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Annual turnover

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  • Mandate: 35379
  • Added: 04 Jun 2022
  • AFS
  • 122

Highly profitable "formula based" broiler chicken production units

Gauteng, Mpumalanga Other Areas
122
Mandate 35379
Added 04 Jun 2022
R 1,085,000* ZAR
Stock: R 0
Assets: R 1,085,000
R 104,021 ZAR
Wynand Wolmarans
(PRINCIPAL)
Aldes Exceed
Gauteng, Sandton
Gauteng, Sandton
Summary

Key features of these turnkey "formula based" environmentally controlled broiler chicken production units: - Business in a box; - This operating model runs to a prescribed formula; - Strong cash at the end of every cycle (7 - 10 days, depending on model selected); - Only 2 staff members required; - High demand for broiler chickens; - State of the art environmentally controlled chicken houses; - Production is done using modern methods to control lightning, temperature and humidity; - Owner is not required to attend to daily operations; and - Various scenarios for 600/1000 and 1500 models based on cycle days 10/40, 9/36, 8/32 and 7/28.

SELLING PRICE AFS
R 1,085,000* ZAR
Stock: R0
Assets: R1,085,000
R 104,021 ZAR
Summary

Key features of these turnkey "formula based" environmentally controlled broiler chicken production units: - Business in a box; - This operating model runs to a prescribed formula; - Strong cash at the end of every cycle (7 - 10 days, depending on model selected); - Only 2 staff members required; - High demand for broiler chickens; - State of the art environmentally controlled chicken houses; - Production is done using modern methods to control lightning, temperature and humidity; - Owner is not required to attend to daily operations; and - Various scenarios for 600/1000 and 1500 models based on cycle days 10/40, 9/36, 8/32 and 7/28.

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Fully describe the business's activities?
The Seller has been manufacturing and erecting insulated climate controlled "fodder growing systems" for the live stock and equine market for the last 8 years. These systems are based on “planting” seed on a daily basis, in a production cycle, such that sprouted feed is available to the farmer on a daily basis. The natural progression of the business was to design a similar concept for rearing broiler chickens and as such the Poultry division was established in 2022. The business runs its own formula based operational enterprise, producing 7 600 birds per month in the Midvaal Municipal district. It is their intention re-establish a new operation where they can produce 20,000 birds per month. Based on the demand for chickens and this type of business with a "formula based' operating model, the Seller has just launched a turnkey solution based on their own environment controlled broiler chicken production set-up and operating model featuring the following standard options: 1 - Model 10/40/600 (600 - 1 000 birds in production in cycles of every 7 - 10 days); 2 - Model 10/40/1000 (1 000 - 1 700 birds in production in cycles of every 7 - 10 days); and 3 - Model 10/40/1500 (1 500 - 2 400 birds in production in cycles of every 7 - 10 days); Unpacking the above mentioned models: 10 = Maximum cycle days; 40 = Maximum full cycle of growth; and 600/1000/1500 = Minimum chicken output based on the longest cycle (10 days). As the Buyer you can select which option is best suited to your requirements, the 10/40 scenario being the most relaxed scenario. The business model offers entrepreneurs and/or investors a turnkey solution focusing on rearing broiler chickens on a formula driven operating model in different cycles ranging from 7 day to 10 days with different weight output depending on the cycle of choice. There are four different cycle options to choose from. The business is formula driven to control all elements of the business, without the need for owners to be involved on a daily basis. There are three marketing strategies to choose from: - Rearing and selling of broiler chickens to the the informal market that does not have access to refrigeration who prefer chickens that are not pumped with brine and selling them in longer cycles and at higher weights; or - Rearing and selling of broiler chickens to the abattoir and selling them in quicker cycles and at smaller weights; or - Rearing and contract slaughtering of broiler chickens and then selling the whole packed chickens to retailers and/or end users. A hybrid of the three scenarios is also a possibility. The turnkey set-up caters for both scenarios. The most preferred scenario will depend on the buyers personal preference. Both models have been tested and proofed in the Sellers own operation. The set-up has been designed and will be constructed applying the most modern methods, of controlling the important elements of rearing chickens, both through summer and winter, such as lighting, temperature and humidity.

