Joffe ‘not leaving Long4Life’

• Dividend goes back on shelf as company mulls delisting while review assesses investment holding structure

Long4Life founder Brian Joffe says he is not quitting after a strategic review of the investment company he founded, amid talk that he would be retiring. The company hired Investec to review its structure and value. Underlying value of about R7.01 a share is not reflected in its share price, which often trades at a 50% discount to asset value.

Long4Life founder Brian Joffe says he is not quitting after a strategic review by Investec of the investment company he founded, amid talk that he would be retiring.

The company that owns Sorbet beauty chain, Sportsman’s Warehouse and Outdoor Warehouse hired Investec corporate bank to review its structure and value. Underlying value of about R7.01 a share is not reflected in its share price that often trades at a 50% discount to asset value.

The group reported a net asset value per share of 701c at the end of February, with its shares trading at a near 50% discount at the time. The group’s share has risen by about a fifth since its 2021 year end.

After the announcement that the company was under review, speculation arose that Joffe, who is in his seventies, might be retiring. He dismissed the rumours on Thursday.

“I am not going nowhere. So you’re stuck with me,” he had told investors on Wednesday.

He is committed to making Long4Life work, he said, describing the review as trying to get a better hand of cards.

Bidvest founder Joffe listed Long4Life in 2017 with a view to building a portfolio of brands catering to growing demand in SA for better lifestyles, but he said the hefty discount at which shares trade has placed an opportunity cost on new acquisitions, and the group has bought back 30%, almost R1bn, of shares since 2019.

The group has held on to its dividend for its year to end February as it mulls options for closing the gap between its market value and its assets.

Investment holding companies often trade at a discount to the value of their underlying assets, with analysts citing general market concerns about the efficiency of holding structures.

Part of the review is to ask whether the fact that it is an investment holding company is the right structure for the firm, Joffe said.

It is also looking at whether unbundling assets would improve value. Acquisitions are hard to come by as companies expect too high a price. While he admitted SA is overregulated, he said JSE listing requirements are not the reason it is investigating whether delisting would be better for the company.

BOUGHT BACK SHARES

The owner of Chill Beverages and Sportsmans Warehouse took a hit from Covid-19 as the pandemic kept people at home and the sale of alcohol was banned for extended periods, school sports were closed and the Sorbet business had space limitations. But the group still bought back almost a fifth of its shares as it sought a use for its cash pile.

Revenue fell 12% to R3.58bn and profit 35% to R234m to end February, with all three of the group’s divisions hit by restrictions to fight Covid-19 in the first half of the year.

There was a strong recovery in Long4Life’s second half, however, when it generated 86.6% of its R367.1m in full-year trading profit.

“While it is anticipated that

I AM NOT GOING NOWHERE. SO YOU’RE STUCK WITH ME. I AM COMMITTED TO MAKING LONG4LIFE WORK ... TRYING TO GET A BETTER HAND OF PLAYING CARDS

Brian Joffe CEO of Long4Life

the possibility of disrupted operations and reduced consumer demand will persist for some time, there has been a strong rebound in the markets in which the group operates,” Long4Life said.

Consumer trends are aligned to the group’s product and service offerings — sport, recreation, health, wellness, beauty and outdoor activity — and are more relevant and popular in a postpandemic environment, Long4Life said, which bodes well for the group.

Its Sorbet trading division is almost back to 80% of preCovid-19 trading, even with restrictions on the number of customers allowed in store.

It had a cash pile of R569.6m at year end, down about 31% year on year.

“Over the past year, the group’s management has focused on containing costs and asset management while improving and expanding online sales platforms and efficiencies.

“This has ensured that our businesses are strongly positioned to take advantage of more stable markets and economic activity which lies ahead,” Joffe said.