Member Info for Savage_KeyboardR

Erik9Haggy - Completely agree about the lease liabilities and what's more... BT was significantly ahead of the game on this matter, they began presses ahead with the real estate consolidation/closures well ahead and under much unjust criticism at the time. The board made the correct call and the benefits will pay into BT's coffers when comparatively the competition are still in the starting blocks on this trend.

I tend to be an optimist but... realism is vital to remain grounded. I don't view the trouble at ATOS as being good news for CPI, even if taking ATOS out from the frame this wider market sector has a rocky road ahead imo and I think negative contagion impacts for CPI are considerably more likely

Royal mail have one it seems. Not BT though! Wonder what Basher/Mandy/Rodders makes of this?

Most businesses tend to do best off when they focus most efforts on maximising their sales, with the revenue and profit growth following. .. than they are on endless pursuit of cuts and cost savings as there's only so far for cuts and efficiencies to take you.

Fleccy, certainly agree it's important cost are saved like energy efficiency and I recall BT board saying at the results presentation the energy savings from the new infrastructure were even greater than they had anticipated. However... with all businesses becoming more efficient in their energy consumption it's seemingly the cost of each unit of energy has been increasing which has directly wiped out the savings, it's not clear that costs per unit of electricity for example will see sufficient downwards pressure and so the 'cost savings' from energy efficiency might not be realised as fully as some might perceive.

Naturally, the context to add to accompany Velo's figures here is the capex keeps on rolling forwards. The size of the business (in terms of it's total capacity/capability offering to customers) will have grown substantially by the time the current FTTP and 5G rollouts come to an end.

So an investor buying up some shares right now is buying into the BT business with its substantial forward growth. Yes, it costs to invest but... any business which does not invest in its growth is 100% guaranteed to stagnate and is far more likely to fall behind its competitors, thereby locking in its own decline (comparatively to a business that invests strategically like BT has).

Kipper9 - Your assumption is disturbing because obviously if Velo is incorrect and the gearing is radically better then I'd be reconsidering CPI as a potential investment. Kipper... Do you have different figures to those which velo stated? or not?

Trisor - I was crystal clear/transparent and this is is a discussion board to air views to allow them to be challenged. Velo put forwards their opinion which I've shared on here to allow rebuttal if anyone should have evidence to counter what they said. If someone on here has different figures then I'd be really interested in reading their interpretation and seeing what figure they think to be correct. It really is that simple.

Trisor - velo made the claim and not I - Can you share what you believe is the correct Net Gearing % is for CPI? Its a perfectly reasonable ask and I've no idea what the net gearing is for CPI but perhaps you know?

Not a clue how velo made any calculations they're claiming. As I said, I just simply copied their post verbatim. I'm not responsible for their numbers so feel free to quality check them and post on here your workings if you believe them to be different 👍

AimMaster2018 said the following on the BT discussion board "about CPI, it's worth looking at guys, they're introducing cuts to increase profit margin from around 4% to 6-8%. A company that generates £2.6billion in revenue. The current market cap is around £230m. All the best imho “

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Response from a poster called velo here:

"- Have you told them it made a loss last year?

Here I am worried about BT’s 165% Leveraged Net Gearing. What the hell am I worrying about when CPI is currently leveraged to infinity and beyond at 500%!

Can hardly believe my eyes - is it a Guinness book of records? - Net Gearing is at 500% !!!!

Working Capital doesn’t exist (like BT) worse it’s Negative Working Capital - and been Negative for more years than BT has, and a few years ago was higher than BT’s is today with CPI back then at -£1.2b!

(Although currently it’s less than BT’s - but still Negative anyway).

And yet it’s only barely more than a 1/10th the size of BT’s revenue.

All the liquidity metrics - all of them - are red flagged to indicate cash flow issues - whilst BT's are nowhere near as bad as CPI's are!