How long has the business been established?
16 years

How long has the owner had the business?
Since 2006

How does the business operate on a daily basis?
The following activities happen on a daily basis: - Feeding chickens; - Check that drinkers are full and that there are no water leaks; - Turn the bedding shavings to ensure a clean and dry environment; - Check and adjust moisture sensors twice a day; - Check and weigh a sample of chickens (weight management); - Daily reporting to owner (batch and stock control reports) The business runs in 7 - 10 day cycles, depending on the option implemented by the Buyer. The following activities happens per cycle (every 7 - 10 days): - Deep cleaning of chicken houses; - Purchase of new chicks; - Purchase of chicken feed and medicine; - Purchase of bedding shavings. The birds receive specific preventative medication at the following intervals: - Day 1 - vitamins, immune and metabolism booster & calming agents; - Day 14 - bird flue immunisation: - Day 17/18 - anti-oxide and heart health; - Day 21/22 - prevention of water on organs and promoting liver health. Sales generally happen anywhere between the last 4 days of the cycle. The chicken house is then deep cleaned and sanitised during the last 2 days in preparation of the next cycle. The chicken rearing business is a relaxed, manager run operation and produces a number of chickens in a predetermined cycle. All you have to do is to follow the "formula" and the business will reward you with strong positive cash-flow and profit every 7 or 8 or 9 or 10 days (cycle dependent).

How are the clients attracted to the business?
You will have to build a trust relationship with abattoirs and/or sellers of live chickens in informal settlements in close proximity to your business. The business model makes provision for a driver/marketer.

What Advertising/Marketing is carried out?
Ongoing face-to-face marketing in the informal settlements/townships and/or the abattoirs and/or retailers is considered the most effective.

What competition exists?
Other small operations will always exist. However they do not operate "state of the art" chicken rearing, and they do it on a much smaller scale and can therefore not guarantee consistent quality and quantity.

What are the seasonal trends?
None, the controlled environment created within the chicken houses allows for the environment to remain equal through winter & summer. This will be a part of your competitive advantage. Demand generally goes up in the informal settlements during winter months as small informal suppliers of live chickens are are exposed to the risks associated with cold weather.

What are the scenarios for selling whole packed chickens?
As is the case with the informal market and the abattoir, there are four different cycle scenarios that you as a Buyer can elect to run your business on i.e. for cycle days 10/40, 9/36, 8/32 and 7/28. These equally apply to all three model options i.e. models 600/1000 and 1500: For illustration purposes model 1000 is used with each of the cycle scenarios below: Scenario 1: - 1 000 birds every 10 days - Average "nett out" weight at the end of 40 days should be 1.82 kg - Average selling prices @ R39-50/kg should be R71.89 per bird - Average net profit (after overheads) should be R23 498 every 10 days. - Average profit per month - R71 473. Scenario 2: - 1 200 birds every 9 days - Average "nett out" weight at the end of 36 days should be 1.61 kg - Average selling prices @ R39-50/kg should be R63.60 per bird - Average net profit (after overheads) should be R25 066 every 9 days. - Average profit per month - R84 713. Scenario 3: - 1 400 birds every 8 days - Average "nett out" weight at the end of 32 days should be 1.344 kg - Average selling prices @ R39-50/kg should be R53.09 per bird - Average net profit (after overheads) should be R23 401 every 8 days. - Average profit per month - R88 974. Scenario 4: - 1 700 birds every 7 days - Average "nett out" weight at the end of 28 days should be 1.120 kg - Average selling prices @ R39-50/kg should be R44.24 per bird - Average net profit (after overheads) should be R22 630 every 7 days. - Average profit per month - R98 333. Birds are sold and delivered/collected to/by the target market during the last 2 days of cycle. All houses are deep cleaned and sanitized at the end of each cycle.

