Saga plc (SAGA) Earnings Call Transcript & Summary

Good morning, and welcome to the Saga plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions published -- submitted today and publish questions -- responses where appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Mike Hazell, CEO. Good morning, sir.

Good morning, everybody, and welcome to Saga's results for the 6 months ended 31st of July 2024. I'm Mike Hazell, Group CEO. And with me today is Group CFO, Mark Watkins; and Steve Kingshott, the CEO of our Insurance business. Thanks for joining us today and for bearing with us while we delayed our results until we were able to also update you on our partnership discussions. On that note, you will have seen that we've released a separate announcement on Friday, confirming that we are in exclusive discussions with Ageas for a proposed transaction. This is a fantastic opportunity for Saga, Ageas and our customers creating a low-risk business model for Home and Motor insurance by combining the capabilities of 2 great businesses. The move would support our growth ambitions, simplify our business and move us towards a more capital-light model in insurance, in line with our stated strategy. The first part of this is the sale of our Insurance Underwriting business, AICL. And the second is a 20-year affinity partnership deal with Ageas for Motor and Home insurance, moving us away from underwriting and risk to a lower cost commission-based model. I'll cover these in more detail later. However, we're excited by the opportunity to work with a partner of the pedigree of Ageas and believe this partnership will deliver great value to our shareholders and great products to our customers. We've had a busy first half to the year and ultimately have delivered a strong set of financial results, while we also continue to explore partnership opportunities across Ocean Cruise and Insurance. During this period, we grew our underlying revenue by 11% and reported an underlying profit before tax of GBP 27.2 million, more than 3x that of the prior year, reflecting strong growth across our Cruise and Travel businesses, offsetting cyclical challenges in our Insurance Broking business. In line with the approach we set out in April, we took action in Insurance Broking to more effectively balance margins and policy volumes. Conditions have, however, remained challenging, ultimately hampering the effectiveness of our actions. These market conditions, most notably the net rate environment in home have impacted Insurance Broking volumes and profitability this year, resulting in a further goodwill impairment of GBP 138.3 million. The group has, therefore, reported a loss before tax of GBP 104 million after this impairment. While Insurance Broking remained challenging, our Insurance Underwriting business finished the first half in a strong position, having returned to an underlying profit. Debt reduction continues to be a key strategic priority for the group, and we made good progress in the first 6 months of the year, having reduced net debt by GBP 42.8 million in the past 12 months and GBP 22.6 million in the last 6 months. Our group remains highly cash generative, and we delivered GBP 54.4 million of available operating cash flow in the first half. Our focus on driving customer engagement continued and following enhancements made to our customer websites, we saw a 21% increase in visits alongside progress with our group customer consent initiative, which saw a number of consented individuals, 16% higher than the same time last year. Next slide, please. Before I hand over to Mark to talk through the financials, let me cover some of the highlights from each of our core businesses. Starting with Cruise, our Ocean and River offerings continue to go from strength to strength. In Ocean Cruise, we achieved a load factor of 90% in the first half of the year, which is 7 percentage points higher than last year, with a per diem that was 9% higher. It's a similar story for River Cruise with a load factor of 86%, up 3 percentage points and a per diem that's 15% higher. Our Travel businesses reported a first half profit for the first time since the pandemic with revenue and passengers 29% and 13%, respectively, higher than in the prior year on a comparable basis. In Insurance, our Underwriting business is in a strong position. Price increases applied over the past couple of years are now flowing through to the result, with the average earned premiums 39% higher than in the year before. It's this action that also supported the net combined operating ratio reducing by 23 percentage points to 102%. The challenging conditions in Insurance Broking mean that, that business reports 13% fewer policy sales, albeit slightly higher margins. Our Money business reports a result consistent with that of the prior year as we build awareness for our new range of products. Finally, data continues to underpin our strategy with 9.5 million individuals on our database and a growing number of these consenting to hear more about our products and services, thanks to the initiatives in [ flight ]. I'll now hand you to Mark, who will go through the financials.

