
Other
broking
£m
35.3
0.3
35.6
(52.4)
(35.0)
(24.3)
–
–
–
(0.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29.9
25.2
11.3
Cruise and
Travel
£m
94.7
(102.9)
(8.2)
(54.9)
(9.7)
–
–
0.1
0.1
(22.2)
(94.8)
Other
Businesses
and Central
Costs
£m
21.5
(8.2)
13.3
(46.2)
(0.5)
0.3
7.2
(0.4)
(3.3)
(18.6)
(48.2)
Total
£m
265.2
(32.2)
233.0
(115.9)
(1.0)
–
–
(0.1)
3.5
–
119.5
Under-
writing
£m
84.7
(29.9)
54.8
(4.2)
(1.0)
–
–
–
3.5
–
53.1
2022
Revenue
Cost of sales
Gross (loss)/profit
Administrative and selling
expenses
Impairment of assets
Gain on lease modification
Net profit on disposal of
assets held for sale
Net profit/(loss) on
disposal of software and
right-of-use assets
Investment income/(loss)
Finance costs
(Loss)/profit before tax
Reconciliation to
Underlying
(Loss)/ Profit
Before Tax5
(Loss)/profit before tax
(94.8)
29.9
25.2
11.3
53.1
119.5
(48.2)
Net fair value loss on
derivative financial
instruments
Impairment/loss on
disposal of assets
Restructuring costs
Net profit on disposal of
assets held for sale
Foreign exchange
movement on
lease liabilities
Costs incurred for ocean
cruise ship loan holiday
Charge on closure of
defined benefit pension
scheme
Underlying (Loss)/
(Profit) Before Tax5
Total assets less
liabilities
(re-presented)
2.7
9.8
3.9
–
(0.9)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.0
–
–
–
–
–
–
1.0
–
–
–
–
–
–
0.7
2.4
(7.2)
–
2.4
2.0
(79.3)
29.9
25.2
11.3
54.1
120.5
(47.9)
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a
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a
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m
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A
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n
Adjustments
£m
(4.2)
–
Total
£m
377.2
(143.3)
(4.2)
233.9
4.2
(212.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11.2)
0.3
7.2
(0.4)
0.3
(40.8)
(23.5)
(23.5)
2.7
11.5
6.3
(7.2)
(0.9)
2.4
2.0
(6.7)
67.2
77.0
189.1
319.6
652.9
Total assets less liabilities have been re-presented due to a revision in the way that inter-company debtors and creditors are reported
between segments. Inter-company debtors and creditors are excluded from re-presented total assets less liabilities.
All revenue is generated solely in the UK.
Total assets less liabilities detailed as adjustments relates to the following unallocated items:
Goodwill (Note 14)
Group bonds and bank loans (excluding ocean cruise ship loans)
2023
£m
449.6
(399.4)
50.2
2022
£m
718.6
(399.0)
319.6
5 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 161
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
3 Segmental information continued
a) Disaggregation of revenue
Major product lines
Ocean Cruise
River Cruise and Travel
Gross earned premium on insurance underwritten
by the Group
Less: ceded to reinsurers
Net revenue on:
Motor broking
Home broking
Other broking
Insurance Underwriting
Money
Media
Insight
Other
Major product lines
Ocean Cruise
River Cruise and Travel
Gross earned premium on insurance underwritten
by the Group
Less: ceded to reinsurers
Net revenue on:
Motor broking
Home broking
Other broking
Insurance Underwriting
Money
Media
Other
2023
Insurance
Earned
premium on
insurance
underwritten
by the Group
£m
Other
revenue
£m
Total
Insurance
£m
Other
Businesses
and Central
Costs
£m
Cruise and
Travel
£m
168.3
137.2
189.5
(111.3)
27.7
–
0.9
49.6
50.0
57.6
44.4
25.6
77.7
57.6
45.3
75.2
305.5
78.2
177.6
255.8
7.9
10.3
0.6
1.0
19.8
2022
Insurance
Earned
premium on
insurance
underwritten
by the Group
£m
Other
revenue
£m
Total
Insurance
£m
Other
Businesses
and Central
Costs
£m
Cruise and
Travel
£m
82.5
12.2
203.0
(123.8)
26.7
–
1.0
51.5
58.3
60.2
34.3
33.2
85.0
60.2
35.3
84.7
94.7
79.2
186.0
265.2
5.9
9.9
1.5
17.3
Total
£m
168.3
137.2
77.7
57.6
45.3
75.2
7.9
10.3
0.6
1.0
581.1
Total
£m
82.5
12.2
85.0
60.2
35.3
84.7
5.9
9.9
1.5
377.2
Included in Insurance Broking other revenue is instalment interest income on premium financing of £9.4m (2022: £9.8m).
b) Contract balances
The following table provides information about contract assets and contract liabilities from contracts with customers as accounted for under
IFRS 15 (the amounts stated here do not include amounts accounted for under IFRS 4):
Contract cost assets (Note 23)
Contract liabilities (Note 29)
162 Saga plc Annual Report and Accounts 2023
2023
£m
2.5
122.2
2022
£m
2.6
114.6
b) Contract balances continued
The contract cost assets relate to commissions paid to price-comparison websites to acquire new business policies not underwritten
by the Group.
Management expects that incremental commission fees paid to price-comparison websites as a result of obtaining insurance contracts
are recoverable. The Group has therefore capitalised them as contract assets amounting to £1.7m for the year ended 31 January 2023
(2022: £1.7m). These fees are amortised over the period of the expected renewal cycle. In the year to 31 January 2023, the amount of
amortisation was £1.8m (2022: £2.0m) and there was no impairment loss in relation to the costs capitalised.
Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an
expense when incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.
The contract liabilities relate to the deferral of revenue for performance obligations not satisfied as at 31 January 2023, and comprise the
advance consideration received from customers for holidays or cruises booked, but not travelled; and insurance premiums received in
advance of the cover start date. There was no revenue recognised in the current reporting year that related to performance obligations that
were satisfied in a prior year.
Significant changes in the contract cost assets and the contract liabilities during the year are as follows:
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Balance as at 1 February
Released to the income statement in the period
Additional contract balances incurred during the period
Amounts refunded to customers
Balance as at 31 January
2023
2022
Contract
cost assets
£m
Contract
liabilities
£m
Contract
cost assets
£m
Contract
liabilities
£m
2.6
(1.8)
1.7
–
2.5
114.6
(245.5)
267.8
(14.7)
122.2
2.9
(2.0)
1.7
–
2.6
82.2
(66.6)
148.6
(49.6)
114.6
c) Transaction price allocated to the remaining performance obligations
The transaction price allocated to three-year fixed-price insurance policy renewal options, where the remaining performance obligations are
not expected to be satisfied within the next 12 months, is £1.1m (2022: £0.7m). This is expected to be recognised as revenue in the subsequent
one to three years.
The transaction price allocated to customer contracts within the Cruise and Travel segment, where the remaining performance obligations
are not expected to be satisfied within the next 12 months, is £1.4m (2022: £0.8m). This is expected to be recognised as revenue in the
subsequent one to two years.
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance
obligations that have original expected durations of one year or less.
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4 Administrative and selling expenses
Staff costs (excluding restructuring costs)
Marketing and fulfilment costs
Short-term lease rentals
Auditors’ remuneration
Other administrative costs
Amounts ceded under reinsurance contracts
Depreciation – property, plant and equipment (Note 17)
Depreciation – right-of-use assets (Note 18)
Amortisation of intangible assets (Note 15)
Restructuring costs
a. Auditors’ remuneration
Audit of the parent company and consolidated financial statements
Audit of subsidiary financial statements
Audit-related assurance services
Total auditors’ remuneration
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2023
£m
89.2
53.5
0.1
2.1
65.2
(8.1)
2.0
1.1
8.1
3.7
2022
£m
85.8
49.6
0.1
2.1
64.0
(6.9)
2.2
0.7
9.7
4.8
216.9
212.1
2023
£m
0.6
1.3
0.2
2.1
2022
£m
0.8
1.1
0.2
2.1
Saga plc Annual Report and Accounts 2023 163
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
5 Impairment of assets
a) Impairments during the year ended 31 January 2023
During the year ended 31 January 2023, the Group impaired the carrying value of the goodwill balance allocated to the Insurance CGU
by £269.0m.
In addition, following the acquisition of The Big Window Consulting Limited (Note 13a), the goodwill arising on the transaction of £0.5m was
immediately impaired in full (Note 14).
Following management’s decision to vacate most of its properties, the Group also impaired the carrying value of the property, plant and
equipment balance by £0.5m (Note 17) and the carrying value of property assets classified as held for sale by £1.2m (Note 38).
b) Impairments during the year ended 31 January 2022
During the year ended 31 January 2022, following the continued impact of the COVID-19 pandemic on the travel industry, management
decided to restructure the Group’s former Tour Operations CGU (now River Cruise and Travel CGUs). As a result of this restructuring,
management performed an impairment review of software assets used by the Tour Operations business. The outcome of the review
concluded that an impairment charge of £9.4m (Note 15) be recognised against the Group’s software assets as at 31 January 2022.
Furthermore, the Group concluded that an impairment charge of £0.5m (Note 15) to software assets was required in the Group’s Central
Costs business unit.
In addition, during the year ended 31 January 2022, following management’s decision to restructure the Group’s Tour Operations CGU,
the Group impaired property, plant and equipment in its Tour Operations CGU by £0.3m (Note 17).
In light of the Group obtaining updated freehold property market valuation reports, management also impaired assets held for sale by £1.0m
(Note 38).
2023
£m
4.7
0.7
(3.9)
1.5
2023
£m
41.0
–
1.2
42.2
2023
£m
1.4
0.1
1.5
2022
£m
4.4
0.2
(4.3)
0.3
2022
£m
37.4
2.7
0.7
40.8
2022
£m
–
–
–
6 Investment income
Interest income recognised using the EIR method
Gains on assets measured at FVTPL
Amounts ceded under reinsurance contracts
7 Finance costs
Interest and charges on debt and borrowings using the EIR method
Net fair value loss on derivative financial instruments
Net interest and finance charges payable on lease liabilities
8 Finance income
Net fair value gain on derivative financial instruments
Net finance income on retirement benefit schemes
164 Saga plc Annual Report and Accounts 2023
9 Directors and employees
Amounts charged to the income statement for the year are as follows:
Wages and salaries
Social security costs
Pension costs (Note 27)
Total staff costs
2023
£m
112.1
10.0
9.9
132.0
2022
£m
97.0
9.3
12.0
118.3
Staff costs (including restructuring and redundancy costs) of £39.1m (2022: £27.7m) and £92.9m (2022: £90.6m) have been allocated to
cost of sales and to administrative and selling expenses respectively. Staff costs above exclude share-based payment charges of £3.9m
(2022: £3.4m). Further detail on share-based payments can be found in Note 36.
Average monthly number of employees:
Cruise and Travel
Insurance
Other Businesses and Central Costs
Total employee numbers
2023
number
2022
number
2,261
1,704
554
4,519
1,705
1,519
552
3,776
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Directors’ remuneration
The information required by the Companies Act 2006 and the Listing Rules of the FCA is contained on pages 92-123 in the Directors’
Remuneration Report.
Compensation of key management personnel of the Group
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the
activities of the Group and comprise the Directors of the Company and the Executive Leadership Team.
The amounts recognised as an expense during the financial year in respect of key management personnel are as follows:
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Short-term benefits
Termination costs
Share-based payments
10 Tax
The major components of the income tax expense are:
Consolidated income statement
Current income tax
Current income tax charge
Adjustments in respect of previous years
Deferred tax
Relating to origination and reversal of temporary differences
Effect of tax rate change on opening balance
Adjustments in respect of previous years
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2023
£m
6.4
0.1
1.6
8.1
2022
£m
6.0
0.3
1.0
7.3
2023
£m
2022
£m
1.1
(0.4)
0.7
3.1
–
1.2
4.3
3.4
(0.1)
3.3
2.7
(2.6)
1.1
1.2
Tax expense in the income statement
5.0
4.5
Saga plc Annual Report and Accounts 2023 165
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
10 Tax continued
Reconciliation of tax expense to loss before tax, multiplied by the UK corporation tax rate:
Loss before tax
Tax at rate of 19.0% (2022: 19.0%)
Adjustments in respect of previous years
Effect of tax rate change on opening balance
Expenses not deductible for tax purposes:
Impairment of goodwill
Other non-deductible expenses/non-taxed income
Effect of Ocean Cruise business entering tonnage tax regime
Tax expense in the income statement
2023
£m
(254.2)
(48.3)
0.8
–
51.2
1.3
–
5.0
2022
£m
(23.5)
(4.5)
1.0
(2.6)
–
1.5
9.1
4.5
The Group’s tax expense for the year was £5.0m (2022: £4.5m) representing a tax effective rate of 32.7% before the impairment of goodwill
(2022: negative 19.1%). In the prior year, the difference between the Group’s tax effective rate and the standard rate of corporation tax of 19%
is mainly due to the Group’s Ocean Cruise business entering the tonnage tax regime on 1 February 2020.
Adjustments in respect of previous years include a charge for the under-provision of tax in prior years of £0.8m (2022: £1.0m) and the impact
of the change in the tax rate on opening deferred tax balances of £nil (2022: £2.6m credit).
Deferred tax
Consolidated statement
of financial position
Consolidated income
statement
Excess of depreciation over capital allowances
Retirement benefit scheme liabilities
Short-term temporary differences:
– Designated hedges recognised through OCI
– Fair value reserve
– Share-based payment reserve
– General bad debt provision
– Capitalised borrowing costs
– IFRS 16 transition adjustments
– Other
Deferred tax charge
Net deferred tax assets
Deferred tax is reflected in the statement of financial position as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
Reconciliation of net deferred tax assets
At 1 February
Tax charge recognised in the income statement
Tax credit recognised in OCI
At 31 January
2023
£m
3.2
3.0
(0.3)
4.1
2.0
0.6
(2.6)
1.2
(1.0)
2022
£m
4.4
(0.3)
0.5
0.3
1.6
1.6
(2.8)
1.4
–
10.2
6.7
2023
£m
1.2
1.5
–
–
(0.4)
1.0
(0.2)
0.2
1.0
4.3
2023
£m
16.1
(5.9)
10.2
2023
£m
6.7
(4.3)
7.8
10.2
2022
£m
(0.5)
(0.1)
–
–
(0.6)
1.2
0.6
0.3
0.3
1.2
2022
£m
12.3
(5.6)
6.7
2022
£m
6.7
(1.2)
1.2
6.7
On 3 March 2021, it was announced that the corporation tax rate would increase from 19% to 25% from 1 April 2023. This increase was
substantively enacted on 24 May 2021. As a result, the closing deferred tax balances at the statement of financial position date have been
reflected at 25%. Net deferred tax assets/(liabilities) are expected to be normally settled in more than 12 months.
166 Saga plc Annual Report and Accounts 2023
11 Dividends
The Board of Directors does not recommend the payment of a final dividend for the 2022/23 financial year (2022: nil pence per share).
For the current and prior year, no interim or final dividends were declared, or paid, during the year.
The distributable reserves of Saga plc are £386.6m deficit as at 31 January 2023, which are equal to the retained earnings reserve.
If necessary, its subsidiary companies hold significant reserves from which a dividend can be paid. Subsidiary distributable reserves are
available immediately, with the exception of companies within the River Cruise, Travel and Insurance Underwriting businesses which require
regulatory approval before any dividends can be declared and paid. Under the terms of the ship debt facilities, dividends remain restricted
until the ship debt principal repayments that were deferred as part of the ship debt repayment holiday are fully repaid (Note 30). In addition,
under the terms of the RCF, dividends also remain restricted while leverage is above 3.0x (excluding Ocean Cruise EBITDA and debt).
12 Loss per share
Basic loss per share is calculated by dividing the loss 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 loss per share 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 other 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 loss per share is as follows:
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Loss attributable to ordinary equity holders
Weighted average number of ordinary shares
Ordinary shares as at 1 February
Long-term Incentive Plan (LTIP) share options exercised
Ordinary shares as at 31 January
2023
£m
(259.2)
2022
£m
(28.0)
‘m
‘m
139.5
–
139.4
0.1
139.5
139.5
Weighted average number of ordinary shares for basic loss per share and diluted loss per share
139.5
139.5
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Basic loss per share
Diluted loss per share
The table below reconciles between basic loss per share and Underlying Basic Earnings/(Loss) Per Share6:
Basic loss per share
Adjusted for:
Derivative (gains)/losses
Impairment, and net loss on disposal, of assets
Impairment of Insurance goodwill
Acquisition costs relating to the Big Window
Charge on closure of defined benefit pension scheme
Foreign exchange movement on lease liabilities
Costs incurred for ocean cruise ship loan holiday
Restructuring costs
IFRS 16 lease accounting adjustment on river cruise vessels
Underlying Basic Earnings/(Loss) Per Share6
(185.8p)
(20.1p)
(185.8p)
(20.1p)
2023
(185.8p)
2022
(20.1p)
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(1.1p)
0.8p
192.8p
0.5p
–
1.5p
–
2.7p
0.5p
11.9p
1.4p
2.3p
–
–
1.1p
(0.5p)
1.3p
3.4p
–
(11.1p)
6 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 167
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
13 Business combinations and disposals
a) Acquisitions during the year ended 31 January 2023
On 16 February 2022, the Group acquired The Big Window Consulting Limited (the Big Window), a specialist research and insight business
focusing on ageing.
The fair values of the identifiable assets and liabilities of the Big Window acquired on the date of acquisition were:
Assets
Trade and other receivables
Cash
Total assets
Liabilities
Trade and other payables
Corporation tax liability
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Cash purchase consideration transferred
£m
0.1
1.3
1.4
0.1
0.1
0.2
1.2
0.5
1.7
The purchase consideration of £1.7m was settled in cash. In addition to the £1.7m cash purchase consideration transferred, as part of the
purchase agreement the Group granted a £0.5m share-based payment arrangement which vests over three years subject to a number of
conditions being met. The £0.5m was transferred in cash to the Group’s share administrators on the date of completion. Cash of £1.3m was
acquired with the Big Window, resulting in a net cash outflow of £0.9m.
Since acquisition, the addition of the Big Window insights and capabilities has added significant value to all Saga business units, in line with
pre-acquisition expectations. However, because these benefits are largely associated with the continued employment of a small number
of individuals, which under IFRS 3 cannot be separately capitalised, and given the low materiality of the amounts in question, the Group has
written-off the £0.5m goodwill arising on acquisition in full in the year to 31 January 2023 (Note 16a).
The Big Window contributed £0.6m of revenue and a loss of £1.0m to the Group loss before tax from the date of acquisition to
31 January 2023.
b) Acquisitions during the year ended 31 January 2022
There were no business acquisitions in the year ended 31 January 2022.
c) Disposals
There were no business disposals in the years ended 31 January 2023 and 31 January 2022.
14 Goodwill
Cost
At 1 February 2021 and 31 January 2022
Acquisition of a subsidiary (Note 13a)
At 31 January 2023
Impairment
At 1 February 2021 and 31 January 2022
Charge for the year (Note 16a)
At 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
Goodwill deductible for tax purposes amounts to £nil (2022: £nil).
168 Saga plc Annual Report and Accounts 2023
Goodwill
£m
1,471.4
0.5
1,471.9
752.8
269.5
1,022.3
449.6
718.6
15 Intangible assets
Cost
At 1 February 2021
Additions and internally developed software
Disposals
At 31 January 2022
Additions and internally developed software
Disposals
At 31 January 2023
Amortisation and impairment
At 1 February 2021
Amortisation
Impairment of assets (Note 16b)
Disposals
At 31 January 2022
Amortisation
Disposals
At 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
Software
£m
151.6
11.2
(53.9)
108.9
13.4
(7.3)
115.0
95.0
10.6
9.9
(53.7)
61.8
9.2
(7.3)
63.7
Total
£m
151.6
11.2
(53.9)
108.9
13.4
(7.3)
115.0
95.0
10.6
9.9
(53.7)
61.8
9.2
(7.3)
63.7
51.3
51.3
47.1
47.1
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The net book value of software at 31 January 2023 includes internally generated software of £26.2m (2022: £26.0m) relating to Guidewire
(the Group’s Insurance Broking, policy administration and billing platform), including additions in the year of £3.0m (2022: £0.2m). The
Guidewire platform has an expected useful economic life of 10 years, with five years of phase one expenditure remaining at 31 January 2023.
