Food Industry Technical Ltd - Intelli-Hood Rental Plan

• Intelli-Hood from FIT provides significant energy savings for our clients but requires an initial investment. Often the lack of capital budgets means that these potential savings are not achieved or are delayed.
• In recognition of this FIT has put in place arrangements through Energy Saving Rental Specialist Sunrise Global Finance to offer Intelli-Hood on a very cost effective long term rental basis.
• Typically the rental agreement is for 5 years, and it is structured as an operating lease. This means that the accounting treatment is “off balance sheet” with the rental payments coming out of the same operating budget as is benefiting from the energy savings. (N.B. This is not the same as a finance lease or HP agreements which are both accounted for on balance sheet.)
• With the rental plan not only does the client avoid the need for capital investment but pay back is immediate.
Example
Energy saving potential of £10,000 a year has been identified at a client’s site but an initial investment of £20,000 is required. i.e. there is a 2 year break even on a capital basis. But there is no capital budget available for this in the current year, and the earliest this could be put in place is in six months. This delay is effectively costing the client £5,000 in lost energy.
However under the rental plan the client can immediately install Intelli-Hood on a rental of £4,500 a year. This is paid out of operating budget and is more than covered by the £10,000 a year saving in the same budget.
So instead of a capital project which achieves a two year pay back, the proposition becomes simply one of saving £5,500 per annum in energy costs.
• The rental plan is specifically designed to encourage upgrade of the technology in order to maximise energy savings and FIT is always looking to develop even more effective savings devices. At any time during the initial rental period the client may exchange/ upgrade the products by rolling forward their agreement at that time.
• Conversely if no roll forward has been effected, at the end of the initial rental period the client has the option of canceling the rental, or of continuing to rent, or of buying the installation, at its “fair market value”, typically 10-15% of the initial capital cost.
• The rental plan is offered subject to credit status.
Summary
Achieve immediate energy savings with Intelli-Hood without up front capital investment. The rental agreement qualifies as an operating lease and hence accounting treatment is off balance sheet. The rentals are paid out of the savings in the operating budget and the result is cash positive from the start. The technology may be upgraded as it becomes available to maximise ongoing energy savings.

Email: claire.diffin@foodindustrytechnical.com