Saga : Prelims 2021 Press Release and Statement Final

7 April 2021

Saga plc

Preliminary results for the full year ended 31 January 2021

Significant progress through the year, with disciplined execution of turnaround

strategy

Insurance delivers resilient performance; Travel ready for restart with strong demand

Saga plc ('Saga' or 'the Group'), the UK's specialist in products and services for people over 50, announces its preliminary results for the 12 months ended 31 January 2021

	31 January	31 January	Change
	2021	2020
Underlying Profit Before Tax1	£17.1m	£109.9m	(84.4%)
Loss before tax	(£61.2m)	(£300.9m)	79.7%
Available operating cash flow1	£3.4m	£92.7m	(96.3%)
Adjusted net debt (excluding Cruise)1	£246.9m	£361.7m	(31.7%)
Leverage ratio (net debt to Trading EBITDA, ex Cruise)	2.7x	2.4x	0.3x

Financial and operational highlights

• Underlying Profit Before Tax of £17.1m, against the backdrop of COVID-19 challenges
• Loss before tax of £61.2m reflecting £59.8m impairment of Travel goodwill in the first half
• Strong liquidity position, with total available cash of £75.4m and undrawn revolving credit facility (RCF) of £100m at 31 January 2021
• Strengthened balance sheet and improved financial resilience as a result of decisive actions taken over the last 12 months, including successful £150m capital raise in September 2020, recent review of covenants attached to term loan and RCF, and further deferral in relation to ship facilities
• Leverage ratio (excluding Cruise) of 2.7x, well within the covenant of 4.75x
• Robust response to COVID-19 challenges, with tight grip maintained on business: colleagues supported through the transition from office to home working, with no interruption to business; Travel reset and ready to operate once restrictions lifted; Insurance clearly focused on supporting customers through pandemic
• Positive progress made against all five pillars of the strategy outlined in September 2020, designed to return Saga to sustainable growth

1 Refer to the Alternative Performance Measures (APM) Glossary on pages 66 to 67 for definition and explanation 1

Divisional performance

Insurance: resilient financial performance; range of COVID-19 care measures implemented to support customers

Retail Broking

• Continued progress in the second half, with launch of online self-serve portal and new motor price- comparison website proposition
• Saga-brandedmotor and home core policies of 1.6m are 1.1% higher than the previous period, with retention 5.4ppts higher than the prior year at 80.5%; performance represents return to growth, underpinned by success of three-yearfixed-price policy
• Motor and home margins (after marketing costs) of £74 per policy, in line with expectations
• Growth in direct channels driven by three-yearfixed-price product, with 610k policies sold in the year, representing more than 63% of direct new business sales

Underwriting

• Underwriting generated profit of £58.7m, including £37.6m of reserve releases, primarily due to continued favourable experience on large bodily injury claims relating to prior accident years
• Claims frequency fell, with customers driving fewer miles during COVID-19 lockdowns. This resulted in reduced current year combined operating ratio of 91.4%, excluding impact of the Group's quota share reinsurance arrangement
• Cautious approach to reserving for the 2020/21 accident year, holding additional component of reserve margin for increased uncertainty over claims development

Travel: detailed work completed for return to service; customer retention strong and high demand for post pandemic travel

• Saga ready to resume its Tour Operations and Cruise businesses in 2021 with specific timing being subject to government restrictions
• Customer demand remains strong, with evidence of significant pent-up demand from customers ready to travel. Total Cruise bookings of £154m for 2021/22 and 2022/23 combined, in comparison to £128m at the same point last year, representing a 20% improvement. This excludes 2020/21 bookings that have been cancelled where the customer has indicated that they want to rebook but have yet to do so on a specific cruise
• Significant number of operational changes implemented, ensuring highest level of health and safety standards; Saga awarded first Lloyd's Register Shield+ accreditation, highest level of health assurance available; introduction of policy that guests are fully vaccinated at time of travel
• Cash burn rate for the second half at lower end of £6-8m per month guidance

Euan Sutherland, Saga's Group Chief Executive Officer, said:

"Saga has made significant progress in a year of unprecedented challenge, during which our key focus has been on serving our customers and keeping our colleagues safe. At the same time, we have continued the work to strengthen our financial position and started to deliver against our new strategy, outlined in September, which will return Saga to sustainable growth. Central to this is our plan for our people which saw us launch a new purpose, values and engagement programme. Overwhelmingly positive feedback has been received to date and is reflected in our colleague engagement score which has increased from September 2020. I want to thank our colleagues for their hard work in delivering exceptional, differentiated products and services for our customers.

2

"The progress we have made is clear in the resilient performance delivered by our Insurance business and in Cruise where our high levels of customer retention show clear loyalty to our differentiated boutique offering. At the same time, we have been working to develop the plans to refresh our brand and to invest in data and digital to improve the customer experience.

"Looking ahead, while we are mindful of economic headwinds and the potential ongoing impacts of COVID- 19, it is clear that there is significant pent-up demand among our customer base, the vast majority of whom have now been vaccinated and are ready to enjoy post-lockdown freedom. Saga is a proud British business, with a strong brand, loyal customers and great people and we are excited about the opportunities ahead. We look forward to relaunching our brand later in 2021 which will only enhance our ability to unlock the potential in Saga, returning the business to sustainable growth and creating significant long-term value for all our investors and stakeholders."

END

A presentation for analysts and investors on the preliminary results will be available to view on Saga's

corporate website from 07.00 today. The webcast can be found at:

https://www.corporate.saga.co.uk/investors/results-reports-presentations/.

Euan Sutherland and James Quin will hold a conference call for analysts and investors at 09.30. The conference call can be accessed on: UK: [phone], all other locations: [phone]. Participant access code: 805740.

