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  • Mandate: 32223
  • Added: 11 Jul 2018
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Suppliers of Cupboard Boards to Client Specifications

KwaZulu-Natal, Durban
Mandate 32223
Added 11 Jul 2018
R 6,565,000* ZAR
Stock: R 865,000
Assets: R 4,346,475
R 272,280 ZAR
Steve Patmore
Aldes Exclusive

The business supplies high quality cut and edged board to client specifications for Kitchen,Bedroom and Vanity Cupboards.

Suppliers of Cupboard Boards to Client Specifications
R 6,565,000* ZAR
Stock: R865,000
Assets: R4,346,475
R 272,280 ZAR

The business supplies high quality cut and edged board to client specifications for Kitchen,Bedroom and Vanity Cupboards.

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Fully describe the business's activities?
The business specialises in the supply of boards that are cut and edged to clients specification for use in Kitchen,Bedroom and Vanity cupboards. The end users are the Retail Market as well as Contractors and Shopfitters . The split between the Retail Market and Contractors/Shopfitters is about 50/50. The business has a Head Office as well as three satellite branches , two in Durban and one on the South Coast. The business also does some design and supply of fitted Kitchen and Bedroom cupboards.

How long has the business been established?
16 years. the business was started in 2002. The first Branch was opened in 2007.

How long has the owner had the business?
The Owner started the business.

How does the business operate on a daily basis?
Orders are placed directly with the Head Office or Branches. A team of internal sales ladies design the size and style of the boards ordered, utilising a software design program. The design sheets are then sent to the factory floor where they are cut and edged to specification. The designs are created by means of CNC machines. All the ordering of the stock boards are done by the Head Office and required stock is sent through to the branches.

How are the clients attracted to the business?
The business has built up a reputation amongst Contractors and Shopfitters. The Branches also attract walk by retail business.

What Advertising/Marketing is carried out?
The business does some local tabloid advertising.

Does the business have any contract work?
No, but Contractors and Shopfitters are recurring customers due to the businesses high quality, reputation and service.

What competition exists?
There are other competitors, but the business has developed a strong footprint in their areas due to their quality and service.

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

What VAT documentation is on file?
All documentation will be made available to qualified Buyers at a due diligence stage.

Are there up-to-date Management Accounts available?
Management Accounts to the end of the Feb. Financial year are on file. At a due diligence stage any updates will be supplied together with monthly revenue breakdowns (while for this Report the annual turnover is just averaged). For the purposes of this report the Management Accounts were utilised and the Owner and his wife's withdrawals added back to the Net Profit. The wife would need to be replaced as she handles the admin of the business. The wife and Husband each withdraw R 360,000 p.a. as members withdrawals. The total add back however is only R 540,000 as R 180,000 has been left in the expenses to cover the salary of a replacement for the wife. Depreciation has also been added back to the Net Profit, which is standard practice as it is only a book entry and not a cash flow item. The Net Profit shown is thus the Owners Discretionary earnings and will differ from the figure shown in the formal Financials.

What Balance Sheet and Income Statements are available?
All Financials will be made available to qualified Buyers at a due diligence stage.

What percentage of the business is cash/credit?
The business is almost entirely cash and operates on a 50% deposit on order with the balance paid on delivery. There is an extremely small debtors book of about R 250,000 on a Turnover of R 23.5 Million.

What is the age analysis of the debtors book?
30-60 days on the current Balance Sheet. Generally however the business is purely run on a cash basis and their is no Debtors Book.

How could the profitability of the business be improved?
The business could expand into more suburban areas by opening up new branches and reaching a wider range of Contractors/Shopfitters and Retail market.

What is the total staff complement?
The total Staff complement including the branches is 42.

Give a breakdown of staff/ functions/ length of service?
2 x Managers 6 x Internal Sales Consultants. 2 x Receptionists. 2 x Drivers. 4 x Machine Operators 1 x CNC Machine Operator. 4 x Wrappers. 20 x General Workers. 1 x Specialist Work Operator.

Are they on contract?
All staff have letters of employment.

Do any have management potential?
There are 2 Managers.

How involved is the Owner in running the business?
The Husband and his Wife ( co owners ) are fully involved. The wife is responsible for most of the admin functions in the business and will need to be replaced. A generous monthly figure of R 15,000 per month ( R 180,000 p.a. ) has been left in the expenses for this purpose and could be less. The Husband, who's strengths lie in the operational side of the business has indicated that he would be open to negotiate him staying on to run the Factory side of the operation if required.

When does the current lease end?
The Head Office Lease and one of the Branches expires in 2020. The other two branches in 2019. All lease documents will be supplied to qualified Buyers at a due diligence stage.

Is there an option of renewal & what period?
All premises have renewal options

What is the annual escalation %?

What are the trading hours?
Mon - Fri: 7.30am - 4.30 pm. Sat: 7.30am - 3pm.

What is the square meters of the business?
Head Office 800 sq.m. The Branches 300, 400 and 600 sq.m. respectively.

Who is the Owner/Landlord?
Landlords info to be supplied at due diligence stage

Is a copy of the lease available?
All leases will be made available to qualified Buyers at due diligence stage.

What lease deposit and/or other surety is required?
Head Office - R 25,000 Branches - R 6,884, R 13,800 and R 14,400 respectively.

What are the main assets of the business?
The Head office has 2 X CNC Machines, a Wrap Machine, 3 x Panel Saws,an Edging Machine , a Router and a Spray Booth, 4 x Delivery Vehicles, CCTV and the usual Office Furniture and Office Equipment. Each of the Branches has similar equipment except for the CNC Machines, Spray Booth and Vehicles. A full list of all assets will be made available at a due diligence stage.

Are any items not included in the sale?
All items are included.

What is their overall condition?
All assets are in good condition.

How have they been valued ?
Assets are valued at book value.

Which assets are on lease/HP and with whom?
Only the 4 Vehicles are on lease . The repayment figures are included in the expenses. Settlement amounts will be made available at a due diligence stage.

What are their settlement amounts?
Will be made available at a due diligence stage.

Will Seller settle or Buyer to take over?
Buyer to take over.

Are copies of agreements available?
Agreements will be made available at a due diligence stage.

Are they presently insured?
All assets are insured

* The business is well established with a strong reputation. * The business prides itself on quality and service. * It is highly profitable with Net Profits of over R 3.2 million p.a. * It has strong cash flow as it is a cash business with 50% deposits on order placement and 50% on delivery. * It has a strong supplier base with secured credit terms. * Procedure manuals for the various job functions have been created.

At present there are no perceived weaknesses. With continued growth the business will need to establish a more structured Management team to relieve the owner of all the decision making . In saying that the staff are well trained and capable of carrying out their current functions without too much supervision.

The business could expand geographically and open new branches. New product ranges to the Contracting/Shopfitting and retail markets could be introduced.

The usual economic downturns could impact the businesses cash flow.

What is the reason for the sale?
The Owner feels that the business has reached a stage where it is starting to outgrow him. His speciality is on the Technical side as well as Customer and Supplier relationships. The business needs someone to take it to the next level from a strategic growth point of view. The Owner is prepared to stay on for a lenghly period, to be negotiated, as a General Manager of the Factory floor if required.

Why is this a good business?
As stated in the SWOT analysis under Strengths.

What is the price plus stock and the net profit?
The price is R 5,700,000 plus stock of approximately R 860,000 with average monthly Net Profits of R 272,000 p.m.

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