What scenarios are available for the abattoir market?
As is the case with the informal market, there are four different cycle scenarios that you as a Buyer can elect to run your business on i.e. for cycle days 10/40, 9/36, 8/32 and 7/28. These equally apply to all three model options i.e. models 600/1000 and 1500: For illustration purposes model 1000 is used with each of the cycle scenarios below: Scenario 1: - 1 000 birds every 10 days - Average weight at the end of 40 days should be 2.6 kg - Average selling prices @ R23/kg should be R59.80 per bird - Average net profit (after overheads) should be R13 721 every 10 days. - Average profit per month - R41 734. Scenario 2: - 1 200 birds every 9 days - Average weight at the end of 36 days should be 2.3 kg - Average selling prices @ R23/kg should be R52.90 per bird - Average net profit (after overheads) should be R15 217 every 9 days. - Average profit per month - R51 427. Scenario 3: - 1 400 birds every 8 days - Average weight at the end of 32 days should be 1.92 kg - Average selling prices @ R23/kg should be R44.16 per bird - Average net profit (after overheads) should be R14 690 every 8 days. - Average profit per month - R55 852. Scenario 4: - 1 700 birds every 7 days - Average weight at the end of 28 days should be 1.6 kg - Average selling prices @ R23/kg should be R36.80 per bird - Average net profit (after overheads) should be R15 097 every 7 days. - Average profit per month - R65 601. Birds are sold and delivered/collected to/by the abattoir during the last 2 days of cycle. All houses are deep cleaned and sanitized at the end of each cycle.

What scenarios are available for the informal market?
There are four different cycle scenarios that you as a Buyer can elect to run your business on i.e. for cycle days 10/40, 9/36, 8/32 and 7/28. These equally apply to all three model options i.e. models 600/1000 and 1500: For illustration purposes model 1000 is used with each of the cycle scenarios below: Scenario 1: - 1 000 birds every 10 days - Average weight at the end of 40 days should be 2.6 kg - Average selling prices should be R65 per bird - Average net profit (after overheads) should be R16 286 every 10 days. - Average profit per month - R49 536. Scenario 2: - 1 200 birds every 9 days - Average weight at the end of 36 days should be 2.3 kg - Average selling prices should be R60 per bird. - Average net profit (after overheads) should be R21 205 every 9 days. - Average profit per month - R71 665. Scenario 3: - 1 400 birds every 8 days - Average weight at the end of 32 days should be 1.92 kg - Average selling prices should be R55 per bird - Average net profit (after overheads) should be R27 359 every 8 days. - Average profit per month - R104 249. The asking selling price and financial information at the end of this report is based on this option. Scenario 4: - 1 700 birds every 7 days - Average weight at the end of 28 days should be 1.6 kg - Average selling prices should be R46 per bird - Average net profit (after overheads) should be R38 467 every 7 days. - Average profit per month - R123 349. Birds are sold and delivered/collected to/by the informal market during the last 4 days of cycle. All houses are deep cleaned and sanitized at the end of each cycle. The majority of the birds are sold wholesale to the street vendors in the informal settlements/locations that sell live chickens to their community.

Are there up-to-date Management Accounts available?
No, this is a new turnkey solution. The budgets and cash-flow forecasts provided by the Seller are based on actual cycles completed at their own operation and based on his experience in the industry.

What percentage of the business is cash/credit?
Abattoir sales - eft. Informal settlement sales - 100% cash on delivery/collection.

How could the profitability of the business be improved?
The business is highly scalable. The initial set-up can be considered as phase 1, the premises must have sufficient space for future expansion. Future expansion can be added in phased based on the same modular set-up.

What is the total staff complement?
2 Staff members are recommended.

Give a breakdown of staff/ functions/ length of service?
1 x Supervisor/overseer - R200 per day. 1 x Driver/marketer/labourer - R166 per day. 1 x Casual labourer to help with cleaning and sanitising the house at the end of each 7 or 8 or 9 or 10 day cycle.

Are they on contract?
No

What are the trading hours?
06h00 - 18h00 (7 days a week).

What is the square meters of the business?
The 10/40/1500 model would require approximately 1 000 sqm of vacant land per phase. More importantly, the land should be zoned agricultural and should be located in close proximity to the target market. A phase will consist of 2 chick houses and 2 chicken houses.