Implementation and the commencement of amortisation of the Guidewire platform is on a phased basis, based on product re-platforming,
and began in the year ended 31 January 2019.
The net book value of software at 31 January 2023 also includes internally generated software of £2.0m (2022: £2.3m) relating to
Tigerbay (the Group’s travel booking reservation system) including additions in the year of £nil (2022: £1.6m). The Tigerbay platform has an
expected useful economic life of 10 years, with six years of phase one expenditure remaining at 31 January 2023. Implementation and the
commencement of amortisation of the Tigerbay platform is on a phased basis, based on product re-platforming, and began in the year
ended 31 January 2020.
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
Group’s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
an impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
impairment charge of £9.4m be recognised against the Group’s software assets as at 31 January 2022, all of which related to the Tigerbay
platform. In addition, the Group concluded that an impairment charge of £0.5m to software assets was required in the Group’s Central
Costs division.
The amortisation charge for the year is analysed as follows:
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Cost of sales
Administrative and selling expenses (Note 4)
2023
£m
1.1
8.1
9.2
2022
£m
0.9
9.7
10.6
During the year, the Group disposed of assets with a net book value of £nil (2022: £0.2m). The profit arising on disposal was £0.1m
(2022: £0.1m loss).
Saga plc Annual Report and Accounts 2023 169
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
16 Impairment of intangible assets
a) Goodwill
Goodwill acquired through business combinations has been allocated to CGUs for the purpose of impairment testing. The carrying value of
goodwill by CGU is as follows:
Insurance
2023
£m
449.6
449.6
2022
£m
718.6
718.6
The Group tests all goodwill balances for impairment at least annually, and twice-yearly if indicators of impairment exist at the interim
reporting date of 31 July. The impairment test compares the recoverable amount of each CGU to the carrying value of its net assets including
the value of the allocated goodwill.
On 1 January 2022, new pricing rules arising from the implementation of recommendations included in the FCA’s GIPP market study came
into effect. As a result, and against the background of a highly competitive motor insurance market, the Group saw a fall in policy volumes in
the period to 31 July 2022 and year to 31 January 2023, with a consequential adverse impact on the profitability of the Insurance business.
Management considered this to be an indicator of impairment and therefore conducted full impairment reviews of the Insurance CGU as at
31 July 2022 and 31 January 2023.
The recoverable amount of the Insurance CGU has been determined based on a value-in-use calculation using nominal cash flow projections
from the Group’s latest five-year financial forecasts to 2027/28, which are derived using past experience of the Group’s trading, combined
with the anticipated impact of changes in macroeconomic and regulatory factors. A terminal value has been calculated using the Gordon
Growth Model based on the fifth year of those projections and an annual growth rate of 2.0% (July 2022: 2.0%; January 2022: 2.0%) as
the expected long-term average nominal growth rate of the UK economy. The cash flows have then been discounted to present value
using a suitably risk-adjusted nominal discount rate based on a market-participant view of the cost of capital and debt relevant to the
insurance industry.
As at 31 January 2023, the pre-tax discount rate used for the Insurance CGU was 13.0% (July 2022: 12.7%; January 2022: 11.5%). The Group’s
five-year financial forecasts incorporate the modelled impact of the new pricing rules and the estimated impact this will likely have on future
new business pricing and retention rates. As per IAS 36.44, incremental cash flows directly attributable to growth initiatives not yet enacted
at the balance sheet date have then been removed for the purpose of the value-in-use calculation.
The Group has also considered the impact of downside stresses, both in terms of adverse impacts to the cash flow projections and to the
discount rate. For the cash flow stress test, the Group has modelled the impact of a more prudent outlook of the current competitive
challenges seen in the insurance broking market, in combination with a more cautious nominal terminal growth rate of 1.5% (July 2022: 1.5%;
January 2022: 1.5%), reflecting a more conservative outlook for growth in the UK economy. For the discount rate stress test, the Group
applied risk premia of +1.3ppt at 31 January 2023 (July 2022: +1.2ppt; January 2022: +1.5ppt).
The headroom/(deficit) for the Insurance CGU against the carrying value of goodwill at the time of the review of £449.6m at 31 January 2023
and £718.6m at 31 July 2022 and 31 January 2022 was as follows:
Central scenario
Headroom/(deficit) £m
Cash flow stress
test scenario
Discount rate stress
test scenario
31 January
2023
31 July
2022
31 January
2022
31 January
2023
31 July
2022
31 January
2022
31 January
2023
31 July
2022
31 January
2022
Insurance
153.9
(121.8)
146.3
12.0
(269.0)
89.7
92.6
(146.8)
(10.2)
As at 31 July 2022, the Group determined that the recoverable amount of the goodwill asset allocated to the Insurance CGU was below the
carrying value, and so the Directors took the decision to impair goodwill allocated to the Insurance CGU by £269.0m.
At 31 January 2023, the recoverable amount of the Insurance goodwill asset is above the carrying value, and no further impairment is
considered necessary.
The headroom calculated is sensitive to the discount rate and terminal growth rate assumed, and to changes in the projected cash flow of the
CGU. Increased inflationary pressures on claims, the evolving market response to the regulatory changes introduced in early 2022 and in
particular the extent to which market prices move against Saga in a period of heightened global economic uncertainty, combine to increase
the range of possible cash flow outcomes in management’s modelling. A quantitative sensitivity analysis for each of these as at 31 January 2023
and its impact on the central scenario headroom against the carrying value of goodwill at the time of the review of £449.6m is as follows:
Insurance
Pre-tax discount rate
Terminal growth rate
Cash flow (annual)
+1.0ppt
£m
–1.0ppt
£m
(47.7)
57.6
+1.0ppt
£m
59.2
–1.0ppt
£m
(46.6)
+10%
£m
57.2
-10%
£m
(57.2)
Given these sensitivities, the Directors consider that there is no reasonably possible change in any of the key assumptions made in the
assessment that, when taken in isolation, would give rise to an impairment greater than that already recognised. However, it is possible that
adverse movements in all key assumptions combined could result in further impairment in future years.
For the reasons explained in Note 13a, goodwill of £0.5m arising on the acquisition of the Big Window was immediately impaired in full.
170 Saga plc Annual Report and Accounts 2023
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b) Other intangible assets
Separately identifiable intangible assets are valued and their appropriate useful lives established at the time of acquisition. The carrying values
of these assets and their remaining useful lives are reviewed annually for indicators of impairment.
In the prior year, following the continued impact of the COVID-19 pandemic on the travel industry, management decided to restructure the
Group’s former Tour Operations business (now River Cruise and Travel). As a result of this restructuring exercise, management performed
an impairment review of software assets used by the Tour Operations business. The outcome of the impairment review concluded that an
impairment charge of £9.4m (Note 15) be recognised against the Group’s software assets as at 31 January 2022, all of which related to the
Tigerbay platform. In addition, the Group concluded that an impairment charge of £0.5m (Note 15) to software assets was required in the
Group’s Central Costs division.
17 Property, plant and equipment
Cost
At 1 February 2021
Additions
Disposals
Transfer of asset class
Reclassification from assets held for sale (Note 38)
Reclassification to assets held for sale (Note 38)
At 31 January 2022
Additions
Disposals
Transfer of asset class
Reclassification to assets held for sale (Note 38)
At 31 January 2023
Depreciation and impairment
At 1 February 2021
Provided during the year
Impairment of assets
Disposals
Transfer of asset class
Reclassification from assets held for sale (Note 38)
Reclassification to assets held for sale (Note 38)
At 31 January 2022
Provided during the year
Impairment of assets
Disposals
Reclassification to assets held for sale (Note 38)
At 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
Freehold
land and
buildings
£m
Long
leasehold
land and
buildings
£m
Ocean
cruise ships
£m
Plant and
equipment
£m
15.4
–
(0.1)
–
3.8
(4.0)
15.1
–
–
–
(14.7)
0.4
2.2
0.2
0.2
–
–
0.8
(1.0)
2.4
0.2
–
–
(2.2)
0.4
9.2
–
–
0.3
–
–
9.5
–
–
–
(4.3)
5.2
5.5
0.1
–
–
0.3
–
–
5.9
0.2
–
–
(0.9)
5.2
648.3
2.7
–
(0.5)
–
–
650.5
6.5
(0.5)
(0.1)
–
656.4
13.3
16.1
–
–
(0.2)
–
–
29.2
20.5
–
(0.3)
–
49.4
61.6
4.4
(18.9)
(0.9)
–
–
46.2
1.7
(9.1)
0.1
(4.3)
34.6
53.3
2.9
0.1
(18.4)
(0.6)
–
–
37.3
2.6
0.5
(9.1)
(0.7)
30.6
Total
£m
734.5
7.1
(19.0)
(1.1)
3.8
(4.0)
721.3
8.2
(9.6)
–
(23.3)
696.6
74.3
19.3
0.3
(18.4)
(0.5)
0.8
(1.0)
74.8
23.5
0.5
(9.4)
(3.8)
85.6
–
–
607.0
4.0
611.0
12.7
3.6
621.3
8.9
646.5
Saga plc Annual Report and Accounts 2023 171
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17 Property, plant and equipment continued
The depreciation charge for the year is analysed as follows:
Cost of sales
Administrative and selling expenses (Note 4)
2023
£m
21.5
2.0
23.5
2022
£m
17.1
2.2
19.3
During the year, the Group disposed of assets with a net book value of £0.2m (2022: £0.6m). The profit arising on disposal was £nil
(2022: £0.4m loss).
Due to the continued impact of the COVID-19 pandemic on the Group’s Cruise and Travel operations in the first half of the year, management
concluded potential indicators of impairment continued to exist as at 31 July 2022 for both of its ocean cruise ships, Spirit of Discovery and
Spirit of Adventure. Management therefore conducted impairment reviews at 31 July 2022 for both vessels, following previous reviews
conducted at 31 January 2022.
The impairment test was conducted using a methodology consistent with that applied as at 31 January 2022. The recoverable amount of
each ocean cruise ship was determined based on a value-in-use calculation using cash flow projections from the Group’s five-year financial
forecasts to 2026/27 and applying a constant annual growth rate of 2% thereafter for subsequent periods until the end of the ship’s useful
economic life of 30 years, at which point a residual value of 15% of original cost was assumed. This was then discounted back to present value
using a suitably risk-adjusted discount rate. The underlying forecast cash flows were updated for the latest impact of the COVID-19 pandemic.
In addition, a stress test of the potential adverse medium-term impact that the pandemic may have on demand for ocean cruises was also
considered, with load factors capped at 80% throughout 2023/24. The annual growth rate beyond the fifth year of management forecasts
was reduced to 1.5% in the stress test scenario, reflecting a more cautious outlook for long-term growth in the UK economy.
Potential environmental regulatory changes were also considered as part of this assessment. The shipping industry has made a commitment
to reduce CO2 emissions by 40% by 2030 (from a 2008 baseline), and the UK Government has made commitments to reach net zero
emissions by 2050. The EEXI (carbon design/technical efficiency indicator) and CII (in-service/operational carbon intensity efficiency
indicator) regulations were introduced internationally during the year to enable the industry to meet the 2030 target, and both of Saga’s ocean
cruise ships meet the requirements of these regulations. The end of their useful economic lives of 30 years will have been reached by 2049 in
the case of Spirit of Discovery and 2051 in the case of Spirit of Adventure.
The Group has not factored in any potential fuel modifications that may occur in the future into the cash flow forecasts used for the
impairment assessment of either ship. Whilst alternative fuels may present a viable route to decarbonisation for the Ocean Cruise business,
there are significant upstream supply challenges which will need to be resolved before these become viable for deployment. The main engines
currently installed in the Group’s ocean cruise ships are capable of being modified for use with certain alternative fuels. Being new vessels, the
design and specification of the Group’s ocean cruise ships was guided by a desire to maximise efficiency through deployment of the most
up-to-date technology. Their hull design maximises fuel efficiency, onboard technology minimises fuel consumption and catalytic converters
reduce carbon emissions. Additionally, the Group is planning to retro-fit shore power connections to both vessels, allowing them to use clean
energy, where available, in ports of call and has commenced a study to evaluate other emerging technologies. The capital expenditure required
for the shore power connections has been included in the forecast cash flows used in the assessment.
There is also currently no technological alternative to either oil or gas to power large vessels and it is not clear if such technology will ever be
commercially viable, or in what time frame this might be achieved.
The cash flows were discounted to present value using a pre-tax discount rate of 8.6% (January 2022: 9.9%) for both vessels. As at 31 July 2022,
the headroom for each of the ships against the carrying value was as follows:
Spirit of Discovery
Spirit of Adventure
Headroom £m
Central
scenario
169.0
114.7
Lower trading
stress test
scenario
146.5
91.6
Based on these impairment tests, and looking at the likelihood of a range of outcomes, the Group was satisfied that no impairment of either
vessel was necessary as at 31 July 2022.
In the second half of the year, further COVID-19 restrictions were lifted for cruise passengers and trading was in line with forecasts. Discount
rates have risen, but not to the extent that they materially change the headroom in the impairment calculation. The Directors therefore
concluded that there were no additional indicators of impairment at 31 January 2023, and accordingly no further impairment review has been
deemed necessary.
172 Saga plc Annual Report and Accounts 2023
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As the Group is planning to vacate most of its properties (Note 38), management has concluded that this constitutes an indicator of
impairment and has duly conducted an impairment review as at 31 January 2023 of the Group’s freehold, and long leasehold, land and
buildings, and related fixtures and fittings. In relation to these freehold and long leasehold properties, value-in-use is negligible and so the
Group has obtained market valuations to determine the fair value of each building. The outcome of these impairment reviews concluded that
an impairment charge totalling £0.5m relating to fixtures and fittings should be recognised against the Group’s assets as at 31 January 2023.
At the year end, the Group reclassified assets with a net book value of £19.5m to assets held for sale (Note 38).
In the prior year, the Group declassified one of the properties classified as held for sale at 31 January 2021, to property, plant and equipment
since it was no longer being actively marketed for disposal (Note 38). The carrying value of this property as at 31 January 2021 was £3.0m.
During the year ended 31 January 2023, a unsolicited conditional offer for sale was accepted by the Group in respect of this property.
As a consequence the property has been reclassified back to assets held for sale as at the statement of financial position date.
In addition, during the year ended 31 January 2022, following management’s decision to restructure the Group’s Tour Operations CGU,
the Group impaired property, plant and equipment in its Tour Operations CGU by £0.3m.
18 Right-of-use assets
Cost
At 1 February 2021
Additions
Disposals
Transfer of asset class
Effect of modification of lease terms
At 31 January 2022
Additions
Disposals
Effect of reassessment of lease terms
At 31 January 2023
Depreciation and impairment
At 1 February 2021
Provided during the year
Disposals
Transfer of asset class
Effect of modification of lease terms
At 31 January 2022
Provided during the year
Disposals
Effect of reassessment of lease terms
At 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
The depreciation charge for the year is analysed as follows:
Cost of sales
Administrative and selling expenses (Note 4)
Long
leasehold
land and
buildings
£m
River
cruise
ships
£m
Plant and
equipment
£m
2.1
1.3
(0.7)
4.0
(5.1)
1.6
0.5
–
–
2.1
1.6
0.1
(0.7)
4.1
(5.0)
0.1
0.4
–
–
0.5
–
33.5
–
–
–
33.5
21.5
–
(22.5)
32.5
–
0.7
–
–
–
0.7
7.4
–
(0.5)
7.6
5.9
1.0
(1.2)
0.9
–
6.6
3.6
(1.6)
–
8.6
3.6
1.5
(0.4)
0.2
–
4.9
1.1
(1.6)
_
4.4
Total
£m
8.0
35.8
(1.9)
4.9
(5.1)
41.7
25.6
(1.6)
(22.5)
43.2
5.2
2.3
(1.1)
4.3
(5.0)
5.7
8.9
(1.6)
(0.5)
12.5
1.6
24.9
4.2
30.7
1.5
32.8
1.7
36.0
2023
£m
7.8
1.1
8.9
2022
£m
1.6
0.7
2.3
Saga plc Annual Report and Accounts 2023 173
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
18 Right-of-use assets continued
During the year, the Group disposed of assets with a net book value of £nil (2022: £0.8m). The profit arising on disposal was £nil (2022: £0.1m).
The total cash outflow for leases amounted to £9.1m (2022: £4.4m).
River cruise ship additions in the year ended 31 January 2023 relate to the river cruise vessels, Spirit of the Danube (Note 37a),
MS River Discovery II and MS Serenade 1. River cruise ship additions in the year ended 31 January 2022 related to the river cruise vessel,
Spirit of the Rhine.
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, reflecting a prospective
change in estimate as required under IAS 8.
In the year ended 31 January 2022, the modification of lease terms relating to long leasehold land and buildings resulted in a gain of £0.3m
being reported in the income statement in the year.
a) Impairment review of right-of-use assets
During the year ended 31 January 2022, the Group took delivery of the river cruise ship, Spirit of the Rhine, under a 10-year lease. The ship’s
first cruise season was initially planned to commence on 1 April 2021, but due to the impact of the COVID-19 pandemic, the start of the first
season was delayed for several months. The Group did not therefore take control of the asset until the ship’s inaugural cruise took place in
September 2021, at which point a right-of-use asset was recognised and a corresponding lease liability was capitalised on the statement of
financial position.
Given the carrying value of the asset is quantitatively material to the Group, combined with the ongoing adverse impacts of the COVID-19
pandemic on the wider travel industry, which constitute an indicator of impairment, management deemed it necessary to conduct an
impairment review on Spirit of the Rhine at 31 January 2022.
Based on the impairment tests undertaken and looking at the likelihood of a range of outcomes, the Group was satisfied that there was
headroom over and above the carrying value of Spirit of the Rhine.
The Group does not consider it necessary to conduct an impairment review of right-of-use assets as at 31 January 2023 since no new
indicators of impairment exist in relation to the Spirit of the Rhine, Spirit of the Danube, MS River Discovery II or MS Serenade 1.
174 Saga plc Annual Report and Accounts 2023
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19 Financial assets and financial liabilities
a) Financial assets
FVTPL
Foreign exchange forward contracts
Loan funds
Money market funds
FVTPL designated in a hedging relationship
Foreign exchange forward contracts
Fuel oil swaps
FVOCI
Debt securities
Amortised cost
Deposits with financial institutions
Total financial assets
Current
Non-current
Total financial assets (as above and presented on the face of the statement of financial position)
Trade receivables (Note 23)
Other receivables (Note 23)
Cash and short-term deposits (Note 25)
Total financial assets (including cash and short-term deposits, trade and other receivables)
2023
£m
0.4
5.9
19.6
25.9
2.1
–
2.1
2022
£m
0.4
6.2
29.2
35.8
0.3
1.2
1.5
254.4
254.4
280.8
280.8
–
–
14.0
14.0
282.4
332.1
62.8
219.6
282.4
2023
£m
282.4
141.3
23.4
176.5
623.6
110.0
222.1
332.1
2022
£m
332.1
109.9
17.3
226.9
686.2
Debt securities, loan funds, money market funds and deposits with financial institutions relate to monies held by the Group’s Insurance
Underwriting business, are subject to contractual restrictions and are not readily available to be used for other purposes within the Group.
Debt securities, where the contractual cash flows are solely principal and interest, and the objective of the Group’s business model is achieved
both by collecting contractual cash flows and selling financial assets, are classified as FVOCI. On disposal of these debt securities, any related
balance within the fair value reserve is reclassified to other gains/(losses) within profit or loss.
