The big news out of Long4Life is that Brian Joffe will be vacating the CEO position, but will stay on as chair at the end of the current financial year.
The announcement, made on Thursday at the tail end of the presentation of the group’s interim results to August 2021, gives no insights into the reasons for Joffe’s departure.
Joffe spent 27 years building Bidvest into an international behemoth before leaving the group in 2017. He brought the same formula of selecting entrepreneurial managers and reasonably valued businesses to his next venture, Long4Life. Joffe’s now into his mid-70s so he will no doubt want to enjoy some of fruits of his labours built up over more than three decades.
Long4Life was always going to be a group to follow, given the Joffe association and his past record at Bidvest.
As Sasfin market commentator David Shapiro remarked many years ago, Joffe’s success was his ability to spot opportunities others didn’t see. For many years Bidvest looked like an ill-fitting agglomeration of businesses that lacked a coherent theme, but Joffe saw something others didn’t: the ability to bind these businesses together through synergy or cross-marketing. He rarely made mistakes. He encouraged management to be bold, and was willing to add a little capital where needed to get things moving in the right direction.
The same formula that worked at Bidvest was clearly in evidence at Long4Life, and shareholders will take comfort that he is not entirely retired from the company.
Current chair Graham Dempster will assume the role of deputy chair. Meanwhile the board has started the process of searching for a new CEO.
The group’s interim results were clearly impact by the Covid lockdowns in 2020, so comparisons with 2019 are more meaningful. The group comprises three divisions – sports and recreation; beverages; and personal care and wellness.
The Covid restrictions were most evident in the beverages division, where revenue, at R630 million, was down 4% over 2019.
It wasn’t all bad news though, as the lockdowns focused management’s attention on costs and logistics, while building up the market presence of Chill Beverages and Inhle.
The result was a 43% surge in trading profit to R69.6 million.
As the graph below shows however, Long4Life’s share price was hammered by the Covid lockdowns.
Especially hard hit was the Personal Care and Wellness division, made up of brands like Sorbet, a beauty therapy network with 200-plus stores, Lime Light and Candi & Co, involved in a growing hair and beauty market, and ClaytonCare, which deals with patient rehabilitation and recovery.
Overall, sales in this division were 12% up on 2019, largely as a result of strong occupancy levels at ClaytonCare facilities and an acquisition by Lime Light.
The third division, Sports and Recreation, managed a slight 2% increase in 2019 revenue for the comparable period in 2019, but reported a trading profit 4% down at R148.1 million (on revenue of R1.1 billion) due to foreign exchange losses. But for the impact of the forex loss, trading profit was 7% higher. This division is made up of brands such as Sportsmans Warehouse and Shelflife, which suffered from the limited team and school sports over the trading period.
The group paid a maiden dividend of 10c a share, having forsaken dividends in prior periods during a share buyback scheme.
Long4Life management says it is optimistic about the future, though a key risk is the possibility of a fourth wave of Covid infections as well as continued supply chain constraints.
The group says it has received an unsolicited expression of interest to acquire all the shares in Long4Life, and is currently evaluating the bid.