Saga says it has been forced to take a £4million hit following the collapse of travel firm Thomas Cook.

The Folkestone-based travel and insurance group for the over-50s - one of the county's biggest employers - revealed the cost to its bottom line in its latest trading update.

Covering the period from August 1, 2019, to January 27, 2020, the company says it continues to execute its new strategy, set out last April, against a "backdrop of a challenging external environment" in the travel and insurance sectors.

It says it anticipates its full year underlying profit before tax to be in line with its previous guidance of between £105-120m

The company, which employs 3,000 people across its sites in Folkestone and Thanet, suffered a drop in profits last year which triggered a free fall in its share price, tumbling by some 40% to its lowest ever figure before slowly recovering.

Since then, it has bid farewell to group CEO Lance Batchelor, who leaves this month, and has hired Euan Sutherland, formerly the boss of fashion firm Superdry to lead the company forward.

Among the changes in its strategy was a push for fixed price three-year insurance policies to be sold direct by the firm.

In its latest figures, it says it has sold 317,000 such policies, with over 60% of direct new business customers choosing the product.

Customer retention across its home and motor business now sits at 75% - around two percentage points better than in the prior period.

However, it says by the end of the full financial year, up to January 31, it expects Saga brand home and motor policies to be some 3% lower than the previous year - a slip, it says, which "reflects a highly competitive market and a disciplined approach to new business".

Its travel arm has been boosted by the launch of its new cruise ship, the Spirit of Discovery, which it expects to have generated more than £20m EBITDA (earnings before interest, tax, depreciation and amortisation).

Another new ship, the Spirit of Adventure, is due to be launched later this year.

It says, with forward bookings for 2020/21 at 76% of its full year target levels, it is on track to see each ship generate £40m EBIDTA.

However, tour operation revenues are expected to slump by 5% for the full year.

It adds it is "seeing a much more resilient picture in those parts of the business where our customer proposition is truly differentiated, notably in escorted tours".

But the administration of Thomas Cook in the second half has "resulted in approximately £4m of one-off costs which will be taken below underlying profit before tax".

Euan Sutherland, group CEO, said: "Although Saga continues to face challenging markets in insurance and travel, we have a clear focus on improving performance and cost efficiencies within the group, while strengthening our financial position and reducing debt.”

It announced this week Chris Simmonds is returning to the firm to head up its Saga Holidays division.

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