Thank you, Mike. Good morning, everybody. I'll spend the next few minutes covering the financial results for the group for the 6 months ended 31st of July 2024. I'll then follow that with the outlook for the remainder of the year. Saga had a positive start to the year, delivering strong financial performance in the first half. Underlying revenue, which is net of reinsurance premiums and exclude some accounting adjustments and one-off items, increased 11% on the prior year. Underlying PBT of GBP 27.2 million is more than 3x that of the same period last year, largely driven by the continued growth in our Cruise and Travel businesses, improved performance in Insurance Underwriting and lower central costs, which were only partially offset by lower Insurance Broking results. As Mike touched on a moment ago, we reported statutory loss before tax of GBP 104 million, which reflects GBP 138.3 million impairment of Insurance Broking goodwill, and we'll cover some of the drivers behind this shortly. We continue to generate strong cash flows with available operating cash flow of GBP 54.4 million. As expected, this figure was lower than the prior year, largely reflecting the one-off benefits of around GBP 20 million from the River Cruise and Travel businesses moving from 100% trust arrangement for customer deposits to a 70% escrow arrangement in the prior year, alongside lower Insurance Broking earnings and Underwriting dividends. Net debt reduction continued, and the position at 31st of July was GBP 614.6 million, GBP 42.8 million lower from 31st of July 2023 and GBP 22.6 million lower than at the year-end. Alongside strong trading EBITDA, which grew 27%, this supported further deleveraging with the total leverage ratio now at 4.6x compared with 7x at the same point in the prior year. Next slide, please. I'll now focus on the headline underlying profit contributions from each of our business units. Our Cruise and Travel businesses continue to generate strong customer demand, delivering GBP 31.2 million of underlying PBT in the first half, more than double that of the year before. The Insurance market continued to be challenging and as expected, Insurance Broking reported a materially lower contribution, predominantly driven by the home product. Insurance Underwriting, however, returned to an underlying PBT versus a loss in the prior year. Other Businesses also returned to profit in the first half following the decision to exit some of our smaller loss-making activities including Saga Insight and Saga Exceptional in the second half of last year. The actions taken to reduce our cost base late last year meant that central costs were 14% lower this year than last despite slightly higher financing costs. The result of all of this is that underlying PBT increased from GBP 8 million in the prior year to GBP 27.2 million in the current year. Next slide, please. Debt reduction is a clear strategic priority for Saga, and we made good progress in this space during the first half of the year. Net debt at 31st of July 2024 was GBP 614.6 million. This was GBP 42.8 million lower than the position 12 months ago and GBP 22.6 million lower than the year-end. Available operating cash flow for the first 6 months was GBP 54.4 million, 37% lower than last year. This was expected given that the prior year included the one-off benefit of around GBP 20 million from River Cruise and Travel moving from 100% trust arrangement for customer deposits to a 70% escrow arrangement alongside lower trading EBITDA from Insurance Broking and no dividends from Insurance Underwriting. This was, however, partially offset by a 15% increase in Ocean River Cruise available operating cash flow, driven by the strong trading and some positive working capital phasing within that business. Many of you will be familiar with the graph, which is shown here, which shows the expected deleveraging profile of the group under a range of possible scenarios, represented by the faded area at the top of the bars. Mike touched earlier on the fact that we're in exclusive discussions with Ageas for the sale of AICL and an insurance partnership. However, as we haven't yet agreed binding documentation, those cash flows are not included here. Before we step into the details, it's important to remember that in May 2024, we repaid the GBP 150 million bond through a combination of available cash and GBP 75 million drawdown on the loan facility provided by Roger De Haan. While this didn't change net -- net debt, it was a key milestone for the group. Looking ahead to the full year, we expect net debt to be slightly higher than at 31st of July. This is due to lower cash generation from the Insurance business, some unwind of the working capital timing differences in the first half of the year and continued repayments on our 2 cruise ship facilities totaling GBP 31.1 million. At 31st of July, the group held available cash of GBP 86.3 million, which excluded the undrawn GBP 50 million revolving credit facility and the GBP 10 million remaining undrawn portion of the loan provided by Roger. We recently concluded discussions with our lenders, which resulted in amendments to the RCF, which provides us with greater financial flexibility. These included an extension to the facility's maturity from May 2025 to March 2026, alongside a revised definition of the leverage test, which used to exclude the Ocean Cruise business, but will now be tested on a total group basis. This level has also been reset to 6x until maturity. Next slide, please. So let's now turn to the full year. Ocean Cruise had a fantastic start to the year, and bookings for the full year are strong. We do expect profitability in the second half to be impacted by the Spirit of Adventures routine dry dock for 18 nights later this month. In River Cruise, bookings for the full year are also ahead of the same point last year and would expect the same from profitability. The usual seasonal trends will mean that profitability in the second half is likely to be lower than the first. The peak trading months for our Travel businesses are typically August to October. And as a result, we expect that profitability will be materially higher in [ H2 ] as we benefit from higher revenue on the same cost base. In Insurance Broking, we expect the trends that we saw towards the end of the first half of the year to continue for the second half, and Mike will touch more on this shortly. And as Insurance Underwriting is now on a much stronger footing, we expect further underlying PBT growth in the second half of the year, alongside a continued reduction in the reported net combined operating ratio. What this all means for the group is that while the mix has changed slightly with more weighting towards Cruise and Travel, we still expect the full year underlying PBT to be broadly consistent with that of '23, '24 in line with our previous guidance. And with that, I'll now hand over to Mike, who's going to cover our strategic progress.

