Total of 18657 firms and businesses for sale today Thursday 28th March 2024
Time to Sell or Time to Buy !

Business Opportunity. New Concepts, Designs, Trademarks & Patents - Eastern Cape (ec)

LISTING DETAILS
Firms For Sale ID:
31915
Vendor reference:
12363
Vendor website:
     
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BUSINESS DETAILS
Location:
Primary sector:
Asking price:
$8,750,000  
Turnover / revenue:
Undisclosed
Net profit / cashflow:
Undisclosed

OTHER DETAILS
Business is relocatable:
No
Business is web-based:
No
Business is home-based:
No
PROPERTY DETAILS
 
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BUSINESS DESCRIPTION
This is an exciting opportunity that exists for investors to participate in an Eastern Cape operation which has already gained significant traction. It is based on a patented Alternative Manufacturing and Construction Technology system, consisting primarily of Expanded Polystyrene ('EPS'), light gauge steel columns and a high-density structural plaster technology.
The history of this business dates back some 12 years when the technology was used to build the first home in South Africa. For more than a decade there after was the alternative technology company focused almost exclusively on building luxury homes with the focus on research and improvement of the technologies. Enormous strides were made in the continual improvement of all facets of the technology for the suitability to all aspects of structural design.
A change of ownership resulted in acceptance and recognition into all segments of the housing, commercial and industrial construction sectors in South Africa. This unparalleled system has proven irresistible to clients across the board, winning social acceptance in every area without exception, ensuring is at the forefront of consideration for virtually every type of structural development.
The unique combination of quality, speed, eco-friendliness and strength has propelled into a large scale manufacturing and construction company active in all of South Africa's nine provinces as well as Namibia, Angola, Zimbabwe and Mozambique with further international expansion at advanced stages.
The company is seeking to sell equity in its Easter Cape Company holding the exclusive license to manufacture and distribute in the Easter Cape Region in South Africa. The holding company currently holds 82.5% of the issued shares in the ECape company and would like to offer all or a portion of these shares to an interested buyer or consortium of investors.
This patented construction system is used across the full spectrum of structural development: from multi-million Rand homes, to affordable housing and informal settlement eradication projects and commercial buildings ranging from warehouses, factories and offices to schools and hotels. In contrast to many other alternative construction technologies, has this patented system been recognized as a system that harnesses the evolution of construction and a global solution for infrastructure backlogs
Annual turnover for Year ONE per the forecast is R35,8m with a net EBITDA (Earnings before interest tax and depreciation) of R0,487k.
Monthly turnover for Year TWO is R5,062k with a gross profit of 22.6% and monthly expenses of R788k with a monthly EBITDA of R355k.
This results in an ROI of 48.7% already achieved in Year TWO compared to the asking price with an excellent pay back period of only 35 months based on Years ONE and TWO combined income.
Their is a three tier margin based on the following :
1)ECape is required to pay royalties to the Holding Co which royalties are based on production volumes and values. These royalties go towards funding the support services as well as research & development and patent protection costs. This royalty structure incentivises the Holding Co to remain actively interested in the ECape success at all times.
2)Manufacturing margin. The production facility that will be set-up in the ECape will obviously supply the ECape region but will also have the opportunity to supply neighbouring regions where the logistical costs favour such an arrangement. To the extent that stock is supplied out of this region, a manufacturing margin will be earned.
3)Distribution margin. This is earned on all business relating to construction projects within the ECape region regardless of whether the product is supplied from the ECape factory or not. This margin is always earned by the entity that owns the distribution rights within a region.
The buyer is purchasing the following:
1) A Fully Operational Manufacturing Facility: Similar to the flagship operation in Gauteng with the
capacity to produce the equivalent of 60 40 square meter houses per day. This includes all equipment, machinery, tools, furniture, computer infrastructure, branding, stationery, website implementation & support, training and recruitment support.
2)Exclusive Manufacture and Distribution Rights in the ECape: All structures built in the ECape using the patented technologies will be manufactured and distributed through ECape.
3) All leads that arise from the ECape Region regardless of their source will be routed through ECape.
4) A Secured Business Pipeline: The holding company has secured a business pipeline of R85m in the ECape. Further details of this business pipeline are available to serious buyers.
5) Architectural and QS Support with a well structured internal QS department that is critical to its total operation.
6)Marketing and Sales Support: Whilst ECape has primary responsibility for sales and marketing within the ECape Region, the holding company will provide valuable support during all aspects of the sales cycle.
REASON for sale :
Until now the business has been self funded. All the objectives of the current investors have been reached. The vast magnitude of the Southern Africa opportunity will however require significant additional capital to take full advantage of opportunities.
The shareholders have developed a second round capitalisation strategy that includes the following:
. Sale of Production and Distribution licenses for the various Provinces in SA.(In this regard the mandating broker can be contacted for options and prices)
. Sales of Production and Distribution licences for other countries in Africa.
. Project Funding.
. Bank Funding.
It is envisaged that the third round of fund raising will constitute a Public Listing which will provide a fundamental ROI to first and second round investors. The envisaged listing is at this stage scheduled for the third quarter 2012.
This is a unique opportunity for an investor or group of investors to own a prestigious business with all the latest technologies available with a proven track of various certifications ,awards and accreditations in place. An example of this that their South African standard was approved by the SABS National Committee for Construction standards - Energy efficiency and energy use in the built environment - has reached consensus that this should become a South African standard. It is now made available by way of public enquiry to all interested and affected parties for public comment.
Their is not many new businesses opportunities having the potential to already have a ROI of 48.7% achieved based on second year projected income. Based on combined forecast income for the first two years is the payback an excellent 35 months.
The holding company has already secured business of R85m in the Eastern Cape and excludes any business still under negotiation. Included in the Expenses is an amount of R600k allowed for a MD's salary and from an investors point of view if the business is owner managed , will make it even a more attractive ROI option. Conversely , the calculated ROI will not adversely be affected if the business is run by a Senior Manager.