Saga's Transformation Bears Fruit: Profit Soars and Debt Falls in 'Pivotal' Year

Holidays: volumes up, UK trips return

• Underlying Profit Before Tax: £14.0m (up 31%).
• Underlying Revenue: £185.1m (up 10%).
• Passengers: 60.8k (up 11%).

Forward Holidays revenue for 2026/27 is £165.9m (up 4%), with 51.6k passengers booked.

Insurance Broking: simplified and growing under Ageas tie-up

The big structural change is done. Saga sold Insurance Underwriting to Ageas in July 2025 and launched a 20-year motor and home affinity partnership in December 2025. That removes underwriting risk and reduces volatility, shifting Saga to a commission-based model while retaining the customer relationship.

• Underlying Profit Before Tax (continuing operations): £16.9m (up 17%).
• Policies sold: 1.386m (up 2.6%); policies in force: 1.294m (up 1.6%).
• Motor policies in force grew 12%. Home policies in force fell 19% due to fewer renewal opportunities from last year’s sales dip.
• Travel insurance policies in force rose 34%; PMI sales increased 7%.

Home new business on the Ageas platform is due by the end of April 2026, with renewals for motor and home to follow later in the year. Management expects Insurance Broking profit to be at least in line with 2025/26 and ahead of previous guidance as the partnership beds in.

Balance sheet, cash and refinancing

Debt reduction is a clear bright spot. Net Debt fell 16% to £499.5m and leverage improved to 3.7x, within an 8.0x covenant. Available Operating Cash Flow surged to £205.9m, helped by stronger Ocean Cruise cash generation and £60.0m of upfront proceeds from Ageas for the affinity partnership (excluded from Net Debt under facility rules until working capital fully unwinds).

Corporate debt has been pushed out: a new £335.0m term loan now matures in January 2031, and the rate is hedged with interest rate swaps until August 2028. Liquidity is sound with £189.7m of Available Cash and undrawn facilities of £116.6m (DDTL) and £33.4m (RCF) at year end.

Dividend remains off the table. The Board does not recommend a final dividend, reflecting the priority to reduce Net Debt and restrictions under financing and ship debt arrangements.

Outlook: more profit, less leverage, clear targets

• 2026/27: management expects another step up in Underlying Profit Before Tax, with Travel driving growth and Insurance Broking at least in line with 2025/26.
• Further reductions in Net Debt and the Leverage Ratio are expected in 2026/27.
• Hedging: 100% FX hedged for 2026/27 and 2027/28; oil hedged 100% and 75% respectively.
• Minimal exposure to the Middle East in current programmes.
• Medium term: still targeting at least £100.0m of annual Underlying Profit Before Tax and leverage below 2.0x by January 2030.

Why this matters for investors

• Return to profit: statutory PBT of £2.1m ends a seven-year run of losses. That is a psychological and financial turning point.
• Travel momentum: higher pricing (per diem) and strong load factors in Ocean Cruise underpin earnings visibility, with forward bookings supportive.
• Lower risk Insurance: the Ageas deal removes underwriting volatility, clarifies cash generation and simplifies operations.
• Deleveraging underway: Net Debt down £93.3m and leverage at 3.7x gives headroom versus an 8.0x covenant.

The watch-outs

• Finance costs: net finance costs rose to £43.1m after refinancing at higher market rates. The hedge helps, but interest remains a notable drag.
• Travel concentration: management flags that most near-term profit comes from Travel. Any sector disruption would matter.
• Home insurance: policies in force are still lower year-on-year; full benefits of the Ageas platform land after renewals migrate later in 2026.
• No dividend yet: deleveraging stays the priority and there are restrictions while leverage is above 3.25x and ship deferrals are outstanding.

Operational colour worth noting

• Ocean Cruise interest cover and debt service cover both improved, reflecting stronger ship cash generation.
• Publishing builds brand reach: over 100k magazine subscribers, 14.7m website visits, and a new podcast with over 8m views since December 2025.
• Money division launched a new savings partnership with NatWest Boxed, starting with an Easy Access Savings Account in January 2026.
• Saga rejoined the FTSE 250 in its 75th year, a handy signal of market rehabilitation.

My take

This is a clean execution year. Saga has simplified, de-risked and grown at the same time – not easy. Travel’s pricing power and high repeat rates offer resilience, while the Ageas tie-up turns Insurance into a steadier commission engine. Cash generation was much better than expected, and leverage is now heading the right way.

Near term, the task is to keep ships full at higher per diems, complete the Insurance migration to Ageas, and keep slicing debt. With hedges in place and bookings supportive, the set-up into 2026/27 looks favourable. The medium-term ambition of at least £100.0m of Underlying Profit Before Tax and leverage below 2.0x by January 2030 remains credible if current trends hold.

What to watch next

• Delivery of motor and home renewals onto the Ageas platform later in 2026 and the impact on margins and retention.
• Ocean and River Cruise booking curves and per diems through peak selling periods.
• Progress on Net Debt reduction and any updates on refinancing costs post-2028 hedge expiry.
• Any signals on reinstating dividends once leverage thresholds and ship facility conditions allow.

Overall, a pivotal year that puts Saga on a firmer course: better earnings quality, stronger cash flow and a visible path to lower leverage.