Thanks, Mark. Now let's turn to look at our broader group strategy, our progress in the first half of the year and how the potential transaction with Ageas fits into that. As a reminder of what we've laid out previously, this slide sets out our strategic direction. Our vision is to become the most trusted brand for older people in the U.K., and we plan to deliver that through our growth plan, which is focused on 3 priorities. These are: maximizing our core businesses, reducing debt through capital-light growth and growing our customer base and deepening our customer relationships. Mark has already updated you on our progress with debt reduction, and I will cover off the progress we've made with maximizing our core businesses and customer engagement over the coming slides. Next slide, please. So how does an insurance partnership fit with that strategy? At present, Saga is responsible for the entire value chain for Motor and Home, which includes sales, marketing, distribution, manufacturing, policy administration and claims handling. This is both complex and costly and involves the underwriting of risks associated with the end-to-end insurance operation. Over the past few years, we've seen increasingly competitive insurance market conditions. While many of the drivers behind these conditions are cyclical, they have led to declining volumes and falling profitability. We've spoken before about where our strengths lie being in our strong brand, customer reach and our data and insights. We are, however, increasingly competing in insurance markets, where irrespective of this, scale and infrastructure are critical. While in the medium term, Saga could address its structural disadvantages in these areas, we believe there are good options to combine our strengths with insurance partners that already have these advantages. In that regard, at Ageas, with its extensive expertise in insurance partnerships, was the obvious choice of partner for Saga. The outcome would ultimately be a less complex, lower risk business model, delivering the same high-quality products and services that customers enjoy today, but delivered in a more efficient and competitive fashion. Next slide, please. Looking at the parameters of the proposed transaction. These are laid out on this slide in a bit more detail. Firstly, Ageas would acquire our Underwriting operations for a total consideration of GBP 67.5 million. Of course, the sale of AICL would be subject to regulatory approval, as you would expect. The 20-year affinity partnership would move us to a lower risk and more efficient commission-based model for Motor and Home without PMI and Travel insurance products remaining as they are today. The partnership would leverage the strength of Saga's great brand, marketing reach and customer base, alongside Ageas' extensive and growing U.K. Insurance operations. Both Saga and Ageas have significant knowledge and experience in what it means to serve older people in the U.K. and when combined, would create a powerful partnership designed to return our Motor and Home insurance operations to growth. Under the proposed arrangement, Ageas would become responsible for the manufacturing, servicing, claims handling and administration for Motor and Home. And importantly, this would all be migrated to their systems. Saga would continue to offer its Motor and Home insurance proposition through Ageas and be responsible for driving sales and marketing alongside a supportive role in future product development. Touching on the economics, we would receive an upfront consideration of GBP 80 million. This may be supplemented with bonus considerations of up to GBP 30 million in 2026 and a further GBP 30 million in 2032, subject to certain volume targets being met. Saga would then receive ongoing commission based on the Motor and Home gross premiums achieved. Next slide, please. And so to wrap up before we move on to Q&A. The group delivered a strong first half result, with underlying PBT more than 3x greater than the same period last year, driven by outperformance across our Cruise and Travel businesses. We are now well positioned for growth. We have strong visibility over the trajectory for Cruise and Travel, both of which are expected to continue growing. And we are in exclusive discussions with Ageas in relation to a strategic partnership, which is designed to return the Insurance business to sustainable growth. On top of this, we are continuing to reduce our debt and have a clear deleveraging path driven by continued strong business performance. We continue to focus on driving greater customer engagement, enhancing our data and insights and ultimately, growing the number of customers that we serve. Overall, we've had a positive first half to the year, making significant progress in hitting a number of key milestones. I'm excited about the future of Saga as we position the business for long-term sustainable growth and move to delivering even better products and services to our customers in the future. Thank you for listening. We'll now move to Q&A.

