SAGA_Review by shuifanglj

VIEWS: 171 PAGES: 33


                                                             review 2004
                                        is what Saga is all
                         nn   ections                       abou
                    d co                                         t....
       M aki

                                                           review 2004
                                                                                                                                                                                                               r t u n i t y.
                                                                                                                                                                                                  v ery
                                                                                                                                                                                  o   st

                                        is what Saga is all                                                                                      by
                         nn   ections                       abou                                                                             s
                    d co                                           t....                                                                 ive
              g goo                                                        ….w                                                  s’
          kin                                                                    e ma                                     mer
       Ma                                                                             ke a p
                                                                                             ositive impact on our c usto

                                                                                      2.8million customers served
                                                                                                                Profit before tax up 62.5% to £81.6m

                                                                                        EBITDA up 56.8% to £94.7m
                                                                                                  12 years compound annual EBITDA growth of 27%
co nt e nt s

overview of saga                              01

chairman’s report                             02

chief executive’s review                      04

saga’s marketplace                            06

insurance & financial services                10

holidays & cruises                            14

media connections                             19

magazine & radio                              20

saga in the community
and the workplace                             23
finance director’s review                     24

contact information                           ibc

Cover photo: Many thanks to Alison Baldwin,
a guest on Saga Rose, April 2004

                                                    Annual                             EBITDA                          Total Group
                                                    Turnover                           Growth                          Customers
                                                    £ millions                         £ millions                      millions
                                                                            383                            95                                  2.07
                                                                      337                                                            1.75
                                                          275                                         60               1.30

                                                    00 01 02 03 04*                    00 01 02 03 04*                 00 01 02 03 04*

                                                    Turnover and EBITDA figures are stated excluding discontinued operations, exceptional items,
                                                    goodwill amortisation and impact of prior year adjustments.
                                                    *Financial years end 31 January.
Saga serves people aged 50 and over through a range of products and services designed specifically for them. We work
hard to understand our customers’ lives and needs, striving to promote the best value and service, and to build lasting
relationships by communicating directly with our customers. Our integrated marketing approach enables us to present
all our services to all our customers, a strategy that underpins the company’s consistently positive financial results.
People aged 50 and over come to Saga for insurance services, financial and investment products, the widest range of
holidays, and cruises. Our award-winning magazine and radio stations are dedicated to serving this audience. Whatever
we do, we are always looking ahead, constantly evolving and improving our products and services to meet the needs of
an expanding and fast-changing market.

                                                                                                                          SAGA REVIEW 01
                 Chairman’s Report
                                           from Roger De Haan

                 At a time when Saga stands on the threshold of a new          Saga’s customer-centred culture is part of the legacy
                 era, the company, its management and staff can feel           established by my late father when he founded Saga back
                 justifiably proud of the progress that has been made in        in 1951. In fact, in many ways, he established the blueprint
                 recent years. The excellent financial results of year ended    for the business, even though it has grown to an extent
                 31 January 2004 represent Saga’s 12th consecutive year of     and in ways he probably never imagined. Sidney De Haan
                 profits growth. The company now serves over 2 million          identified the value in providing holidays specially for
                 customers.                                                    older people, thereby tapping into a market which was
                                                                               ignored by others. He established the practice of dealing
                 I believe that the key to Saga’s success has been an
                                                                               direct with customers, which was to eventually evolve
                 absolute focus on our customers. We have a very clear
                                                                               into a direct database marketing capability, and which
                 strategy of serving people aged 50 and over, through
                                                                               has enabled Saga to build lasting relationships with
                 providing services specifically designed for them. We work
                                                                               customers and a much more immediate understanding
                 hard to understand the lives of people in our market, and
                                                                               of them.
                 their needs and interests, and to deliver relevant services
                 of high quality and excellent value. We also strive to        Over the past 15 years Saga has undergone enormous
                 achieve the best standards of customer service.               change. The company has grown by developing a broader

Saga has experienced huge changes in the 53 years
since it was founded by the late Sidney De Haan.
Our commitment to provide high quality products and
services, excellent value for money and really look
after our customers is as important to us now as when
we first began trading.

range of services, particularly insurance and financial      50 and over, all of whom have either bought from Saga         with our target market, and the strength and reputation
services, by attracting a growing number of customers,      or made enquiries for information. This is a repository for   of the Saga brand, are the key assets which have delivered
and by working hard to establish high rates of repeat       recording all our customers’ interests, enabling Saga to      success to date, and which ensure Saga is well-placed for
and renewal business. Saga remains most famous for          deliver relevant and timely information about products        a successful future.
its holidays, but today most of our customers (76%) are     and services, and to personalise customer service and
purchasers of insurance and financial services. Saga has     written communications. It gives us the ability to cross-
established, and continues to expand, a successful cruise   sell products to existing customers, broadening and
ship operation. We have also developed a market-leading     deepening their relationship with Saga; it facilitates
magazine, and created a growing network of pioneering       building the business through introducing new services;
radio stations. Brand awareness now stands at 89%           it helps the company better to understand customers by
                                                                                                                          ROGER DE HAAN
among Saga’s target market, and the company enjoys          tracking their interests in a wide range of subjects.
an enviable reputation for trust and understanding the
                                                            In an ageing society, Saga stands to benefit from a
needs and interests of people aged 50 and over.
                                                            demographic shift which will see its target market
At the heart of the Saga business is a customer database,   increase by 5 million people over the next 20 years.
which now gives us access to over 8 million people aged     Our database, our marketing and business expertise

                                                                                                                                                                       SAGA REVIEW 03
                                                                                                                                               Chief Executive’s Review
                                                                                                                                                                      from Andrew Goodsell

