Saga reveals profit fall ahead of IPO

The retirement firm’s 328-page prospectus for investors interested in purchasing shares when the company floats on the London Stock Exchange later this month showed that revenue increased by £82.6m – 7 per cent – from £1.1753bn in the year to 31 January 2012 to £1.2579bn in the year to 31 January 2014.

However, year-on-year revenue fell 4 per cent, from £1.3104bn to £1.2579bn. The company posted total liabilities of £2.8bn at 31 January 2014.

A banker close to the deal said underlying Ebitda – earnings before interest, taxes, depreciation and amortisation – gave “a true reflection” of value in the business, as the fall in revenue reflected the sale of one of the company’s three cruise ships last year, as well as a decline in motor insurance, driven by lower premiums across the market.

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In 2012, the firm’s Ebitda was £192.7m, rising to £213.7m in 2013 and £222.4m in 2014.

Advisers were told last Friday that they can apply for Saga shares on clients’ behalf until 20 May, with the minimum application threshold for retail clients set at £1,000.

The group confirmed the initial public offering would have an expected offer price range set between 185p and 245p a share, giving a market cap between £2bn and £2.5bn.

Shares are on offer to private investors, institutional investors, employees and intermediaries, with the proceeds from the primary offering of approximately £550m being used to reduce the net debt of the company to approximately £700m.

The deal is underwritten by Citigroup Global Markets, Bank of America Merrill Lynch, Credit Suisse Securities (Europe) and Goldman Sachs International.

Broker view

Gavin Oldham, executive chairman of The Share Centre, said: “As the proportion of the population over 50 is expected to increase significantly over the coming years, there should be plenty of opportunity for growth in all areas of its business.”