[Operator Instructions] But just while the team take a few moments to review those questions submitted today, I'd like to remind you recording of the presentation along with a copy of the slides and the published Q&A can be accessed via your Investor dashboard. As you can see, we've received a number of questions both pre-submitted and throughout today's meeting, thank you very much for submitting those. And perhaps I may start with the first one here relating to Ageas. Was Ageas the only partner to enter discussions over insurance partnering?

Thanks, Paul. So look, I think I'll answer that question slightly more broadly just to give some more color on that partnership. But taking that question in particular, we talked about partnerships for most of this year. So we started talking about Cruise in January, and I think we first talked about Insurance in April. So clearly, this is the end of a substantial piece of work. We've looked at all options. We looked to multiple partners and run a comprehensive process to consider the best options for Saga. And this -- that would have been a competitive process, and this is the option that we've landed on as a result of that comprehensive exercise. We're very excited about the opportunity. We think it is the right option for Saga. So that's a little bit of color on the process. However, let me just take a step back and just give you a bit more color on the transaction itself because I realize it is a meaningful update that it's important, everybody understands. So as I said, we think it's a really exciting opportunity for Saga and Ageas, but importantly, for our customers, too. It brings together 2 great businesses, Saga with its brand and marketing reach and its data and insights, combined with Ageas' first-class Insurance operations. Really importantly, they already have substantial experience in serving customers over 50. I think it's around 70% of their customers are already over 50. So there's a lot of compatibility between the 2 businesses, and they've got expertise in running partnerships. That is what Ageas do. They partner with brands to deliver insurance propositions. So we get the best of both worlds, which is Saga's brand marketing reach, data and insights, combined with a scale insurance operator that can really bring the efficiencies and expertise to partner with us on an increasingly competitive insurance market. It moves us to a lower risk model where we're no longer exposed to the insurance risk associated with Home and Motor, and we would, going forward, be a -- the model would be a commission-based model. We would have lower operational costs and complexity and transferring those costs of operations over to Ageas. And we would have joint capabilities that really prime us to continue to grow that business. Really importantly, as we look forward for our refinancing, that puts us in a very strong position when it comes to looking at each of our respective businesses and the prospects for growth as we go forward. The sale of AICL was GBP 67.5 million. We've talked about that already. And the affinity partnership deal would cover Motor and Home. The -- an important point to help you understand is just the timings of the partnership. Really importantly, we haven't signed a deal yet. We are just in exclusive negotiations. But you will have gathered from the level of detail that we put into our announcement and Ageas have also that we're clearly in advanced stages of those negotiations. But once we do sign, assuming that we do, then there would be a 12-month build stage, where Ageas would build a platform for Home and Motor, upon which we could then transfer or to which we would then transfer Saga customers. So you would have 12 months of status quo. Thereafter, we would then go live, and we would then spend the next 12 months migrating our customers across to Ageas' platform. And it would be on that go-live date that the GBP 80 million affinity partnership proceeds would be received. And the economics of the partnership would stop from that point. The AICL completion would run in parallel to that, and we would expect upon signing for there to be a 5 or 6 months process of completion largely related to the work we would do with the regulators, and therefore, we would expect the AICL completion to go through around about March, April next year, and the consideration for April would be received at that point. So what would it deliver? It will deliver a hugely simplified model for Saga. It would transfer insurance risk to Ageas, who are a scale insurance player that deal with that day in, day out. And it would set us up for growth as both sides set to grow our volumes and our customer numbers from there. We would benefit from significant operational efficiencies, and I would expect volume and profit growth to grow over the life of the partnership. A question that some of you may ask is, well, you haven't disclosed commissions. So can you give us any color on that? We're not able to disclose the commission percentage. It will be a percentage of gross written premium across Home and Motor, but it is a confidential number that is commercially sensitive, and therefore, we're not able to disclose that. But to help you think about what this model looks like, once we are fully transitioned across to Ageas and up and running, we would expect our Insurance business to be making similar profit and achieving similar volumes, if not exceeding those to that, which our Insurance business achieves today. Paul, can I just hand to Mark, just quickly talk about the cash flows because I think -- color on that.