Saga enjoyed record results in 2003/04, with profit before                                           Iraq war and SARS put a brake on business at a critical time      The decision to establish Saga Insurance Company Ltd as
tax* of £81.6m (up 62.5%), on turnover of £382.7m. Our                                              in the booking cycle. However, I am delighted to report that      the underwriter for our motor insurance product was a key
management and staff demonstrated their commitment and                                              despite these setbacks the travel business increased profits       strategic development in 2003. This is the first time Saga has
talent in a challenging environment, and continued to build                                         by 18% through the careful management of costs and tactical       assumed underwriting risk, and it is an exciting development
on the strategy which has delivered Saga an average annual                                          marketing. The first summer cruise season of Saga Pearl,           which will enable us to control all aspects of our relationship
compound growth in EBITDA (earnings before interest, tax,                                           operating under charter, provided the capacity to grow our        with the customer, especially the critical claims handling
depreciation and amortisation) of 27% since 1992.                                                   in-house cruise product, and a new joint marketing initiative     area. Saga Insurance Company Ltd started to underwrite
                                                                                                    with Hilton introduced a range of best-value UK short breaks.     Saga’s motor book from 1 January 2004, and has already
Insurance and financial services have for several years been
                                                                                                                                                                      achieved some significant cost savings and efficiencies,
Saga’s major source of earnings: 1.9 million insurance policies                                     Saga Magazine continued to build circulation (up 3.4%) and
                                                                                                                                                                      enabling us to maintain margins and to continue to deliver
were issued in 2003/04. Motor insurance has represented a                                           subscription volumes (up 7%), while third party advertising
                                                                                                                                                                      value to customers. As an underwriter, Saga will recognise
key area of growth in the last five years, and has delivered a                                       revenues grew by 8% despite the weaker advertising sales
                                                                                                                                                                      its profits from motor insurance later than it has done
large number of new customers to whom we are increasingly                                           market. Our magazine continues to contribute greatly to
                                                                                                                                                                      previously. This had the effect of reducing profits in 2003/04
cross-selling other Saga products. 2003/04 also saw good                                            Saga’s success, strengthening the brand, building affinity
                                                                                                                                                                      by £3.1 million.
performances from a number of other insurance lines: home                                           with current and potential customers, and providing an
insurance policies issued were up 12%, medical insurance new                                        effective channel to market for all of our products.              Current trading gives us reason for optimism, especially with
business was up 50%, total travel policies issued were up 10%,                                                                                                        increasing confidence in the travel markets. Looking further
                                                                                                    Saga launched its first FM radio station in the West Midlands
and there was a 13% increase in the total number of caravan                                                                                                           ahead, the purchase last year of the sister ship of our very
                                                                                                    in 2001. Last year we opened a second FM station covering
and motorhome insurance policies. Overall, increased sales                                                                                                            successful cruise vessel, Saga Rose, will enable the company
                                                                                                    the East Midlands, and were awarded a new FM licence
and margins, and improvements in operating efficiencies                                                                                                                to further increase capacity to meet the strong demand for
                                                                                                    covering Glasgow and West Central Scotland.
which held increases in divisional overheads down to 5.5%,                                                                                                            this product in 2005.
resulted in an overall profits growth of 49.8% for insurance                                         MetroMail, Saga’s wholly-owned mailing house, handled
                                                                                                                                                                      Saga’s strategy is geared towards further organic growth,
and financial services (including savings and investments).                                          85.4 million Saga mail packs in 2003/04, a 26.7% increase on
                                                                                                                                                                      through maintaining our absolute focus on serving people
                                                                                                    the previous year. Total sales of Saga and third party business
In contrast, 2003 was a difficult year for the travel sector.                                                                                                          aged 50 and over, delivering value and quality and a total
                                                                                                    combined were up 11.2% to £8.3 million.
After a promising initial booking period in late 2002, the                                                                                                            commitment to customer service. The business is constantly

*All reported figures exclude amounts relating to discontinued operations, exceptional items and goodwill amortisation

                                                        Saga’s key values >

    1                                          Focus on serving people aged 50 and over

    2                                 Understand the needs and interests of our customer group

    3      Encourage innovative and imaginative business and product development to address these needs and interests

    4                 Always strive to offer good value, excellent product quality and excellent customer service

    5                     Maintain an absolute commitment to customer satisfaction as the basis for growth

evolving to meet the changing needs of its marketplace,
and will continue to introduce new products and services for
our customers. Future expansion is expected to come from:

> Growth potential within our key business areas

> A regional marketing strategy to lift market share in areas
 where penetration is currently below average

> Further developing our successful cross-selling strategies

> The introduction of new products and services, together
 with enhancements to our existing portfolio

> Opportunities arising from a general increase in the
 population of people aged 50 and over

Saga has immense brand strength, a proven strategy and
a staff and management team with a solid track record in
delivering results. We enjoy 89% brand awareness amongst
our target market, and our database continues to grow,
increasing 7% year on year, now giving access to over
8 million current, past and potential customers. I believe the
business is in great shape to achieve future success.


                                                                                                                        SAGA REVIEW 05
                 Saga’s Marketplace
                            Tim Bull, Strategic Planning Director

                                                             Saga serves a market of 19.6 million people
                                                             aged 50 and over in the United Kingdom.
                                                             Over the next 22 years this group is projected
                                                             to increase by 26%, to 24.8 million, while the
                                                             population of those under 50 reduces by 4%
                                                             or 1.5 million. This ‘age shift’ is a result of the
                                                             ageing of the post war baby boomers, increasing
                                                             life expectancy, and the falling birth rate.

                 There are 12.3 million, 50+ headed households in
                 the UK, with an annual spend of £215 billion of which....   £11.2 billion   is spent on holidays and
                                                                                                                        billion   is spent on insurance products

                 Source: Food & Expenditure Survey 2003-04

                                                                                        PROJECTED % CHANGE IN AGE GROUPS, FROM 2004 TO 2026 (Source: Government actuary 2003 projections)
People aged 50 and over are estimated to account for 80%
of the UK’s private wealth, and 60% of personal savings.
                                                                                                0-17                   18-34                   35-49                   50+
They spend £215 billion each year and are major consumers
of leisure and financial services.
However, it is simplistic to talk about ‘the over 50s market’.                                                        +0.1%
In reality it subdivides into a wide range of lifestyle groups
and market segments. A critical part of the marketing                                         -2.8%
strategy is to understand how needs and interests vary by
segment, and to align products and communications with
these. An example of Saga’s response is the wide range of
travel products available, catering for many different ‘types’
of traveller, and ensuring that we can meet our customers’        The ‘age-shift’ is the result of the ageing of the post war baby boomers, increased life expectancy and the falling birth rate
changing needs over time.

Saga’s market is also characterised by rapidly changing
attitudes as ‘new’ over 50s bring with them different
perspectives, expectations and demands. The first wave of
Baby Boomer consumers are already changing the way we
think about what it means to be over 50, further emphasising
the gulf between today’s ‘50 somethings’ and the first Saga
customers in the early 1950s. Saga’s strength is its ability to                              The percentage of 50+ people with household insurance is                    87%        (17,383,000 people covered)
adapt, using its direct relationship with customers to be able
to monitor and respond to these changes.

                                                                      The percentage of 50+ people with motor insurance is                    62%              (12,388,000 people covered)

                                                                                                                                                                                              SAGA REVIEW 07
                                                                                 The Saga Database

                                                                                                            Holidays & Cruises customers

                       1,578,000                                                                            8.7%                                                                               786,000
                                                                                                                                                Publishing & Radio customers
Insurance & Finance customers


                     > Saga has 2,090,000 customer households, with 2,848,000 individuals within those households.
                                                > 45,200 (2.2%) are customers of all three business areas.
                  > 410,800 customers (20%) have relationships with more than one of Saga’s three main business areas.

