Saga PLC (LSE:SAGA) shares jumped to their highest level since before the Covid pandemic after final results showed a return to profit and stronger cash generation after what was described as a "transformational year" driven by its travel and insurance businesses.
The group, which provides products for over-50s, reported underlying profit before tax up 19% to £44.2 million, while swinging to a reported profit before tax of £2.1 million compared with a £160.2 million loss a year earlier.
This was on the back of revenue increasing 12% to £660 million.
Available operating cash flow nearly doubled to £205.9 million, helping net debt be trimmed by 16% to just under £500 million. This meant the leverage ratio improved to 3.7 times from 4.4 times.
Saga said performance was supported by growth in travel, particularly cruise, and insurance broking following the sale of its underwriting arm and partnership with Ageas SA/NV.
Chief executive Mike Hazell said: "This has been a transformational year for Saga. The restructuring of our Insurance business, and the partnership with Ageas, derisks and simplifies our operating model, creating a more stable platform for growth.
Alongside this, he said there was growth across all travel businesses, driven in particular by a newly combined management team's focus on delivering "differentiated travel experiences designed with the needs of our customers in mind".
Looking ahead, he said the performance this year has further strengthened the confidence in medium-term targets of delivering underlying profits of at least £100 million by January 2030, and leverage below 2.0x.
Further profit and cash growth is expected in the 2027 financial year, supported by strong forward bookings in travel and a full contribution from the Ageas partnership.
Shares in Saga climbed 8.4% to 631p, earlier topping 650p for the first time since January 2020.
Broker Peel Hunt said the adjusted PBT of £44.2 million comfortably beat the consensus forecast of £42.9 million and its own £43.7 million estimate.
"We are not changing forecasts today," analysts said, adding that "current trading is encouraging, but there is still a long way to go, and our forecasts remain at the top of the range".
They added that the time and effort freed up by the restructuring of travel and insurance "can now be applied to driving growth", with prospects suggesting "plain sailing from here" as ocean cruises are 79% sold for FY27, with per diem pricing up 12.6%. "Even allowing for reinvestment in product, this implies scope for upgrades."
** UPDATE: Adds broker comments, updates share price **