Long4Life to continue share buybacks


Long4Life to continue share buybacks

Published Date: 2019-10-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

Long4Life to continue share buybacks

The lifestyle investor plans to continue repurchasing its shares to maximise shareholder returns.

Long4Life expects to grow full-year profit, despite a weaker first-half performance as it invested in infrastructure, store development and marketing in order to makes its businesses more competitive and sustainable. The lifestyle investment group says its second half is traditionally strong, with the festive season and warmer summer months boosting sales at businesses that include Sportsmans Warehouse, Outdoor Warehouse and the Sorbet chain of hair and beauty chains, amongst others.

The group, which has also built up a 14.4% stake in restaurant group Spur Corporation, said spending on production capacity, plant upgrades and marketing at its Chill Beverages business weighed on its results in the six months to end-August as the investment had yet to be matched by increased sales. Still, it believes it delivered a reasonable first-half performance, considering the difficult trading environment. It also had to contend with the adoption of new reporting standards, which have skewed its financial performance.

Sales rose 20% to R1,84 billion the six months to end-August and trading profit was up 13% to R201 million under the new IFRS 16 methodology. On a like-for-like basis and excluding the impact of IFRS 16, it declined 1%. Headline earnings per share fell 9% to 14.5c using IFRS 16 but were 4% lower at 15.4c using the old methodology. IFRS 16 changes the way that lease contracts are accounted for on companies' balance sheets. It generated R117 million in cash from its operations, 86% more than the comparative period.

The group isn't paying an interim dividend but spent R109 million buying back 26.8-million of its own shares at an average price of R4.07 over the period. It plans to continue repurchasing its stock on the open market to maximise shareholder returns.

Its shares rose 2.8% to R4.11 yesterday.

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