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 I. Background
Sperosens is a market leader in mining and industrial environmental monitoring as well as Fire detection, prevention and suppression technologies. Established in 1988 in Centurion South Africa, we quickly expanded by establishing branches in Witbank, Klerksdorp and Rustenburg to establish local presence at our clients for focussed service delivery. Our core expertise includes telemetry, fire detection, prevention and suppression, control systems, and maintenance of client solutions. Sperosens focuses on creating safe working and operational environments in challenging and harsh conditions through our range of innovative certified products and solutions. Sperosens boasts some of the largest underground installed networks, with a high degree of innovation and a solid customer solid customer base of more than 50 installations. We continue our investment in cutting edge technologies, enabling us to be globally competitive. Sperosens understands the pressure of the marketplace and through detailed analysis launched our ‘Rent-to-own’ full maintenance rental option to facilitate our Client’s needs where appropriate.
II. Introduction
This option is available for the renting of assets with the intention to own it. SperoSens would engage with the customer to propose a workable solution for the procurement, finance and management of non-core safety assets. SperoSens is confident in its ability to provide a model that will be beneficial for all parties involved. This will help solve the challenges that some customers are experiencing with regards to the ownership, maintenance and where required, the replacement of equipment through a definitive SLA (Service Level Agreement) during the rental period.
III. Value Proposition to Client
Sperosens will be instrumental in implementing a replacement plan, which will ensure that the customer remains at the leading edge of the latest technological safety advances. To provide a solution to facilitate the upgrades that the customer is implementing, Sperosens is proposing a model whereby the customer gets access to the technology it requires without a massive upfront capital outlay for the equipment.
Our solution would entail, inter-alia, the following:
• The customer will have a single service provider- who supplies and maintains the equipment with innovative financing structures.
• Because SperoSens has a secondary market for used equipment with some of our products, it can structure trade- in/buyback as an option on the current infrastructure that needs to be replaced.
• A residual structure is available on new equipment; the customer will enjoy an aggressively reduced rate, which will be cheaper than their average cost of capital.
• SperoSens will provide the equipment together with a service and maintenance contract to ensure that equipment is maintained and fully operational at all times. For this, a service Level Agreement guaranteeing at least 90% uptime on a 24/7 basis underpins the maintenance contract.
• The client would not have the sometimes cumbersome responsibility of asset ownership management.
• Because all the equipment remains at the leading edge of technology, downtime is reduced, and the cost that accompanies it is reduced due to the optimal lifecycle management of assets.
• The maintenance contract will ensure the client enjoys and benefit by having the newest updated equipment available on site and operational.
• At expiry of the agreed rental period, which will be matched to the useful life of the equipment or a minimum period of four years, Sperosens will collect obsolete equipment and the customer can upgrade with the latest technology on signing a new lease agreement.
• The client will be the owner of such equipment after his lease agreements expires and if so, he might wish to keep the equipment.
• New equipment installation, due to operational growth, can be done before expiry of the contract without incurring any penalties.
• We offer flexible terms whereby the customer can determine the period of the rental regarding the specifics of the equipment and rental price.
• The disposal of equipment will be the responsibility of Sperosens if the client does not wish to keep or renew the lease agreement.
• The customer does not need to dedicate resources on disposal management.
The client can utilize a facility put in place by Sperosens to procure Equipment, instead of using capital for outright purchases. When equipment needs to be replaced / upgraded, it is done on the rental facility, and Sperosens disposes of the old equipment. This process can repeat itself resulting therein that the client stays abreast of technology without periodical capital outlay. By using this solution, the customer is realising value in the equipment at the end of its useful life, upfront. Sperosens specialises in finance and asset management, the customer will be able to control what is purchased and what the asset register entails at all times.
IV. Financial & qualitative benefits
The financial & qualitative benefits of an operating lease can be summarised as follows:
• The finance is done off the balance sheet, and indicated as a operational expense in the financial statements;
• Minimum capital outlay required;
• Reduced cost of funds, due to the reduced rate, and the opportunity cost of capital;
• No need to keep an asset register, further reducing cost and resources allocated to asset management;
• Finance payments are fully tax deductable;
• Improved ROI (Return on Investment) & ROA (Return on Assets) ratio’s;
• Asset management is the responsibility of SperoSens;
• SperoSens carries the risk in the residual value of the equipment;
• The lifecycle management provided by SperoSens ensures that the customer always stays abreast of the latest technology;
• SperoSens would manage the operation and cost associated with the ownership of equipment until the lease agreement expires and the equipment gets officially handed over;
• SperoSens is responsible for the reverse logistics if the lease agreement expires after the period set out by the contract and there is no new lease agreement replacing the old.
V. Summary
SperoSens is confident that the solution that it is offering is more competitive as it entails the provision of appropriate resources by the correct entities. It is believed that SperoSens will provide and maintain the equipment and our finance entity, SperoFin will provide the finance. In this way, the client enjoys the best of both solutions. This proposal demonstrates the cost savings that can be achieved by utilising an operating lease with the intention to own for the procurement and management of assets. “There are minimum safety levels in place, but the industry is too under-resourced to police basic safety compliance.” - Carlman Moyo, regional director for DuPont Sub-Saharan Africa, Business Day, 14 April, 2010. Sperosens can contribute towards alleviating the client’s under-resourced safety compliance activities through plans such as these. Please feel free to contact your local marketing representative in your area to discuss innovative ways on how Sperosens can formulate a workable solution.
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