Deposits with financial institutions, where the contractual cash flows are solely principal and interest, and the objective of the Group’s business
model is achieved by holding the asset in order to collect contractual cash flows, are classified as measured at amortised cost. The fair values
of financial assets held at amortised cost are not materially different from their carrying amounts.
Saga plc Annual Report and Accounts 2023 175
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
19 Financial assets and financial liabilities continued
b) Financial liabilities
FVTPL
Foreign exchange forward contracts
FVTPL designated in a hedging relationship
Foreign exchange forward contracts
Fuel oil swaps
Amortised cost
Bonds and bank loans (Note 30)
Lease liabilities
Bank overdrafts
Total financial liabilities
Current
Non-current
Total financial liabilities (as above and presented on the face of the statement of financial position)
Trade payables (Note 26)
Other payables (Note 26)
2023
£m
2022
£m
0.2
0.2
1.0
4.0
5.0
1.3
1.3
2.7
–
2.7
854.6
32.6
4.4
891.6
896.5
35.3
0.4
932.2
896.8
936.2
118.6
778.2
896.8
2023
£m
896.8
140.1
2.9
56.1
880.1
936.2
2022
£m
936.2
124.8
5.8
Total financial liabilities (including trade and other payables)
1,039.8
1,066.8
Except for the Group’s bonds, the fair values of financial liabilities held at amortised cost are not materially different from their carrying
amounts, since the interest payable on those liabilities is close to current market rates. The fair value of the Group’s bonds (Note 30) at
31 January 2023 is £334.3m (2022: £382.5m).
All financial assets that are measured at FVTPL are mandatorily measured at FVTPL and all financial liabilities that are measured at FVTPL
meet the definition of held for trading.
c) Fair values
Financial instruments held at fair value are valued using quoted market prices or other valuation techniques.
Valuation techniques include net present value and discounted cash flow models, and comparison to similar instruments for which market
observable prices exist. Assumptions and market observable inputs used in valuation techniques include foreign currency exchange rates and
future oil prices.
The objective of using valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the
reporting date, which would have been determined by market participants acting at arm’s length.
Observable prices are those that have been seen either from counterparties or from market pricing sources, including Bloomberg. The use
of these depends upon the liquidity of the relevant market.
176 Saga plc Annual Report and Accounts 2023
c) Fair values continued
Financial instruments held at fair value have been categorised into a fair value measurement hierarchy as follows:
i) Level 1
These are valuation techniques that are based entirely on quoted market prices in an actively traded market and are the most reliable.
All money market funds, loan funds and debt securities are categorised as Level 1 as the fair value is obtained directly from the quoted active
market price.
ii) Level 2
These are valuation techniques for which all significant inputs are taken from observable market data. These include valuation models used to
calculate the present value of expected future cash flows and may be employed either when no active market exists or when there are quoted
prices available for similar instruments in active markets.
The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the
underlying instrument.
All the derivative financial instruments are categorised as Level 2 as the fair values are obtained from the counterparty, brokers or valued using
observable inputs. Where material, credit valuation adjustment /debit valuation adjustment risk adjustments are factored into the fair values
of these instruments. As at 31 January 2023, the marked-to-market values of derivative assets are net of a credit valuation adjustment
attributable to derivative counterparty default risk.
i
i
S
S
t
t
r
r
a
a
t
t
e
e
g
g
c
c
r
r
e
e
p
p
o
o
r
r
t
t
G
G
o
o
v
v
e
e
r
r
n
n
a
a
n
n
c
c
e
e
i
i
F
F
n
n
a
a
n
n
c
c
a
a
i
i
l
l
s
s
t
t
a
a
t
t
e
e
m
m
e
e
n
n
t
t
s
s
A
A
d
d
d
d
i
i
t
t
i
i
o
o
n
n
a
a
l
l
i
i
n
n
f
f
o
o
r
r
m
m
a
a
t
t
i
i
o
o
n
n
The fair values are periodically reviewed by the Group’s Treasury Committees.
iii) Level 3
These are valuation techniques for which any significant inputs are not based on observable market data.
The following tables provide the quantitative fair value hierarchy of the Group’s financial assets and financial liabilities that are held at fair value:
At 31 January 2023
At 31 January 2022
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets measured
at fair value
Foreign exchange forwards
Fuel oil swaps
Loan funds
Debt securities
Money market funds
Financial liabilities measured
at fair value
Foreign exchange forwards
Fuel oil swaps
Financial assets for which fair
values are disclosed
Deposits with institutions
Financial liabilities for which
fair values are disclosed
Bonds and bank loans
Lease liabilities
Bank overdrafts
–
–
5.9
254.4
19.6
–
–
–
–
–
–
2.5
–
–
–
–
1.2
4.0
–
788.9
32.6
4.4
–
–
–
–
–
–
–
–
–
–
–
2.5
–
5.9
254.4
19.6
–
–
6.2
280.8
29.2
1.2
4.0
–
–
0.7
1.2
–
–
–
4.0
–
–
–
–
–
–
–
–
0.7
1.2
6.2
280.8
29.2
4.0
–
–
–
14.0
–
14.0
788.9
32.6
4.4
–
–
–
879.0
35.3
0.4
–
–
–
879.0
35.3
0.4
There have been no transfers between Level 1 and Level 2 and no non-recurring fair value measurements of assets and liabilities during the
year (2022: none). The Group’s policy is to recognise transfers into, and out of, fair value hierarchy levels as at the end of the reporting period.
The values of the debt securities, money market funds and loan funds are based upon publicly available market prices.
Foreign exchange forwards are valued using current spot and forward rates discounted to present value. They are also adjusted for
counterparty credit risk using credit default swap curves. Fuel oil swaps are valued with reference to the valuations provided by third parties,
which use current Platts index rates, discounted to present value.
Saga plc Annual Report and Accounts 2023 177
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
19 Financial assets and financial liabilities continued
d) Cash flow hedges
i) Forward currency risk
During the year ended 31 January 2023, the Group designated 352 foreign exchange forward currency contracts as hedges of highly
probable foreign currency cash expenses in future periods. These contracts are entered into to minimise the Group’s exposure to foreign
exchange risk.
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
Foreign currency cash flow hedging instruments
Volume
Euro (EUR)
US dollar (USD)
Other currencies
Total
70
109
173
352
£m
0.6
(0.2)
(0.1)
0.3
Volume
103
127
216
446
£m
1.1
0.1
(0.1)
1.1
Volume
133
86
212
431
£m
(2.5)
0.1
–
(2.4)
Hedging instruments for other currencies are in respect of Australian dollars, Canadian dollars, Swiss francs, Japanese yen, New Zealand
dollars, Norwegian krone, Thai baht, Chinese yuan, Danish krona and South African rand.
ii) Commodity price risk
The Group uses derivative financial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into fixed price
contracts (swaps) in the management of its fuel price exposures. These contracts are expected to reduce the volatility attributable to price
fluctuations of fuel and are designated as cash flow hedges. Hedging the price volatility of forecast fuel purchases is in accordance with the risk
management strategy outlined by the Board of Directors.
Commodity cash flow hedging instruments
Hedging instruments
Volume
68
£m
(4.0)
Volume
68
£m
(4.0)
Volume
36
£m
1.2
Designated in the year
At 31 Jan 2023
At 31 Jan 2022
iii) Hedge maturity profile
The table below summarises the present value of the highly probable forecast cash flows that have been designated in a hedging relationship
as at 31 January 2023. These cash flows are expected to become determined in profit or loss in the same period in which the cash flows occur.
Determination period
1 February 2023 to 31 July 2023
1 August 2023 to 31 January 2024
1 February 2024 to 31 July 2024
1 August 2024 to 31 January 2025
Total
EUR
£m
28.1
20.4
2.1
0.1
50.7
USD
£m
22.4
20.6
8.1
2.2
53.3
Other
currencies
£m
Currency
hedges £m
Fuel hedges
£m
6.7
5.8
0.7
0.5
13.7
57.2
46.8
10.9
2.8
117.7
(1.8)
(1.6)
(0.3)
(0.3)
(4.0)
Total
£m
55.4
45.2
10.6
2.5
113.7
During the year, the Group recognised net losses of £2.0m (2022: £2.1m gains) on cash flow hedging instruments through OCI into the
hedging reserve. The Group recognised £nil gains (2022: £nil) through the income statement in respect of the ineffective portion of hedges
measured during the year.
During the year, the Group has de-designated 12 foreign currency forward contracts, with a transaction value of £0.7m, where forecast cash
flows are no longer expected to occur with a sufficiently high degree of certainty to meet the requirements of IFRS 9. The accumulated gains
in relation to these contracts of £nil have been reclassified from the hedging reserve into profit or loss during the year. The Group has not
de-designated any fuel oil swaps during the year. During the year, the Group recognised a £0.3m loss (2022: £1.2m gain) through the income
statement in respect of matured hedges which have been recycled from OCI.
178 Saga plc Annual Report and Accounts 2023
20 Financial risk management objectives and policies
The Group’s principal financial liabilities comprise loans and borrowings, and trade and other payables. The main purpose of the loans and
borrowings financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. The Group’s principal
financial assets include debt securities, deposits with financial institutions, money market funds, loan funds, trade and other receivables, and
cash and short-term deposits. The Group also enters into derivative transactions such as foreign exchange forward contracts, fuel and gas oil
swaps and interest rate swaps to manage its exposures to various risks.
The Group is exposed to market risk, credit risk, liquidity risk, insurance risk and operational risk. The Group’s senior management oversees
these risks, supported by the Group Treasury function and Treasury Committees within the key areas of the Group that advise on financial
risks and the appropriate financial risk governance framework for the Group. These functions and Committees ensure that the Group’s
financial risks are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in
accordance with the Group’s policies and risk objectives. All derivative activities are for risk management purposes and are carried out by
the Group’s Treasury function. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken.
The Group manages concentration risk on its financial assets through a policy of diversification that is outlined in the Group Treasury Policy
and approved by the Board. The policy defines the exposure limit by asset class and to third-party institutions based on the credit ratings of
the individual counterparties, combined with the views of the Board. On a monthly basis, exposure to each asset class and counterparty is
calculated and reported, and compliance with the policy is monitored.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market prices. The Group
is exposed to the following market risk factors:
i
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S
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r
a
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c
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e
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p
p
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r
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t
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G
G
o
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v
v
e
e
r
r
n
n
a
a
n
n
c
c
e
e
i
i
F
F
n
n
a
a
n
n
c
c
a
a
i
i
l
l
s
s
t
t
a
a
t
t
e
e
m
m
e
e
n
n
t
t
s
s
A
A
d
d
d
d
i
i
t
t
i
i
o
o
n
n
a
a
l
l
i
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n
f
f
o
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r
r
m
m
a
a
t
t
i
i
o
o
n
n
• Foreign currency risk
• Commodity price risk
• Interest rate risk
The Group has policies and limits approved by the Board for managing the market risk exposure. These set out the principles that the business
should adhere to for managing market risk and establishing the maximum limits that the Group is willing to accept considering strategy, risk
appetite and capital resources. The Group has the ability to monitor market risk exposure on a daily basis and has established limits for each
component of market risk.
The Group uses derivatives for hedging its exposure to foreign currency and fuel oil price risks. The market risk policy explicitly prohibits the
use of derivatives for speculative purposes. For risk exposures that the Group hedges, and for which the Group applies hedge accounting,
ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the
credit risk of the derivative counterparty. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic
prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument.
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
i) Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of a financial asset or liability will fluctuate because of changes in foreign
exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities
(when revenue or expense is denominated in a different currency from the Group’s functional currency).
The Group uses foreign exchange forward contracts to manage the majority of its transaction exposures. The foreign exchange forward
contracts, some of which are formally designated as hedging instruments, are entered into for periods consistent with the foreign currency
exposure of the underlying transactions, generally from one to 24 months. The foreign exchange forward contracts vary with the level of
expected foreign currency sales and purchases.
Saga plc Annual Report and Accounts 2023 179
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
20 Financial risk management objectives and policies continued
The following table demonstrates the sensitivity of the fair value of forward exchange contracts to a 5% change in USD and EUR exchange
rates, with all other variables held constant. The Group’s exposure to foreign currency changes for all other currencies is not material.
The impact is shown net of tax at the current rate.
Sensitivity of +/– 5% forex
rate change in
Effect on equity
Effect on profit after tax
2023
2022
EUR
USD
EUR
USD
+/– £2.4m
+/– £2.5m
+/– £2.8m
+/– £1.7m
+/– £0.2m
+/– £0.2m
+/– £0.7m
+/– £0.4m
To the extent that forward exchange contracts are held as part of effective hedging relationships, any change to the fair value of the instrument
will be offset by an equal and opposite change to the cost of the hedged item.
ii) Commodity price risk
The Group is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of fuel and gas oil to
sail its ocean cruise ships and therefore require a continuous supply of fuel and gas oil. The volatility in the price of fuel and gas oil has led to the
decision to enter into commodity fuel and gas oil swap contracts. These contracts are expected to reduce the volatility attributable to price
fluctuations of fuel and gas oil. Managing the price volatility of forecast oil purchases is in accordance with the risk management strategy
outlined by the Board of Directors.
The Group manages the purchase price using forward commodity purchase contracts based on future forecast fuel oil requirements.
The following table shows the sensitivity of the fair value of fuel oil swaps to changes in the underlying fuel oil price (USD) with all other variables
held constant. The impact is shown net of tax at the current rate.
2023
2022
Sensitivity of +/– 5% rate
change in
USD – Fuel oil price
USD – Fuel oil price
Effect on equity
Effect on profit after tax
+/– £0.8m
+/– £0.5m
+/– £0.0m
+/– £0.0m
iii) Interest rate risk
Interest rate risk is defined in IFRS 7 as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates.
Interest rate risk arises primarily from medium and long-term investments in fixed interest securities. The market value of these investments
is affected by the movement in interest rates. This is managed by a policy of holding the majority of investments to maturity by closely matching
asset and liability duration.
It is also ensured that the investment portfolio has a diversified range of investments such that there is a combination of fixed and floating rate
securities, as well as other types of investment such as Retail Price Index linked securities.
Interest rate risk also arises in respect of the Group’s borrowings where the interest rate attaching to those borrowings is not fixed.
Where the Group perceives there to be a significant interest rate risk, it manages its exposure to such risks by purchasing interest rate caps
to limit the risk.
The following table shows the sensitivity of financial assets and liabilities to changes in the Sterling Overnight Index Average (SONIA). The
impact is shown net of tax at the current rate.
2023
2022
Sensitivity of +/– 1% rate
change in
SONIA
SONIA
Effect on equity
Effect on profit after tax
+/– £0.4m
+/– £0.8m
+/– £0.4m
+/– £0.2m
180 Saga plc Annual Report and Accounts 2023
b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risk in relation to its financial and reinsurance assets, outstanding derivatives, trade and other receivables,
and cash and cash equivalents. The Group assesses its counterparty exposure in relation to the investment of surplus cash, fuel oil and foreign
currency contracts, and undrawn credit facilities. The Group primarily uses published credit ratings to assess counterparty strength and
therefore define the credit limit for each counterparty in accordance with approved treasury policies.
The credit risk in respect of trade and other receivables is generally limited as payment from customers is generally required before services
are provided. At 31 January 2023, the maximum exposure to credit risk for trade receivables by operating segment was as follows:
Cruise and Travel
Insurance
Other Businesses and Central Costs
2023
£m
1.8
68.0
2.1
71.9
2022
£m
2.3
42.6
2.3
47.2
The variance between the quantum of the maximum exposure to credit risk for trade receivables (above) and total of trade receivables
presented in ‘Trade and other receivables’ (Note 23) primarily relates to insurance instalment gross premium debtors due from customers,
for which a corresponding related creditor exists with third-party insurers for the net premium. In the event of payment obligation default by
a customer no longer on risk, the impairment of the debtor balance by the Group would lead to a corresponding reduction in the related
creditor with, or refund of net premium from, the third-party insurer. In the event of payment obligation default by a customer remaining on
risk, the impairment of the debtor balance by the Group would not lead to a corresponding reduction in the related creditor with, or refund
of net premium from, the third-party insurer, and the Group would bear the credit risk relating to the debtor balance.
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large
number of small balances. The loss allowance required for these receivables is calculated in line with the simplified method for trade
receivables per IFRS 9, whereby lifetime ECLs are recognised irrelevant of the credit risk. The loss allowance is based on a combination of:
(i) aged debtor analysis; (ii) historical experience of write-offs for each receivable; (iii) any specific indicators of credit deterioration observed;
and (iv) management judgement. Loss rates are based on the probability of a receivable progressing through successive stages of delinquency
to write-off. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a
repayment plan with the Group.
On that basis, the loss allowance as at 31 January 2023 and 31 January 2022 was determined as follows for trade receivables:
i
i
S
S
t
t
r
r
a
a
t
t
e
e
g
g
c
c
r
r
e
e
p
p
o
o
r
r
t
t
G
G
o
o
v
v
e
e
r
r
n
n
a
a
n
n
c
c
e
e
i
i
F
F
n
n
a
a
n
n
c
c
a
a
i
i
l
l
s
s
t
t
a
a
t
t
e
e
m
m
e
e
n
n
t
t
s
s
31 January 2023
Expected loss rate
Gross carrying amount – trade
receivables (Note 23)
Loss allowance (Note 23)
31 January 2022
Expected loss rate
Gross carrying amount – trade
receivables (Note 23)
Loss allowance (Note 23)
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
Total
0%
7%
6%
34%
15%
66%
£139.1m
£0.5m
£2.1m
£0.1m
£0.2m
£0.0m
£0.1m
£0.0m
£0.2m
£0.0m
£0.7m
£0.5m
Current
< 30 days
30-60 days
61-90 days
91-120 days
> 120 days
1%
13%
4%
6%
4%
39%
£142.4m
£1.1m
Total
£101.7m
£0.6m
£1.2m
£0.2m
£0.5m
£0.0m
£0.4m
£0.0m
£0.4m
£0.0m
£10.7m
£4.2m
£114.9m
£5.0m
A
A
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The loss allowance for trade receivables reconciles to the opening allowances as follows:
Opening loss allowance at 1 February
Increase in loan loss allowance recognised in profit or loss during the year
Receivables written off during the year as uncollectable
Unused amount reversed
Closing loss allowance at 31 January
2023
£m
5.0
1.3
(3.5)
(1.7)
1.1
2022
(restated)
£m
13.9
0.77
(8.0)7
(1.6)7
5.0
7 Movements in the credit loss allowance for the year ended 31 January 2022 have been restated due to an incorrect allocation between the various movements in
the year
Saga plc Annual Report and Accounts 2023 181
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
20 Financial risk management objectives and policies continued
Credit risk in relation to deposits, debt securities and derivative counterparties is managed by the Group’s Treasury function in accordance
with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each
counterparty. Counterparty credit limits are reviewed on a regular basis and updated throughout the year subject to approval by the Board.
The limits are set to minimise the concentration of risks and therefore mitigate financial loss through any potential counterparty failure.
The Group is exposed to the risk of default on the reinsurance arrangements in its Insurance Underwriting business when amounts
recoverable under those arrangements become due. The Group has entered into a funds-withheld quota share reinsurance contract to
reduce its exposure to credit risk. Credit risk in respect of reinsurance arrangements is assessed at the time of entering into a reinsurance
contract. The Group’s reinsurance programme is only placed with reinsurers which meet the Group’s financial strength criteria.
The Group’s maximum exposure to credit risk for the components of the statement of financial position at 31 January 2023 and 31 January
2022 is the gross carrying amount except for derivative financial instruments and trade receivables. The Group’s maximum exposure for
financial guarantees and financial derivative instruments is noted under liquidity risk. None of the financial assets, other than trade receivables
where a loss allowance has been determined as set out above, were impaired at the reporting date.