Yes, absolutely. Thanks, Mike. So as Mike said, there's 2 elements to the cash flows. The first associated with AICL, which will flow once we receive regulatory permission for the change in control, that's expected in Q1, Q2 next year. So the GBP 67.5 million will flow at that point. There are some deductions against that of roughly around GBP 20 million. Half of that relates to properties, which are currently owned by AICL, but are used by the group, and therefore, we will transfer them out prior to completion. And then the residual half relates to what would be sort of typical transaction costs and then also a de-participation payment to the defined benefit pension scheme that Saga operates relating to the AICL entity. The second, cash flows are around the GBP 80 million associated with the affinity partnership agreement. And again, as Mike said, that is paid on the go live of the contract, i.e. when Ageas starts writing Saga policies. There is an unwind of working capital that happens within the Saga business. The Saga business -- the Saga Insurance business has benefited from a negative working capital as we receive customer payments at the start of their insurance policy, and we remit those amounts to underwriters somewhere between 30 and 90 days depending on the counterparty and so as the policies transfer to Ageas and therefore, customers will pay Ageas their premiums, that negative working capital balance will unwind. And the way to think about the quantum of that is the GBP 80 million is broadly offset by that working capital outflow.

Next question we've got here is, aren't you exiting insurance at the worst point in the cycle and retaining cruise ships towards the top of their cycle?

Okay. So really importantly, we're not exiting insurance. We're continuing to offer the same great products to our customers that we offer today. But we think this is a much more efficient means by which we can offer those products. We also think that the combination of Saga and Ageas will mean that we can deliver more products and more volume and grow our profitability more quickly than we would be able to if we were to do this on our own. So it's about enhancing and growing rather than exiting anything on insurance.

Next question here, just following that theme. Does management have a view on Saga's intrinsic value, especially after the Ageas deal?

Thank you. So look, I think the way to look at this is -- if you look at our profitability levels and you look at the multiples that some of our peers are trading at, then I think you would quickly reach the conclusion that our share price was undervalued. What will change that will be 2 things. It will be profit growth, continued profit growth. But really importantly, it will also be reducing our debt. So also I'm not going to give you a valuation. I think you can understand why reducing our debt, moving to a capital-light model and continuing to grow our profits fits absolutely the heart of driving shareholder value and that's what we're focused on. The Ageas deal is absolutely in the sweet spot for that because it generates cash flows to support our deleveraging, but also puts us on a lower risk insurance model to mean that we will continue to grow on a commission-based lower-risk basis without the bumps in the road that arise from having an end-to-end Insurance, Home and Motor proposition. But it also means we partner with Ageas, who are very, very active and keen to grow their presence in the U.K. And so together, we can achieve more than we would do on our own. And I think that fits perfectly with driving shareholder value.

The next question we've got here is, what's caused the change from trust to 70% escrow in holidays?

Mark, you want to take that?

Yes, absolutely. So this happens as part of our discussions with the CAA each year. So by law, we have to offer customers financial protection. That is part of the conversation with the CAA each year as we renew our Travel licenses, which allow us to operate. And the 100% trust arrangement was something that was put in place during COVID, obviously, when Travel businesses were under a lot of stress. And prior to COVID, they operated in a slightly different way, but it is much more akin to the 70% structure that we have today and reflects the fact that the sort of liquidity and sort of pressures that the travel businesses were under during COVID have ceased.

So I think you can see that as positive on 2 fronts. One is it's clearly, the CAA take a more positive outlook on our liquidity and credit position as we continue to delever, but it also means that it's cash flow positive as that percentage comes down, albeit we're not expecting it to materially come down further from that.

What can you say around the sale and leaseback discussions on Cruise?

So we haven't talked about sale and leaseback on Cruise, albeit that has been widely suggested, what we've talked about is partnership opportunities on Cruise. So as a reminder, what we have said is, we've got a fantastic Ocean Cruise business, but the capacity is now starting to get close to optimal levels. So we're at load factors of 90%. And whilst that could go a little bit further, there's only so many people we can put on the 2 ships that we operate. It's a great business, and there are significant waiting list now for people to join our cruises. So there is clear demand for a third or fourth ship and therefore, when we look at partnerships and as we have looked at that over the course of this year, we've had 2 objectives. One is can we release some capital from that great business to further enhance our deleveraging path. And secondly, can we do it in a way that strikes strategic partnerships that would continue to allow us to grow that great Ocean Cruise business. So those have been the objectives. And I think when you look at it like that, you can see how a straight sale and leaseback of a ship doesn't achieve that, so that's not been on the list, albeit we've looked at a whole long list of different things that to narrow down what strategic options might work for us. So we continue to have discussions and look at strategic partnerships for Cruise. Those discussions continue. But at this point, we don't have anything to update on.