For further information please contact:
Saga plc
Emily Roalfe, Head of Investor Relations	Tel: [phone]
	Email: [e-mail]
Headland Consultancy
Susanna Voyle	Tel: [phone]
Henry Wallers	Tel: [phone]
	Tel: [phone]
	Email: [e-mail]

Notes to editors

Saga is a specialist in the provision of products and services for people over 50. The Saga brand is one of the most recognised and trusted brands in the UK and is known for its high level of customer service and its high quality, award winning products and services including cruises and holidays, insurance, personal finance and publishing. www.saga.co.uk

3

Chairman's statement

2020/21 was extraordinary for Saga. Like most other companies, we have had to deal with the unprecedented threats posed by the COVID-19 pandemic, including the lockdowns and ensuing uncertainties. We also took the opportunity to address some long-standing, fundamental issues within our organisation. Euan Sutherland, Saga's new Group Chief Executive Officer (CEO) and his senior team, most of whom have only joined the Company in the last two years, have responded to all challenges extremely effectively.

I joined the Company as its eleventh employee in 1966. When Saga was floated for the first time in 1978 and I was Managing Director, our principal business was operating holidays for older people. It was in 1984, when my father who had founded the Company retired, that I became Chairman and CEO and we began to focus on developing our Insurance and Financial Services businesses. This diversification has served Saga well through the challenges of the past financial year.

On 5 October 2020, I became Non-Executive Chairman after the Company's successful capital raise which generated £150m (approximately £140m net of costs). I personally invested £100m for just over 26% of the share capital. I did this, not only because I realised that it would substantially improve the Company's position but because I thought I was making a sound investment, and felt that my long experience with Saga could benefit the Company today.

I was attracted by Euan Sutherland's plans for the business and particularly by his determination to refocus the Company to concentrate on serving its customers better. During the last financial year, Saga sold a number of non-core businesses which no longer fit with the new strategy, as well as our old cruise ship, Saga Sapphire.

We renegotiated more favourable repayment terms for the facilities which funded the purchase of our two new cruise ships ordered in 2015 and 2017 and delivered in June 2019 and September 2020. Our balance sheet strengthened during the year and, at our year end, our net bank debt, excluding the two cruise ship facilities, was £115m lower than in the prior year, enabling us to agree flexibility within the covenants attached to our term loan and revolving credit facility (RCF). Colleague and marketing costs were £37m lower than the previous year and a decision was made not to draw on any support from government funding.

During the year, we increased the number of our Insurance customers (excluding for travel insurance) and, despite combined losses of £78m from our Travel business that was not able to generate revenues for 10 months of the financial year, we earned an underlying profit of £17m. Given the global challenges, this was a highly satisfactory result.

In January 2020, Euan Sutherland took over the executive leadership of a company which, not long after it had been floated in 2014, had begun to see a significant downward trend in the number of its Travel customers and Insurance policyholders, as well as of its income and underlying profits. In February last year, Euan introduced a plan for Saga to become more efficient and to reduce costs. However, by the end of February 2020, the senior management team realised the seriousness of the threat of the COVID-19 pandemic and began to develop a new plan which included office-based colleagues being able to work from home. Within a few hours of the Prime Minister's announcement of the first lockdown on 23 March 2020, we contacted 95% of Saga's office-based colleagues. Within a week we distributed over 1,500 laptops with access to the Company's computer systems, ensuring that Saga's customers faced no interruption as we supported the transition of over 2,000 people moving from office to home working.

Although none of our customers have been able to travel since the first lockdown, we needed substantial numbers of colleagues to assist customers who had already booked holidays and cruises, and to be able to provide a good service to those who wished to book new holidays. We also had to continue to work with our suppliers. All this was without knowing when our Travel operations could start again. We have implemented a raft of measures to ensure that our holidays will be COVID-19 secure and have recently announced that

4

we will only take customers on holiday who have been fully vaccinated. Our Travel businesses are therefore well-prepared to start their programmes when travel is allowed again.

Saga's Insurance Broking arm saw a return to growth in the number of customers for its main lines of business, motor and home insurance. This was achieved by greatly improving customer retention. It also generated a greater proportion of direct sales, relying less on price-comparison websites. Saga's Underwriting company, AICL, experienced continued favourable development on large bodily injury claims, alongside reduced claims frequency in line with the rest of the market.

Saga's magazine continued its printed circulation with over 200,000 subscribers, and recently successfully launched the digital version of the magazine.

During the year, despite the massive distraction caused by the pandemic, Euan Sutherland successfully launched Saga's new strategic plan, and this is now being embedded in the organisation. The strategy requires us all to work hard to understand the lives and needs of people in our market, and to deliver relevant products and services of high quality and excellent value, always striving to achieve the best standards of customer service. The plan sets these objectives in the context of our digital age and requires the Company to continue to invest in its technology. It restructures the business with a leaner operating model that will lead to a more efficient and collaborative way of working. Management layers have been reduced from 17 to 5.

To ensure excellent virtual communication within the organisation, technology has been used very effectively and considerable emphasis has been placed on providing support for the wellbeing of all those working from home. Despite the uncertainty created by the pandemic and the major changes the organisation has been through, our surveys show that our team morale remains strong and is better now than at the beginning of the financial year.

During the last financial year, we sought ways to meet our Environmental, Social and Governance (ESG) responsibilities even more effectively and we will continue to develop our reporting to reflect the progress we are making.

I would like to thank everyone at Saga, including our Board, for working so hard and embracing so enthusiastically the changes we have had and have chosen to adopt. I would also like to congratulate Euan Sutherland and his senior management team. Given our circumstances, the financial results were very encouraging and we are beginning to lay the foundations for the Company to prosper in the future. I look forward to celebrating our 70th anniversary this year.

5