Sectors / Category

Annual turnover

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  • Mandate: 31903
  • Added: 28 Feb 2018
  • AFS
  • 1134

Design and Manufacture of Steel Products

Western Cape, Cape Town
1134
Mandate 31903
Added 28 Feb 2018
R 33,250,000* ZAR
Stock: R 4,250,000
Assets: R 23,861,566
R 543,577 ZAR
Kutu Venter
(PRINCIPAL)
Aldes Alpha
Western Cape
Western Cape
Summary

This top manufacturer of steel products is a major supplier in the Western Cape area. Well equipped to address the increasing demand for their product with a staff compliment of 40.

Design and Manufacture of  Steel Products
SELLING PRICE AFS
R 33,250,000* ZAR
Stock: R4,250,000
Assets: R23,861,566
R 543,577 ZAR
Summary

This top manufacturer of steel products is a major supplier in the Western Cape area. Well equipped to address the increasing demand for their product with a staff compliment of 40.

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Fully describe the business's activities?
Design and manufacturing of steel products. Sale of steel products.

How long has the business been established?
The current owners established the business 15 years ago.

What steps are in place to solve 'load shedding' problems?
The business has a 450KVA Generator.

How does the business operate on a daily basis?
One of the owners consults with customers and assists with the design of products per client specifications. Products are manufactured at the factory and the business also delivers to its customers. No installation of products.

How are the clients attracted to the business?
Mostly tenders and word of mouth. A lot of repeat business from existing clients.

What Advertising/Marketing is carried out?
No advertising other than their website describing the product range and delivery vehicles with company branding.

Does the business have any contract work?
Lots of repeat work but not seen as contracts.

What competition exists?
Through the years there has been new players entering and exiting the market, but they have established themselves as a major player within the industry with little competition at their level.

What are the seasonal trends?
During the months of April to June customers are less active with a pick up in activities from early September.

Is the business VAT Registered?
The business is VAT registered.

What VAT documentation is on file?
VAT documents are available.

Are there up-to-date Management Accounts available?
The company uses a Pastel Accounting program. Management accounts and the like is readily available. We have received Management accounts for the period July 2017 to December 2017 (6 months). We have based our recasted Income Statement on this set of Management accounts.

What Balance Sheet and Income Statements are available?
We have a copy of the June 2017 signed Financial Statements.

How could the profitability of the business be improved?
There is scope for improvement of the BEE accreditation for this business. It seems that the business is losing out on potential contract work due to its current BEE status. Current production of steel is between 170 to 200 tons per month and can be increased further.

Is Seller finance available and for what amount?
The seller will not consider this as an option, however one of the owners indicated his desire to remain in the business.

How was Net Profit calculated?
We used the Management Accounts for the 6 months period ending December 2017. The Financial Statements reflects lots of deductions and drawings that we deemed not to be core business expenses. The Financial Statements will not reflect the profits as per our calculation.

What is the total staff complement?
40 Staff members with casual laborers as required during peak seasons.

Give a breakdown of staff/ functions/ length of service?
Most of the staff has been with the business for quite some time and the owners strictly adhere to the weekly working hours for its personnel. Office administration is taken care of by the two owners and two administrative employees.

Do any receive special perks or incentives?
One staff member receives a petrol allowance as well as commission when sourcing new business. The Production Manager has a company car.

Are they on contract?
All staff members are on contract.

Do any have management potential?
The current owners are hands on operators.

How involved is the Owner in running the business?
On a daily basis one of the owners takes care of all the banking and financial aspects of the business. The other owner acts as General Manager overseeing aspects such as client liaison, purchases, as well as the design of products and the programming/aligning of the production machinery.

When does the current lease end?
October 2018.

Is there an option of renewal & what period?
An option to renew for a further four years.

What are the trading hours?
The business operates Monday to Friday. Eight hours a day. Limited to 40 working hours per week.

What is the square meters of the business?
2500 sq/m

Is a copy of the lease available?
A copy of the lease will be made available.

What lease deposit and/or other surety is required?
Lease deposit to be negotiated with the landlord.

What are the main assets of the business?
Production machinery such as Decoiler, Eccentric Press, Welding machines, Plate roller, Pipe Bender and the like. Also three delivery vehicles.

Are any items not included in the sale?
Two vehicles registered in the company name which is used for owners private use.

What is their overall condition?
On our visit through the factory we were impressed with the condition and the overall maintenance of all the production equipment.

Do any require repairing?
Being a manufacturer regular repairs and maintenance is required. This is an in-house function.

How have they been valued ?
The owner assisted us with an asset list and a valuation of each item.

Which assets are on lease/HP and with whom?
One Truck and one Bakkie as well as four other items are on Hire Purchase.

What are their settlement amounts?
Around R2 650 000 outstanding on lease/HP agreements. (December 2017)

Will Seller settle or Buyer to take over?
To be negotiated.

Are they presently insured?
All business assets are comprehensively insured.

Strengths?
Top quality product. Lots of referral and word of mouth business. Specialized and focused area of manufacturing.

Weaknesses?
Poor advertising. Black Empowerment Status.

Opportunities?
Sizable scope to expand the output of the factory.

Threats?
Other than the fluctuation in steel prices, couldn't identify specific threats for this business.

What is the reason for the sale?
One of the owners wishes to retire.

Why is this a good business?
Very neat production line with a top quality product in high demand. We were most impressed with the gross profit margins maintained by the business.

Who would be a suitable Buyer?
The company is not suitable for a corporate buyer. A Buyer that requires to finance the transaction will also not be suitable. The Seller is aiming to negotiate with an Entrepreneur with some background and experience in the industry.

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FRANCHISE DETAILS

Aldes Alpha

2 members
4 active mandates
Western Cape
Galleon Beach, Pelican Parade
7530

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