                  Insurance & Finance / Holidays & Cruises                                      Holidays / Publishing                                                            Insurance & Finance / Publishing
                            91,100 (4.4%)                                                         75,000 (3.6%)                                                                       335,200 (16.0%)

                                                           Source : Saga Database 3 April 2004. Because of overlapping definitions, percentages add to greater than 100%
                                                  Figures above show the numbers of customer households that have purchase relationships with more than one Saga business unit

                                                                  MetroMail: our mailing house

                                                                  Devising an effective direct mail campaign is only half the story. It requires seamless collation,
                                                                  dispatch and fulfilment to make the campaign work. From its state-of-the-art, 90,000 sq.ft.
                                                                  facility in County Durham, our wholly-owned mailing house MetroMail can handle all stages
                                                                  of the direct mail cycle. It does this both for Saga and third party customers – from processing
Saga’s Group-wide database currently includes details of
                                                                  data and high speed laser printing, through to folding and enclosing inserts, polywrapping,
6.4 million households. That equates to some 8.4 million
                                                                  handling and mailing completed packs. In 2003/04 MetroMail handled 85.4 million Saga mail
people who are either existing Saga customers or who have
                                                                  packs, a 26.7% increase on 2002/03. In the same year, total sales of Saga and third party business
expressed an interest in becoming one in response to a direct
marketing or other external advertising campaign.
                                                                  combined were up 11.2% to £8.3 million.

We manage the database entirely in-house and, while we
make it available to marketing staff across the Group, we
never allow third party access.

The system holds summaries of each individual’s contact
and transactional history, information that can be instantly
accessed – and added to – from point-of-sale systems across
all our call centres. This enables our staff to offer much more
personalised service through easy access to information
relevant to customers’ known interests, as well as saving
customers’ time.

Our database makes connections between customer interest
and service features and lies at the heart of Saga’s strategy
of cross-selling. As a result, 20% of customers currently have
purchase relationships with more than one business area.

                                                                  METROMAIL CLIENTS INCLUDE:                                QUALITY STANDARDS:

                                                                  ANP                          Kwik Fit                     1994 ISO 9002
TIM BULL                                                          Direct Wines                 Leger Holidays               1995 Investors in People
                                                                  Dewhirst                     Middlesbrough FC             2001 QMP (Royal Mail accreditation of mailing houses)
                                                                  Experian                     Newcastle Building Society   2002 BS 7799 (Information Security Management standard)
                                                                  Express Gifts                NHS                          2003 OHSAS 18001 (Health and Safety standard)
                                                                  Home Service                 Theatre Royal                We anticipate accreditation to the ISO 14001 Environment standard
                                                                  JD Williams                  University of Durham         by 30 June 2004.

                                                                                                                                                                                  SAGA REVIEW 09
                               …stay on the move
                                     Saga Motor Insurance
                                     Good value insurance for drivers 50 and over, who are significantly
                                     less likely to make a claim than those under 50.

                                     Saga Motoring Assistance
                                     Breakdown cover at some of the lowest vehicle breakdown
                                     premiums on the market.

                                     Saga Caravan Insurance                                                                                         …take the worry out of home security
                                     Low cost caravan cover that provides for emergency
                                     travel and accommodation.
                                                                                                                                                         Saga Home Insurance
                                     Saga Motorhome Insurance
                                                                                                                                                         Three levels of cover plus a wide range of additional options
                                     Wide-ranging protection for motorhomes.                                                                             meeting specific needs.
                                     Saga Boat Insurance                                                                                                 Saga Holiday Home Insurance
                                     Straightforward policies for most types of vessel including yachts,                                                 Protecting properties in France, Spain, Portugal, Italy, their islands
                                     motorboats, narrowboats and more.                                                                                   in the Mediterranean and the Canary Islands.

                                        designed to help our customers....
                                                                                                                                                …keep their pets healthy
                                                                                                                                                  Saga Pet Insurance
                                                                                                                                                  Protection for cats and dogs – the perfect
                                                                                                                                                  antidote to expensive vets’ bills.
…stay in good health
  Saga Private Medical Insurance
  Prompt, efficient medical care – regardless of NHS
  waiting lists.

  Saga Health Cash Plan
  Tax-free financial support towards dental and optical
  bills, physiotherapy and other common healthcare needs.

                                                                                   …relax and enjoy!
                                                                                         Saga Travel Insurance
                                                                                         Single trip cover offering Standard or Winter Sports
                                                                                         Cover for European and worldwide destinations.

                                    …ensure a secure future for dependants
                                         Saga Accidental Death Benefit
                                         Lessening the financial impact following death due to an accident.

                                                                                                                                                …invest in the stock market
                                                                                                                                                     Saga Share Direct
                                                                                                                                                     A reliable, execution-only share dealing service designed to
                                                                                                                                                     simplify and minimise the cost of buying and selling shares
                                                                                                                                                     by phone and on the internet.

                                             …pay on the spot
                                                   Saga Visa Card
                                                   Credit card convenience with no annual fee plus internet fraud
                                                   guarantee, Saga resort discounts and other exclusive benefits.

                                 Insurance & Financial Services

…save with simplicity
  Saga Secure Savings Account
  Offering an interest rate linked to the Bank of England base rate.
                                                                                                                    …plan ahead
  Saga Secure ISA
                                                                                                                      Saga Financial Planning
  A Mini Cash ISA with interest linked to the Bank of England base rate.
                                                                                                                      Independent financial advice on investing for income or growth,
                                                                                                                      long term care planning, Inheritance Tax mitigation, annuity
                                                                                                                      broking and retirement planning.

                                                                                                                                                                                                 SAGA REVIEW 11
Insurance & Financial Services

                                                                                                       We’ve since applied the same thinking to expand the
We first entered the home insurance market                                                              Saga range of insurance products, each backed up by high
                                                                                                       quality personal service. This now includes motor, motoring
because our research showed that older people                                                          assistance, private medical and health cash plan products,
                                                                                                       travel, personal accident, pet, caravan, motorhome, holiday
represent lower risk. We decided that this                                                             homes abroad, and marine insurance for private boats.

should be rewarded with lower premiums.                                                                By using the Saga database to cross-sell to existing
                                                                                                       customers – supported by the full range of external
                                                                                                       marketing media – we’ve built a business that accounted for
                                                                                                       £96.6 million or 93% of Group profit before central costs in

“Home and motor are our biggest insurance lines.                                                       the year ended 31 January 2004.

 677,000 home policies and over 874,000 motor                                                          We now deal with most aspects of customer facing
 policies were sold in 2003/2004” ANDREW GOODSELL                                                      operations including sales, after-sales service, documentation,
                                                                                                       adjustments and renewals. Claims handling is generally
                                                                                                       devolved to our underwriting partners, although here too we
> 1.283 million households in the UK have at least one
                                                                                                       are a first point of contact in the claims process.
  Saga insurance policy.
> This equates to 10.4% penetration of the market of
  over 50 households.

                                                                                                      Growth of Saga’s Home                        Growth of Saga’s Motor
                                                                                                      Insurance Policies by Year                   Insurance Policies by Year
                                                                                                      000s                                         000s                       874.1
                                                                                                                                   603.3                                         771.3

                                                                                                                           518.0                                         663.9

                                                                                                     399.3 417.2



                             Andrew Goodsell Saga Group Chief Executive. Andrew is also Chief
                             Executive of Saga Services, Saga Investment Direct and Saga Insurance   99     00      01     02       03     04*    99     00       01      02      03     04*
                             Company Ltd. He originally joined Saga in 1992.

