Saga's (SAGA) focus is to make sure its customers keep coming back. The over-50s insurance and travel specialist is introducing a membership scheme, Saga Possibilities, which will include offering retailer discounts and access to special events. Management hopes to grow the number of products held by its "high affinity" customers, who represent a fifth of the client base but account for three-quarters of profits.
The motor broking business benefited from increased customer retention during the reported period, boosting pre-tax profits more than half to £45m. Its motor panel, which sells higher-margin (and higher-risk) policies, added £3m to profits. An increasingly competitive UK home insurance market continued to weigh on Saga. Pre-tax profits there declined slightly to £61m, but volumes held up. Underwriter AICL's new reinsurance arrangement and a reduction in reserve releases also ate into pre-tax profits.
A shift towards higher-value, longer-haul products helped lift pre-tax profits by just under a third at the tour operating division. Cruise sales were up 8 per cent, and management expects to reach its target of £40m cash profits for the travel business by the end of January 2018, a year ahead of schedule. It now targets growing the business's pre-tax profits by four to five times during the next five years.
Peel Hunt expects adjusted pre-tax profits of £210m for the year to January 2018 (£193m in FY2017), giving EPS of 15.1p.
SAGA (SAGA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 207.4p | MARKET VALUE: | £2.32bn | |
| TOUCH: | 207.3-207.5p | 12-MONTH HIGH: | 227p | LOW: 175p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 107p* | NET DEBT: | 39% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1310 | 150 | na | na |
| 2014** | 944 | 171 | 16.0 | na |
| 2015 | 901 | 114 | 8.6 | 4.1 |
| 2016 | 963 | 176 | 13.3 | 7.2 |
| 2017 | 871 | 193 | 14.1 | 8.5 |
| % change | -10 | +10 | +6 | +18 |
Ex-div: 11 May Payment: 30 Jun *Includes intangible assets of £1.5bn, or 138p a share **Company floated in May 2014 | ||||
