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Early retirement for the owner of Saga (and he is hoping for a £1bn pension)

Saeed Shah,Matthew Beard
Thursday 27 November 2003 01:00 GMT
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Roger De Haan has been in the business for more than three decades and yesterday, he announced it was time to retire at the relatively youthful age of 55. Fitting, perhaps, that the operation he is putting up for sale with an asking price of £1bn is Saga, the successful company that looks after Britain's growing grey brigade.

Mr De Haan, son of Saga's founders, Sidney and Margery, is its chairman and chief executive. He has taken a huge step. When he sells the firm his parents founded in Folkestone, Kent, more than 50 years ago, he will cut all links with it.

Though he has lived and breathed the brand, he will not take on any consultancies. As with many of Saga's clients, he will be aiming to live his retirement to the full, a wealthy man able to indulge his charity work. He is backing two new-style "academy" schools in Kent, and the creation of an artistic quarter in Folkestone, where Saga still has its headquarters.

Mr De Haan, a father of five, said yesterday: "After 37 years in the business, I believe that now is a good time to step down from the business. Andrew Goodsell, my deputy, leads an excellent management team, with enormous commitment and experience, who are well able to take the business forward and capitalise on our strong market position and the many opportunities for further growth."

UBS, a leading City bank, has been hired either to sell the business to another company or float it on the stock market again: it was bought back by the de Haan family in 1990 after a previous flotation in a deal that valued the group at just £54m, a near ten-fold increase in 13 years.

Saga has had a remarkable success story, starting as a travel business before diversifying in the late 1980s. As well as its eponymous magazine, it is an insurance provider and radio broadcaster. It employs 3,000 people and its annual turnover this year is expected to be over £350m. Profits? They came in at £50m last year, and are growing at a rate of 30 per cent per annum.

All this from the kernel of an idea soon after the war. When Sidney De Haan returned from active service, he was looking to revive the fortunes of the family hotel in Folkestone.

His wife, Margery, a nurse he met during the war, noticed that many of the town's homeless were elderly people sleeping on park benches. She suggested that they could be put up in the hotel cheaply, particularly out of season. The couple then hit upon the idea of busing people into the area. Margery's idea and Sidney's business acumen launched what is now a billion-pound empire.

One of 11 children of Flemish origin born to a shoe factory worker from Mile End, east London, Sidney, who died last year aged 83, left school at 14. His first foray into the leisure industry was as a chef at the Waldorf Hotel in London, but when the war broke out in 1939 he joined the medical corps, only to be captured at Dunkirk. While in prisoner of war camp in Poland he spent extended periods in detention for insubordination. But his single mindedness was to prove a boon in enterprise.

The De Haans' 12-bedroomed hotel in Folkestone, the Rhodesia, initially earned a pittance from its elderly guests. Travel agents were earning too little commission to bother chasing bookings.

Sidney's idea was to devise a marketing strategy based on how far he thought elderly people would be prepared to travel by coach to the Kent coast for a short holiday. He pinpointed South Yorkshire as fertile territory. He sold the seaside holiday package, including travel, for £6.50 via Darby and Joan clubs, other pensioners' groups and old-fashioned door-knocking.

Soon, the De Haans bought a second hotel to meet the demand and, with other hoteliers queuing to copy the idea, Sidney set up Saga as a tour operator in 1951.

They revolutionised the holiday industry in much the same way that Billy Butlin and Fred Pontin did. While Butlin and Pontin were building their holiday camps, the De Haans were using empty university accommodation for holidays. Then they set their sights abroad.

Looking for a warm climate for the elderly clientele, Saga was one of the first companies operating in the Algarve. It also ran passport-free day trips to France. By the 1970s, Saga's brochure included trips behind the iron curtain to Romania and Yugoslavia.

In 1978, when the De Haans floated the company on the stock market, it was the most over-subscribed offer of the year. But the De Haans resumed control in 1990, convinced that the City would not support the long-term investment needed to broaden the company's services.

Now Mr De Haan will cash in on the massive growth of the "grey pound" since the 1950s, boosted by Britain's ageing population and the emergence of a much more prosperous class of pensioner.

Today, while the travel business still provides the bulk of the company's turnover, it is the much newer insurance division that provides most of the profits. In the early 1990s, the company decided to move into financial services and brought in Mr Goodsell to mastermind the division.

Saga has become a trusted brand, and has extended into dozens of areas. It uses one arm of the business to promote others in a tightly directed cross-selling strategy. This includes everything from cruises - it even owns three ships - to credit cards, caravans and pet insurance.

Saga magazine ties the brands together. With 1.2 million people taking the title every month, it is the largest subscription magazine in the country and easily the biggest retirement publication. It has pulled off a number of coups, including interviews with Mick Jagger and Sting. Earlier this year, Tony Blair chose the magazine for his only interview to mark his 50th birthday.

Mr Goodsell, who will now succeed Mr De Haan as chief executive, said that financial services, especially insurance, were the "powerhouse" of the company now. He explained that older people were a much better insurance risk, so that Saga was able to offer them specially tailored policies at competitive rates.

He said: "A lot of insurance claims are fraudulent. The over-50s have a higher level of integrity and honesty. And they look after their homes and other things better."

Older citizens also make for loyal customers if offered competitive deals and good after-sales service. Repeat business is unparalleled, he added.

The older market has grown significantly since the 1950s. Today, 19.6 million people in the UK or 44 per cent of the adult population are over 50 and this market has 60 per cent of all the personal savings in the country. Over the next 20 years,more than half of the adult population is set to fall into this age bracket.

Although there are millions of pensioners in poverty in this country, the second half of the 20th century also saw the emergence of a large group of relatively well-off older citizens.

Mr Goodsell, looking forward to taking over the reins, said: "Older people in the 1950s were quite poor. Today Saga is focused on ABC1s. The demographics are stacked in favour of this business going forward."

A MATURING COMPANY

*Despite specialising in selling insurance, personal investment, mail order and the supply of electrical goods, Saga is most famous for its holidays and its monthly magazine.

*The readership of the publication, which was launched in the 1950s for the over-50s and is edited by Emma Soames, is not confined to "oldies". This may be due to its string of cover stars, including a semi-naked Helen Mirren, the actress Goldie Hawn, Mick Jagger and Tony Blair, who turned 50 in May.

*Mo Mowlam, the former Northern Ireland secretary, told Saga magazine that she had smoked cannabis at university in the Sixties. "Unlike Bill Clinton, I did inhale," she said.

*In a further attempt to dispel its associations with bus passes, three years ago the Saga Group also launched Primetime, a nationwide 24-hour digital radio station, aimed at the older generation, featuring an eclectic array of artists from Sinatra to Sting.

*The announcement that the Saga Group was to be put up for sale sent shock waves around the world. Shares in Saga Communications, an American broadcasting company, halted trading yesterday after its stock rose 5 percent to $18.30. It was forced to clarify that it had no affiliation with the Saga Group Ltd that was for sale.

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