                                                                                                      *Financial years end 31 January
When it comes to product development we have consider-         Expanding financial services
able in-house expertise including our own actuarial team.
                                                               We also offer a range of financial services including retail
We specify bespoke Saga policies to the underwriters who
                                                               savings, personal investment products, and financial
in turn submit financial terms for writing the business.
                                                               planning, managed by our regulated subsidiary Saga
This enables us to maintain close control of pricing and
                                                               Investment Direct Ltd.
quickly respond to market changes.
                                                               Key products include Saga Share Direct (a phone and
2004 saw the opening of a new chapter in the development
                                                               internet-based stockbroking system) and a Saga-branded
of our insurance business with the setting up of a motor
                                                               postal savings account. We’ve also recently introduced a fully
insurance company based in Gibraltar. The move enables us
                                                               independent financial planning service in the south east
to further control our claims process (sub-contracted to a
                                                               of England operated through a team of directly-employed,
specialist claims agency) thereby ensuring higher standards
                                                               independent financial advisers (IFAs).
of customer service, greater cost effectiveness and enhanced

  ‘Best Home and Motor Insurance Provider’

  ‘Best Share Dealing Provider’

  ‘Best Share Dealing Provider’

                                                                                                                                           Our call centre at Thanet deals with 3,500 calls a day

Here are some                                                  Mark Thompson and Tom Wilson Develop-             Nicci Chapman Saga Services Marketing                    Simon McPhee Managing mailings and ad-
                                                               ing Team Manager Mark and karate partner          Development Manager Nicci is introducing                 verts demand efficient time management
of our people who                                              Sales Adviser Thomas are big on quick             new IT print technologies. Patience and                  from Senior Marketing Executive Simon.
                                                               thinking. It gives them a kick in (and out)       an eye for design also fuel her hobby –                  Football, gym, snowboarding and squash
make it happen...                                              of the office.                                     tailoring and making shoes and accessories.              mean he’s adept at ‘fitting it all in’.

                                                                                                                                                                                                 SAGA REVIEW 13
…style and elegance

                                                                                                                                      …a total change!
     ‘Own label’ cruising
                                                                                                                                        Exotic, long-haul destinations
     A dedicated product designed exclusively for the 50s and over
                                                                                                                                        Including long-stay holidays to Chiang Mai,
     on board our own ship Saga Rose, the chartered Saga Pearl
                                                                                                                                        northern Thailand and Malaysia.
     and, from 2005, a new ship.

                                   Saga customers can check in for…

                                                                     …a taste of luxury
                                                                       Resort holidays
                                                                       At worldwide destinations, with all amenities close at hand.

                                                                                                                                              …the buzz of urban life
                                                                                                                                                   Short breaks
                                                                                                                                                   Guaranteed lowest price deals with Hilton for UK short
                                                                                                                                                   breaks and Travelscene for European city destinations.

                     …immense choice and range
                          Packaged stays, tours and cruises
                          Holidays across all five continents – including historic and cultural
                          destinations and river and ocean cruises all around the world.

                                                               Holidays & Cruises
                                                                                                 …doing and thinking
                                                                                                   Special interest programmes
…the chance to fulfil an ambition                                                                  From bridge, whist, painting, archaeology and walking, to railways,
                                                                                                   historic houses and art appreciation - in the UK and overseas.
  Activity, adventure and lifestyle holidays
  For those looking for more from their holiday than lying on the beach
  - for example scuba diving off Borneo coral reefs or photographing
  wildlife on a South African safari.

                                                                                                                                                            SAGA REVIEW 15
Holidays & Cruises

                                                                                                                         The success of this core product is pivotal for maintaining
Holidays are where the Saga Group began more                                                                             our customer-focused values, as well as delivering valuable
                                                                                                                         income. By continuing only to sell our holiday and cruise
than 50 years ago, with Sidney De Haan’s launch                                                                          products direct, we build on customer relationships and
                                                                                                                         avoid the brand-dilution that comes with distribution
of low-cost, off-peak trips first to Folkestone and                                                                       through travel agents.

other British destinations, and later to worldwide                                                                       Rather than operate our own accommodation and transport
                                                                                                                         resources, we use our in-house product development team

resorts too.                                                                                                             to negotiate with third party suppliers for aviation, ground
                                                                                                                         transport, staffing and other services. Compared to many of
                                                                                                                         our competitors, we enjoy limited exposure to fixed-cost risk
                                                                                                                         that translates into better value for our customers.
> Europe, including the Mediterranean, is our largest
                                                                                                                         Where new ideas count
  volume destination
                                                                                                                         Our strategy at Saga Holidays is not only to offer excellent
> Long-haul holidays to North America, Africa and Asia
                                                                                                                         value-for-money, but also to reflect the changing values
  represent our highest value products.                                                                                  and aspirations of what is an increasingly sophisticated and
> In 2003, of our customers who answered the question                                                                    experienced customer group.

  on their holiday questionnaire, ‘how do you rate your                                                                  As a result, we have an extensive product range covering
  holiday?’ 97% responded either excellent or good.                                                                      virtually every holiday type. Each holiday product is carefully
                                                                                                                         engineered with the needs of our customers in mind and
                                                                                                                         we’re always exploring new ways of satisfying customer
                                                                                                                         needs and preferences with innovative ideas that deliver
                                                                                                                         added value and competitive advantage.