We have got another question here, but I think you've just covered that off really. What is the expected time scale for establishing those partnerships, strategic initiatives on Ocean and River Cruises? And what's the key objective just in case there's anything further to add? But I think you might have covered most of that off.

Yes, I have covered that...

Perfect. Great. The next one here, just following that theme, who are your major competitors for Cruise? And what's the real competitive advantages versus theirs?

So that's the really interesting thing when you look at our Ocean Cruise business. There really are -- well, there really is nobody that is operating in the market that we operate in. You've either got very small cruise ship operators that are operating with smaller, older ships or you have more typically very large ships catering for a very different market. When you look at the size of our ships and the market that we serve in the U.K., there is very little competition in that market, and we do it brilliantly. So we have a very differentiated proposition. The berths on our ships are less than 1,000 per ship that compares to GBP 3,000 or 4,000 on the majority of operators in the U.K. But not only that, the things that are included and the luxury components within our Cruise proposition really do stand us apart. It's a very tailored proposition for the over 50s. And in reality, over 60s Cruise market. And there's very few people tailoring to that market and nobody doing it as well as we do. So hence, the -- when we put out a new itinerary, it sells very, very quickly and until we put that itinerary out, we have a constant stream of customers waiting and queuing to take up that proposition. And that's why the load factors hitting 90%. But really importantly, it's also why the per dims now are growing rapidly year-on-year because the real demand and supply component that customers are willing to pay extra to get on our ships knowing that they've got to get in early.

Saga continuing to run the private jet tours beyond 2025, and what figures do you have on its success?

So we ran those cruises in 2023 -- sorry, cruises. We ran those private jet tours in 2023. We haven't run any in 2024. And it is just another tour. We look at it on its merits. It grabbed some headlines. But I think probably the way I would look at that is you can see, as I talk about our vision and growth objectives, I talked about growing our core -- maximizing our core businesses. And so yes, we will look at things like that from time to time. But fundamentally, I want to grow our core tour business. I want to grow our tour -- our core holiday business, grow tailor-made as well. And whilst we did that in 2023, and it was profitable, demand for it has been pretty light since then. It is at a price point that really is beyond the majority of our customers. And just out of interest, we have this year instead or for next year, replace that with -- on our itinerary with an Atlantic -- sorry, an Antarctic and South American tour and cruise option, which is already selling very well. So I think that's more in keeping with our focus right now, how do we maximize the things that we do really well rather than some other things that might distract us from those great businesses.

What news can you give on assets held for sale? Are the former office sites subject to an uplift clause reliant on planning?

Mark, do you want to just talk briefly about property?

Yes, absolutely. So just as a reminder, we own a number of properties across the group. Some of them during COVID were, as we transition from a sort of office environment to work from home were empty during COVID, and we've not moved back into them. So we've been undertaking a sales process across the property estate to rightsize it and reduce costs over the past couple of years. Currently, none of those -- none of the properties that we have on the books today are under a sales contract. So there isn't a -- there isn't any sort of sales contract that has an uplift mechanism in them. Clearly, as the question indicates, I think there is a difference between a site that doesn't have planning versus a site that does have planning. And to the extent that we are able, we will look to capture some of that upside.

Another question kind of perhaps follows on from that. I know Saga owns various redundant assets, which could be sold to improve their cash flow position. I'd be most interested, for example, to learn what are the plans for the Folkestone site and any timetable for this sale?

Sure I tell you that, Mark, because I think it's probably beyond just pure property strategy. I think it's fair to say that as we look at the things we've been looking at for this year, one of the things that has very much been on my list is, is the core values of the business taking us back to what we do best and making sure that our colleagues have Saga customers, our culture and values at the heart of everything that they do. So we have a very remote working structure at the moment, and we're not looking to move away from the hybrid nature within which we work. But that said, that we are looking at whether there is a central base for our colleagues much like Enbrook. So we currently have a number of different hubs dotted around mostly Kent and some beyond. And so the site at Enbrook, certainly is an area that we're looking at as to, does it make sense to reoccupy some of that as our Spiritual Home and make sure that, that is the -- an effective base for Saga to bring everybody together. So more to come on that in the future, but it's something we're considering.