Geezalou mate, grab what you can and head for the hills because if CPI is still solvent in 2 years I’ll be a monkey’s uncle!

In fact if it is still standing in two years - I demand you hunt me down and tell me it’s still operating. Because I’ll be straight down to the financial metrics shop demanding a refund!"

Velo- that's exactly what I have been saying because I first considered buying a stake in CPI, examined the financials and then I asked a few questions on the discussion board on here to try and make sense of all the info and see if there was some nugget of good news I had missed somewhere along the line... anyway no one on the forum was able to address my concerns so I haven't invested and instead I put more of my cash into BT. AimMaster2018 unfortunately seems to have taken major issue with my legitimate and robust challenge of CPI's financials as yep, revenues at CPI have halved over the last 7yrs, losses have grown and their sales keep on falling too.

Notice how AimMaster2018 hasn't denied that he's carrying big paper losses on his CPI holdings.

AimMaster2018 is just jealous as he has massive Capita (CPI) holdings (currently sat as incredibly big paper losses). Potentially CPI may not recover, it could tap it's shareholders too (potentially ahead of it eventually succumbing to the inevitable and perhaps folding).

The other much less discussed factor...

Once the infrastructure has been installed via the capital expenditure the customer base continues on growing for long afterwards. To assume revenues will not grow would be a massive mistake as not only will customer numbers grow but so too will the numbers of services taken per customer as well.

Kipper9 - ATOS is fast becoming a cine yep, and I reckon it's not impossible that CPI could closely follow a similar path... it's also possible CPI survives but I think the survival battle will be far tougher than many anticipate.

Biskit - Yes, the annual price increase is displayed to new customers in £+pence but... the formula which sits behind it is still a % applied atop the RPI

It's certainly very interesting observing how many of you leap to blame Gov for Capita's ills...

You'll fit right in with the Reform party with your gammonsplaining, after all the reform party mantra tends to be 'spend lots of money and take no responsibility' as none of you seem to acknowledge just what a poor investment CPI is right now.

CPI has been failing for a long time now, selling a rubbish service for overhyped prices... then you wonder why it's sales, revenues and profits fall through the floor! It's sort of laughable the snooty look down the nose attitude of superiority you all have really.... Exemplified by Simpiles comment here where they said:"If the Gov wants Capita to take on projects then it will be at a fair price! Capita has walked away from several large projects lately." - A superb strategy for yet further revenue and profit reductions on the long road to recovery ahead.

Lordy2020 - I take your point that 'revenue is only any use if it delivers profit' and I whole heartedly agree... However, as well as more than halving of the CPI revenues I draw your attention to the CPI profits (or moreover distinct lack of them) over the past 7yrs too.

Now I get you're laying the blame at JL but... is he the only person responsible for CPI's financial calamity? Because I think there's much bigger issues with CPI, embedded right through root and branch and I also think there is a wider problem with the wider sector and the business model of other businesses like CPI. ATOS being a rather similar beast compared to CPI may just be one of the first collapses and CPI could well be next?

Simpiles has chimed in with "It’s not Capita’s job to fix the UK’s problems." - I think this looks at the problem from the wrong direction... in the opinion of many it's CPI that has many problems... which appear to be causing UK Gov to suffer ill effects and migraines too! Might help explain why CPI's sales, revenues and profits are all down, perhaps because CPI is just a shockingly bad business? and a shockingly poor investment too?

Strike123 - it's also the case that BT/EE routinely apply price rises of RPI +3.9%... this helps ensure the revenue generation helps support & fund the continual investment in BT/EE infrastructure e.g. the capital expenditure on FTTP and 5G... So debts are much less of an issue for BT as it has a continually growing customer base (as population grows) and the number of services add-ons being purchased also continues on growing healthily long after the initial capex investment rounds.

High debt levels are much more of a problem when any business which experiences an ongoing trend of falling customer numbers and falling quantities of services being sold simultaneously. Neither of which are set to happen for BT.