                  Chris Simmonds Managing Director Saga Holidays Ltd. Chris has                Steve King As Head of Studio, Steve is                  John Atherton Deep tactical understanding
                  completed over 20 years at Saga, joining in 1983. His career has taken       responsible for creating all Saga Holidays’             is crucial for John’s job as a Senior IT
                  in a variety of departments including eight years in Costings and Pricing.   marketing communications. Terrific                       Project Manager. It also comes in handy as
                  Appointed Head of Marketing in 1994, Chris joined the Saga Holidays          technical prowess also qualifies Steve                   President of Folkestone Chess Club and on
                  Board in 1997 as Sales and Operations Director.                              perfectly for his hobby – racing Minis.                 the putting green.
These range from ‘no extra supplements’ for thousands of                     impact. Results have been extremely positive all round – as
single travellers at hotels worldwide, to our Price Promise to
pass on post-purchase price reductions, and Star Value all-
                                                                             measured through customer satisfaction surveys, a high level
                                                                             of repeat purchase and excellent financial yields.
                                                                                                                                                Saga customers come first
inclusive holidays.
                                                                             Meet our fleet
Other examples of our commitment to innovation include
                                                                             The Saga cruise programme is currently operated by our
exclusive Saga lounges, flexible holiday extensions and
                                                                             wholly-owned Saga Shipping subsidiary with two vessels
special interest holidays – such as gardens programmes in
                                                                             sailing out of UK ports.
Mauritius and New Zealand, and car and computer courses
here in the UK.                                                              Saga Rose carries 580 passengers and was bought by Saga
                                                                             Shipping from Cunard in 1996.
A different kind of cruise product
                                                                             Saga Pearl carries 350 passengers and is operated by Saga           Award-winning Saga Holidays Resort Manager Eileen Pollock
Our Saga cruise programme appeals to customers who                                                                                               describes some of the reasons why 68% of Saga guests are
                                                                             Shipping under charter.
enjoy all the trappings of a high quality, traditional cruise                                                                                    repeat customers.
experience in the exclusive company of fellow over 50s.                      Saga Shipping bought Caronia from Cunard in 2003.
                                                                                                                                                 “Working for Saga is not like working for other travel companies
                                                                             She carries 655 passengers and sets sail for Saga from
All elements of our itineraries, wining and dining, excursions,                                                                                  – I’m not judged purely on excursion sales. The focus is more on
                                                                             Spring 2005.                                                        attention to detail and providing genuine care and information
entertainment and activity programmes are planned
                                                                                                                                                 for customers. Every holiday is planned in minute detail.
meticulously with our older customer profile firmly in mind.
                                                                                                                                                 Whatever the age range, we offer the over 50s the security of
The fact that the Saga cruise product is the only one from                                                                                       knowing they’ll be properly looked after.”
which under 50s are effectively barred sets us clearly apart
                                                                               AWARDS                                                             A record-breaking 30-year career with Saga has seen Eileen
from the current trend towards a more youth-oriented                                                                                             cruising in the Amazon jungle and to the USA. She is currently
cruise experience. ‘Own-label’ cruising has been a major
                                                                               2nd in ‘Best Tour Operator’ category                              based in Majorca.
                                                                               2002 AND 2003 TELEGRAPH TRAVEL AWARDS
development for Saga, which has made a positive brand

            Captain David Warden-Owen Former QE2                  Dawn Cartwright Raised in South Africa                                    Jim Clench Jim has been Managing Director of Saga Shipping since 1998.
            Staff Captain, David took command of                  from the age of three, Dawn joined Saga                                   Previously a member of the Board of Cunard Line and Chief Surveyor for
            Saga Rose in 1997. His passion for the sea            Rose as Chief Purser in 1999. Dry land
                                                                                                                                            the Marine Safety Agency, he served at sea for 20 years as an engineer
            means he races yachts and scuba dives in              hobbies include Ceroc dancing and the
                                                                                                                                            officer. A Chartered Engineer, he is a member of Lloyds Register Technical
            his spare time.                                       theatre.
                                                                                                                                            Committee and the Merchant Navy Training Board.

                                                                                                                                                                                                         SAGA REVIEW 17
“ Life on the range was real easy.”

                                                                                   “yee haa! ”

                                                     “ In fact they hardly let us lift a suitcase!”

                                                 Alex and Sue Gunn
                                                            aged 60 and 58, married with 3 children and 8 grandchildren (one more on the way!)

                                                            Alexander’s 60th birthday present from wife Susan was a sure-fire hit
                                                            – 10 days in Arizona’s ‘Big Country’ on Saga’s Cowboy Experience. The
                                                            couple, who have since travelled with Saga to South Africa, switched
                                                            their motor and healthcare insurance to Saga in 2003.

                              limes farm, hawkinge
                                    kent 2004
Media Connections

Entertaining and informative in equal measure, the                            The title’s subscription and third party advertising revenue                Saga Radio was developed in response to our having
award-winning Saga Magazine has been central to                               make it a thriving business unit in its own right.                          identified that commercial radio was not adequately
the successful development of the Group’s brand and                           Saga Circles is a free and completely secure online service                 catering for the tastes and interests of the older
business. It makes a vital contribution to the Group’s                        that enables people aged 50 and over to contact others with                 population.
success by enabling us to communicate regularly and                           similar interests, and to search for friends with whom they
                                                                                                                                                          The Saga radio format encompasses melodic music
directly with current and potential customers, providing                      have lost touch. Our service has been designed to make
                                                                                                                                                          from the past six decades and today, mixed with lifestyle-
a powerful channel to market for our businesses. More                         getting in touch as easy as possible whilst ensuring our users’
                                                                                                                                                          oriented speech and relevant news and information.
importantly, its editorial content builds affinity with                        privacy remains fully protected.
                                                                                                                                                          It allows advertisers to specifically target older listeners,
current and potential customers, by reflecting their lives
                                                                                                                                                          which they had not previously been able to do.
and interests.

Saga Magazine is our main ‘shop window’. Through it we’re
able to promote the full range of Saga products and services
and add to our database. Its high quality, award-winning
editorial content covers a rich tapestry of subjects, at once
entertaining, informative and at times inspiring. Our writers
explore the important lifestyle topics for our readers, from
health to wealth, and illustrate the many opportunities being
taken up by today’s over 50s.

By showing that it understands the lives and interests of
our customers, Saga Magazine demonstrates how Saga is
constantly evolving with the times.

                    Emma Soames Emma is Editor of Saga Magazine, which she joined in                                                        Ron Coles Director of Saga Radio since 1999, Ron has worked in the radio
                    March 2002, and Editorial Director of Saga Publishing. Formerly she was                                                 industry for 36 years – most of them in management. He started with the
                    Editor of the Saturday Telegraph Magazine for seven years and before that                                               BBC, moving to the commercial sector in 1980. He is a past chairman of
                    Editor of the Evening Standard’s ES Magazine, Tatler and the Literary                                                   the industry’s trade association (now the CRCA) and the Radio Academy of
                    Review. She is also an occasional columnist for the Daily Telegraph.                                                    which he is a Fellow.

                                                                                                                                                                                                                 SAGA REVIEW 19
Saga Magazine

                           Circulation and Distribution                                                 Meet our Editor: Emma Soames
Saga Magazine is the       Produced by Saga Publishing, the magazine has an average                     In 2003 Emma was named Editor of the Year by the

largest, subscription-     per issue readership of 2,523,000 (Source: NRS, Jan-Dec ‘03),
                           of which 73% fall into the ABC1 category. Saga Magazine is an
                                                                                                        prestigious British Society of Magazine Editors in their
                                                                                                        competitive general interest and current affairs awards

based publication in       ideal vehicle for reaching high-spending customers buying
                           consumer durables, technical, leisure and luxury goods.
                                                                                                        category. The judges described Saga Magazine as ‘a class
                                                                                                        act that made them less frightened about growing old.’

the UK with a monthly      Free copies are distributed on a carefully targeted basis as a
                           means of alerting possible customers to new services and/or
                                                                                                        Emma Soames’ arrival has seen the magazine increase
                                                                                                        its appeal to a slightly younger, 50+ age group without

circulation of over 1.2    to promote subscriptions.                                                    alienating existing older readers. By bolstering in-house
                                                                                                        talent with new writers and undertaking a bold re-design,

million. It’s a powerful                                                                                Emma has catapulted the title into the public eye. It’s now
                                                                                                        a challenging and intelligent ‘must read’ that ranks alongside
                            > Saga Magazine has an average,
voice for the company         per issue readership of 2,523,000
                                                                                                        the most high profile and well-respected magazines in
                                                                                                        British publishing.

and an excellent            > 73% of Saga Magazine readers
                              are ABC1 profile
marketing tool.