The Group’s financial assets and reinsurance assets are analysed by Moody’s credit risk rating as follows:
Ratings analysis
31 January 2023
£m
Debt securities
Money market funds
Derivative assets
Loan funds
Reinsurance assets
Total
31 January 2022
£m
Debt securities
Money market funds
Deposits with financial institutions
Derivative assets
Loan funds
Reinsurance assets
Total
AAA
23.5
19.6
–
–
43.1
–
43.1
AAA
20.2
29.2
–
–
–
49.4
–
49.4
AA
74.9
–
–
–
74.9
38.2
113.1
AA
94.4
–
–
–
–
94.4
36.3
130.7
A
64.2
–
2.5
–
66.7
30.6
97.3
A
68.0
–
14.0
1.8
–
83.8
29.1
112.9
BBB
91.8
–
–
–
91.8
–
91.8
BBB
98.2
–
–
0.1
–
98.3
–
98.3
Unrated
–
–
–
5.9
5.9
–
5.9
Unrated
–
–
–
–
6.2
6.2
–
6.2
Total
254.4
19.6
2.5
5.9
282.4
68.8
351.2
Total
280.8
29.2
14.0
1.9
6.2
332.1
65.4
397.5
c) Liquidity risk
Liquidity risk is the risk that the Group, although solvent, either does not have available sufficient financial resources to enable it to meet its
obligations as they fall due or can secure them only at excessive cost. The Group’s approach to managing liquidity risk is to evaluate current
and expected liquidity requirements to ensure that it maintains sufficient reserves of cash or availability on its RCF. The Group manages
its obligations to pay claims to policyholders as they fall due by matching the maturity of investments to the expected maturity of
claims payments.
The table below analyses the maturity of the Group’s financial liabilities and insurance contract liabilities on contractual payments. The analysis
of non-derivative financial liabilities is based on the remaining period at the reporting date to the contractual maturity date. The analysis of
claims outstanding is based on the expected dates on which the claims will be settled and is before discounting, gross of reinsurance.
31 January 2023
£m
Bonds and bank loans
Interest on bonds and bank loans
Insurance contract liabilities
Derivative liabilities
Lease liabilities
On demand
Less than
1 year
–
–
–
–
–
–
62.2
33.6
85.3
4.1
8.9
194.1
1 to 2
years
212.2
28.8
79.7
1.1
3.5
325.3
2 to 5
years
406.4
46.0
75.7
–
10.0
538.1
Over 5
years
188.4
13.4
102.1
–
10.2
314.1
Total
869.2
121.8
342.8
5.2
32.6
1,371.6
182 Saga plc Annual Report and Accounts 2023
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m
m
a
a
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31 January 2022
£m
Bonds and bank loans
Interest on bonds and bank loans
Insurance contract liabilities
Derivative liabilities
Lease liabilities
On demand
Less than
1 year
–
–
–
–
–
–
46.4
32.7
88.0
3.7
3.9
174.7
1 to 2
years
62.2
31.3
50.1
0.3
3.6
2 to 5
years
572.0
65.4
76.8
–
11.4
Over 5
years
235.0
20.0
115.9
–
16.4
Total
915.6
149.4
330.8
4.0
35.3
147.5
725.6
387.3
1,435.1
d) Insurance risk
Insurance risk arises from the inherent uncertainties as to the occurrence, cost and timing of insured events that could lead to significant
individual or aggregated claims in terms of quantity or value. This could be for a number of reasons, including weather-related events, large
individual claims, changes in claimant behaviour patterns such as increased levels of fraudulent activities, the use of PPOs, prospective or
retrospective legislative changes, unresponsive and inaccurate pricing or reserving methodologies and the deterioration in the Group’s ability
to effectively and efficiently handle claims while delivering excellent customer service.
The Group manages insurance risk within its risk management framework as set out by the Board. The key policies and processes of mitigating
these risks have been implemented, which include underwriting partnership arrangements, reinsurance excess of loss contracts, pricing
policies and claims management, and administration policies.
i) Underwriting and pricing risk
The Group primarily underwrites motor insurance for private cars in the UK. The book consists of a large number of individual risks which are
widely spread geographically, which helps to minimise concentration risk. The Group has controls in place to restrict access to its products to
only those risks that it wishes to underwrite.
The Group has management information to allow it to monitor underwriting performance on a continuous basis and the ability to make pricing
and underwriting changes quickly. The Group undertakes detailed statistical analysis of underwriting experience for each rating factor and
combination of rating factors, to enable it to adjust pricing for emerging trends.
ii) Reserving risk
Reserving risk is the risk that insufficient funds have been set aside to settle claims as they fall due. The Group undertakes regular internal
actuarial reviews and commissions external actuarial reviews at least once a year. These reviews estimate the future liabilities in order to
consider the adequacy of the provisions.
Claims which are subject to PPOs are a significant source of uncertainty in the claim’s reserves. Cash flow projections are undertaken for
PPO claims to estimate the gross and net of reinsurance provisions required. PPO provisions are discounted to reflect expectations of future
investment returns and cost inflation.
In the year to 31 January 2022, the Group considered the additional latency risk to claims cost development caused by the impact of the
COVID-19 pandemic and recognised an additional claims reserve above actuarial best estimate to cover this specific risk. The latency risk
provision in relation to the COVID-19 pandemic has been released over the year to 31 January 2023, reflective of the improvement in the
COVID-19 outlook.
iii) Reinsurance
The Group purchases reinsurance to reduce the impact of individual large losses or accumulations from a single catastrophic event. During
2018, the Group entered into a funds-withheld quota share reinsurance contract that reinsures 80% of the Group’s motor claims risks limited
by a loss ratio cap of 130%, effective from 1 February 2019. Prior to this, the Group had a funds-withheld quota share reinsurance contract in
place that reinsured 75% of the Group’s motor claims risks limited by a loss ratio cap of 120%. The Group also purchases individual excess of
loss protections for the motor portfolio to limit the impact of a single large claim. Similar protections are in place for all years for which the
Group has underwritten motor business.
Reinsurance recoveries on individual excess of loss protections can take many years to collect, particularly if a claim is subject to a PPO.
This means that the Group has exposure to reinsurance credit risk for many years. Reinsurers are therefore required to have strong credit
ratings and their financial health is regularly monitored.
iv) Sensitivities
The following table demonstrates the impact on profit and loss and equity of a five-percentage point variation in the recorded loss ratio at
31 January 2023 and 31 January 2022. The impact of a 5% change in claims outstanding is also shown at the same dates. The impact is shown
net of reinsurance and tax at the current rate. The impact to the statement of financial position as at 31 January 2023 and 31 January 2022
of a 0.25% percentage point change in discount rate for PPOs is also shown.
Impact of a five-percentage point change in loss ratio
Impact of 5% change in claims outstanding
Impact of a 0.25 percentage point change in discount rate for PPOs
2023
2022
+/– £3.0m
+/– £3.3m
+/– £4.1m
+/– £4.1m
+/– £2.0m +/– £2.2m
Saga plc Annual Report and Accounts 2023 183
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
20 Financial risk management objectives and policies continued
e) Operational risk
Effective operational risk management requires the Group to identify, assess, manage, monitor, report and mitigate all areas of exposure.
The Group operates across a range of segments and operational risk is inherent in all of the Group’s products and services, arising from the
operation of assets, from external events and dependencies, and from internal processes and systems.
The Group manages its operational risk through the risk management framework agreed by the Board, and through the use of risk
management tools which, together, ensure that operational risks are identified, managed and mitigated to the level accepted, and that
contingency processes and disaster recovery plans are in place. Regular reporting is undertaken to segment boards and includes details of
new and emerging risks, as well as monitoring of existing risks. Testing of contingency processes and disaster recovery plans is undertaken to
ensure the effectiveness of these processes. The resilience of the Group’s disaster recovery plans was demonstrated during the COVID-19
lockdown. The Group was able to quickly move office-based colleagues to working from home arrangements, ensuring that it was able to
continue to support existing and new customers through the contact centre and support functions.
All of the Group’s operations are dependent on: the proper functioning of its IT and communication systems; its properties and other
infrastructure assets; the need to adequately maintain and protect customer and employee data and other information; and the ability of
the Group to attract and retain colleagues. Specific areas of operational risk by segment include:
i) Cruise and Travel
The Cruise and Travel segment operates two ocean cruise ships, which are the Group’s largest trading assets. Risk to the operation of these
cruise ships arises from the impact of mechanical or other malfunction, non-compliance with regulatory requirements, and from global
weather and socio-economic events. The tour holidays operated by the segment are also affected by global weather and socio-economic
events which impact either the Group directly, or its suppliers. The Cruise and Travel segments transact with multiple suppliers which
minimises the impact of any socio-economic events affecting its suppliers. The COVID-19 pandemic created an unprecedented challenge for
the Group and a high level of uncertainty for all companies. This uncertainty eased as COVID-19 restrictions lifted. Further detail is provided
within the basis of preparation and going concern sections in Note 2.1 on pages 143-144.
ii) Insurance
The Insurance segment is required to comply with various operational regulatory requirements, primarily in the UK but also within Gibraltar
for its Underwriting business. To the extent that significant external events could increase the incidence of claims, these would place additional
strain on the claims handling function but any financial impact of such an event is considered to be an insurance risk.
iii) Other Businesses and Central Costs
The financial services business is required to comply with various operational regulatory requirements in the UK.
21 Interests in unconsolidated structured entities
A structured entity is defined as an entity that has been designed so that voting, or similar, rights are not the dominant factor in deciding who
controls the entity, such as when any voting rights relate to the administrative tasks only and the relevant activities are directed by means of
contractual agreements. The Group has interests in unconsolidated structured entities in the form of investment funds comprising:
• bank loan funds; and
• money market funds.
The nature and purpose of the bank loan funds are to diversify the investment portfolio and enhance the overall yield, while maintaining an
acceptable level of risk for the portfolio as a whole.
Bank loan funds invest in secured loans to companies rated below investment grade.
The nature and purpose of the money market funds is to provide maximum security and liquidity for the funds invested while also providing an
adequate return. The money market funds used by the Group are all members of the Institutional Money Market Funds Association. They are
thus required to maintain specified liquidity and diversification characteristics of their underlying portfolios, which comprise investment grade
investments in financial institutions.
The Group invests in unconsolidated structured entities as part of its investment activities. The Group does not sponsor any of the
unconsolidated structured entities.
At 31 January 2023, the Group’s total interest in unconsolidated structured entities was £25.5m analysed as follows:
Loan funds
Money market funds
Carrying
value
£m
Interest
income
£m
Fair value
losses
£m
5.9
19.6
0.2
0.5
(0.3)
–
These investments are typically managed under credit risk management as described in Note 20. The Group’s maximum exposure to loss on
the interests presented above is the carrying amount of the Group’s investments. No further loss can be made by the Group in relation to
these investments. For this reason, the total assets of the entities are not considered meaningful for the purposes of understanding the
related risks and so have not been presented.
184 Saga plc Annual Report and Accounts 2023
22 Inventories
Raw materials
Technical stocks
Finished goods
2023
£m
0.7
4.4
1.9
7.0
2022
£m
0.3
2.3
3.7
6.3
Technical stocks are spare parts for the Group’s ocean cruise ships. Finished goods primarily relate to ocean cruise ship fuel, food, bar and
sundry stocks.
23 Trade and other receivables
Trade receivables (Note 20b)
Loss allowance (Note 20b)
Other receivables
Prepayments
Contract cost assets (Note 3b)
Deferred acquisition costs
Other taxes and social security costs
2023
£m
142.4
(1.1)
141.3
23.4
25.8
2.5
13.9
5.6
2022
£m
114.9
(5.0)
109.9
17.3
16.8
2.6
18.2
4.7
212.5
169.5
An explanation of how the Group manages and measures the credit risk of trade receivables can be found in Note 20b. The Group expects
trade and other receivables to be normally settled within 12 months. Due to the short-term nature of the current receivables, their carrying
amount is considered to be the same as their fair value.
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24 Trust accounts
The Civil Aviation Authority (CAA) and Association of British Travel Agents (ABTA) regulated the River Cruise and Travel businesses
conducted by the Group in the UK during the year. To comply with its regulatory obligations, the Group is required to arrange financial security
to protect customer monies, in addition to making ATOL Protection Contributions, which the Group pays into the Air Travel Trust Fund.
From 25 September 2020, the Group changed its method of customer protection for ATOL licensable bookings from financial security
bonds to paying customer monies into trust (Trust Accounting). Under Trust Accounting, all monies the Group receives from customers in
respect of ATOL licensable holiday packages sold, are held in trust until such time as the Group has fulfilled its obligations to the customer. The
trust is administered and controlled by an independent Trustee, PT Trustees Limited. Interest arising from the funds held on trust belongs to
the Group.
With the introduction of Trust Accounting in September 2020, the Group is no longer required to hold financial security bonds in relation to
ATOL bookings. In relation to ABTA bookings a bonding requirement still exists (Note 37c).
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25 Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Cash and short-term deposits
Money market funds
Bank overdraft
Cash and cash equivalents in the cash flow statement
2023
£m
52.0
124.5
176.5
19.6
(4.4)
191.7
2022
£m
174.6
52.3
226.9
29.2
(0.4)
255.7
Included within cash and cash equivalents are amounts held by the Group’s River Cruise, Travel and Insurance businesses, which are subject to
contractual or regulatory restrictions (Note 35). These amounts held are not readily available to be used for other purposes within the Group
and total £34.2m (2022: £69.1m). Available Cash8 excludes these amounts.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are typically made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective
short-term deposit rates.
The bank overdraft is subject to a guarantee in favour of the Group’s bankers and is limited to the amount drawn. The bank overdraft is
repayable on demand.
8 Refer to the Alternative Performance Measures Glossary on page 209 for definition and explanation
Saga plc Annual Report and Accounts 2023 185
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
26 Trade and other payables
Trade payables
Other payables
Other taxes and social security costs
Assets in the course of construction
Accruals
2023
£m
140.1
2.9
8.7
4.5
41.5
197.7
2022
£m
124.8
5.8
9.4
3.8
55.9
199.7
All trade and other payables are current in nature. The carrying amounts of trade and other payables are considered to be the same as their
fair values, due to their short-term nature.
27 Retirement benefit schemes
The Group operates retirement benefit schemes for the employees of the Group consisting of defined contribution plans and a legacy defined
benefit plan.
In July 2021, following the completion of a review of the Group’s pension arrangements, a consultation process with active members
was launched. The consultation process concluded during October 2021, and with effect from 31 October 2021, the Group closed both its
existing schemes to future accrual: the Saga Pension Scheme (its defined benefit plan) and the Saga Workplace Pension Plan (its defined
contribution plan). In their place, the Group launched a new defined contribution pension scheme arrangement, operated as a Master Trust.
This move served to reduce the risk of further deficits developing in the future on the defined benefit scheme, while moving to a fairer
scheme for all colleagues.
a) Defined contribution plans
There are three defined contribution schemes in the Group at 31 January 2023 (2022: three). The total charge for the year in respect of the
defined contribution schemes was £9.9m (2022: £4.5m). The assets of these schemes are held separately from those of the Group in funds
under the control of Trustees.
b) Defined benefit plan
The Group operated a funded defined benefit scheme, the Saga Pension Scheme, which was closed to future accrual on 31 October 2021.
From 1 November 2021, members moved from active to deferred status, with future indexation of deferred pensions before retirement
measured by reference to the Consumer Price Index. During the prior year, a net expense of £2.0m was recognised as a past service cost
(within administrative and selling expenses) relating to the closure. The assets of the scheme are held separately from those of the Group
in independently administered funds.
The scheme is governed by the employment laws of the UK. The level of benefits provided depends on the member’s length of service and
average salary while a member of the scheme. The scheme requires contributions to be made to a separately administered fund which is
governed by a Board of Trustees and consists of an equal number of employer and employee representatives. The Board of Trustees is
responsible for the administration of the plan assets and for the definition of the investment strategy.
The long-term investment objectives of the Trustees and the Group are to limit the risk of the assets failing to meet the liabilities of the scheme
over the long term, and to maximise returns consistent with an acceptable level of risk so as to control the long-term costs of the scheme.
To meet those objectives, the scheme’s assets are invested in different categories of assets, with different maturities designed to match
liabilities as they fall due. The investment strategy will continue to evolve over time and is expected to match the liability profile increasingly
closely. The pension liability is exposed to inflation rate risks and changes in the life expectancy of members. As the plan assets include
investments in quoted equities, the Group is exposed to equity market risk. The Group has provided super security to the Trustees of the
scheme, which ranks before any liabilities under the senior facilities agreement (as detailed in Note 30). The value of the security is capped
at £47.5m.
The fair value of the assets and present value of the obligations of the Saga defined benefit scheme are as follows:
Fair value of scheme assets
Present value of defined benefit obligation
Defined benefit scheme (liability)/asset
2023
£m
224.1
(236.2)
(12.1)
2022
£m
412.0
(410.9)
1.1
The present values of the defined benefit obligation, and any related current service and past service costs, have been measured using the
projected unit credit valuation method.
186 Saga plc Annual Report and Accounts 2023
During the year ended 31 January 2023, the net position of the Saga Scheme has decreased by £13.2m, resulting in an overall scheme deficit
of £12.1m. The movements observed in the scheme’s assets and obligations have been impacted significantly by macroeconomic factors
during the year where, at a global level, there have been rising inflation and cost of living pressures, as well as shifts in long-term market yields.
The present value of defined benefit obligations decreased by £174.7m to £236.2m, primarily due to a 245bps increase in the discount rate
which is based on increases in long-term trend corporate bond yields. The fair value of scheme assets decreased by £187.9m to £224.1m.
The decrease in asset values has been largely driven by the sharp rise in interest rates in the year. Liability driven investment (LDI) strategies
resulted in assets being sold in order to meet the liquidity calls required by the fall in leveraged LDI values. The Saga scheme has a hedged
component, but this is relative to gilt yields, rather than corporate bond yields, which are used to derive the defined benefit obligation. A £5.8m
deficit funding contribution was paid by the Group in February 2022 in relation to a recovery plan agreed under the latest triennial valuation
of the scheme as at 31 January 2020.
The following table summarises the components of the net benefit expense recognised in the income statement, OCI and amounts
recognised in the statement of financial position for the scheme for the year ended 31 January 2023:
1 February 2022
Pension cost charge to income statement
Net interest
Included in income statement
Benefits paid
Return on plan assets (excluding amounts included in net interest expense)
Actuarial changes arising from changes in financial assumptions
Experience adjustments
Sub-total included in OCI
Total contributions by employer
At 31 January 2023
Fair value of
scheme
assets
£m
Defined
benefit
obligation
£m
412.0
(410.9)
8.9
8.9
(6.8)
(195.8)
–
–
(202.6)
5.8
(8.8)
(8.8)
6.8
–
184.3
(7.6)
183.5
–
224.1
(236.2)
Defined
benefit
scheme
liability
£m
1.1
0.1
0.1
–
(195.8)
184.3
(7.6)
(19.1)
5.8
(12.1)
The following table summarises the components of the net benefit expense recognised in the income statement, OCI and amounts
recognised in the statement of financial position for the scheme for the year ended 31 January 2022:
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At 1 February 2021
Pension cost charge to income statement
Current service cost paid in cash during the period
Non-cash current service cost uplift
Total current service cost
Past service costs
Net interest
Included in income statement
Benefits paid
Return on plan assets (excluding amounts included in net interest expense)
Actuarial changes arising from changes in demographic assumptions
Actuarial changes arising from changes in financial assumptions
Experience adjustments
Sub-total included in OCI
Total contributions by employer
At 31 January 2022
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Fair value of
scheme
assets
£m
Defined
benefit
obligation
£m
Defined
benefit
scheme
(liability)/
surplus
£m
411.2
(415.5)
(4.3)
–
–
–
–
5.9
5.9
(7.5)
(5.8)
–
–
–
(13.3)
8.2
412.0
(3.9)
(1.6)
(5.5)
(2.0)
(5.9)
(13.4)
7.5
–
(5.3)
16.2
(0.3)
18.1
(0.1)
(410.9)
(3.9)
(1.6)
(5.5)
(2.0)
–
(7.5)
–
(5.8)
(5.3)
16.2
(0.3)
4.8
8.1
1.1
Saga plc Annual Report and Accounts 2023 187
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
27 Retirement benefit schemes continued
b) Defined benefit plan continued
The major categories of assets in the scheme are as follows:
Equities
Bonds
Property and alternatives
Hedge funds
Insured annuities
Cash and other
Total
2023
£m
16.4
92.2
74.6
28.7
3.9
8.3
2022
£m
50.2
159.4
58.4
133.5
5.3
5.2
224.1
412.0
Equities and bonds are all quoted in active markets, while property and hedge funds are not. The impact of COVID-19 over the past three years
and the Russia-Ukraine conflict have increased the level of uncertainty and volatility in global financial markets. While the ultimate extent of the
effect of this on the asset portfolio is not possible to quantify at this time, management has used the latest available fund pricing data to derive
the valuations of assets which are not quoted in active markets.
