Summary

Petrol & Diesel has become an integral part of our lives that we cannot do without.The business community & transport contractors rely on this product to operate daily, execute deliveries & generate income to every person connected to the business chain link ! Energy efficient fuel measures are applied. Safety measures are complied & adhered too.Drivers receive continous training in regards to HazChem making their work environment safe.Fixed client base with SERVICE EXCELLENCE & QUALITY !!!

1. History Background

Fully describe the business's activities?

The most impressive, well organised & structured wholesale petrol & diesel supplier we have visited in a long time!This business sends the message of success, service & availability.The business supplies more petrol than diesel to filling stations & logistics contractors.The depo/storage facility is well located on a very spacious piece of land approx 1 hectare in size just outside the CBD area.The tanks are above ground and well in line with fire & safety regulations.7x 42 000 litre tanks (storage on Trucks ) , 4x 23 000 litre tanks above ground , 2x2200 litre tanks above the ground on stands (safe & secure). A truck wash facility for the business "own " trucks. The wash bay cost R130 000 to construct to withstand the pressure of the heavy trucks. The business services & maintains the regular clients on a weekly basis about 80 000 litres per client.

How long has the business been established?

The Seller, who is a Lawyer by profession ,noticed a gap in the market in 2004 and decided to embark on this challenging venture.Initially the business seen some trials some days but the Owner was ready for any obstacles that would come his way.9 years later he built the business into an empire & something to be so proud of!

2. Present Market

How does the business operate on a daily basis?

The business operates from two premises: one is an office in the CBD area where the staff & manager is housed.The administration , ordering , payments , credit references are all checked in the office before delivering to the client.This ensures that the client can afford the stock he purchases, thereby curbing the risk for the company.The 2nd premises is the storage facility or depo situated a few km out of town.The manager ensures that the health & safety regulations are applied and adhered too. Fire hydrants and registration with the fire department is essential.

How are the clients attracted to the business?

The service & availability of product is excellent.The business is well geared up to attend to the needs of every client.The manager controls a "logistics board" whereby the routes are planned to deliver petrol/diesel to clients.The geographical area the business covers is Gauteng, Mpumalanga & Limpopo.The business sells "pure " diesel and petrol , not mixed or tampered with.Quality perseveres and in the long run maintains loyal & trusting relationships.

What Advertising/Marketing is carried out?

None at this stage.The business is very profitable with the existing client base and the clients are satisfied with the great service.The opportunity is there for the Buyer to expand should he wish to supply the mines with petrol/diesel. The only hiccup would be the payment structure of 30-60 days from invoice.If the buyer has enough capital to carry him then this could be a viable option.

Does the business have any contract work?

Yes.The business has currently on book 30 solid & regular clients, mostly filling stations and transport businesses.The owner believes in supplying smaller quantities to various clients instead of huge amounts to one or only a few clients which could end up to be a rather risky business.

What competition exists?

Petrol & Diesel is a cut throat business. There are many competitors in the market BUT essentially service is what matters.Quality of product rises above price.If product quality is poor or mixed with other substances this can damage your reputation and supporting client base.Pay for quality and the history will be built on a stable foundation.Great monetary rewards & credibility will be achieved.

What are the seasonal trends?

This business is stable & consistent throughout the year. Petrol sales make up 2/3rds of the sales.Selling LRP(unleaded 93) & ULP (premium 93).The balance makes up the Diesel sales.No paraffin sales.The monthly turnovers are averaging 3 million litres per month equivalent in rand value of R30 million (sales). Additional bonuses are received on "petrol gains " equaling approximately 5000litres in summer, rand equivalent of R185 000.Not 100% sure of winter months.

3. Financial

Is the business VAT Registered?

Yes.Most definitely.The documents are on file and will be available to serious buyers only! The business taxes are up to date & the Seller ensures that both himself and the business remain in "good standing " with the LAW. Vat 201's are on file with the bookkeeper.

Are there up-to-date Management Accounts available?