                           Katy Bravery Saga Magazine Deputy Editor           Sam Burnett Sam has worked in a variety                 Paul Hayes-Watkins Art Director Paul
                           Katy ensures great ideas turn into sparkling           of Saga’s departments and is now an                 oversees the ‘look and feel’ of Saga
                           stories. Her energy is just as limitless           Editorial Assistant on Saga Magazine. Her               Magazine. His speed and stamina are
                           – windsurfing or playing with six-year-old          lively personality has a spin-off for her               vital elsewhere – as a father of three
                           son Alfie.                                          social life – which revolves around tap                 and racing cyclist.
                                                                              dancing and cabaret.

Saga Radio

                                                  Saga Radio has been successful in applications for three                   Our latest FM station SAGA 105.2FM Glasgow was
Saga Radio now                                    major new FM radio licences in three years. The success                    awarded its licence in November 2003 and will commence
                                                  of these stations can be measured by their audience: over                  broadcasting in Autumn 2004.
operates two regional                             560,000 people are tuning in each week for our promise of
                                                                                                                             Digital Services
                                                  a format reflecting ‘Your Life. Your Music.’
FM stations, with a                               We also operate a number of digital stations at both national              PrimeTime Radio

third coming on stream                            and regional level, which will substantially increase the reach
                                                  of our radio channels as digital radio take-up grows.
                                                                                                                             > A music-only service broadcasting nationally on DAB digital
                                                                                                                               radio in the UK and Northern Ireland, on satellite and cable
                                                                                                                               digital TV networks, and online.
in Autumn 2004, and                               FM Stations
                                                                                                                             SAGA RADIO digital

national and regional                             SAGA 105.7FM West Midlands
                                                  > Launched October 2001
                                                                                                                             > A speech and music mix, broadcasting regionally in DAB
                                                                                                                               digital radio in Scotland, London and the south of England.

digital services. The                             > 364,000 listeners (weekly audience) tuning in for 11 hours
                                                    per listener per week
                                                                                                                             > Winner of the SONY Station of the Year (digital)
                                                                                                                               award, 2003
stations have combined                            > 5.2% market share                                                        (Audience data from RAJAR Quarter 4, 2003)

measured audiences                                SAGA 106.6FM East Midlands
                                                  > Launched February 2003

of nearly 700,000.                                > 198,000 listeners (weekly audience) tuning in for 12 hours
                                                    per listener per week
                                                  > 5.1% market share

             David Hamilton Leading member of Saga’s 50-strong presenter             Jenny Hanley The phrase ‘star of stage, screen and TV’‚ certainly
             team, David Hamilton appears on all our FM and digital stations.        applies to Saga presenter Jenny Hanley. Her face is instantly
             Before going into radio, David worked with legends such as Ken          recognisable as a former presenter of ITV’s children’s classic Magpie.
             Dodd, The Beatles and The Rolling Stones and presented many high        Prior to her radio career, she also appeared in a string of movies
             profile TV shows including Top of the Pops. His radio career began in    including On Her Majesty’s Secret Service, TV shows such as Softly
             1973 with his own BBC Radio One afternoon slot which drew large         Softly, Emmerdale Farm and even Countdown.
             audiences for 14 years.                                                 Jenny now brings her bubbly personality, regular topical guests and
             By way of BBC Radio Two, Capital Gold, Classic Gold and Melody          wonderful music to Saga Radio every weekday afternoon, as well as
             RADIO, David joined Saga in May 2000.                                   on Sunday mornings.

                                                                                                                                                                              SAGA REVIEW 21
Midge Williams
   aged 52, lives with partner Steve, has three children and five grandchildren

                                                        THE HOME

                                                                                                          Midge says it was a breath of fresh air when Saga Car Direct
                                                                                                          saved her £1500 on a brand new Astra convertible. She’s also
                                                                                                          made Saga savings on home and car insurance – plus cover

                                                                                                          for her two King Charles spaniels and cat.
                THE ASTRA



                                                                                 the williams household
                                                                                 southampton, hampshire
Saga in the Community and the Workplace

The Workplace                                                      Examples include school governors or mentors to young                          The aim is not simply to donate
                                                                   people, participants in business and economic development                      money, but to invest in small-
We have 2,400 staff employed in the UK, the majority at our
                                                                   forums, or Trustees of charities or organisations. In Folkestone               scale, sustainable projects that will
sites in Folkestone and Thanet in Kent, MetroMail in County
                                                                   this has included support for the local Metropole Art Centre                   empower and assist local communities. In
Durham and nearly 1,000 others working on our cruise
                                                                   and the Folkestone Literary Festival.                                          this way we can provide practical help for those
ships and overseas holidays. Staff training, development
                                                                                                                                                  in need, as well as increased opportunities for
and welfare are high priorities, and their benefits are             The Wider Community
                                                                                                                                                  disadvantaged groups to benefit from tourism.
demonstrated by lower than average staff turnover rates.
                                                                   Saga has a policy of aiding organisations or projects
                                                                                                                                                  Trust projects are carefully selected by a board of
In addition to providing internal and external skills training,    dedicated to the betterment of the lives of older people, and
                                                                                                                                                  Trustees, who also take care to ensure there is a reliable
Saga has had a management training scheme for over                 has pursued this through financial support and benefits ‘in
                                                                                                                                                  local sponsor to account for all expenditure.
25 years, which is accessible to new recruits and existing         kind’. We have a long-standing relationship with Research
employees. We also operate the Saga Learning Academy,              Into Ageing, the only national charity that raises and allocates               Projects are up and running in South Africa, the Far East,
designed to help any employees learn new skills or develop         funds for research into medical conditions that affect older                   the Indian sub-continent and South America; all are happy to
existing ones. The Academy provides locations for reading          people, which is now part of Help the Aged. Through its                        welcome visiting Saga guests. Examples include a nursery in
and study, and offers computer access to over 250 e-learning       media businesses, Saga often provides coverage of campaigns                    a poor area of Lima; a school for disadvantaged children in Ho
courses.                                                           which seek particularly to address issues affecting older                      Chi Minh City, Vietnam; a children’s crèche and women’s co-
                                                                   people, and which are often ignored by mainstream media.                       operative in South Africa; and a new school building in Nepal.
In addition to the usual employee benefits, we provide a
                                                                   Saga does not make political donations.
range of discounts for staff and their families on holiday,
travel, and insurance products, as well as operating a lively      Overseas
social club. As an equal opportunities employer, Saga also has
                                                                   The Saga Charitable Trust, a registered charity, exists to
progressive policies on paternity leave, and in Folkestone we
                                                                   benefit under-privileged communities at destinations in
operate a nursery for children of our employees.
                                                                   developing countries that host Saga holidaymakers.
The Local Community
                                                                   The Trust’s activities are funded by Saga Group Ltd, as well
Saga has a policy of active support for the communities in         as by Saga customers and staff. In addition, Saga covers
which we are located. This includes support for local charities,   all administrative costs and overheads so that 100% of all
organisations and clubs, and infrastructure projects, as well      donations received go to Trust-supported projects.
as encouraging employees to play extra curricular roles.