Within bonds is a hedging component totalling £85.5m (2022: £118.7m).
The pension scheme has not invested in any of the Group’s own financial instruments.
The principal assumptions used in determining pension benefit obligations for the scheme are shown below:
Real rate of increase of pensions in payment
Real rate of increase of pensions in deferment
Discount rate – pensioner
Discount rate – non-pensioner
Inflation – pensioner
Inflation – non-pensioner
Life expectancy of a member retiring in 20 years’ time – Male
Life expectancy of a member retiring in 20 years’ time – Female
2023
3.05%
3.00%
4.65%
4.60%
3.20%
3.15%
2022
3.45%
3.30%
2.20%
2.15%
3.80%
3.60%
27.8 yrs
27.8 yrs
29.5 yrs
29.5 yrs
The discount rate assumption is used to calculate the defined benefit obligation. The rate is derived from high quality corporate bonds,
generally regarded as those with an AA rating. Management have opted to use the XPS Single Agency curve for deriving the discount rate
assumptions at January 2023, rather than deriving the rate from the Merrill Lynch AA yield curve which was used for the 31 January 2022
valuation. The impact of this change in methodology is estimated at a £10.0m reduction in the defined benefit obligation as at 31 January 2023.
In addition, the scheme lost some of its inflation hedge during the year and as a result management have made an allowance for inflation risk
premium of 0.2% (2022: nil). The impact of the change was an estimated £5.0m reduction in the defined benefit obligation as at 31 January 2023.
Mortality assumptions are set using standard tables based on specific experience, where available, and allow for future mortality improvements.
The scheme assumption is that a member currently aged 60 will live on average for a further 26.2 years if they are male and on average for a
further 28.0 years if they are female.
A quantitative sensitivity analysis for significant assumptions as at 31 January 2023 and their impact on the scheme liabilities is as follows:
Assumptions
Sensitivity
Impact £m
Discount rate
+/– 0.25%
Future inflation
Life expectancy
+/– 0.25%
+/– 1 year
Increase
Decrease
Increase
Decrease
Increase
Decrease
(12.3)
13.2
5.7
(6.1)
8.0
(9.2)
Note: a positive impact represents an increase in the net defined benefit liability.
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity
of the defined benefit obligation to significant actuarial assumptions, the same method has been applied as when calculating the pension
liability recognised within the statement of financial position. The methods and types of assumption used in preparing the sensitivity analysis
did not change compared to the prior period.
The expected contribution in respect of the accrual of benefits payable to the scheme for the next financial year is £nil and the average
duration of the defined benefit plan obligation at the end of the reporting period has reduced from 22 to 23 years down to 20 to 21 years,
due to the significant rise in the discount rate assumption. Formal actuarial valuations take place every three years for the scheme. The
assumptions adopted for actuarial valuations are determined by the Trustees, agreed with the Group and are normally more prudent than
the assumptions adopted for IAS 19 purposes, which are best estimate. Where a funding deficit is identified, the Group and the Trustees
may agree a deficit recovery plan to pay additional contributions above those needed to fund the scheme.
188 Saga plc Annual Report and Accounts 2023
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The Group’s latest triennial valuation of the Saga Scheme defined benefit plan was as at 31 January 2020. Saga plc, and certain guarantor
subsidiaries in the Group, have provided a super security to the Trustees of the scheme, which ranks before any liabilities under the Group’s
bank facilities. The value of the security is capped at £47.5m under the 2020 triennial valuation. Further to this valuation, a recovery plan was
also put in place for the scheme. Under the agreed recovery plan, the Group made an additional payment of £5.8m during the year ended
31 January 2023 and will make annual payments of £5.8m totalling a further £29.0m over the next five financial years, with the last payment
being made on 29 February 2027. The total expected contributions in the year ending 31 January 2024 are £5.8m and entirely relate to the
£5.8m recovery payment.
The Group has also agreed to pay additional amounts into an escrow account should asset returns fall below an agreed level over set periods
of time. Dependent upon the level of return on the scheme’s assets between 31 January 2020 and 31 January 2027, any amount in the escrow
account will be released to either the Group, or the scheme, by 30 June 2027.
28 Insurance contract liabilities and reinsurance assets
The analysis of gross and net insurance liabilities is as follows:
Gross
Claims outstanding
Provision for unearned premiums
Total gross liabilities
Recoverable from reinsurers
Claims outstanding
Provision for unearned premiums
Total reinsurers’ share of insurance liabilities (as presented on the face of the statement of financial position)
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
– Claims outstanding
– Provision for unearned premiums
Total reinsurers’ share of insurance liabilities after funds-withheld quota share
Analysed as:
Claims outstanding
Provision for unearned premiums
Total reinsurers’ share of insurance liabilities after funds-withheld quota share
Net
Claims outstanding
Provision for unearned premiums
Total net insurance liabilities
Amounts recoverable under funds-withheld quota share agreements recognised within trade receivables/payables:
– Claims outstanding
– Provision for unearned premiums
Total net insurance liabilities after funds-withheld quota share
Analysed as:
Claims outstanding
Provision for unearned premiums
Total net insurance liabilities after funds-withheld quota share
2023
£m
2022
£m
285.2
83.1
368.3
2023
£m
62.1
6.7
68.8
123.1
44.6
236.5
185.2
51.3
236.5
2023
£m
223.1
76.4
299.5
(123.1)
(44.6)
131.8
100.0
31.8
131.8
292.8
93.9
386.7
2022
£m
59.1
6.3
65.4
133.0
50.7
249.1
192.1
57.0
249.1
2022
£m
233.7
87.6
321.3
(133.0)
(50.7)
137.6
100.7
36.9
137.6
Saga plc Annual Report and Accounts 2023 189
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
28 Insurance contract liabilities and reinsurance assets continued
Reconciliation of movements in claims outstanding
Gross claims outstanding at 1 February
Less: reinsurance claims outstanding
Net claims outstanding at 1 February
Gross claims incurred
Less: reinsurance recoveries
Net claims incurred
Gross claims paid
Less: received from reinsurance
Net claims paid
Gross claims outstanding at 31 January
Less: reinsurance claims outstanding
Net claims outstanding at 31 January
Reconciliation of movements in the provision for net unearned premiums
Gross unearned premiums at 1 February
Less: unearned reinsurance premiums
Net unearned premiums at 1 February
Gross premiums written
Less: outward reinsurance premium
Net premiums written
Gross premiums earned
Less reinsurance premium earned
Net premiums earned
Gross unearned premiums at 31 January
Less: unearned reinsurance premiums
Net unearned premiums at 31 January
2023
£m
292.8
(192.1)
100.7
157.2
(99.1)
58.1
(164.8)
106.0
(58.8)
285.2
(185.2)
100.0
2023
£m
93.9
(57.0)
36.9
178.7
(105.6)
73.1
2022
£m
329.5
(212.3)
117.2
94.6
(63.3)
31.3
(131.3)
83.5
(47.8)
292.8
(192.1)
100.7
2022
£m
96.8
(62.3)
34.5
200.1
(118.5)
81.6
(189.5)
(203.0)
111.3
(78.2)
83.1
(51.3)
31.8
123.8
(79.2)
93.9
(57.0)
36.9
The net income of purchasing reinsurance in 2023 was £22.4m (2022: £7.7m cost).
The insurance liabilities presented here, and on the face of the Group’s statement of financial position, are based on an Ogden discount rate
of –0.25%.
a) Discounting
Claims outstanding provisions are calculated on an undiscounted basis, with the exception of PPOs made by the courts as part of a bodily
injury claim settlement. Claims outstanding provisions for PPOs are discounted at a rate of –1.5% (2022: –1.5%) representing the Group’s
view on long-term carer wage inflation, less the expected return on holding the invested financial assets associated with these claims.
The value of claims outstanding before discounting was £342.8m (2022: £330.8m) gross of reinsurance and £116.2m (2022: £109.2m)
net of reinsurance.
The period between the statement of financial position date and the estimated final payment date was calculated using Ogden life expectancy
tables, with appropriate adjustments where necessary for impaired life. The average life expectancy from PPO settlement date to the final
PPO payment was 36 years (2022: 38 years) and the rate of investment return used to determine the discounted value of claims provisions
was 2.0% (2022: 2.0%).
190 Saga plc Annual Report and Accounts 2023
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b) Analysis of claims incurred: claims development tables
The following tables detail the Group’s initial estimate of ultimate gross and net claims incurred over the past 10 years and the re-estimation
at subsequent financial period ends.
The following table analyses the gross incurred claims (before deducting reinsurance recoveries) on an accident year basis:
Financial year ended 31 January
Analysis of
claims incurred
Accident year
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
Gross
claims
out-
standing
£m
Claims
paid
£m
2014 and earlier
238.4
2015
2016
2017
2018
2019
2020
2021
2022
2023
(66.8)
231.6
(65.1)
(65.3)
(36.6)
(25.5)
12.9
(12.2)
(14.0)
(16.5)
250.0
2.2
204.2
(11.0)
(1.7)
(33.1)
(13.7)
(15.1)
(8.6)
(7.3)
(9.5)
(13.4)
(8.5)
(1.9)
(14.6)
196.9
5.4
(10.9)
(10.8)
185.4
4.5
182.4
(1.5)
9.1
(1.7)
(1.2)
(9.7)
(2.2)
(7.0)
(9.6)
(9.9)
(4.0)
(0.8)
0.2
(1.8)
(4.5)
(10.7)
n/a
n/a
182.7
189.4
160.7
169.1
168.1
111.4
156.0
166.4
(178.2)
(176.1)
(155.5)
(162.7)
(145.1)
(151.0)
(87.6)
(101.8)
(88.3)
45.6
4.5
13.3
5.2
6.4
23.0
24.3
23.8
54.2
78.1
278.4
6.8
285.2
(6.3)
175.3
142.9
(15.0)
(16.5)
136.6
80.3
14.3
19.4
166.4
141.4
15.8
Claims handling
costs
238.4
164.8
197.8
128.9
133.6
102.0
135.5
101.3
17.2
18.0
21.4
20.6
20.8
18.0
16.7
16.3
255.6
182.8
219.2
149.5
154.4
120.0
152.2
117.6
94.6
157.2
Favourable claims development over the year has resulted in a £25.0m (2022: £56.3m) reduction in the gross claims incurred in respect of
prior years.
The development of the associated loss ratios on the same basis is as follows:
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Financial year ended 31 January
Accident year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
76%
72%
70%
67%
73%
77%
63%
70%
78%
70%
61%
66%
75%
69%
76%
58%
61%
65%
65%
78%
78%
57%
58%
62%
61%
74%
80%
78%
56%
55%
62%
56%
70%
79%
82%
64%
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56%
55%
59%
56%
67%
75%
78%
58%
67%
56%
55%
59%
55%
65%
71%
75%
50%
77%
88%
Saga plc Annual Report and Accounts 2023 191
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
28 Insurance contract liabilities and reinsurance assets continued
The following table analyses the net incurred claims (after deducting reinsurance recoveries) on an accident year basis:
Financial year ended 31 January
Analysis of
claims incurred
Accident year
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
Net
claims
out-
standing
£m
Claims
paid
£m
2014 and earlier
219.8
(57.8)
(72.8)
(53.9)
(35.3)
(28.1)
(13.0)
219.1
5.3
220.9
(9.2)
3.2
94.0
(11.1)
(16.4)
(5.0)
(15.1)
(22.5)
1.5
78.8
(3.8)
(0.8)
72.3
(9.1)
(1.9)
(1.6)
(0.2)
55.9
2015
2016
2017
2018
2019
2020
2021
2022
2023
(11.1)
(7.9)
(5.8)
(3.6)
(2.7)
(0.1)
0.6
41.8
(2.3)
(1.0)
(4.6)
(0.5)
(1.7)
(2.0)
(1.4)
(4.9)
43.7
Claims handling
costs
219.8
161.3
153.4
17.2
18.0
21.5
34.1
11.5
18.8
10.5
0.7
8.9
25.1
5.7
11.2
7.0
25.3
6.0
(4.7)
(0.8)
(1.7)
(1.8)
(4.4)
(9.6)
(0.2)
(2.0)
(1.8)
78.9
51.9
6.2
237.0
179.3
174.9
45.6
29.3
9.6
30.8
18.2
31.3
58.1
The development of the associated loss ratios on the same basis is as follows:
n/a
n/a
18.9
173.0
165.3
(168.5)
(161.2)
83.9
67.6
60.4
54.9
34.9
41.9
78.9
(78.7)
(61.2)
(42.7)
(48.8)
(29.6)
(35.7)
(60.1)
4.5
4.1
5.2
6.4
17.7
6.1
5.3
6.2
18.8
93.2
6.8
100.0
Accident year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Financial year ended 31 January
75%
71%
67%
65%
69%
70%
62%
66%
71%
56%
59%
63%
66%
56%
66%
56%
58%
59%
54%
65%
71%
55%
56%
56%
53%
64%
71%
63%
54%
54%
54%
51%
62%
71%
64%
53%
54%
53%
53%
51%
60%
69%
62%
47%
55%
54%
53%
52%
50%
56%
59%
62%
44%
53%
101%
Favourable claims development over the year resulted in a £27.0m (2022: £18.4m) reduction in the net claims incurred in respect of prior years.
29 Contract liabilities
Deferred revenue (Note 3b)
Current
Non-current
2023
£m
122.2
122.2
119.6
2.6
122.2
2022
£m
114.6
114.6
113.0
1.6
114.6
Deferred revenue comprises amounts received within the Cruise and Travel segment for cruises and holidays with departure dates after
the reporting date, and insurance premiums and sales revenues received in the Insurance segment in respect of insurance policies which
commence after the reporting date, and represents the performance obligations not yet satisfied as at 31 January 2023.
192 Saga plc Annual Report and Accounts 2023
30 Loans and borrowings
Bonds
Ship loans
Revolving credit facility
Accrued interest payable
Less: deferred issue costs
2023
£m
400.0
469.2
–
5.5
874.7
(20.1)
2022
£m
400.0
515.6
–
5.9
921.5
(25.0)
854.6
896.5
Bonds, RCF and term loan
At 31 January 2023, the Group’s financing facilities consisted of a £150.0m seven-year senior unsecured bond (repayable May 2024),
a £250.0m five-year senior unsecured bond (repayable July 2026) and a £50.0m five-year RCF (expiry in May 2025). The bonds are listed
on the Irish Stock Exchange and are guaranteed by Saga Services Limited and Saga Mid Co Limited.
Interest on the 2024 corporate bond is incurred at an annual interest rate of 3.375%. Interest on the 2026 corporate bond is incurred at an
annual interest rate of 5.5%. Interest payable on the Group’s RCF, if drawn down, is incurred at a variable rate of SONIA plus a bank margin
which is linked to the Group’s leverage ratio.
During the year to 31 January 2023, the Group agreed amendments with its banks to simplify the RCF arrangement to remove certain
clauses that were introduced during the COVID-19 pandemic and reduce the aggregate facility cost. The amendments to the RCF include:
• removal of the £40.0m minimum liquidity requirement;
• removal of the condition that the facility (if drawn) is repaid on 1 March 2024, if the existing 2024 bond has not been redeemed prior to
this date; and
• reduction of the RCF commitment from £100.0m to £50.0m.
In addition, dividends remain restricted while leverage (excluding Cruise) is above 3.0x.
Subsequent to the above, the Group had further discussions with its lending banks behind the RCF and agreed the following amendments to
the facility:
• The introduction of a restriction whereby no utilisation of the facility is permitted prior to repayment of the 2024 bond if leverage exceeds
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5.5x, or liquidity is below £170m.
• During 2023 and 2024, should the RCF be drawn, leverage covenant testing will be quarterly.
• Repayment of the 2024 bond, ahead of maturity, is restricted while leverage remains above 3.75x.
• Amendments to the leverage and interest cover covenants attached to the facility, as follows:
31 January 2023
30 April 2023
31 July 2023
31 October 2023
31 January 2024
30 April 2024
31 July 2024
31 October 2024
31 January 2025
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Leverage
(excl. Ocean Cruise)
Interest
cover
4.75x
6.75x
6.75x
6.75x
5.5x
5.5x
5.5x
5.5x
4.75x
2.5x
n/a
2.5x
n/a
2.75x
n/a
3.0x
n/a
3.0x
At 31 January 2023, the Group’s £50.0m RCF remained undrawn. Accrued interest payable on the Group’s bonds at 31 January 2023 is
£2.2m (2022: £2.8m).
During the year ended 31 January 2022, the Group repaid its £200.0m five-year term loan (repayable May 2023) in full. Interest was incurred
at a variable rate of London Inter-Bank Offered Rate (LIBOR, since replaced by SONIA) plus a bank margin which was linked to the Group’s
leverage ratio.
Saga plc Annual Report and Accounts 2023 193
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
30 Loans and borrowings continued
Ocean cruise ship loans
In June 2019, the Group drew down £245.0m of financing for its ocean cruise ship, Spirit of Discovery. The financing represents a 12-year
fixed-rate sterling loan, secured against the Spirit of Discovery cruise ship asset, and backed by an export credit guarantee. The initial loan was
repayable in 24 broadly equal instalments, with the first payment of £10.2m paid in December 2019.
The Board announced on 22 June 2020 that it had secured a debt holiday and covenant waiver for the Group’s ship facilities. The Group’s
lenders agreed to a deferral of £32.1m in principal payments under the ship facilities that were due up to 31 March 2021. These deferred
amounts were to be paid between June 2021 and December 2024 for Spirit of Discovery and between September 2021 and March 2025
for Spirit of Adventure, and interest remained payable.
On 29 September 2020, the Group drew down £280.8m of financing for its ocean cruise ship, Spirit of Adventure. The financing, secured
against the Spirit of Adventure cruise ship asset, represents a 12-year fixed-rate sterling loan, backed by an export credit guarantee. The loan
is repayable in 24 broadly equal instalments, with the first payment originally due six months after delivery in March 2021, but initially deferred
to September 2021 as a result of the debt holiday described above.
In March 2021, the Group reached agreement of a one-year extension to the debt deferral on its ocean cruise ship facilities. As part of an
industry-wide package of measures to support the cruise industry, an extension of the existing debt deferral was agreed to 31 March 2022.
The key terms of this deferral were:
• all principal payments to 31 March 2022 (£51.8m) deferred and repaid over five years;
• all financial covenants until 31 March 2022 waived; and
• dividends remain restricted while the deferred principal is outstanding.
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
debt facilities (Note 41). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
Interest on the Spirit of Discovery ship loan is incurred at an effective annual interest rate of 4.31% (including arrangement and commitment
fees). Interest on the Spirit of Adventure ship loan is incurred at an effective annual interest rate of 3.30% (including arrangement and
commitment fees). Interest payable on the Group’s ocean cruise ship debt deferrals is incurred at a variable rate of SONIA plus a bank margin.
Accrued interest payable on the Group’s ocean cruise ship loans at 31 January 2023 is £3.3m (2022: £3.1m).
