Fully describe the business's activities?
Textile printing (screen, rotary & pad), heat pressing, sublimation, embroidery & sticker, service supplier to the clothing industry. Long established client base, being added to continually. Clothing overalls, caps, bags, banners, etc etc
How long has the owner had the business?
12 years when it was started (2008)
How does the business operate on a daily basis?
Established clients total some 150 odd, with some 50 being more regular & the top 6 being some 50% of turnover. They place orders & forward their fabric/material for embroidery, silkscreen, sublimation, heat/vinyl sticker services, which are priced & prioritised, specifically w.r.t. day/night shifts. The graphic designer develops & sends through the design work, if not already on hand from past jobs. The two production line managers, then ensure their teams carry out the jobs at hand, right through to packaging.
How are the clients attracted to the business?
The client base has been established over 12 years, with new clients being attracted by the wide spectrum of services, word of mouth referrals, & the website
Does the business have any contract work?
Not really, rather continuous orders coming through from regular clients, as well as, ad hoc work from existing & new clients
What competition exists?
There is a lot of general competition, but few that meet the range of services, quality & delivery timings, that this Company does.
What are the seasonal trends?
Busy year throughout in 2 shifts
How did the Covid-19 pandemic impact the business turnover / daily operations?
It was only really affected in April 2020, while the factory was shut, as thereafter mask/buff & then normal production returned to normal.
Is the business VAT Registered?
Yes - all on file
Are there up-to-date Management Accounts available?
MA's are produced monthly & available, showing monthly incomes & costs.
What Balance Sheet and Income Statements are available?
This Report is based on signed-off 2020 AFS, with a turnover of some R9.767m & Net Profit of R2.2m inclusive of depreciation, personal addbacks, etc. AFS for last few years are available; noting that the business has with an investment of some R1m in machinery in 2017/18, R400 000 in 2019, & R1m in 2020, as well as, through committed clients, grown substantially from turnovers of R4m in 2017, to R6m in 2018, to R9.7m in both 2019 & 2020. Likewise, NP's have grown substantially over the years.
What is the age analysis of the debtors book?
current 48% with 22% within 30 days, 16% at 60 days; 9% at 90 days, & 5% at 120 days
How could the profitability of the business be improved?
The profitability is improving every year as client orders, turnover, & machinery investments continue to match each other.
What is the total staff complement?
2 divisional managers, 5 admin & graphic designers, & 55 factory staff . The one long serving manager controls the major portion of the factory production lines
How involved is the Owner in running the business?
The owner has reduced his involvement over the years to rather just controlling the strategic & financial side of the business, with the two managers & some key staff managing the business for most of the day or if the owner is away
The seller owns the building & is looking to lease the main portion of 647m2 (plus 35m2 mezzanine) to the Business Purchaser at the present rate of R42 000pm +9% escalation rate. If one decides to buy the premises then one would include the additional/separate space as follows: a 2nd portion of 256m2 being rented out to a separate party at R28 000 pm; & a third portion of 173m2; then the total sale price for all 3 portions would be collectively, some R6.5m
What are the main assets of the business?
6 Embroidery machines (4 were bought in 2018 ), 4 screen printing machines (2 were bought in 2019), heat press, sublimation machine (bought mid-2020 for R1m), various smaller sticker/vinyl machines, tools, shelving, office equipment including graphics programmes, & a delivery vehicle. All are in excellent condition & depreciated to some R3.5m, which would cost some R7m to replace with new machines, but with a 2nd hand value of some R3m. The staff manage the machines, but external service providers in the area do repairs & maintenance when required.
Long established, good client base, capable managers & staff, good mix of services & necessary machinery (some being only 1 yr old), with continually increasing orders, turnovers and NP's
Downturn in textile industry which is unlikely with growing market & focus on local production, as well as, the introduction of new technology
Already being introduced via the R1m large format sublimation machine that is only running at 1 shift vs the factory at 2 shifts.
That new players come into the market & pushes prices down, but this is unlikely to occur due to high barriers to entry, in respect of machinery costs, skilled design & production staff, past service history, & client business development
What is the reason for the sale?
What is the price plus stock and the profit?
The Sale Price is R5.5m (excl stock of some R20 000 being inks/packaging, as clients supply other materials), with a Net Profit of R2.2m for the 2020 Financial Year (inclusive of depreciation & personal addbacks); with assets that were purchased at some R7m (some as recently as 2020), depreciated to some R3.5m & worth some R3m at least on the 2nd hand market.
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