National Stocktakers where approached to value the Stock-in-Trade at the premises of a small chemical plant for the purposes of a change of ownership.

Worldwide, there are a number of small specialist Chemical Plants, making Chemicals to order. Their inhouse team of Ph.D’s in Chemical analysis, enable them to take a request (such as a plant feed) from a customer and design a Chemical to match. The Chemical is produced from a ‘Recipe’. The theory is quite simple, you start with a variety of base chemicals, which are purchased in large containers and then brew them to create a broth. Once the broth is ready, other chemicals are added and a new broth is once again made. Sometimes 2 to 8 or more broths may be required to create the final chemical.

Synopsis
We were approached to carryout the valuation via the agents involved in the purchase of this company.
Our ‘Terms of Reference’ were to value the stock-in-Trade at and about the premises of ‘The Company’. The instructions were to validate the stock records, ensure that the costing’s used were correct and then to verify that the stock was active.

The Valuation:-
A variety of steps were required in order to arrive at a fair Valuaion, due in part, to the chemicals in production ‘The Broth’.
First a stock check of the base stock was required, as well as a spot check of the base stocks ‘purity’.
We then had to value the stock in production. The value of each broth was based on its stage in the recipe. As each stage commenced, its value increased, due to production costs.
Finally, we needed to investigate the commercial viability of any chemical held in stock. As stock is only produced to order, it would seem that the only stock held on site, would be ready for distribution to clients. In this company’s case, we found over £500,000 worth of stock held for over two years.

The Result:-
We provided a ‘Valuation for Transfer’ purposes, on the agreed date.
Our valuation included: a value of good stock, a value for waste and a value for stock deemed to have no commercial use.