Yes.The business prides itself with sound and strict bookkeeping principles.This ensures that all sales are recorded , all payments are banked, all taxes are paid and cleared.The business operates on a system based programme allowing the smooth flow of business in regard to orders, invoicing and delivery.The client must complete a credit application with all FICA documents. Approval must be given before orders are placed or delivered.

What Balance Sheet and Income Statements are available?

The latest " Financials " will be completed at the end of February 2012.Management accounts are available with daily sales recordings , cost of sales & expenses.Available at any time to serious buyers. The fuel is noted as an "expense" in the business.PLEASE NOTE : unpaid vat claims , loan accounts and benefits before take over of the business is for the benefit of the Seller.

What percentage of the business is cash/credit?

80% Credit 7 days 20% Up front payment into bank account. payments are checked before volumes are sent to client. Surety must be provided to counter any potential risk.

What is the age analysis of the debtors book?

7 days.The filling stations pay via eft into the business bank account within 7 days.Some clients pay COD.This facility has a proven track record and is based on excellent client relationships and loyalty.

How could the profitability of the business be improved?

Profitability may be improved by : 1. Opening of 30 day accounts which is not highly recommended though. Petrol must be sold COD. 2. Setting up of tanks & equipment on premises of regular clients (if applicable). 3. Representative that markets the business in the surrounding area. 4. Contract with mines. Only problem would be the 30-60 day payment waiting period. 5. Retail Oil Supplier.

Is Seller finance available and for what amount?

Yes. Options may be discussed with BANK GUARANTEES presented to Broker/Seller.

4. Staffing

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

16 Staff Members 1x Operating manager 1x Representative 1x Receptionist 2x Administration ladies 2x Truck Washers 7x Truck Drivers 1x Mechanic

Do any receive special perks or incentives?

Yes. The manager receives a " good salary " with a "house " for him and his family to reside in.The owner is much impressed with the manager's performance that he wishes to increase his monthly package. In retrospect the manager is the core of the business!!

Are they on contract?

Yes.The staff are on contract and will be disclosed to serious buyers. The staff are well looked after in this business.There is a shower with a "solar geyser" at the storage yard for the drivers & mechanics benefit. 2x caravans should they require a time to rest. 2x containers for the tools & spare parts.

Do any have management potential?

Yes .The current manager is worth every cent. He is operating the business on a daily basis and works in harmony with the Owner. He supervises and controls the staff, logistics, payments received, orders of volumes and such.

How involved is the Owner in running the business?

The business is manager operated.The Owner has more free time on his hands to travel the world and see exciting places with his beloved wife.He positioned himself to relief the manager by working in shifts per one week/per one weekend.This enables the manager to be relaxed and ready to face the " adrenalin pumped business " for the weeks ahead.

5. Premises

What are the trading hours?

Trading hours for the office : Monday to Fridays 7:30am to 16:30pm The mechanic is available for breakdowns , should the services be required.

What is the square meters of the business?

Office space is 125m2 Storage yard & premises - 1 Hectare

Is a copy of the lease available?

The office space has a lease agreement with the LANDLORD. The lease contract is renewable with a 10% escalation. The lease expires in December 2013 The storage yard is the property of the Owner.

Do you require a licence?

Yes. Wholesale License.This will be transferable to the Buyer.The DTI will be notified and the necessary forms and payments will be made.During that time the Buyer will be trained to operate and manage the business. Please visit the website @ www.energy.gov.za to view granted licenses.The truck drivers & vehicles are licensed.Mechanic is qualified.

What lease deposit and/or other surety is required?

The Landlord will require one or two months "key deposit" . One months rental in advance. This is for the office space in the CBD area.

6. Assets

Assets that are excluded from the sale ???

2x vehicles that are used by the mechanic for breakdowns Tools on premises ( Seller is willing to sell this to the Buyer)

Is a full asset list on file?