Also since the year end, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
commencing on 1 January 2024, under which the Company may draw down up to £50m with 30 days’ notice to support liquidity needs and
specifically the repayment of £150m bonds maturing in May 2024. The facility is provided on an arm’s length basis and is guaranteed by Saga plc,
Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of the
loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is subject
to a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the facility
is payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024 and
31 December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
Total debt and finance costs
At 31 January 2023, debt issue costs were £20.1m (2022: £25.0m). The movement in the year represents expense amortisation for
the period.
During the year, the Group charged £41.0m (2022: £37.4m) to the income statement in respect of fees and interest associated with the
bonds, RCF, term loan and ship loans. In addition, finance costs recognised in the income statement include £1.2m (2022: £0.7m) relating to
interest and finance charges on lease liabilities and net fair value losses on derivatives are £nil (2022: £2.7m). The Group has complied with the
financial covenants of its borrowing facilities during the current year and prior year.
194 Saga plc Annual Report and Accounts 2023
31 Provisions
At 1 February 2021
Utilised during the year
Released unutilised during the year
Charge for the year
At 31 January 2022
Utilised during the year
Released unutilised during the year
Charge for the year
At 31 January 2023
Current
Non-current
At 31 January 2023
Current
Non-current
At 31 January 2022
PMI
£m
4.9
(4.8)
–
0.7
0.8
(0.8)
–
–
–
PMI
£m
–
–
–
PMI
£m
0.8
–
0.8
Other
£m
6.8
(8.5)
(0.4)
8.0
5.9
(4.2)
(0.6)
4.1
5.2
Other
£m
4.4
0.8
5.2
Other
£m
5.6
0.3
5.9
Total
£m
11.7
(13.3)
(0.4)
8.7
6.7
(5.0)
(0.6)
4.1
5.2
Total
£m
4.4
0.8
5.2
Total
£m
6.4
0.3
6.7
The COVID-19 pandemic led to a high level of disruption to private medical inpatient appointments over 2020 and 2021, with appointments
and operations initially being delayed and rescheduled. In the year ended 31 January 2021, delayed appointments had a favourable impact on
the underwriting performance of PMI, resulting in a profit share due from the underwriter. Due to the Group’s public commitment to not profit
from the impacts of COVID-19, a provision to offset this profit share was made.
Other provisions primarily comprise:
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• provisions for the return of insurance commission in respect of policies cancelled mid-term after the reporting date or as a result of being
cancelled during the statutory cooling-off period after the reporting date;
• credit hire and repair claims handling and litigation costs on income booked as at the reporting date;
• fleet insurance at the estimated cost of settling all outstanding incidents at the reporting date;
• customer remediation relating to areas where there is likely to be a requirement to remedy various errors that have had an adverse
impact on customer outcomes; and
• an employer liability provision relating to various Group-related, self-funded insurance arrangements.
All provisions are expected to be fully utilised over the next 12 months with the exception of the fleet insurance, credit hire and repair claims
handling and litigation costs, and employer liability provisions. The timing of fleet insurance costs is uncertain and will depend upon the nature
of each incident. The costs of debt recovery on credit hire and repair claims handling and litigation costs are uncertain and will depend upon
the nature and timing of each claim. The settlement cash outflows from the employer liability provision depend on the timing of the settlement
of claims.
These items are reviewed and updated annually.
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Saga plc Annual Report and Accounts 2023 195
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
32 Reconciliation of liabilities arising from financing activities
The following tables analyse the cash and non-cash movements for liabilities arising from financing activities:
Lease liabilities (Note 37)
Ship loans (Note 30)
Bonds (Note 30)
Deferred issue costs (Note 30)
Lease liabilities (Note 37)
Bank loans (Note 30)
Ship loans (Note 30)
Bonds (Note 30)
Deferred issue costs (Note 30)
Non-cash changes
Financing
cash flows
£m
New leases
(Note 18)
£m
(7.8)
(46.4)
–
–
25.6
–
–
–
Other
£m
(20.5)
–
–
4.9
Non-cash changes
Financing
cash flows
£m
New leases
(Note 18)
£m
(3.6)
(70.0)
–
150.0
(6.8)
35.8
–
–
–
–
Other
£m
(1.3)
–
–
–
8.6
2022
£m
35.3
515.6
400.0
(25.0)
2021
£m
4.4
70.0
515.6
250.0
(26.8)
2023
£m
32.6
469.2
400.0
(20.1)
2022
£m
35.3
–
515.6
400.0
(25.0)
Included within ‘Other’ for lease liabilities are amounts relating to foreign exchange movements of £2.0m credit (2022: £0.9m debit), lease
modifications of £nil (2022: £0.4m debit) and lease re-assessments of £22.5m debit (2022: £nil) (Note 18).
Included within ‘Other’ for deferred issue costs is the amortisation of costs of £4.9m (2022: £8.6m).
In the prior year, cash flows relating to bonds comprise proceeds from borrowings of £250.0m, relating to a new five-year senior unsecured
bond, less repayment of borrowings of £100.0m, relating to the existing seven-year senior unsecured 2024 bond.
Accrued interest payable on the loans and bonds above is disclosed in Note 30. Interest paid during the year is included within operating
activities in the consolidated statement of cash flows.
33 Called up share capital
Allotted, called up and fully paid
At 1 February 2021
Issue of shares – 12 November 2021
At 31 January 2022 and 31 January 2023
Ordinary shares
Nominal
value
£
0.15
0.15
0.15
Number
140,102,227
235,044
140,337,271
Value
£m
21.0
0.1
21.1
On 12 November 2021, Saga plc issued 235,044 new ordinary shares of 15p each, with a value of £0.1m, for transfer into an Employee Benefit
Trust to satisfy employee incentive arrangements.
34 Reserves
Share-based payment reserve
Prior to vesting, the share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their remuneration. More detail is provided in Note 36.
Fair value reserve
The fair value reserve comprises the unrealised gains or losses of FVOCI assets pending subsequent recognition in profit or loss once the
investment is derecognised.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow
hedges pending subsequent recognition in: (a) profit or loss as the hedged cash flows or items affect profit or loss; or (b) the statement of
financial position as the hedged cash flows or items affect property, plant and equipment.
196 Saga plc Annual Report and Accounts 2023
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35 Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Group’s capital management, capital comprises total equity of £369.5m (2022: £652.9m) as shown on the
consolidated statement of financial position. The Group operates in a number of regulated markets and includes subsidiaries which are
required to comply with specific requirements in respect of capital or other resources.
The Group’s financial services businesses are regulated primarily by the Financial Services Commission in Gibraltar and by the FCA in the UK;
and the cash requirements of its River Cruise and Travel businesses are regulated by the CAA in the UK. It is the Group’s policy to comply with
the requirements of these regulators in respect of capital adequacy or other similar tests at all times.
The Group’s regulated Underwriting business is based in Gibraltar and regulated by the FSC. The Underwriting business is required to ensure
that it has a sufficient level of capitalisation in accordance with Solvency II.
The Group and its subsidiaries have complied with externally-imposed capital requirements during the year. (The amounts set out in the
following three paragraphs are provisional and unaudited).
The Group monitored its ability to comply with the requirements of Solvency II throughout the year to 31 January 2023, having previously
received approval from the FSC for the Undertaking of Specific Parameters when applying the standard formula to measure capital
requirements for this business under Solvency II rules. Under Solvency II, AICL remained well capitalised, and at 31 January 2023 available
capital was £98.4m against a Solvency Capital Requirement of £45.6m, giving 216% coverage. As at 31 January 2022, available capital was
£115.1m against a Solvency Capital Requirement of £54.1m, giving 213% coverage.
The Group’s regulated Insurance Broking business is based in the UK and regulated by the FCA. Due to the nature of the business, the capital
requirements are significantly less than for the Underwriting business, but the Group is required to comply with the Adequate Resources
requirements of Threshold Condition 2.4 of the FCA Handbook. The Group undertakes a rigorous assessment against the requirements of
this Condition on an annual basis and, as a consequence, calculates and holds an appropriate amount of capital in respect of the Insurance
Broking business. The Minimum Regulatory Capital requirement of this business at 31 January 2023 was £5.7m (2022: £11.7m).
The regulated River Cruise and Travel businesses are required to comply with a main test based on liquidity. The CAA liquidity test is a
requirement to hold at least 70% of advanced customer receipts in cash on the last day of each month. The Group monitors its compliance
with this test on a monthly basis including forward-looking compliance using budgets and forecasts. As at 31 January 2023 and 31 January
2022, the businesses had sufficient coverage against this covenant.
36 Share-based payments
The Group has granted a number of different equity-based awards to employees and customers which it has determined to be
share-based payments:
a. Share options and Free Shares offer granted at the time of the IPO
• On 29 May 2014, nil cost options over 13,132,410 shares were granted to certain Directors and employees with no exercise price and
no service or performance vesting conditions. There are no cash settlement alternatives.
• Eligible customers and employees who acquired their shares under the Customer or Employee Offers in the Prospectus received one
bonus share for every 20 shares they acquired and held continuously for one year to 29 May 2015. As these were bonus shares, there
was no exercise price and no cash settlement alternative.
b. Saga Transformation Plan (STP)
• In July 2022, the Board and shareholders approved the issue of an additional new award called the STP. The STP has a five-year vesting
period and participants receive a 12.5% share in shareholder value (share price plus dividends) created above a £6 per share hurdle over
a five-year performance period commencing from the grant date, subject to continuing employment. For Directors and senior leaders,
the STP will be equity-settled. For other employees, the STP will be settled in cash. There is a cap of £88.0m on the value of awards that
may vest, and the awards have a range of grant dates based on the tranche that each participant falls into.
• On 5 July 2022, nil cost options were issued under the STP to certain Directors and other senior employees which vest and become
exercisable on the fifth anniversary of the grant date, subject to continuing employment.
c. Restricted Share Plan (RSP)
• The RSP is a discretionary executive share plan under which the Board may grant options over shares in Saga plc.
• During the year, nil cost options over 2,548,775 shares were issued under the RSP to certain Directors and other senior employees
which vest and become exercisable on the third anniversary of the grant date, subject to continuing employment.
Saga plc Annual Report and Accounts 2023 197
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
36 Share-based payments continued
d. Long-term Incentive Plan (LTIP)
• The LTIP is a legacy discretionary executive share plan under which the Board may, within certain limits and subject to applicable
performance conditions, grant options over shares in Saga plc.
• Up to 31 January 2017, these options are 50% linked to a non-market vesting condition, earnings per share, and 50% linked to a market
vesting condition, total shareholder return (TSR).
• From 1 February 2017 to 31 January 2018, these options were 60% linked to non-market vesting conditions (30% linked to basic earnings
per share and 30% linked to organic earnings per share) and 40% linked to a market vesting condition, TSR.
• From 1 February 2018, these options were 60% linked to non-market vesting conditions (30% linked to organic earnings per share and
30% linked to return on capital employed (ROCE)) and 40% linked to a market vesting condition, TSR.
• From 1 February 2019, these options are 75% linked to non-market vesting conditions (50% linked to operational and strategic measures
and 25% linked to ROCE) and 25% linked to a market vesting condition, TSR.
e. Deferred Bonus Plan (DBP)
• On 28 April 2022, nil cost options over 345,353 shares were issued under the DBP to the Executive Directors reflecting their deferred
bonus in respect of 2021/22, which vest and become exercisable on the third anniversary of the grant date. Under the DBP scheme,
executives receive two-thirds of the bonus award in cash and one-third in the form of rights to shares of the Company.
f. Employee Free Shares
• There were no shares awarded during the year. Employee Free Shares are allocated at nil cost and the shares become beneficially owned
over a three-year period from allocation, subject to continuing service.
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient
on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date
of vesting to the date of their expiry. With the exception of share options granted at the time of the IPO, if an employee ceases to be employed
by the Group, the option rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
The table below summarises the movements in the number of share options outstanding for the Group and their weighted average
exercise price:
IPO options
RSP
LTIP
DBP
STP
Employee
Free
Shares
Total
At 1 February 2022
8,437
1,362,338
618,203
365,502
Granted
Forfeited
Exercised
–
–
2,548,775
–
345,353
(59,184)
(545,236)
(1,117)
–
(9,402)
–
–
At 31 January 2023
7,320
3,851,929
63,565
710,855
–
–
–
–
–
560,566 2,915,046
– 2,894,128
(28,065)
(632,485)
(40,453)
(50,972)
492,048
5,125,717
Exercise price
£nil
£nil
£nil
£nil
£nil
£nil
£nil
Exercisable at 31 January 2023
7,320
–
63,565
33,094
–
114,464
218,443
Average remaining contractual life
–
1.9 years
–
1.5 years
4.4 years
1.0 years
1.7 years
Average fair value at grant
£27.75
£2.11
£9.84
£3.26
n/a
£5.80
£2.75
The average fair values at grant date have been restated to reflect the impact of the share consolidation on 13 October 2020.
The weighted average share price at the date of exercise for share options exercised during the year ended 31 January 2023 was £1.48
(2022: £3.85).
The following information is relevant in the determination of the fair value of options granted during the year under the equity-settled and
cash-settled share-based remuneration schemes operated by the Group.
Model used
Expected life of share option
Weighted average share price
198 Saga plc Annual Report and Accounts 2023
RSP
DBP
Black-Scholes Black-Scholes
3 years
£1.55
3 years
£2.43
As at 31 January 2023, the Group did not hold any liability in relation to cash-settled share-based remuneration that had vested by the end
of the year.
As only limited historical data for the Group’s share price is available, the Group estimated the Company’s share price volatility as an average
of the volatilities of its TSR comparator group over a historical period commensurate with the expected life of the award immediately prior
to the date of the grant for awards under the RSP, DBP and Employee Free Share scheme.
For awards under the new STP scheme, approved in July 2022, a volatility assumption of 31% has been employed, calculated based on volatility
in Saga plc’s historical share price in the five years to 31 December 2019. This time period was selected to strip out the impact of the COVID-19
pandemic, which has had a significant impact on Saga’s business since the beginning of 2020. The impacts on the share price of profit warnings
in December 2019 and April 2019 have also been excluded from the calculation.
The total amount charged to the income statement in the year ended 31 January 2023 is £3.9m (2022: £3.4m). This has been charged to
administrative and selling expenses.
The Group did not enter into any share-based payment transactions with parties other than employees during the current period.
37 Commitments and contingencies
a) Lease commitments
The Group leases various river cruise ships, offices, warehouses, equipment and vehicles. The contract lengths of the leases vary considerably
and may include extension or termination options. Where it is reasonably certain that an extension option will be triggered in a contract, lease
payments to be made in respect of the option are included in the measurement of the lease liability. Future minimum lease payments under
lease contracts, together with the present values of the net minimum lease payments, are as follows:
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Within one year
Between one and five years
After five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
2023
£m
11.5
15.4
11.1
38.0
(5.4)
32.6
2022
£m
5.4
19.5
18.0
42.9
(7.6)
35.3
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As at 31 January 2023, the value of lease liabilities contracted for, but not provided for, in the financial statements in respect of right-of-use
assets amounted to £nil (2022: £42.5m). At 31 January 2022, these lease commitments related to the river cruise vessel, Spirit of the Danube
which has been recognised within right-of-use assets (Note 18) during the year to 31 January 2023.
During the year ended 31 January 2023, management reviewed the allocation of costs under its river cruise charter agreements. As a
consequence, a proportion of costs previously included as lease costs for Spirit of the Rhine were reassessed as costs of ongoing service
provision. Accordingly, the right-of-use asset and liability relating to this ship have been adjusted in the current year, reflecting a prospective
change in estimate as required under IAS 8. For Spirit of the Danube, a similar treatment has been applied. Please refer to Note 18 for
further detail.
b) Commitments
As at 31 January 2023, the capital amount contracted for, but not provided for, in the financial statements in respect of property, plant and
equipment, amounted to £nil (2022: £nil).
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c) Contingent liabilities
The CAA and ABTA regulate the Group’s River Cruise and Travel businesses. ABTA requires the Group to put in place bonds to provide
customer protection. At 31 January 2023, the Group had £28.4m (2022: £19.4m) of Ocean Cruise and Travel related bonds in place.
Saga plc Annual Report and Accounts 2023 199
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
38 Assets held for sale
At the end of the year ended 31 January 2021, the Group made the decision to initiate an active programme to locate buyers for a number of
its freehold properties. At the point of reclassification to held for sale, the carrying values of £16.9m were considered to be equal to, or below,
fair value less costs to sell and hence no revaluation at the point of reclassification was required.
During the year ended 31 January 2022, the Group disposed of a property reclassified from property, plant and equipment to held for sale in
the period. Cash consideration received (net of transaction costs) was £10.2m and the carrying value of the property at the date of disposal
was £3.0m. Profit arising on disposal was £7.2m.
In addition, during the year ended 31 January 2022, the Group declassified one of the properties from held for sale back to property, plant and
equipment, since it was no longer being actively marketed for disposal. The carrying value of this property as at 31 January 2021 was £3.0m.
Management conducted impairment reviews of the freehold property assets held for sale as at 31 January 2022 and 31 January 2023.
In relation to these freehold properties, value-in-use continued to be negligible and so the Group obtained updated market valuations to
determine the fair value of each building. The outcome of these impairment reviews concluded that net impairment charges totalling £1.2m
(2022: £1.0m) should be recognised against the Group’s property assets held for sale as at 31 January 2023 and 31 January 2022
respectively.
At the end of the year ended 31 January 2023, the Group made the decision to initiate an active programme to locate buyers for a further two
of its freehold properties and one of its long leasehold properties. The Group also reclassified to held for sale the related fixtures and fittings
associated with one of these freehold properties. At the point of reclassification to held for sale, the carrying values of £15.9m for the
properties and £3.6m for the related fixtures and fittings, total £19.5m, were considered to be equal to, or below, fair value less costs to sell
and hence no revaluation at the point of reclassification was required. These properties are being actively marketed and the disposals are
expected to be completed within 12 months of the end of the financial year.
As at 31 January 2023, the carrying values of the properties classified as held for sale, totalling £31.2m, are representative of either each
property’s fair value or historic cost less accumulated depreciation and any impairment charges to date, whichever is lower.
200 Saga plc Annual Report and Accounts 2023
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39 Subsidiaries
The entities listed below are subsidiaries of the Company or Group. All of the undertakings are wholly owned and included within the
consolidated financial statements. The registered office address for all entities registered in England is Enbrook Park, Sandgate, Folkestone,
Kent CT20 3SE, United Kingdom. The registered office address of Acromas Insurance Company Limited is 57/63 Line Wall Road, Gibraltar.
The registered office address of Saga Cruises GmbH is Industriegebiet Süd, 26871, Papenburg, Niedersachsen, Germany. The registered
office address of Saffron Maritime Limited is Aspire Corporate Services Limited, PO Box 191, Elizabeth House, Ruettes Brayes, St Peter Port,
Guernsey, GY1 4HW.
Company name
Saga Personal Finance Limited
Saga Services Limited
Acromas Insurance Company Limited
CHMC Limited9
PEC Services Limited9
ST&H Limited
Titan Transport (UK) Limited
Saga Travel Group (UK) Limited (formerly Titan Travel (UK) Limited)
Saga Travel Group Limited (formerly Titan Travel Group Limited)
Titan Transport Limited
Saga Cruises Limited
Saga Cruises IV Limited
Saga Cruises V Limited
Saga Cruises VI Limited
Saga Cruises GmbH
Saga Crewing Services Limited9
Saffron Maritime Limited
CustomerKNECT Limited9 (formerly MetroMail Limited)
Saga Mid Co Limited
Saga Publishing Limited9
Saga Membership Limited9
The Big Window Consulting Limited9
CHMC Holdings Limited
ST&H Group Limited
Saga Leisure Limited
Saga Group Limited
Confident Services Limited
Saga Healthcare Limited
Saga Radio (North West) Limited
Country of registration
Nature of business
England
England
Gibraltar
England
England
England
England
England
England
England
England
England
England
England
Germany
England
Guernsey
England
England
England
England
England
England
England
England
England
England
England
England
Delivery of regulated investment products
Regulated Insurance broking
Insurance underwriting
Motor accident management
Repairer of automotive vehicles
Tour operating
Dormant company
Tour operating
Tour operating
Tour operating
Cruising
Cruising
Cruising
Cruising
Cruising
Cruising
Cruising
Mailing house
Debt service provider
Publishing
Customer loyalty scheme
Research and insight analysis
Dormant holding company
Holding company
Dormant holding company
Provision of administrative function
for central costs
Dormant company
Dormant company
Dormant company
9 These subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year ended 31 January 2023. As required,
Saga plc, the ultimate parent undertaking and controlling party of the Group, guarantees all outstanding liabilities to which these subsidiary companies are subject at
the end of the financial year, until they are satisfied in full. This is in accordance with Section 479C of the Companies Act 2006. The guarantee is enforceable against
Saga plc as the ultimate parent undertaking, by any person to whom the subsidiary companies listed above are liable in respect of those liabilities.