Question here. First, I'd like to congratulate the Board for the results and the transaction with Ageas. I'd note from the last reports and accounts, there's an outstanding 5.5% corporate bond, Spirit of Discovery ship loan and Spirit of Adventure ship loan with maturity dates of July '26, June '31 and September '32, respectively. Is it the intention and ability of the Board to use Saga's improved cash flow to buy back these loans at the earliest opportunity or does Saga have to continue paying interest on these loans until their maturity?

Okay. I think the other loan that is mentioned there is the Roger De Haan loan that also expires in 2026. I don't think it's on that list. But the way to look at this is, Saga will never be debt-free, and we wouldn't want it to be debt-free. We want to have the right level of debt that can be supported by its profitability and that debt can be used to invest in the business and continue to grow. So that's what all major businesses will be doing. The only point at which you would go debt-free is at the point you cease to have any areas that you can grow and invest in. So that's the first point. Therefore, when you take that and look at our 2026 maturities, you should see that we will continue to reduce our debt levels as we go through the coming years. That is what we're doing now, and that's what we'll continue to do. The Ageas transaction accelerates that and that it gives us a little more -- it's not transformational levels of upfront cash flow because we do get material ongoing commissions. But those upfront cash flows do give us an extra leg up in terms of further deleveraging such that by the time we get to refinancing the 2026 debt, we will have less debt to refinance. But really importantly, we've got a business model that would set us up well for those refinancing discussions. Am going to just pause there, and see if Mark's got anything he wants to add.

No, nothing in addition to that, Mike. Thanks.

And just perhaps a follow-on on that. Again, you kind of covered off that whole debt-free position. But how much of the GBP 67 million AICL consideration is expected to be available to reduce debt?

Mark, I think you covered it off a moment ago, but do you want to just take that again?

Yes, I did. So the GBP 67.5 million, as I said, there's about GBP 20 million that is going to get deducted from that. So GBP 47.5 million is principally available to reduce our debt position.

What are the key challenges and sensitivities in relation to forecasting revenue and profit forecast for Saga? What level of future profit visibility would you normally expect?

Sorry, that was me taking a sip of tea as opposed to a deep breath. So look, I think that's a very helpful question actually when you think about what we are doing with Ageas. So when we stand back and look at this business, we have an Ocean Cruise business that is growing very well. We think there is opportunities to grow that further through partnerships with a third or fourth ship. But clearly, even absent third or fourth ship, load factors can rise a little, and we think there is plenty of scope for per diems to continue to rise as we add more value into the proposition. And indeed, as customers clamor for the space that we have on those ships. So Ocean Cruise has got strong growth trajectory from here. We don't talk much about River because it tends to be sort of bracketed into is an ocean -- isn't cruise doing well, and therefore, gets crowded out by the size of the Ocean Cruise profits. But River is a rapidly growing part of our Cruise proposition. And as we go forward over the coming years, there will be material growth coming through on River. We put the River business under our Ocean Cruise team around about 18 months ago and with the view of delivering a very similar proposition on our River Cruises as we do on our Ocean Cruise, and that's really worked very well. Hence, the growth in profits that we're seeing. But as we look forward, River really does have a significant growth potential from its relatively low base today. So you have an Ocean and River Cruise business that is well set for growth and indeed is growing. Travel is also growing rapidly. So we have turned into a profit for the first half of this year from a loss every year since the pandemic, but really importantly, the full year profits will be strong. And so we'll have gone from a loss-making business only a couple of years ago to strong profits, and we expect that to continue to grow. So right the way across our Travel businesses, growth is coming through, both in terms of customer numbers, but also profits. The money business is small, but we have worked hard to create the foundations that we think will now deliver material growth as we go forward. So you can see that in terms of the number of products that we've launched that will now mature and attract customers and profits over time. Sorry, my screen has gone off a bit. 2 seconds. So money has significant growth potential. And then you're left with an Insurance business that has clearly been through the mill over recent years. And what the Ageas transaction does is really derisk materially the outlook for those profits. So as I've said before, we would expect to be able to take the volumes and profits that we're achieving today and achieve those in the Ageas model in the future and indeed, grow further beyond those, which we can today. So that business model is one that really means that we really like the fire under each one of -- each of our respective businesses and can be confident in the growth trajectory going forward. The current Insurance model means that clearly, it's a much more volatile profit stream to forecast for. And hence, this model can achieve similar profit levels, grow those profit levels, but on a lower risk commission-based model.