Yes . A full asset list is available.The following are the vehicle asset list : 1x2006 Freight line Agasi 530 1x2007 Hino Horse 57450 1x2008 Hino Rigid 28418 3x2010 UD TON Horses 460 1x2012 UD TON Rigid 460 Trailers & Tankers: 1x2006 Tank Clinic Tri-Axle 1x2007 Tank Clinic Semi Trailer 1x2007 Tank Trailer Tri-Axle 1x2008 Tank Trailer Draw Bar Trailer 1x2010 Tank Trailer 2008 Hino Rigid 1x2012 GRW Tri -Axle STORAGE YARD ASSETS: 1x 1 hectare of land 1x Generator 65KW 2x Containers (6x3) 4x 23 000 litre tanks 2x 2 200 litre tanks 1x Caravan (security office) 1x Electric fencing around premises 1x CCTV cameras @ R100 000 1x Truck wash bay 1x Shade netting Mechanic 1x Solar panel 4x single garages at truck yard. Water & Electricity has been serviced. Shade Netting for Vehicles. Letter from the municipality that states storage facility is approved. Under 80000 litres , no rezoning required on Agricultural land.

What is their overall condition?

All assets are well maintained and managed.The owner is a firm believer that "prevention is better than cure" .All company trucks are serviced & maintained regularly.Without well serviced trucks the business cannot operate as this increases the risk of breakdowns and not reaching clients on time.Trucks that are in warranty periods are serviced at the dealership and the rest are serviced by a qualified mechanic.Tyres are checked ,rotated & changed for safety.Licenses are renewed annually.

Which assets are on lease/HP and with whom?

Current HP will be settled by the Seller. The latest amount will be determined upon request from a serious buyer.The owner estimated the amounts to be R3.5 million. The owner is in the process of purchasing a new UD GRW Tri-Axle 2012 & Trailer 2012

Are copies of agreements available?

Yes. On request from a serious buyer.

Are they presently insured?

Yes. ABSA "ONE COMMERCIAL INVESTMENT HOLDINGS" insurance policy. Covered for spillages ,liabilities & fire.Copy of the insurance contract is available to serious buyers only.This includes Hazchem (hazardous chemical ) cover.

7. S.W.O.T. Analysis

Strengths?

Strengths: 1. Established & proven business for 9 years 2. Service excellence 3. Trucks are serviced & well maintained. 4. Tanks are sealed with "Intertech technology" to prevent stock losses. This system saves the company MONEY in real time.5000 plus litres per week in summer = 185 000 pm , not sure of amount in winter (losses due to temperature).WOW , great saving monetary wise.The company pays R18 000 pm for the sealing so that volumes are controlled, sealed without theft.Gains are made when the truck is not standing on level ground and extra volume lies in the tank.Those gains are now as a "bonus" for the company.

Weaknesses?

Weaknesses: 1.The Buyer needs capital to operate the business and keep the tanks full. R6 million 2. Security checks & FICA documentation must be adhered to in order to prevent "bad debt" 3. CASH is KING rule must apply.Granted existing clients with a 7 day account cannot be changed suddenly.What will help is "surety" and security cessions of property to protect the business interest. 4. Confirm payments before release of orders.

Opportunities?

Opportunities: 1. Supply the mines in the area. 2. Retailing Oil (this is an excellent "add on" to the current business)

8. Reason For Sale

What is the reason for the sale?

Owner & Family would like to immigrate to Australia. This will take effect when the business is sold.

9. Conclusion

Why is this a good business?

An excellent opportunity due to : 1. Filling station & transport clients are patrons of this business. 2. Petrol is the main sale item. 3. Trucks , Trailers ,Tanks & Property. 4. Service & Quality is the mission statement of this business.

What is the price plus stock and the net profit?

The Price is R31 million : The package consists of the following: 7xTrucks R 12 million Stock on hand R 1.5 million Debtors R 4.5 million (7 days-clients must settle previous debt before ordering new stock) Property 1 Hectare R 2 million Business as going concern R11 million 4x23000l tanks , 2x2200l tanks , wash bay , 2xcontainers ,2x caravans, electric fencing , camera system , small office building , shade netting, services & electrical completed, 30x fixed client base, 4x single garages at yard.