                     Margaret Sweeney Margaret has been            Merewyn Forrest Senior Copywriter                   Neil Cron Saga Social Club Director and                  Janice Lee Janice has been Saga Charitable
                     a Saga Nursery Nurse for five years.           Merewyn manages a small team of writers.            sports fan Neil has made a career out of                 Trust Director since 2002. Multi-level
                     Looking after nine under twos in the          Her communications skills play a leading            getting on with people. He’s got a winning               communications skills are essential for a
                     baby unit qualifies her as the perfect new     role outside work – as a lover of amateur–          way organising exciting staff events.                    complex job with a demanding, multi-cul-
                     grandmother.                                  dramatics, netball and tap-dancing.                                                                          tural dimension.

                                                                                                                                                                                                          SAGA REVIEW 23
Finance Director’s Review
                 from Stuart Howard

                                      The result for the year to 31 January 2004 extends Saga’s         also contributed to profit growth by increasing the capacity
                                      unbroken run of organic profit growth to 12 years. The             of Saga’s own cruise product.
                                      average annual compound growth in EBITDA over this period
                                                                                                        The low effective tax rate achieved for the Group of 28%
                                      has been 27%, with 2003/04 being the strongest year yet
                                                                                                        (2003: 28%) is due to the Group’s shipping subsidiary being
                                      with growth of 57%.
                                                                                                        subject to the tonnage tax regime and hence the majority
                                      This continued success has been achieved due to our               of its profits are not subject to corporation tax.
                                      fundamental commitment to customer service, which
                                                                                                        In addition to the strong growth in profits, the business
                                      results in high repeat traveller rates in our travel businesses
                                                                                                        has also generated more than £50m of cash (before taking
                                      and high retention rates in our insurance business.
                                                                                                        account of financing or dividends). The Group has generated
                                      The strong performance in 2003/04 has been achieved by            operating cash flows of more than £125m over the last
                                      growing gross profit by 20% whilst overheads remained              three years.
                                      flat. The constraint in overhead growth has been achieved
                                                                                                        On 1 January 2004 Saga Insurance Company began trading,
                                      through our continued drive to improve efficiency whilst
                                                                                                        replacing our existing third party underwriter for our motor
                                      maintaining the quality of our customer service.
                                                                                                        business. Bringing this business in-house has already
                                      The increase in gross profit has been primarily due to the         delivered significant cost savings and efficiencies.
                                      continued growth of the Group’s insurance business, where
                                                                                                        During 2003, Saga acquired the sister ship to Saga Rose in
                                      the number of policies issued increased by 12% to 1.9m.
                                                                                                        order to satisfy strong demand for cruise holidays. The ship
                                      Despite the uncertainties in the travel market created by         will begin operating in Saga colours in early 2005 following
                                      the Iraq war and the SARS outbreak, profits from Saga’s            an extensive refit.
                                      travel business have grown by 18%. Saga Holidays’ flexible
                                      operating structure with low levels of committed capacity
                                      has enabled it to react quickly to changes in customer
                                      holiday preferences. The chartering of Saga Pearl has             STUART HOWARD

Unaudited pro forma summary consolidated profit and loss account

                                                                                                          YEA R E N D E D 3 1 JAN UARY 2004                                PRO FORMA YEAR E N DE D 31 JAN UARY 2003

                                                                                         Before goodwill,                  Goodwill,                             Before goodwill,                   Goodwill,
                                                                                         exceptional and            exceptional and                              exceptional and             exceptional and
                                                                                      non-recurring items        non-recurring items                 Total    non-recurring items         non-recurring items                Total
                                                                                                £ millions                 £ millions           £ millions              £ millions                  £ millions          £ millions

                                         Turnover                                                  382.7                        0.1              382.8                      336.7                           5.0            341.7
The accounts published on this page      Cost of sales                                             (177.2)                      0.1              (177.1)                    (165.3)                         (3.9)        (169.2)
are not the Company’s statutory
accounts. Statutory accounts for the     Gross profit                                              205.5                         0.2              205.7                        171.4                          1.1           172.5
year ended 31 January 2004 and the
                                         Administrative and marketing expenses
year ended 31 January 2003 have been
completed. The Company’s auditors        before depreciation & amortisation                       (116.5)                       (2.9)            (119.4)                    (116.3)                         (2.8)         (119.1)
have made an unqualified report to
the Company’s members for both
                                         Other operating income                                       5.7                      (0.1)                 5.6                        5.3                        (0.1)              5.2
years. The 2003 accounts have been       EBITDA                                                     94.7                        (2.8)              91.9                       60.4                          (1.8)           58.6
filed at Companies House. The 2004
accounts will be filed in due course.     Depreciation                                                (9.0)                       -                  (9.0)                      (6.5)                         -              (6.5)
Note: Saga Ltd acquired the Saga         Amortisation                                                 -                       (14.8)              (14.8)                         -                         (9.3)            (9.3)
group of companies in June 2002.
All 2003 comparatives show the           Operating profit                                            85.7                       (17.6)              68.1                        53.9                        (11.1)           42.8
Group’s result as if Saga Ltd had
                                         Interest payable                                            (4.1)                       -                  (4.1)                      (3.7)                         -               (3.7)
acquired the Saga businesses on
1 February 2002. The non recurring
items comprise the Group’s               Profit before taxation                                       81.6                      (17.6)              64.0                       50.2                         (11.1)           39.1
discontinued US operations. The
exceptional items relate to a major
                                         Taxation                                                  (23.0)                       0.6               (22.4)                      (14.0)                        0.9             (13.1)
one-off programme of remedial works      Profit after taxation                                       58.6                       (17.0)               41.6                      36.2                         (10.2)           26.0
to one of the Group’s office buildings.

                                         Katharine Parkes Visa Card Usage Manager                   Viv Jones Head of Quality and Product                    Makala Thomas Makala is Europe Field
                                         Katharine negotiates attractive offers for                 Engineering, Viv ensures customers’                      Staff Manager for our European ‘stay
                                         Saga Visa Card customers. Persistence is                   expectations are exceeded - not just met.                product’ holiday destinations. Her great
                                         key - as it is when she’s renovating her                   Standards are equally high when she’s                    co-ordination skills are pre-requisites for
                                         Kent cottage.                                              cooking and entertaining.                                out-of-hours salsa and gym sessions.

