Saga : Annual Report 2021

SAGA PLC

ANNUAL REPORT AND ACCOUNTS 2021

OUR PURPOSE

To deliver exceptional experiences every day, while being a driver of positive change in our markets and communities.

STRATEGIC REPORT

Highlights	1
Our business at a glance	2
Chairman's Statement	4
Group Chief Executive Officer's Statement	6
Market overview	10
Purpose and business model	12
Strategic priorities	14
Key performance indicators	16
Environmental, Social and Governance	18
Principal risks and uncertainties	28
Operating and Financial Review	30
Viability Statement	46
Key disclosure statements	47

GOVERNANCE

Corporate Governance Statement

Chairman's introduction to governance	50
Governance in action	52
Governance statements	53
Board leadership and Company purpose	56
Division of responsibilities	58
Composition, succession and evaluation	61
Board of Directors	62
Nomination Committee Report	64
Audit, risk and internal control	66
Audit Committee Report	70
Risk Committee Report	74
Directors' Remuneration Report
Annual Statement	77
Annual Report on Remuneration	81
Directors' Remuneration Policy	95
Directors' Report	111
Statements of responsibilities	116
Independent Auditor's Report to the Members of Saga plc	117

FINANCIAL STATEMENTS

Consolidated financial statements

Consolidated income statement	131
Consolidated statement of comprehensive income	132
Consolidated statement of financial position	133
Consolidated statement of changes in equity	134
Consolidated statement of cash flows	135
Notes to the consolidated financial statements	136
Company financial statements of Saga plc
Balance sheet	204
Statement of changes in equity	205
Notes to the Company financial statements	206

ADDITIONAL INFORMATION

Alternative Performance Measures Glossary	212
Glossary	213
Shareholder information	216

ICONS APPEARING THROUGHOUT

THE ANNUAL REPORT

s172
This icon denotes	Read more
information relevant to
section 172(1) on pages
47-48

Saga plcAnnual Report and Accounts 2021

Highlights

FINANCIAL HIGHLIGHTS

Underlying Profit Before Tax1

£17.1m

2020: £109.9m

Loss before tax

£(61.2m)

2020: £(300.9m)

Available operating cash flow1

£3.4m

Strategic Report

YEAR IN REVIEW

• Positive progress made against delivery of the strategy aimed at returning Saga to sustainable growth.
• Key focus for the year has been on serving our customers and supporting the wellbeing of our colleagues in a year of unprecedented challenge.
• Insurance business performed resiliently in a highly competitive market.
• Preparations complete in anticipation of the Travel business returning to service, supported by strong customer retention and high demand for travel in the future.

OPERATIONAL HIGHLIGHTS

2020: £92.7m

Basic profit/(loss) per share1

(67.0p)

2020: (381.7p)2

Underlying Earnings Per Share1

13.2p

Robust response to COVID-19

2,100

colleagues working from home with no business interruption

High level of Cruise customer loyalty with

73%

bookings retained through the COVID-19suspension period

Completed Cruise transformation strategy with

delivery of Spirit of Adventure in September 2020

Well positioned to resume Travel operations as the first cruise operator awarded the new Lloyd's Register Shield+

COVID-19 safety accreditation

2020: 121.0p2

Debt ratio (adjusted net debt to adjusted Trading EBITDA)1

2.7x

2020: 2.4x

Resilient performance in motor and home insurance

1% 59%

2020: (3%)	2020: 57%
policy growth	of new business came to
	us on a direct basis

80%	610k
2020: 75%	2020: 320k
customer retention	three-yearfixed-price
	policies sold

1. Refer to the Alternative Performance Measure (APM) Glossary on page 212 for definition and explanation
2. 2020 figures restated to reflect the effect of the share consolidation completed in October 2020

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Strategic Report

Our business at a glance

INSURANCE

Saga's Insurance business remains the largest part of the Group and comprises:

- Retail Broking, which provides tailored products, principally motor, home, private medical and travel insurance; and

- Underwriting, representing the Group's in-house underwriter, Acromas Insurance Company Limited (AICL), which sits on the panel of insurers and underwrites 70% of Saga's motor insurance policies.

Operating and Financial Review, pages 32-36

TRAVEL

The Travel business has been the heart of the Saga brand for many years. As a consequence of the COVID-19 pandemic, the Group suspended Travel operations in March 2020.

The two components of the Group's Travel business are:

- Cruise, providing boutique ocean cruises onboard its new luxury cruise ships, Spirit of Discovery and Spirit of Adventure; and

- Tour Operations, offering package holidays including escorted tours, special interest trips, hotel stays and river cruises.

Operating and Financial Review, pages 36-37

OTHER BUSINESSES

The Group's Other Businesses include:

- Saga Personal Finance, offering principally equity release and savings products;

- Saga Magazine; and

- Our in-house mailing and printing business.

Operating and Financial Review, page 37

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Strategic Report

Strong delivery against targets set

• Growth in Saga-branded motor and home policies, after several years in decline.
• Improvement in customer retention due to the positive impact of our three-yearfixed-price product.
• Increase in the proportion of customers coming to us on a direct basis.
• Margins per policy in line with expectations.
• Launch of our new motor price- comparison website proposition, COVID-19 inclusive travel insurance and online self-serve portal for customers.

Well placed to operate once government restrictions allow

• The Group suspended Travel operations in March 2020.
• Safe repatriation of all customers and crew ahead of the first lockdown.
• Implemented operational changes, ensuring the highest level of health and safety standards; including the requirement that all customers are fully vaccinated ahead of their departure.
• Reset our Tour Operations business to focus on offering a higher-quality, differentiated product portfolio that is consistent with the Saga brand.

Retail Broking Underlying	Underwriting Underlying
Profit Before Tax	Profit Before Tax
£75.9m	£58.7m
2020: £90.2m	2020: £40.6m

Core Saga branded motor and home	Underlying reported combined
policy count	operating ratio (COR)1
1,617k	70.8%
2020: 1,600k	2020: 83.0%

Underlying (Loss)/Profit

Before Tax

£(78.5m)

2020: £19.8m

Continued review of non-core businesses

• Completed sale of the Group's Healthcare operation.
• Launched a digital version of the Saga Magazine which has been well received.

Underlying Profit

Before Tax

£2.8m

2020: £4.6m

1 Refer to page 35 of the Operating and Financial Review for how this measure is calculated and defined

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