Summary

A FIVE YEAR CONTRACT WITH A POWER STATION VALUED AT R22 MILLION !!!Members of Master Builders Association, Solahart,Aquathin and many more elite names.Certified with BEE as a level 6 contributor.The business can reach new levels of growth with marketing & innovative ideas.The building industry in and around the area ensures that the best service receives the reward!

1. History Background

Fully describe the business's activities?

The business provides for services & products in the residential , commercial and industrial sector.Some of the products include SOLAR water heating products namely Solahart geysers with their accreditation of SABS, Solar KeyMark , CE approval, ISO 9001:2000.The business retails & supplies plumbing accessories sanitary ware, sink valves, stainless steel & imported products.The business adheres to stringent health & safety regulations.The business strives to keep prices reasonable & affordable. Free traveling within 5km in and around area. 24 hours assistance in case of emergencies is available with technical advice.The Mines and ESKOM are a good patron of this local business.They are registered with the Major Insurance Companies and are prepared to handle insurance claims.They are on all major vendor lists.

How long has the business been established?

The business was incorporated in 1941 and has since grown into this huge business enterprise.

How long has the owner had the business?

The current owner took ownership of the business when his father retired and has been operating since then.

What steps are in place to solve 'load shedding' problems?

The business has a generator on premises for load shedding.

2. Present Market

How does the business operate on a daily basis?

The main function is to obtain contracts with Mining sites, new site developers, building contractors, private sectors and upgrades on existing buildings.There are 10(ten) teams consisting of 2 persons per team, that assist with the service & installations.This ensures that the "work performance" is at a high standard at all times.Warranty's and Guarantees are issued.All fittings are SAB approved.Solar Geysers & Solar panels are stocked, fitted & supplied.

How are the clients attracted to the business?

Innovated methods are used in quality & services.The main attraction would be the highly qualified ,skilled and trained staff members.They are an ASSET to the company and know how to satisfy the needs of the client.With the years of experience in the business trade the plumbers can work independently without much supervision.They provide the customer with solutions and technical advise. They use local reliable products as well as imported products. Safety in work procedures is a priority leading to excellent work performance, skill, knowledge and shorter working times.

What Advertising/Marketing is carried out?

Advertising is spread via the internet & Mobile Vehicle Advertising.The owners believe in colourful attractive moving advertisements.These ads attract the passing traffic and when stopping at traffic lights, people read the content & this is imprinted in their minds for the next time.The business has a "website" displaying the latest and advanced methods they employ to install the products. Word of mouth is the best advertising mechanism! Advertising weekly in the local newspaper.

Does the business have any contract work?

Yes.They are contracted with the local Mines & a company called Selected Energy.Selected Energy contributes R200 000 in monthly turnover to this business.Selected Energy are the leaders in the SOLAR water heating industry.The business has a R22 million contract in the pipeline & owners are just waiting for the fine print document.They are listed on the major vendor lists with an excellent reputation in service and delivery.New building contractors purchase geysers and other plumbing supplies from the business.

What competition exists?

There is none to compare with this company!!!Boasting skilled & qualified plumbers.The longevity of the business featuring a total of 70 years and currently a successfull existence has become a "Household" name.This business featured in the TOP SURVEY OF PLUMBERS which amplifies their great stature in the industry.Competition exists and is good for business as it contributes to reasonable prices & quality services.Their reputation and service level places them high on the client list.

What are the seasonal trends?

Winter months are the busiest times of the year.Geyser problems are the most common.Insurance claims on domestic usage adds to the turnover.Construction is seasonal and effects the business. Maintenance is "unpredictable" and can happen at any time.Maintenance & Repairs is a constant rollover of turnover approx R120 000.Interest rates effect the buying power of our clients in general.

3. Financial

Is the business VAT Registered?

Yes the business is VAT registered and information is available on file.

What VAT documentation is on file?

Vat 201' is available and on file.

Are there up-to-date Management Accounts available?

Yes there is "up to date" management accounts and is available to serious clients.When buyer performs his "due diligence" , management accounts will reveal the true turnovers and expenses in the business. At this stage the Balance sheet of Jan 2011 was used.