I'm just going to combine a couple of questions here just on Ageas, part of which you've already answered. But how many other parties did you have serious negotiations with before opting to go with Ageas? Why is the go-live date so far out? Again, I think you've covered that off in the presentation. But what proportion of Ageas business would Saga account for?

So yes, so we've talked -- we've run an extensive process to talk to most of the large insurance providers. So I won't labor that process again. The -- sorry, Paul, you have to remind me the second component of that question.

The second component was, what proportion of Ageas' business would Saga account for?

Yes. So I think they are over 4 million policyholders. And we have -- actually, I'm going to let Steve give a bit more color just in terms of not only the number of policies, but also their broader perspective. Steve, do you want to comment on that?

Yes. Thanks, Mike. Yes, Ageas has about 4 million customers at the moment. And as Mike said earlier on, about 70%, slightly more are over 50%. When we bring our scale to that, we'd account for between 20 -- north of 20% of the customer base.

Super. What is the particular expertise required to serve customers over the age of 50?

Well, that's a very, very broad question. But I think it cuts to the heart of what Saga is, and it's frankly different things in different businesses. So if I was to take our Cruise business, then look, why do our customers that tend to be over 60, many of them over 70, like what we do for cruising right? Well, firstly, once customers start to get to that age, many of them are done with dealing with the hassles at airports. So they like our cruise proposition. Our VIP car service will pick them up from the door, take their bags and the next time they see, those bags will be in their cabin on the ship, which really takes out a lot of the hassle for that customer and that demographic. When you get on the ship, it is a smaller ship. So it's not the huge ships that the likes of [ P&O ] and others are sailing around in. It's a ship that makes sense of the needs of our customer base, the -- everything on that ship is designed. We've got significant single cabin proportionality, which means that with our customers, a number of those customers or a large portion of customers are solo travelers because they've lost a partner. And therefore, when they come on our ships, they don't feel like they are out on a limb because actually, we catered very well for solo travelers both in terms of how we run meal times, how we set up out. We have many single cabins. So look, I could go on and on about cruise, but it is every aspect of that proposition is tailored for our customer demographic. When you then look at touring, it's a completely different proposition. So touring tends to be for a more active customer base, and therefore, typically, while still over 50, a younger over 50 than those that we typically see on cruise. And therefore, what gets tailored for that market is, well, different age groups within that will look at different pace of tours. So we have tours that are more active and tours that are less active. We have tours that are spread over 3 weeks to give customers a bit more time to dwell in destinations and not have to change hotels every night. Other customers towards the younger end wants to move on and see an awful lot in a 2-week time frame. So it's really horses for courses. But what we do, by virtue of the nearly 10 million customers we have in our database, is we can understand what customers are looking for right the way across each of our product sets and then tailor those propositions for that. By the way, it also means we can look at things that we don't currently do today and see what customers are looking for, where they're not well served and look to fill those gaps, which is something that obviously is on my mind for the future.

To what extent are your growth ambitions constrained by the number of cruise ships you have?

So I think I've already talked about that. Look, clearly, there's only so many people we can take on our ocean ships. There are only 2 of them, but we are still building on load factors and that can go a little bit more. But in terms of profit growth, we can continue to add more value in per diems and we can add more value purely, more profit purely because customers are increasingly competing for this limited space on those cabins. But as I've said moment ago, let's not forget River Cruise, which is a much earlier trajectory in its growth phase, and there is very material growth that we are seeing and will continue to see coming through on River Cruise.

Fantastic. We're just coming up to the hour mark. And I think most of the other questions you've got there, we've covered off and of course, the company can review those questions and submit responses where appropriate to do so. Before redirecting investors to provide you their feedback, it's particularly important to you and the team. Mike, could I ask you for a few closing comments, please?

Sure. Look, we're very pleased with the results we've put out. It's been a busy 6 months, but I think it's worth in terms of the numbers we've put out. And we're very excited about the discussions we're having with Ageas, which I think, will be very helpful to an Insurance business that's clearly been under pressure in the last couple of years. But very much appreciate everybody's support. I appreciate you dialing in today asking your questions and listening to the team. And look forward to updating you in due course as we look to sign the Ageas deal and indeed talk to you about further growth in the future.

Fantastic. Thank you all for updating investors today. Can I please ask investors not to close this session. You should be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete, and it's greatly valued by the company. On behalf of the management team of Saga plc, I would like to thank you for attending today's presentation. That concludes today's session, and good morning to you all.