Saga plc Annual Report and Accounts 2023 201
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
40 Related party transactions
There were no related party transactions in the year ended 31 January 2023.
A working capital facility of £10.0m, agreed with Sir Roger De Haan, the Non-Executive Chairman of Saga plc, to fund the short-term liquidity
needs of the Cruise business was cancelled in July 2021.
As set out in Note 30, on 3 April 2023, the Company entered into a forward starting loan facility agreement with Sir Roger De Haan,
commencing on 1 January 2024, under which the Company may draw down up to £50m with 30 days’ notice to support liquidity needs and
specifically the repayment of £150m bonds maturing in May 2024. The facility is provided on an arm’s length basis and is guaranteed by Saga
plc, Saga Midco and Saga Services Limited. Interest will accrue on the facility at the rate of 10% and is payable on the last day of the period of
the loan. The facility matures on 30 June 2025, at which point any outstanding amounts, including interest, must be repaid. The facility is
subject to a 2% arrangement fee, payable on entering into the arrangement. A draw down fee of 2% on any amount drawn down under the
facility is payable on the drawing date; and milestone fees of 2% on any uncancelled amount of the facility become payable on 31 March 2024
and 31 December 2024 respectively. The facility would automatically terminate on the completed sale of AICL.
41 Events after the reporting period
After the year end, the Group concluded discussions with its Cruise lenders in respect of the covenant restrictions attaching to its two ship
debt facilities (Note 30). Lenders have agreed to a waiver of the EBITDA to debt repayment covenant ratio for the 31 July 2023 testing date.
Also since 31 January, the Company has agreed a £50m loan facility with Sir Roger De Haan, to commence on 1 January 2024, details of which
are set out in Note 40 above.
202 Saga plc Annual Report and Accounts 2023
Company financial statements of Saga plc
Balance sheet
Fixed assets
Investment in subsidiaries
Current assets
Debtors – amounts falling due after more than one year
Debtors – amounts falling due within one year
Cash and short-term deposits
Creditors – amounts falling due within one year
Net current assets
Note
2023
£m
2022
£m
2
3
3
4
167.3
552.3
521.3
3.3
–
501.8
3.0
38.0
524.6
542.8
(2.9)
521.7
(3.9)
538.9
Creditors – amounts falling due after more than one year
5
(397.2)
(396.2)
Net assets
Capital and reserves
Called up share capital
Share premium account
Retained (deficit)/earnings
Share-based payment reserve
Total shareholders’ funds
291.8
695.0
6
21.1
648.3
(386.6)
9.0
291.8
21.1
648.3
18.1
7.5
695.0
The Company has not presented its own profit and loss account as permitted by section 408(3) of the Companies Act 2006 (the Act).
The loss included in the financial statements of the Company, determined in accordance with the Act, was £407.1m (2022: £21.9m).
Company number: 08804263
The Notes on pages 205-208 form an integral part of these financial statements.
Signed for and on behalf of the Board on 17 April 2023 by
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E A Sutherland
Group Chief Executive Officer
J B Quin
Group Chief Financial Officer
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Saga plc Annual Report and Accounts 2023 203
FINANCIAL STATEMENTS
Company financial statements of Saga plc
Statement of changes in equity
At 1 February 2021
Loss for the financial year
Issue of share capital (Note 6)
Share-based payment charge
Transfer upon vesting of share options
At 31 January 2022
Loss for the financial year
Share-based payment charge
Transfer upon vesting of share options
At 31 January 2023
Called up
share
capital
£m
Share
premium
account
£m
Retained
earnings/
(deficit)
£m
Share-based
payment
reserve
£m
21.0
648.3
–
0.1
–
–
–
–
–
–
21.1
648.3
–
–
–
–
–
–
38.2
(21.9)
–
–
1.8
18.1
(407.1)
–
2.4
21.1
648.3
(386.6)
5.9
–
–
3.4
(1.8)
7.5
–
3.9
(2.4)
9.0
Total
equity
£m
713.4
(21.9)
0.1
3.4
–
695.0
(407.1)
3.9
–
291.8
The Notes on pages 205-208 form an integral part of these financial statements.
204 Saga plc Annual Report and Accounts 2023
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Notes to the Company financial statements
1.1 Accounting policies
a) Accounting convention
These financial statements were prepared in accordance with
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’
(FRS 101).
In preparing these financial statements, the Company applies
the recognition, measurement and disclosure requirements of
UK-adopted international accounting standards, but makes
amendments where necessary in order to comply with Companies
Act 2006 (the Act) and has set out below where advantage of the
FRS 101 disclosure exemptions has been taken.
The financial statements are prepared under the historical cost
convention, as modified by derivative financial assets and financial
liabilities measured at fair value through profit or loss, and in
accordance with the Act, and are prepared on a going concern basis
(please refer to Note 2.1 of the Saga plc consolidated accounts on
pages 143-144 for an assessment of the going concern basis for the
Group and the Company).
The Company’s financial statements are presented in sterling
and all values are rounded to the nearest hundred thousand (£m)
except when otherwise indicated.
The accounting policies which follow set out those policies which
apply in preparing the financial statements for the year ended
31 January 2023.
The Company has taken advantage of the following disclosure
exemptions under FRS 101:
• The requirements of International Financial Reporting Standard
(IFRS) 7 ‘Financial Instruments: Disclosures’.
• The requirement in paragraph 38 of International Accounting
Standard (IAS) 1 ‘Presentation of Financial Statements’ to present
comparative information in respect of paragraph 79(a)(iv) of IAS 1.
• The requirements of paragraphs 10(d), 10(f), 16, 38A,
38B-D, 40A-D, 111 and 134-136 of IAS 1 ‘Presentation of
Financial Statements’.
• The requirements of IAS 7 ‘Statement of Cash Flows’.
• The requirements of paragraphs 30 and 31 of IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates and Errors’.
• The requirements of paragraphs 17 and 18A of IAS 24 ‘Related
Party Disclosures’.
• The requirements in IAS 24 ‘Related Party Disclosures’ to disclose
related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member.
• The requirements of paragraphs 45(b) and 46-52 of IFRS 2
‘Share-based Payment’.
b) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less a
provision for impairment and are reviewed for impairment when
events or changes in circumstances indicate the carrying value
may not be recoverable.
c) Debtors
Trade and other debtors are initially recognised at fair value and,
where the time value of money is material, subsequently measured
at amortised cost using the effective interest rate (EIR) method.
Provision for impairment is made using the simplified approach set
out in IFRS 9, whereby no credit loss allowance is recognised on initial
recognition, and then at each subsequent reporting date the loss
allowance will be the present value of the expected cash flow shortfalls
over the remaining life of the debtors (i.e. lifetime expected credit
losses (ECLs)). Balances are written off when the probability of
recovery is assessed as being remote.
Amounts due from Group undertakings are classified as debtors.
They have no fixed date of payment and are payable on demand.
The amounts due from Group undertakings are disclosed at
amortised cost.
d) Deferred tax
Deferred tax is provided on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that
it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses, can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Unrecognised deferred tax assets
are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date. Deferred
tax is charged or credited in the income statement, except when it
relates to items charged or credited in other comprehensive income
(OCI), in which case the deferred tax is dealt with in OCI.
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.
e) Share-based payments
The Company provides benefits to employees (including Directors)
of Saga plc and its subsidiary undertakings, in the form of share-based
payment transactions, whereby employees render services as
consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is measured by reference to
the fair value on the grant date and is recognised as an expense over
the relevant vesting period, ending on the date on which the employee
becomes fully entitled to the award.
Fair values of share-based payment transactions are calculated
using Black-Scholes and Monte Carlo modelling techniques.
In valuing equity-settled transactions, assessment is made
of any vesting conditions to categorise these into market
performance conditions, non-market performance conditions
and service conditions.
Saga plc Annual Report and Accounts 2023 205
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
1.1 Accounting policies continued
Where the equity-settled transactions have market performance
conditions (that is, performance which is directly or indirectly linked
to the share price), the fair value of the award is assessed at the time
of grant and is not changed, regardless of the actual level of vesting
achieved, except where the employee ceases to be employed prior
to the vesting date.
For service conditions and non-market performance conditions,
the fair value of the award is assessed at the time of grant and is
reassessed at each reporting date to reflect updated expectations
for the level of vesting. No expense is recognised for awards that
ultimately do not vest.
At each reporting date prior to vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has
expired and, in the case of non-market conditions, the best estimate
of the number of equity instruments that will ultimately vest or, in the
case of instruments subject to market conditions, the fair value on
grant adjusted only for leavers. The movement in the cumulative
expense since the previous reporting date is recognised in the
income statement, with the corresponding increase in share-based
payments reserve.
Upon vesting of an equity instrument, the cumulative cost in the
share-based payments reserve is reclassified to reserves.
f) Financial instruments
i) Financial assets
On initial recognition, a financial asset is classified as either amortised
cost, fair value through other comprehensive income (FVOCI) or fair
value through profit and loss (FVTPL). The classification of financial
assets is based on the business model in which a financial asset is
managed, and its contractual cash flow characteristics.
The Company measures all financial assets at fair value at each
reporting date, other than those instruments measured at
amortised cost.
The Company’s financial assets at amortised cost include amounts
due from Group undertakings. The Company does not hold any
financial assets classified as FVOCI or FVTPL.
Financial assets at amortised cost
Initial recognition and measurement
A financial asset is classified at amortised cost 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 to hold assets
to collect contractual cash flows.
• 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 EIR method. The amortised cost is reduced by impairment losses
(see (ii) below). Impairment losses are recognised in profit or loss as
they are incurred. Any gain or loss on derecognition is recognised
in profit or loss immediately.
Derecognition
A financial asset is derecognised when the rights to receive cash
flows from the asset have expired or when the Company has
transferred substantially all the risks and rewards relating to
the asset to a third party.
206 Saga plc Annual Report and Accounts 2023
ii) Impairment of financial assets
The ECL impairment model applies to financial assets measured
at amortised cost and debt investments at FVOCI.
The Company measures loss allowances at an amount equal to
12-month ECLs, except for trade receivables and contract assets
that result from transactions within the scope of IFRS 15.
When determining whether the credit risk of a financial asset has
increased significantly since initial recognition and when estimating
ECLs, the Company 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 Company’s historical experience and informed
credit assessment and including forward-looking information.
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. Loss
allowances for ECLs on financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets, with a
corresponding charge to the income statement.
iii) Financial liabilities
Initial recognition and measurement
All financial liabilities are classified as financial liabilities at amortised
cost on 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 Company’s financial liabilities comprise loans and borrowings.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings and
other payables are subsequently measured at amortised cost using
the EIR method. 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.
g) Audit remuneration
Amounts receivable by the Company’s auditor and its associates
in respect of services to the Company and its associates, other than
the audit of the Company’s financial statements, have not been
disclosed as the information is required instead to be disclosed on
a consolidated basis in the consolidated financial statements.
1.2 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires the Company to select accounting policies and make estimates and assumptions that affect
items reported in the primary Company financial statements and Notes to the Company financial statements.
Significant estimates
All estimates are based on management’s knowledge of current facts and circumstances, assumptions based on that knowledge and
predictions of future events and actions. Actual results may therefore differ from those estimates.
The table below sets out those items the Company considers susceptible to changes in critical estimates and assumptions together with the
relevant accounting policy.
Acc. policy
Items involving estimation
Sources of estimation uncertainty
1.1b
Investment in subsidiaries
impairment testing
The Company determines whether investment in subsidiaries needs to be impaired when indicators
of impairment exist. This requires an estimation of the value-in-use of the subsidiaries owned by the
Company. The value-in-use calculation requires the Company to estimate the future cash flows
expected to arise from the subsidiaries, discounted at a suitably risk-adjusted rate in order to
calculate present value.
Sensitivity analysis has been undertaken to determine the effect of changing the discount rate,
the terminal value and EBITDA multiple on the present value calculation, which is shown in
Note 2 below.
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2 Investment in subsidiaries
Cost
At 1 February 2021
At 31 January 2022 and 31 January 2023
Amounts provided for
At 1 February 2021 and 31 January 2022
Amounts provided in the year
At 31 January 2022 and 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
£m
4,132.7
4,132.7
3,580.4
385.0
3,965.4
167.3
552.3
See Note 39 to the consolidated financial statements for a list of the Company’s investments.
The net assets of the Company were in excess of its market capitalisation at 31 January 2023, thus constituting an indicator of impairment.
An impairment assessment was therefore performed in which the recoverable amount of the investment was compared to its carrying value.
The recoverable amount of the Company’s investment in subsidiaries has been determined based on a sum-of-the-parts valuation, by deriving
a value-in-use for each of the Group’s businesses, using discounted cash flow projections from the Group’s Board-approved five-year plan to
2027/28 for certain parts of the business, and EBITDA multiples to estimate the present value of future dividend streams for other subsidiaries.
For the discounted cash flow projections, a terminal value has been calculated using the Gordon Growth Model based on the fifth year of
those projections and an annual growth rate of 2.0% (2022: 2.0%) as the expected long-term average nominal growth rate of the UK
economy. The cash flows have then been discounted to present value using a suitably risk-adjusted nominal discount rate relevant to each of
the segments. As at 31 January 2023, the range of pre-tax discount rates used was 13.0% to 14.7% (2022: 9.9% to 11.7%). As per IAS 36.44,
incremental cash flows directly attributable to growth initiatives not yet enacted at the balance sheet date have been removed for the purpose
of the value-in-use calculation.
In the current year, the recoverable amount when compared against the carrying value of the investment in subsidiaries resulted in a deficit
of £385.0m, therefore management considered it necessary to impair the investment in subsidiaries balance by this amount.
The deficit calculated is most sensitive to the EBITDA multiple, the discount rate, and the terminal growth rate assumed. A quantitative
sensitivity analysis for each of these as at 31 January 2023 and its impact on the headroom/(deficit) against the carrying value of investment
in subsidiaries is as follows:
Impact
EBITDA multiple
Pre-tax discount rate
Terminal growth rate
+1x
£m
86.6
–1x
£m
(86.6)
+1.0ppt
£m
–1.0ppt
£m
+1.0ppt
£m
–1.0ppt
£m
(34.9)
42.8
41.2
(32.6)
Saga plc Annual Report and Accounts 2023 207
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
3 Debtors
Amounts falling due after more than one year
Amounts due from Group undertakings
Amounts falling due within one year
Deferred tax asset
Other debtors
For amounts due from Group undertakings, the expected credit losses are considered to be immaterial.
4 Creditors – amounts falling due in less than one year
Other creditors
Accrued interest payable
5 Creditors – amounts falling due in more than one year
Bonds
Unamortised issue costs
Please refer to Note 30 of the Saga plc consolidated accounts on pages 193-194 for further details relating to the bonds.
2023
£m
521.3
521.3
2023
£m
2.0
1.3
3.3
2023
£m
1.1
1.8
2.9
2022
£m
501.8
501.8
2022
£m
1.7
1.3
3.0
2022
£m
2.0
1.9
3.9
2023
£m
400.0
2022
£m
400.0
(2.8)
(3.8)
397.2
396.2
6 Called up share capital
Allotted, called up and fully paid
At 1 February 2021
Issue of shares – 12 November 2021
At 31 January 2022 and 31 January 2023
Ordinary shares
Nominal
value
£
0.15
0.15
0.15
Number
140,102,227
235,044
140,337,271
Value
£m
21.0
0.1
21.1
On 12 November 2021, Saga plc issued 235,044 new ordinary shares of 15p each, with a value of £0.1m, for transfer into an Employee Benefit
Trust to satisfy employee incentive arrangements.
7 Commitments
The Company has provided guarantees for the Group’s bonds, ship debt, RCF and bank overdraft (please refer to Notes 25 and 30 of the
Saga plc consolidated accounts on pages 185, and 193-194).
208 Saga plc Annual Report and Accounts 2023
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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 are set out below.
APMs are usually derived from financial statement line 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 to, rather than a substitute for, GAAP measures.
Underlying Profit/(Loss) Before Tax
Underlying Profit/(Loss) Before Tax represents the loss before
tax excluding unrealised fair value gains and losses on derivatives,
the net profit on disposal of assets, impairment of the carrying value
of assets including goodwill, the charge on closure of the defined
benefit pension scheme, foreign exchange movements on river
cruise ship leases, costs incurred for the ship debt holiday, costs
in relation to the acquisition of The Big Window Consulting Limited
(the Big Window), the International Financial Reporting Standard
(IFRS) 16 lease accounting adjustment on river cruise vessels and
restructuring costs. It is reconciled to statutory loss before tax
within the Group Chief Financial Officer’s Review on page 45.
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 technical accounting adjustments and one-off
financial impacts that are not expected to recur.
Trading EBITDA/Adjusted Trading EBITDA
Trading EBITDA is defined as earnings before interest payable, tax,
depreciation and amortisation, and excludes the IAS 19R pension
charge, exceptional costs and impairments. Adjusted Trading
EBITDA also excludes the impact of IFRS 16 leases and the Trading
EBITDA relating to the two ocean cruise ships, Spirit of Discovery and
Spirit of Adventure in line with the covenant on the Group’s revolving
credit facility (RCF). It is reconciled to Underlying Profit/(Loss)
Before Tax within the Group Chief Financial Officer’s Review on
page 56. Underlying Profit/(Loss) Before Tax is reconciled to
statutory loss before tax within the Group Chief Financial
Officer’s Review on page 45.
This measure is linked to the covenant on the Group’s RCF, being the
denominator in the Group’s leverage ratio calculation.
Underlying Basic Earnings/(Loss) Per Share
Underlying Basic Earnings/(Loss) Per Share represents basic loss per
share excluding the post-tax effect of unrealised fair value gains and
losses on derivatives, the net profit on disposal of assets, impairment
of the carrying value of assets including goodwill, the charge on the
closure of the defined benefit pension scheme, foreign exchange gains
on river cruise ship leases, costs incurred for the ship debt holiday,
costs in relation to the acquisition of the Big Window, the IFRS 16 lease
accounting adjustment on river cruise vessels and restructuring
costs. This measure is reconciled to the statutory basic loss per
share in Note 12 to the accounts on page 167.
This measure is linked to the Group’s key performance indicator
Underlying Profit/(Loss) Before Tax and represents what
management consider to be the underlying shareholder value
generated in the year.
Available Cash
Available Cash represents cash held by subsidiaries within the Group
that is not subject to regulatory restrictions, net of any overdrafts
held by those subsidiaries. This measure is reconciled to the statutory
measure of cash in Note 25 to the accounts on page 185.
Available Operating Cash Flow
Available Operating Cash Flow is net cash flow from operating
activities after capital expenditure but before tax, interest paid,
restructuring costs, proceeds from business and property disposals
and other 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 Group Chief Financial Officer’s Review on page 56.
Net Debt
Net Debt is the sum of the carrying values of the Group’s debt facilities
less the amount of Available Cash it holds and is analysed further
within the Group Chief Financial Officer’s Review on page 59.
