Zero Capital Re-lamping.
Once again, with this ‘First mover’ advantage, our business model has changed dramatically with the introduction of the rental/finance option. Even though the energy savings are so obvious and the ROI (Return-On-Investment) payback is very quick, the main objection from purchasers has been the relatively high Capital Investment (CAPEX).
From March 2011 onwards, our Agents, Resellers and Stockist Distributors are offering a fully Financed (zero capital investment) option for re-lamping to Individuals, Corporations and Government for projects up to $15,000,000 without any of these customers having to pay anything up front, nor having to offer any supplementary security.
LUXMANN’s biggest achievement in this was to go through the approval process and pre-qualify all the LUXMANN products and services by FLEXIGROUP, so they now accept the LUXMANN products as the ‘Security’ asset. Up to this point, Finance Companies and Banks considered LED lamps to be ‘consumables’ and therefore refused to accept them as Security.
This now wide-ranging, off balance-sheet Rental/Finance (OPEX) facility gives you the option of either 4 or 5 years and a set monthly rental amount which represents a minor share/portion of your overall energy savings. Typically, this portion is around 20-45%, depending on the rental term and on your particular hours of operation. The-higher-the hours of operation, the-higher-the savings, the-lower-the share percentage. For example, in 24/7 operations, the share percentage is around 20-25% and in 14h/day operations, the share percentage is around 35-45% and so on.
You get all your LUXMANN lamps supplied and installed for no capital outlay. You are therefore cash flow positive from day one and you receive the ‘lion’s’ share of the Energy Savings (between 55-80%).
Needless to say, that after the end of say a 60-month rental term, you can upgrade your lamps or for an extra 3 monthly payments you can own them outright and revert to benefiting from the full 100% energy savings for the remaining 6-10 years life of the lamps.
The agreed valued-security vested in the LUXMANN lamps also provides for a ‘soft’ charges uplift of up to 30% allowing for Installation, Consulting or extended warranty charges, as well as accessories or replacement fittings etc to be included in the same rental agreement.
Application approvals are automated and take from 10 minutes to 48 hours. Councils, Universities and State Government are pre-approved and enjoy better rates than corporations.
If you manage a typical apartment block and you agree to re-lamp your common areas typically using say 300pcs of our MR16/GU10 Halogen replacements and 300pcs 4ft tubes in your carpark, FLEXIGROUP would pay us $32,998 and charge you $874 per month rental for 48 months. ie $10,448 per year (capital and interest). These lamps traditionally run for 24/7 and at light-commercial tariffs, you would roughly save $50,000 per year just in Energy Savings.
Therefore, on the 24/7 usage basis, you are only giving away to Flexi 20-21% of your annual savings for 4 years. However, if you have the lamps turned-on only 18 hours a day, then you give away around 30% of your savings and so on.