It’s little wonder that these full-year figures from Saga (SAGA) inspired a relief rally that lifted the shares as much as 8 per cent on results day. Cash generation remained robust, helping reduce leverage to 1.7 times cash profits, from 1.9 times the prior year. What’s more, early results of the additional £10m in annual marketing spend are encouraging, with a 14 per cent increase in new retail broking business during the first two months of this year.
Management hopes this will feed through to reverse the decline in high affinity customer (HAC) numbers, which reduced by 12,000 to 471,000 last year. However, new product launches and marketing activity helped drive a 6 per cent increase in average revenue per HAC. Retail insurance broking continued to come under pressure from premium price inflation, resulting in a fall in written motor policies remaining in force from 69.2 per cent to 65.4 per cent.
The shift towards higher-value, long-haul river cruises continued to boost pre-tax profits for the travel business, which were up a fifth on an underlying basis. Two cruise ships are under construction, with delivery of the second brought forward to 2020, which should result in a step up in profitability that year.
Analysts at Peel Hunt forecast adjusted pre-tax profits of £183m for the year to January 2019, giving EPS of 13.2p (from £190m and 12.3p in 2018).
| SAGA (SAGA) | ||||
| ORD PRICE: | 124p | MARKET VALUE: | £1.39bn | |
| TOUCH: | 123.9-124.1p | 12-MONTH HIGH: | 214p | LOW: 108p |
| DIVIDEND YIELD: | 7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 35% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014** | 944 | 171 | 16 | na |
| 2015 | 901 | 114 | 8.6 | 4.1 |
| 2016 | 963 | 176 | 13.3 | 7.2 |
| 2017 | 871 | 193 | 14.1 | 8.5 |
| 2018 | 860 | 179 | 13 | 9 |
| % change | -1 | -7 | -8 | +6 |
| Ex-div: | 17 May | |||
| Payment: | 29 Jun | |||
| *Includes intangible assets of £1.5bn, or 138p a share | ||||