What Balance Sheet and Income Statements are available?

The BALANCE SHEET Figures have been used on the income statement therefore the solid line on the graph.The business operates on the following systems: VIP Payroll System, EasyFile & E Filing,Pastel ,TeleMasters Phone system and the normal Window XP systems.The vehicles are registered on the NETSTAR tracking device whereby reports are printed for time management and job performance.Pastel Evolution and SAP systems are used in the business.The premises is secured with CCTV cameras and alarm systems.Any successful business is system managed & efficient controls can be put into place.

What percentage of the business is cash/credit?

50% cash & 50% card sales.Residential Clients are required to pay the full amount upfront.Contracted clients pay monthly and on time via EFT transfers.

What is the age analysis of the debtors book?

The "age analysis" is up to date and documentation is on file as from 2006 up until 2011.

How could the profitability of the business be improved?

Profitability of the business can be improved by: 1.CAPITAL INPUT and stock a variety of products. 2.The business must always be service & work performance driven. 3.Re instate the Creditors and continue to develop & expand the business.Creditors assist with cash flow even if only 7(seven) days in some cases. 4. Fully Stock the installation vehicles with supplies they need in order to be more cost effective & productive.This will enable them to complete 3 to 4 Job cards per day instead of 1 or 2 currently.This situation is ONLY the result of a "Lack in Cash Flow ".

Is Seller finance available and for what amount?

Yes. It depends on the offer and how close it is to the Purchase Price.The owners are prepared to look at further options of partnership perhaps 33,33% or 50% or 100%. The business is highly profitable and can perform much better with Capital Input. The owners feel strongly about this business and are willing to invest their own cash into the business should a partnership be considered.

4. Staffing

What is the total staff complement?

Staff Breakdown : 15 x Administration Staff 23 x Production Staff

Give a breakdown of staff/functions/length of service?

The Seller will present a "full breakdown " of staff , functions & salary.This will be disclosed to serious buyers only.

Do any receive special perks or incentives?

There is only 1 x Representative , earning a basic salary & commission. Only the Manager receives added perks as agreed upon with the Owner.

Are they on contract?

Yes all staff is on contract and on the payroll. A Labour consultant is paid monthly to handle staff issues & CCMA representations.

Do any have management potential?

The current manager has perfected the art of managing & operating the business.He has eight(8) years experience in the business.A true and dependable individual to be your business partner. Then we have the production foreman , storeroom manager & the accounts manager who have all displayed commitment to excellence & responsibility to the business.They should be rewarded and considered for future management.An excellent Track record worth acknowledging !!!

How involved is the Owner in running the business?

The business is MANAGER OPERATED.The Owner was 100% involved in the business.He then was offered another career opportunity in line with his interests & passions.He feels that the business was a family heritage but cannot see himself driving the business at this stage.A opportunity that can be well effected and more successes achieved if the reins were handed to someone that is locally involved.Clients want to meet the owner & feel important with his personal touch.Although the Owner is not present on a daily basis , the Manager communicates to him telephonically the happenings of the day regarding figures & opportunity's.They make decisions together & the manager has a firm hand on the business.

5. Premises

When does the current lease end?

The property belongs to the Owner.The property valuation affirms the selling price of R3.2 million. Valuation was performed in April 2011. Should the buyer not wish to purchase the Property with the business, the Owner will draft a lease agreement and provide the new owner with a lease. Terms an conditions and escalation rates etc.

What are the trading hours?

Trading Hours : Mondays to Fridays :7am to 5pm Saturdays :7am to 10am 24 hours standby due to Geyser bursts or plumbing problems. There is a flat fee regarding call outs to prevent unnecessary driving. Weekdays R350. SUNDAYS R400.

What is the square meterage of the business?

Size of Property : Building : 541 m2 Premises : 1812 m2 Property Valuators used : Tetragon Valuers ( Pty) Ltd ALL Valuations , locality maps ,certificates are on file with ALDES Business Brokers

Do you require a licence?

