Saga may expand into Europe after steep rise in profits

The chance of a high valuation being applied to any sale or flotation of Saga, the business that targets the over-50s, was boosted yesterday by a steep rise in profits at the group.

The private company, which is majority owned by its chairman Roger De Haan, said it is considering expanding into new areas including pension provision and establishing itself in continental Europe.

Andrew Goodsell, the chief executive, said the most attractive countries were France, Germany and the Netherlands, as those nations had similar demographics to the UK.

Saga provides services for older consumers, from insurance to travel bookings to its eponymously titled magazine.

The company reported a 63 per cent jump in underlying pre-tax profit to £81.6m, for the year ended 31 January. The bottom-line figure, before tax, was £64.0m, up from the £39.1m which was achieved in the previous financial year. Turnover was £383m, up more than £40m.

In November last year, Saga said it was to put itself up for sale. There has been speculation that the group could be worth up to £1bn.

The company said yesterday said that a deal would not happen before the autumn. Mr Goodsell denied reports that the process had been delayed, possibly as a result of a dispute among members of the De Haan family.

According to an agreement whereby Roger De Haan bought his brother Peter out of the business in 2002 for £80m, a further payment to Peter would have been due if a sale took place before 26 July this year.

Mr Goodsell said that the autumn 2004 target for a disposal was solely "dictated by the workload" of preparatory work needed before a deal. An information memorandum would be produced in the summer. The company and its advisers, UBS, have already sent interested parties some "teaser" information.

Saga will gear up for either a sale or an initial public offering in a "twin track" approach. Mr Goodsell said the company was "relaxed" about which option was eventually taken.

A number of potential private equity buyers, including Cinven, have shown an interest in acquiring the business.