Do you require a licence?
No. However, in terms of the National Environmental Management Act (Act 107 of 1889), an Environmental Authorisation is required if individual chicken houses exceed the following sizes (the Act differentiates between chic houses and chicken houses): (i) more than 1 000 poultry per facility situated within an urban area, excluding chicks younger than 20 days; (ii) more than 5 000 poultry per facility situated outside an urban area, excluding chicks younger than 20 days; (iii) more than 5 000 chicks younger than 20 days per facility situated within an urban area; or (iv) more than 25 000 chicks younger than 20 days per facility situated outside an urban area.

What are the main assets of the business?
The following is included as part of the turnkey solution: • Foundations brick walling and concrete slab. • Houses as stated above complete insulated structure, with aluminium fixing and flashing. • Electricity reticulation, LED lighting & all materials. • Extractor fans. • Air conditioners for temperature control. • Humidity controllers connected to extractor fans. • Doors & louvered air vent windows with fly screen fitted. • Water reticulation, pipes, fittings and water tanks on aluminium stands. • Feeding & drinking equipment, complete with hangar brackets. • Distribution transport crates (1 per 75 birds) • Erection and commissioning.

Are any items not included in the sale?
The following assets will also have to be provided by the buyer/investor: • Delivery vehicle (1 t bakkie) with a trailer. • Container to be used as a water tight store room and administrative office.

Strengths?
- Controlled environment (can guarantee consistency, quality and quantity) ; - State-of-the-art equipment and methods; - The business runs to a prescribed formula; - The business is not labour intensive; - Low overheads; - Chickens are not "finicky" animals (they are very tenacious); and - Date schedules to assist with feed and day-old chick purchases.

Weaknesses?
Start-up business in a "box", having said that, the market and the business model is fairly robust.

Opportunities?
- Strong and ever-growing demand for live broiler chickens; - Business in a "box" that is very scalable in a modular format as demand and reputation grows; - Various business models/scenarios available to choose from. - Expanding the business to include own hatchery. - Expanding the business to include own abattoir. - Outsourcing the "slaughtering" to an abattoir and selling the meat to retailers at higher yield per kg.

Threats?
- Sicknesses entering a chicken house (this treat is strongly mitigated by strict adherence to cleanliness, enclosed chicken houses and decontamination procedures). - Theft (this threat can be mitigated by one the labourer living on-site 24h a day).

Why is this a good business?
- This business runs to a prescribed formula; - Owner is not required to attend to daily operations; - Daily reports are made available for the owner to follow daily progress; - Not a stressful business to run; - Ever increasing demand for live chickens from abattoirs and informal settlements; - Consistent and sustainable cash-flow (every 7 - 10 days, depending on the buyer's preferred cycle); and - Feel good business with a balanced and relaxed lifestyle.

What is the price plus stock and the profit?
The advertised purchase price and budget/cash-flow forecast is based on model 10/40/1000. The price excludes: • VAT. • Land and the clearing thereof. • Excavations and earthworks to an abnormal slope. • Primary water and electricity supply to the main site distribution points. • Storm water reticulation and water retaining walls. • Paving. • Washing and cleaning equipment. • Security and fencing. • Administration offices & store. • Transport of equipment to your destination. • Lodging for erection crew (3) if further than 80Km from Boksburg ( 2 x WC & 1 x labourer) • One full cycle of training (optional extra). Pricing for the smaller models are as follows: - Model 10/40/1500 = R1 540 000 - Model 10/40/1000 = R1 085 000 - Model 10/40/600 = R640 000 Budgets/cash-flow forecasts for all models are available on request.

What operational assistance is included?
• Soft copies of operation controls & daily information feedback. • Budget & cash flow forecasts, to the extent that the Seller wont have full insight into your operation. • Required feed volumes. • Ordering frequency reminder tables. • Medication requirements. • Maintenance procedures. • Ongoing advice when required.

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AGENCY DETAILS

Aldes Exceed

1 members
11 mandates
Gauteng , Sandton
53 Park Drive, Mulbarton Ext.3, Johannesburg, 2059
Sandton

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