                                                                                                                                                                                                                    SAGA REVIEW 25
Summary consolidated balance sheet
                                                                                                                                        31 January 2004            31 January 2003
                                                                                                                                              £ millions                  £ millions

                                       Fixed assets
                                       Intangible assets                                                                                         272.8                      287.6
                                       Tangible assets                                                                                            84.5                        67.4
                                                                                                                                                  357.3                     355.0
                                       Current assets
                                       Stock                                                                                                        0.9                         1.4
                                       Debtors                                                                                                   102.9                        80.5
                                       Cash on deposit                                                                                            183.1                      139.8
                                       Cash at bank and in hand                                                                                     11.4                        8.2
                                                                                                                                                 298.3                      229.9
                                       - amounts falling due within one year                                                                    (267.9)                    (222.2)
                                       Net current assets                                                                                          30.4                         7.7
                                       Total assets less current liabilities                                                                     387.7                      362.7
                                       - amounts falling due after more than one year                                                             (58.6)                     (83.4)
                                       Insurance technical provisions                                                                             (21.2)                        -
                                       Provisions for liabilities and charges                                                                      (4.2)                       (1.3)
The accounts published on this page
are not the Company’s statutory                                                                                                                  303.7                      278.0
accounts. Statutory accounts for the
                                       Capital and reserves
year ended 31 January 2004 and the
year ended 31 January 2003 have been   Called up share capital                                                                                       2.0                        2.0
completed. The Company’s auditors
have made an unqualified report to      Other reserves                                                                                             251.0                     265.6
the Company’s members for both
years. The 2003 accounts have been
                                       Profit and loss account                                                                                      50.7                       10.4
filed at Companies House. The 2004
                                       Total shareholders’ funds (including non-equity interests)                                                303.7                      278.0
accounts will be filed in due course.

                                       Gloria Fletcher & Maria Abobeleira Both Maria      Jackie B wning Specialist Travel Consultant   Jacqueline Wood Good communication

                                       and Gloria are Editorial Assistants on Saga        Jackie has vast knowledge of many long haul   skills are vital for Jackie’s job as an insurance
                                       Magazine. Maria’s role is customer-facing, while   destinations. Her healthy life/work balance   Sales Adviser. They also come in handy every
                                       Gloria spends her day researching – and being      includes cycling, swimming, snowboarding      Thursday evening as 1st Cheriton Scout
                                       patient with her PC.                               – and playing her didgeridoo.                 Group Leader.

Unaudited pro forma cash flow summary                                                                                       Year ended
                                                                                                                                               year ended
                                                                                                                       31 January 2004    31 January 2003
                                                                                                                            £ millions         £ millions

                                       EBITDA                                                                                   94.7              60.4
                                       Tax paid                                                                                 (19.6)            (10.2)
                                       Capital expenditure                                                                     (24.5)              (6.9)
                                       Operating cash flow *                                                                     50.6               43.3

                                       Working capital                                                                          14.0                8.8
                                       Financing                                                                                 (5.1)            (32.8)
                                       Interest paid                                                                             (4.2)              (3.4)
                                       Exceptional and discontinued cash flows                                                    (2.8)              (1.4)
                                       Ordinary dividends paid                                                                   (6.0)             (4.0)
                                       Net cash movement                                                                        46.5               10.5
*Operating cash flow excludes
 working capital movements as
 these are affected by the timing of
 advance payments from customers
                                       Opening cash balances                                                                   148.0              137.5
 and movements in the insurance        Closing cash balances                                                                   194.5             148.0
company’s technical provisions.

Unaudited pro forma five year summary
                                                                                    2000          2001        2002                2003             2004
                                       Year ended 31 January                    £ millions   £ millions   £ millions         £ millions        £ millions

                                       Financial Services                           61.3         75.2        101.3             125.0              165.0
                                       Travel                                      173.2        187.8       196.8              195.1              199.7
                                       Media & Business Services                     11.0         11.9        14.0               16.6               18.0
The accounts published on this page    Turnover                                   245.5        274.9         312.1             336.7              382.7
are not the Company’s statutory
accounts. Statutory accounts for the
year ended 31 January 2004 and the     Gross profit                                 107.2        123.8        147.2              171.4            205.5
year ended 31 January 2003 have been
completed. The Company’s auditors      Gross margin                                 43.7%        45.0%         47.2%            50.9%              53.7%
have made an unqualified report to
the Company’s members for both
years. The 2003 accounts have been     EBITDA                                       34.3         42.0         48.2              60.4               94.7
filed at Companies House. The 2004
accounts will be filed in due course.

Note: Saga Ltd acquired the Saga       Operating profit                              28.9         36.3          41.9              53.9              85.7
group of companies in June 2002.
All 2003 amounts show the Group’s
                                       Operating margin                              11.8%       13.2%         13.4%             16.0%             22.4%
result as if Saga Ltd had acquired
the Saga businesses on 1 February
2002. All years exclude amounts        Profit before taxation                        23.3         31.3         39.2              50.2                81.6
relating to the Group’s discontinued
US operations, exceptional items,
goodwill amortisation and prior year
                                       Operating cash flow                           19.8         31.6         32.8              43.3               50.6

                                                                                                                                                            SAGA REVIEW 27
                                                                                                        “For me Saga says ‘quality and service’ ”

                                                        “Saga would always be my first port of call ”

Oonagh and Raymond Nicholas
   aged 70+ and 76, married with 4 children and 8 grandchildren

   The cruise-bug bit deep for Raymond and Oonagh during their first Saga
   cruise ‘Magic of the Mediterranean’ in October 2003. Spotted in South Africa
   on a Saga world cruise in early April 2004, the couple also use Saga travel
   insurance, our Visa card and read Saga Magazine.

                                                                                onboard the saga rose
                                                                                   cape town 2004
Saga would like to take this opportunity to
thank all of our staff and our customers who
have helped in the creation of this brochure.

Saga Limited and subsidiaries head office:
The Saga Building, Enbrook Park, Folkestone, Kent CT20 3SE

Contact telephone numbers:
Saga Head Office (Insurance, Financial Services, Travel and Publishing): 01303 771111
Saga Radio: 0115 943 5050
MetroMail: 0191 301 1700
Saga Press Office: 01303 771522

Saga Financial Planning is a trading name of Saga Investment Direct Ltd which is
authorised and regulated by the FSA. The Saga Share Dealing Service is operated
for Saga Investment Direct by Pershing Securities Limited which is authorised and
regulated by the FSA. Saga Share Direct is an execution only service.

The Saga Secure Savings Account is offered by Birmingham Midshires which is
a division of Halifax plc.

The Saga Visa Card is issued by Liverpool Victoria Banking Services Limited which
is authorised and regulated by the FSA.

The FSA does not regulate visa cards, savings accounts, current accounts, financial
magazines, mortgages, remortgages, personal loans, or personal insurance products.

Printed in England by Royle Corporate Print

                                                                                        SAGA   Saga Limited The Saga Building Enbrook Park Folkestone Kent CT20 3SE

To top