Saga plc
Capital Markets Day
15 January 2015
Capital Markets Day Highlights
· Creation of Saga Investment Services, a wealth management partnership with Tilney Bestinvest
· Renewed focus on growth initiatives in Saga's existing businesses
· Intention to launch motor broking panel to broaden accessible client base
· Decision to divest Saga's local authority section of its healthcare business, Allied Healthcare, and focus on privately funded healthcare
· Trading for 2014/2015 in line with market expectations and the dividend is expected to be at the top end of the forecast pay-out range
Saga plc ("Saga") is today holding a Capital Markets Day to update investors and analysts on the company's strategy. The presentation will be made available at corporate.saga.co.uk this morning.
Lance Batchelor, Group Chief Executive Officer, commented:
"In the ten months that I have led the business, I have seen the depth of insight into our core demographic that our unique database provides, the potential of our brand, the consistent performance of the Group - in particular our insurance business - and the quality of our people.
"I am very clear that our model is predominantly that of a broker, accessing the best products for our customers and delivering them with our own high standards of customer service. This model works best when superior customer knowledge and a trusted brand work together to create a competitive edge, helping to build enduring relationships directly with our customers.
"The strategy that we outline today shows how we intend to use these competitive strengths to unlock the potential of our existing businesses and to continue to explore new areas of growth, while maintaining our capital-light, cash-generative operating model. This will drive growth in our existing businesses, provide scope for investment in new products and underpin a progressive dividend policy."
Wealth Management
Following a comprehensive review of the wealth management marketplace, Saga announces the creation of Saga Investment Services, powered by Tilney Bestinvest. The joint venture will draw on our respective strengths to deliver a compelling wealth and investment proposition for Saga customers. Saga's insight into the needs of the UK's over 50s will inform and drive proposition design and customer experience, while Tilney Bestinvest will provide investment and financial planning expertise.
Healthcare
As part of its strategic review, Saga has decided to focus on privately funded homecare where Saga has a relationship directly with the customer. A dedicated management team is running this part of the business, including the Patricia White's, Country Cousins and Saga SOS branded businesses and the pilot in Private Pay Homecare.
As a result, the parts of the Allied Healthcare business focussed on Local Authorities and the NHS do not fit with the Saga business model and the decision has been taken to divest this part of the business. Saga remains absolutely committed to delivering excellent standards of care to Allied Healthcare's customers during this period. A further update will be provided in due course.
Growing our existing businesses
· In Saga's Insurance business, growth will be driven primarily through broking, while maintaining a targeted underwriting exposure in areas where there is a track record of strong and consistent profitability based on Saga's access to superior customer data.
· Saga today announces the intention to launch a new motor panel to broaden the accessible client base without assuming any incremental underwriting risk. Saga has achieved excellent results with this approach in its Home Insurance business and it will enable Saga to offer competitive quotes to Saga customers that currently sit outside our core underwriting activities.
· In Travel, Saga aims to double EBITDA within five years from January 2014 by further diversifying its offer to include a greater range of third-party products alongside its own to target different groups of customers more effectively, while also diversifying distribution channels.
Further New Initiatives
· Saga Legal Services is now operational with more than 8,000 customers.
· Saga also announces today that it has signed a partnership with Spire Healthcare, to pilot a 'home from hospital service', which will enable patients to be discharged earlier from hospital and help them to resettle at home after a hospital stay.
· Saga continues to work with its partner, Rangeford, on the Wadswick Green retirement village pilot development in Wiltshire.
Trading Update for 2014/15 Preliminary Results
· Trading is in line with market expectations.
· The dividend for 2014/15 is anticipated to be at the top end of the targeted 40-50% pay-out range, highlighting our progressive dividend policy.
· The Group will seek to maximise returns for investors by optimising the balance between investment, dividends and debt reduction.
· Allied will no longer be presented as part of the continuing operations and will give rise to a one-off write-down of goodwill and potentially other related balance sheet items, the amount of which will be determined over the coming months.
Appendix I contains the interim results of the business for the period to 31 July 2014 presented to exclude the Allied Healthcare business to be divested.
ENDS
For further information, please contact:
Appendix I
Interim results of the business for the period to 31 July 2014 presented to exclude the Allied Healthcare business to be divested.
|
Continuing Operations |
|
As Reported |
£m |
6m to
Jul 2014 |
6m to
Jul 2013 |
12m to
Jan 2014 |
|
6m to
Jul 2014 |
6m to
Jul 2013 |
12m to
Jan 2014 |
Revenue |
440.1 |
447.7 |
895.5 |
|
583.5 |
607.1 |
1,209.3 |
Trading EBITDA |
129.6 |
118.7 |
214.8 |
|
130.4 |
118.9 |
222.4 |
Operating profit |
116.3 |
104.9 |
182.4 |
|
110.0 |
95.5 |
169.6 |
PBT (like-for-like) |
115.9 |
105.3 |
167.9 |
|
106.5 |
92.7 |
146.5 |
Revenue growth |
(1.7%) |
|
|
|
(3.9%) |
|
|
Trading EBITDA growth |
9.2% |
|
|
|
9.7% |
|
|
Operating profit % |
26.4% |
23.4% |
20.4% |
|
18.9% |
15.7% |
14.0% |
Intangibles amortisation |
(0.1) |
(0.1) |
(0.1) |
|
(5.2) |
(8.0) |
(17.8) |