Adjusted Net Debt
Adjusted Net Debt is the sum of the carrying values of the Group’s
debt facilities less the amount of Available Cash it holds but excludes
the ship debt and the Cruise business Available Cash. It is linked to the
covenant on the Group’s RCF, being the numerator in the Group’s
leverage ratio calculation, and is analysed further within the Group
Chief Financial Officer’s Review on page 59.
Saga plc Annual Report and Accounts 2023 209
ADDITIONAL INFORMATION
Glossary
ABTA (Association of British Travel Agents) the trade association
for tour operators and travel agents in the UK
Accident year the financial year in which an insurance loss occurs
Act the UK Companies Act 2006, as amended from time to time
COR (combined operating ratio) the ratio of the claims costs
and expenses incurred to underwrite insurance (numerator),
to the revenue earned by Acromas Insurance Company Limited
(denominator) in a given period. Can otherwise be calculated as
the sum of the loss ratio and expense ratio
Add-on an insurance policy that is actively marketed and sold as an
addition to a core policy
Core policy an insurance policy that is actively marketed and sold on
its own, irrespective of any add-ons purchased
AGM (Annual General Meeting) to be held at 11.00am on
20 June 2023 at Numis Securities Limited at 45 Gresham Street,
London EC2V 7EH
AICL (Acromas Insurance Company Limited) the Group’s
Insurance Underwriting business
Annual Bonus Plan provides an incentive to the Executive Directors,
linked to achievement in delivering goals that are closely aligned with
Saga’s strategy
Annual policy a 12-month insurance policy with no option to fix the
premium at renewal
APMs (Alternative Performance Measures) a series of measures
which are not required or commonly reported under accounting
standards but are used by the Group to help the user of the
accounts better understand the financial performance and
position of the business
AQR (Audit Quality Review) inspection of the quality of Saga’s
external audit carried out by the Financial Reporting Council
ATOL (Air Travel Organiser’s Licence) government-run financial
protection scheme operated by the Civil Aviation Authority
Be Well our new colleague wellbeing brand and proposition
Board Saga plc Board of Directors
CAA (Civil Aviation Authority) one of the bodies that regulates the
Group’s Travel business, responsible for the management of the
Air Travel Organiser’s Licence scheme
CDP (formerly known as the Carbon Disclosure Project) charity
that manages companies’ disclosure of their environmental impacts
CEO (Chief Executive Officer) Euan Sutherland for the 2022/23
financial year
CFO (Chief Financial Officer) James Quin for the 2022/23
financial year
CGU (cash generating unit) group of assets that generate
cash inflows
CPO (Chief People Officer) Jane Storm for the 2022/23 financial year
Credit hire and credit repair the temporary replacement vehicle
services provided by a credit hire organisation in the event of a
non-fault road traffic accident
CustomerKNECT our in-house mailing and printing business
formerly known as MetroMail
DBP (Deferred Bonus Plan) reward scheme used to incentivise
colleagues over the longer term, ensuring alignment with
Company goals
DE&I (diversity, equity and inclusion) the agenda under which
Saga is committed to creating an inclusive culture where all
colleagues can bring their full and authentic selves to work
DTRs (Disclosure and Transparency Rules) rules published by the
Financial Conduct Authority relating to the disclosure of information
by a company listed in the UK
Dual reporting the quantification, and reporting, of Scope 2
greenhouse gas emissions under the location-based method and the
market-based method
Employee Assistance Programme a service offered by
Saga intended to support colleagues with problems that may
adversely impact their work, health and wellbeing
Earned premium insurance premiums that are recognised in the
income statement over the period of cover to which the premiums
relate, deferred on a 365ths basis
Earnings per share represents underlying shareholder value
generated in a given period
EBITDA earnings before interest, tax, depreciation and amortisation
of acquired intangibles, non-trading costs and impairments
ECL (expected credit loss) impairment model applied to
financial assets
EIR (effective interest rate) method used to calculate interest paid
and payable
CIIA (Chartered Institute of Internal Auditors) body representing
internal auditors in the UK
ELT (Executive Leadership Team) the first layer of management
below Board level
Claims frequency the number of claims incurred divided by the
number of policies earned in a given period
Claims reserves accounting provisions that have been set to meet
outstanding insurance claims, incurred but not reported and
associated claims handling costs
Code the UK Corporate Governance Code published by the UK
Financial Reporting Council setting out guidance in the form of
principles and provisions to address the principal aspects of
corporate governance
eNPS (employee net promoter score) a measure that represents
the willingness of colleagues to recommend Saga to others
EQ (Equiniti) our share registrar and first point of contact for
shareholding-related enquiries
Equity-settled transactions benefits provided to colleagues in the
form of share-based payment transactions
ESEF (European Single Electronic Format) the electronic
reporting format that Saga must use to prepare their annual
financial reports
Colleague Ambassador a Saga colleague who represents the voices
and views of peers at our People Committee and Colleague Forums
ESG (Environmental, Social and Governance) central factors in
measuring the sustainability and societal impact of the business
Colleague Forum a monthly forum, chaired by a member of the
Executive Leadership Team, enabling colleagues to have their say
Company Saga plc
COO (Chief Operating Officer) Paula Kerrigan for the 2022/23
financial year
Executive Director of Saga plc (unless otherwise stated)
Expense ratio the ratio of expenses incurred to underwrite
insurance (numerator) to the revenue earned by Acromas Insurance
Company Limited (denominator) in a given period
EV (electric vehicles) the Group’s insurance offering for
electric vehicles
FCA (Financial Conduct Authority) the independent UK body that
regulates the financial services industry, including general insurance
210 Saga plc Annual Report and Accounts 2023
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FRC (Financial Reporting Council) the independent body that
regulates auditors, accountants and actuaries in the UK
Leverage ratio the ratio of Adjusted Net Debt to Adjusted
Trading EBITDA
Free Shares the gift of shares to colleagues to recognise their
contributions towards the Company’s performance
LIBOR (London inter-bank offered rate) benchmark interest
rate estimated from London banks
FRS (Financial Reporting Standard) accounting standards issued
by the International Financial Reporting Standards Foundation
FVOCI (fair value through other comprehensive income) one of
three classification categories for financial assets under International
Financial Reporting Standard 9
FVTPL (fair value through profit and loss) one of three
classification categories for financial assets under International
Financial Reporting Standard 9
Listing Rules a set of mandatory regulations of the Financial
Conduct Authority applicable to a company listed on the London
Stock Exchange
Load factor the total number of Cruise passengers booked
(numerator) as a proportion of the total cruise ship
capacity (denominator)
Loss ratio a ratio of the claims costs (numerator) to the net earned
premium (denominator) in a given period
GAAP (Generally Accepted Accounting Principles) a common set
of accounting principles, standards and procedures issued by the
Financial Accounting Standards Board
GDPR (General Data Protection Regulation) data protection
regulation introduced in 2018 that applies to most UK businesses,
including Saga
Generation Experience a term used by Saga referring to people
over 50 in the UK
LSE (London Stock Exchange) the stock exchange upon which
Saga plc is listed
LTIP (Long-term Incentive Plan) legacy reward scheme used to
incentivise colleagues over the longer term, ensuring alignment with
Company goals
Malus an arrangement that permits the forfeiture of unvested
remuneration awards in circumstances the Company
considers appropriate
GHG (greenhouse gas) a type of gas for which Saga provides annual
reporting on its emissions
Management Report the Directors’ Report, together with the
Strategic Report within this document
GIPP (General Insurance Pricing Practices) a review into pricing
practices within the UK insurance market conducted by the Financial
Conduct Authority
Gross premium the premium charged to the customer in respect
of insurance cover
Master Trust Saga’s defined contribution pension scheme, operated
by Aviva
Measurement Date the date on which the value created at the end
of the five-year performance period is measured under the Saga
Transformation Plan
Group the Saga plc group
Growth plan Saga’s three-step strategic plan set out in March 2022
GWP (gross written premium) the total premium charged to
customers for a core insurance product, excluding insurance
premium tax but before the deduction of any outward
reinsurance premiums
Hurdle the level at which Executive Directors share in the value
created under the Saga Transformation Plan, currently £6.00,
including share price and dividends
MMQ (middle market quotation) the average of the best buying and
selling prices quoted by market makers taken at the close of the
market each day
Net earned premium earned premium net of any outward earned
reinsurance premium paid
Net premium the component of gross premium that is charged by
the underwriter for each insurance claim
New business new insurance policies sold to customers that do not
have an existing policy
IAA (Internal Audit and Assurance) the Group’s internal audit
and assurance function
NPS (net promoter score) represents the willingness of customers
to recommend Saga products and services to others
IAS (International Accounting Standards) accounting standards
issued by the International Accounting Standards Committee
IBNR (incurred but not reported) a claims reserve provided to
meet the estimated cost of claims that have occurred, but have not
yet been reported to the insurer
IFRS (International Financial Reporting Standards) accounting
standards issued by the International Accounting Standards Board
IPO (Initial Public Offering) the first sale of shares by a previously
unlisted company to investors on a securities exchange
IPT (insurance premium tax) tax payable on general insurance
premiums in the UK
IR (Investor Relations) the team responsible for facilitating
communication between Saga plc and its investors
KPI (key performance indicator) quantifiable measure used to
evaluate performance
LDI (liability driven investment) a type of investment strategy
used by pension funds
OCI (other comprehensive income) revenues, expenses, gains and
losses under International Financial Reporting Standards that are
excluded from the income statement
Ogden discount rate the discount rate set by the relevant
government bodies, the Lord Chancellor and Scottish Ministers,
and used to calculate lump sum awards in bodily injury cases
PAA (premium allocation approach) Saga’s expected approach
to International Financial Reporting Standard 17 adoption
PBT (profit before tax) one of the Group’s primary key
performance indicators
People Champion Eva Eisenschimmel for the 2022/23 financial year
People Committee a monthly forum, chaired by the Chief People
Officer and attended by Lead Colleague Ambassadors from across
the Group, enabling colleagues to share their thoughts and views
Per diem the total amount of Cruise revenue earned per guest
per day
PMI (private medical insurance) one of the products offered within
the Group’s Insurance Broking business
Policies in force the number of core insurance policies in force at
any given time
Saga plc Annual Report and Accounts 2023 211
ADDITIONAL INFORMATION
Glossary continued
PPO (periodic payment order) a court order prescribing
settlement of an insurance claim through regular payments
Private jet tour a new escorted tour offering within our
Travel business
PRUs (principal risks and uncertainties) the most significant
risks threatening Saga plc
PwC (PricewaterhouseCoopers) an advisor that provides
independent consultation advice to the Group
RCF (revolving credit facility) the facility that Saga has in place
with its lending banks, allowing draw down of funds up to £50m
Real living wage a pay rate that is independently-calculated, based
on the cost of living and is typically higher than the national
minimum wage
Reinsurance contractual arrangements where an insurer transfers
part, or all, of the insurance risk written to another insurer, in
exchange for a share of the customer premium
Relationship Agreement agreement that regulates the relationship
between the Company and Roger De Haan
Restricted Shares share awards granted annually to Executive
Directors under Saga’s Restricted Share Plan
Risk adjustment one of the components for measuring the
liability for incurred claims under International Financial Reporting
Standard 17, being an explicit margin above the expected future
cash flows that represents the compensation required for bearing
non-financial uncertainty
ROCE (return on capital employed) a financial ratio used as a
performance condition under the legacy Long-term Incentive Plan
RSP (Restricted Share Plan) share scheme, and corresponding
share awards used to incentivise colleagues over the longer-term,
ensuring alignment with Company goals
Run-off deviations differences between the outstanding claims
provision at the reporting date and the settlements and provisions
in the following year
Saga Cruise Saga Cruises Limited, Saga Cruises IV Limited, Saga
Cruises V Limited, Saga Cruises VI Limited, Saga Cruises GmbH,
Saga Crewing Services Limited and Saffron Maritime Limited
Saga Insight The Big Window Consulting Limited
Saga Insurance Saga Services Limited, Acromas Insurance
Company Limited, CHMC Holdings Limited, CHMC Limited and
PEC Services Limited
Saga Media Saga Publishing Limited
Saga Money Saga Personal Finance Limited
Saga Travel ST&H Limited, ST&H Group Limited, Saga Travel Group
Limited, Titan Transport (UK) Limited, Saga Travel Group (UK)
Limited and Titan Transport Limited
Scope 2 Guidance standardises how corporations measure
emissions from purchased or acquired electricity, steam, heat
and cooling
SDGs (Sustainable Development Goals) a series of goals adopted
by the United Nations as a universal call to action to end poverty,
protect the planet and ensure that, by 2030, all people enjoy peace
and prosperity
Shareholder Information annual reports, notices of shareholder
meetings and other documentation that Saga is required to send
to shareholders
Shareholder Reference a unique reference number issued to
shareholders of Saga plc
Shareview Portfolio an online portal, accessed via
www.sagashareholder.co.uk that allows shareholders to manage
all aspects of their shareholding in Saga plc
212 Saga plc Annual Report and Accounts 2023
SIP (Share Incentive Plan) a plan available to all colleagues
allowing them to purchase shares in Saga plc through a monthly
payroll deduction
SLT (Senior Leadership Team) the second layer of management
below Board level
SMT (Senior Management Team) the third layer of management
below Board level
Solvency Capital Requirement/Solvency II insurance regulations
designed to harmonise European Union insurance regulation.
Primarily this concerns the amount of capital that European
insurance companies must hold under a measure of capital and risk
SONIA (Sterling Overnight Index Average) a replacement for
the London inter-bank offered rate, introduced in the UK in 2021
Speak Up Champion Gareth Hoskin for the 2022/23 financial year
SPF (Saga Personal Finance) the Group’s Personal Finance Business,
known as Saga Money
SSL (Saga Services Limited) the Group’s Insurance Broking business
STP (Saga Transformation Plan) a long-term incentive for
participants to receive a portion of the value created above a
stretching hurdle over a five-year period
STP Pool the maximum number of share awards which may vest
under the Saga Transformation Plan, being 12.5% of the value created
above £6.00 of shareholder value
Street pricing adjustment any adjustment to the net premium
of an insurance policy that is applied during the broking service
Swaps fixed price contracts used by the Group to manage its
exposure to fuel prices
TCFD (Task Force on Climate-Related Financial Disclosures)
part of the regulatory framework introduced by the Financial Stability
Board to improve and increase reporting on climate-related
financial information
tCH4 tonnes of methane
tCO2e tonnes of carbon dioxide equivalent
tN2O tonnes of nitrous oxide equivalent
Tell Euan About sessions a communications forum allowing
colleagues to interact with the Group Chief Executive Officer
the Big Window known as Saga Insight, a specialist research and
insight business focused on the ageing process
Three-year fixed-price policy an insurance policy with the option to
fix the premium for three years
Travel passengers the number of passengers that have travelled on
a Saga or Titan holiday in a given period
Trust (Saga Employee Benefit Trust) trust established to hold
assets to provide benefits for employees
TSR (total shareholder return) the theoretical growth in value of a
shareholding over a period, by reference to the beginning and ending
share price, assuming that dividends, including special dividends, are
reinvested to purchase additional units of the equity
Unearned premium an amount of insurance premium that has been
written but not yet earned
Unmind a mental health app provided to colleagues as part of our
suite of wellbeing tools
Workplace Saga’s internal communications platform that keeps
colleagues informed and connected via a single, mobile-first channel
Written to earned adjustment an Insurance Broking accounting
adjustment required under International Financial Reporting
Standard 15 that spreads revenue and associated costs which are
underwritten by the Group over the life of the insurance policy
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Shareholder information
Financial calendar
2023 Annual General Meeting – 20 June 2023
Shareholder information online
The Company will publish annual reports, notices of shareholder
meetings and other documents which we are required to send to
shareholders (Shareholder Information) on our website.
Consenting shareholders will be notified either by post or email, if
preferred, each time the Company publishes Shareholder
Information. This allows us to increase speed of communication,
reduce our impact on the environment and keep costs to a minimum.
Shareholders can change their communication preference via
their Shareview Portfolio which can be accessed on our website
(www.sagashareholder.co.uk) or by contacting Equiniti (EQ). In order
to register, a Shareholder Reference is required which can be found
on most communications from EQ.
Shareview Portfolio is free to use, secure, easy to administer and
allows shareholders to elect to receive certain communications
electronically, update their UK bank account details, send general
meeting voting instructions in advance of meetings, keep their
contact details up to date and buy and sell shares easily.
Shareholder fraud
Shareholders are advised to be wary of any unsolicited advice or
offers, whether over the telephone, through the post or by email.
If any such unsolicited communication is received, shareholders
should check that the company, or person, contacting them is
properly authorised by the Financial Conduct Authority (FCA) before
getting involved. Fraudsters use persuasive and high-pressure tactics
to lure investors into scams. They may offer to sell shares that turn
out to be worthless or non-existent, or to buy shares at an inflated
price in return for an upfront payment. While high profits are
promised, if shares are purchased or sold in this way, individuals may
lose their money. More information can be found on the FCA website
or by calling the FCA Consumer Helpline on 0800 1116768. If a
shareholder has already paid money to share fraudsters, they should
contact Action Fraud on 0300 123 2040.
Advisers
Joint corporate brokers
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Numis Securities Ltd
45 Gresham Street
London EC2V 7BF
Media relations advisers
Headland Consultancy
Cannon Green
1 Suffolk Lane
London EC4R 0AX
Independent auditors
KPMG LLP
15 Canada Square
Canary Wharf
London E14 5GL
Legal advisers
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London EC2A 2EG
Registrars
Equiniti Group
For shareholder enquiries, please contact:
Equiniti Group
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: +44 (0) 371 384 2640
Calls to freephone numbers will vary by provider. Calls from outside
the UK will be charged at the applicable international rate. Lines are
open 8.30am to 5.30pm, Monday to Friday, excluding public holidays
in England and Wales.
customer@equiniti.com
Information for shareholders
Information for shareholders is provided online as part of the Group’s
corporate website (www.corporate.saga.co.uk/investors).
Registered office
Saga plc
Enbrook Park
Sandgate
Folkestone
Kent CT20 3SE
Registered in England. Company Number: 08804263
Corporate websites
Information made available on the Group’s websites does not, and
is not intended to, form part of this Annual Report and Accounts.
Saga plc Annual Report and Accounts 2023 213
ADDITIONAL INFORMATION
Forward-looking statements
This Annual Report and Accounts contains certain forward-looking
statements with respect to Saga’s expectations, including strategy,
management objectives, future developments and financial position
and performance. These statements are subject to assumptions,
risks and uncertainties, many of which relate to factors that are
beyond Saga’s ability to control and which could cause actual results
and performance to differ materially from those expressed or
implied by these forward-looking statements. Any forward-looking
statements made are based upon the knowledge and information
available to Directors on the date of this Annual Report and Accounts
and are subject to change without notice. Shareholders are cautioned
not to place undue reliance on the forward-looking statements.
Nothing in this Annual Report and Accounts should be construed
as a profit estimate or forecast.
214 Saga plc Annual Report and Accounts 2023
Designed and produced by Friend
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This report has been printed on Amadeus
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The mill and printer are both certified to
ISO 14001 environmental management
system. The report was printed using
vegetable-based inks by a CarbonNeutral®
printer.
This publication is produced by a
CarbonNeutral® company and Carbon
Balanced with World Land Trust.
Balancing is delivered by World Land Trust,
an international conservation charity,
who offset carbon emissions through
the purchase and preservation of high
conservation value land.
Through protecting standing forests,
under threat of clearance, carbon is locked
in that would otherwise be released. These
protected forests are then able to continue
absorbing carbon from the atmosphere,
referred to as REDD (Reduced Emissions
from Deforestation and forest Degradation).
This is now recognised as one of the most
cost-effective and swiftest ways to arrest
the rise in atmospheric CO2 and global
warming effects. Additional to the carbon
benefits is the flora and fauna this land
preserves, including a number of species
identified at risk of extinction on the
IUCN Red List of Threatened Species.
CBP00019082504183028
SAGA PLC
Enbrook Park
Sandgate
Folkestone
Kent
CT20 3SE