The Owner was the Chairman of IOPSA- Institute of Plumbers South AFrica.He was also part of the Gauteng Masters Builders Association.The business is registered with SESA and penalties are paid should the work not be 100% correct and compliant. So in essence the Business is PERFECT in every way , just waiting for that second chance to perform its grandest!! 1.The Business owner must be registered with the municipality.A once off fee of R700 is required. 2.The business must possess all legal certificates required for installations & technical data and risk assessments. 3.The business must adhere to safety regulations. 2x Fire extinguishers & 2x Fire Exits. 4.The business must adhere to SAB standards.

6. Assets

Is a full asset list on file?

Yes a full Asset list is available and on file with ALDES Business Brokers and will be shown to the prospective buyer on request. The list of Vehicles/ make and model /mileage are on file with Broker.

Are any items not included in the sale?

A pending amount of R700 000 due to the owner from a Civil Court Case.More info will be divulged to a serious buyer.

Do any require repairing?

Vehicles require ongoing maintenance. There are a 4xvehicles standing on the premises that require tyres & small other things to be in mint condition.This will increase turnover and allow more teams to be on the road.Standing vehicles means loss of income.

What are their settlement amounts?

Settlement amounts on applicable vehicles/items will be obtained.

Will Seller settle or Buyer to take over?

The seller will settle all outstanding HP's.This can form part of the negotiations whether the purchaser will continue the monthly installments or settle completely.

Are copies of agreements available?

Yes. HP on CCTV.

Are they presently insured?

Yes they are insured with New National .

7. S.W.O.T. Analysis

Strengths?

Strengths: 1. The strength of a business lie within its people.The business is fully equipped with qualified plumbers ,skilled and experienced personnel that built a respectable name for itself in this trade.They are friendly & efficient making it a pleasure to transact with. 2. The business is stable & has built up a good client base.The company has been in existence for 70 years. 3.This is a well organised company with competitive prices, specialised sales and products available to the public. 4.They provide a 24 hour service and are committed to excellence. 5. Stock the vehicles to save time & increase work performance.

Weaknesses?

Weakness: ONLY ONE WEAKNESS EXISTS : CAPITAL CAPITAL CAPITAL !! With more cash in the business, more stock can be purchased , more clients can be assisted , more big business can be contracted. Cash has a positive DOMINO effect on the business!!!

Opportunities?

Opportunities: A GRAND UNTAPPED OPPORTUNITY COMPELLED BY LAW AWAITS THE PURCHASER: On September 9th 2011 the Minister of Trade and Industry,Dr Rob Davies, signed the amended National Building Regulations and Building Standards Act.The amended act is in effect since November 2011. It states that all new commercial and residential buildings will have to receive at least 50% of its hot water requirements from renewable energy resources such as SOLAR water heating.The regulation also stipulates that buildings should be designed with the regions climate in mind to prevent the use of extra energy to heat or cool the building.SELECTED ENERGY IS THE WAY FORWARD !! The owner is considering opening a sub-station within the Plumbing business for the benefit of both parties. 1.By employing sales representatives. 2.More marketing and exposure of the business products and services . 3.Insurance claims can double the profits. 4.Mines are an untapped market. 5.Solar Heating is definitely going to increase turnovers. The banks offer funding for such geysers.Plus point for clients.

Threats?

Threats: 1.The economy plays a major role in the amount of cash flow available.

8. Reason For Sale

What is the reason for the sale?

The Seller is permanently employed in a professional position at a company in JHB. The Seller is always looking after the business interest and will continue to do so. The Seller will continue to support the business with SELECTED ENERGY products.

9. Conclusion

Why is this a good business?

The business provides the following : 1.Job continuity & maintain families that have grown with the company since 1941. 2. Excellent reputation & qualified competent staff members 3. Very efficient Manager operating the business both in motivation & discipline. 4.Future Contract with a POWER STATION for the next 5 years .A minimum of R350 000 pm rise in turnover.This could be more with current escalation of 10%.The company tendered 2 years ago and the rewards have realised.

What is the price plus stock and the net profit?

R2.5 million Property Optional at R3.2 million