Member Info for Savage_KeyboardR

Google AI:

"Smart DCC Ltd. is a wholly-owned but non-consolidated subsidiary of Capita PLC, meaning its revenue and costs do not directly contribute to Capita's consolidated revenue or profit figures in the main financial statements.

However, it contributes to Capita's valuation in the following ways:

Shared Services Charge (SSC): Capita is able to recover a charge (agreed at 4.5% of eligible costs from April 2025, previously 9.5%) for shared services it provides to Smart DCC. This charge contributes to Capita's revenue.

Contract Value: The Smart DCC contract itself has a significant total value, for instance, a recent two-year extension was valued at up to £135 million. This consistent contract flow provides a stable, long-term revenue stream for the Public Service division and underpins investor confidence in Capita's future earnings.

Performance-Based Margin: Smart DCC is permitted an amount of additional revenue, a "Baseline Margin" (BM), over its costs, which is at risk against its performance. This margin contributes to the overall value derived from the subsidiary.

Strategic Importance: The contract to manage the UK's smart meter network is a significant, high-profile government project, which enhances Capita's reputation and strategic position in the public sector market.

While a specific, single monetary value for the subsidiary's exact contribution to the parent company's market capitalization is not disclosed in the search results, the contract is a material asset that provides a steady, regulated revenue stream and a substantial contract value, thereby supporting Capita PLC's overall valuation and future prospects. The financial impact is subject to regulatory oversight by Ofgem, which has the power to disallow certain costs, a factor that is considered in the overall valuation risk."

DYOR

Simpiles - Wrong. To be owned it must have a value, even if that value is a token £1.

Owning something with a value of £0 is not owning it for something with no value cannot be owned.

New reporting that 'Goldman Sachs now forecasts UK interest rates to fall to 3% by Jul 26'.

I reckon BoE rates will rapidly head to 1.75%-2.25% - Goldman laying down the gauntlet, for Bailey to explain himself?! Looks to me like Goldman think Bailey has made an error in voting for the 4% hold yesterday.

DYOR - IMO

I'm certainly not ruling out that possibility over here! There's plenty of global macroeconomic turbulence, and specific ongoing weakness with UK economy too. Shorters clearly jumping on these opportunities to take profits.

EU seems to have gone through their difficult period though, sharp ECB rate cuts have definitely helped, and within EU market there might soon be promising signs of recovery. I'll be holding my lot, and I'll accumulate some more should the SP head low.

DYOR - IMO

Adelaide23 - Everything has a value. If the sum valuation of Smart DCC falls then it impact the owner which is CPI. It really is that simple.

Google AI:

"Smart DCC Ltd does not have a publicly traded market valuation as it is a private company, a licensed and regulated monopoly that operates the UK's smart metering network. It is a wholly owned subsidiary of Capita plc.

As a result, its "valuation" is not determined by market forces like a public company's stock price. Instead, its finances, including allowed revenues and costs, are subject to a price control mechanism and strict regulation by Ofgem (the Office of Gas and Electricity Markets) and the Department for Energy, Security & Net Zero (DESNZ)."

Simpiles - I literally stated that "Smart DCC Limited, a Capita-owned subsidiary" - as per google AI's verdict.

Just because it's 'not for profit' that does not mean it is not owned by CPI. That Capita-owned subsidiary will have a valuation - it cannot be worth £0.

Therefore whatever value it has, if it receives a fine, will either:

1. Be subtracted from it's overall valuation (as the ultimate owner it'd be the case CPI would see a 'down valuation' of it's total business portfolio).

2. Be subtracted from it's current cash holdings (and possibly offset over time via higher service charges being levied going forwards).

3. If the fine is large enough and the subsidiary cannot pay, well then it'd become insolvent.

Just because it's 'not for profit' that does not mean there is zero consequence for CPI, which owns the subsidiary.

DYOR - IMO

Pls correct me if I'm wrong. I interpret this to mean the following:

If Smart DCC Limited, a Capita-owned subsidiary, is hit with the £25.5m fine then either it'll require a cash input from its owner (CPI) to remain worth the same size & value as a subsidiary. Alternatively, it could become fiscally smaller (if able to remain solvent in so doing) i.e. have a lower valuation (to reflect the fact there would be less money within its treasury).

Not a direct hit to CPI balance sheet sure. Though CPI as the owner of this subsidiary will be liable, albeit indirectly, for plugging the hole which any fine levied might cause.

DYOR - IMO

Google AI returns this:

"Ofgem has not directly fined Capita, but has announced plans to disallow some of the costs incurred by Smart DCC Limited, a Capita-owned subsidiary that operates the smart meter network, due to alleged inefficiencies in planning and procurement. In November 2024, Ofgem issued a ruling that it would disallow a total of £25.5 million in costs reported by the Data Communications Company (DCC) for the 2023/24 financial year, citing reasons such as:

Inefficiencies in planning (£6.1 million).

Contractor staff salaries exceeding benchmarks.

Work carried out without a clear mandate or benefit.

This action relates to Ofgem's regulatory role over the DCC licence, which is operated by Capita."

Still £22 away from Simpiles target price!

Eightyeight88 - Many shares doing well, and I'm content to continue buying more SSPG here btw, as I think it'll easily weather this turbulent period.

I'm just pointing out if you examine the whole FTSE 250 index then it doesn't make sense that Bailey and the MPC are worried about an overly hot economy (the usual primary justification for any central bank to hold rates up high, and at restrictive levels).

I'm confident Bailey will lead UK into having an unemployment problem and subsequent deflation problem - and that's only going to do lots of harm when it comes to the political efforts to recover from 14yrs of Tory economic ineptitude.

I completely disagree. This can be proven by the fact the moment anyone prominent suggests jettisoning Reeves the bonds rates immediately shoot upwards.

The primary problem IMV is rates are too high and the UK economy (after 14yrs of Tory neglect) is so battered it can't cope with the elevated rates like it used to be able to in the past, when economy was stronger & inside EU. £ needs to be allowed to fall, and UK citizens need to accept they're all now permanently poorer, due to their choice of Brexit.

UBS going for the classic 'pump & dump' move it seems. They've certainly done this with CPI before, I'd imagine they'll go for the same trick again IMO

Successfully delivering misery for UK equities since 16th March 2020!

It's quite staggering Bailey is concerned with UK overheating at the minute... when the FTSE 250 is around about similar level it was in Jan 2020

Angelis - I'm fairing just fine & dandy, it's not the case that 'all my stocks are down or dead in the water'. Perhaps you should concern yourself with your own stocks?

Tbf I agree with you Macy - USA performance has been significantly supporting SSPG's fiscal performance in recent times. Any knock to USA air travel & therefore food sales will be felt through lower than previously anticipated sales and revenue generation. Should be short term though, so long as a deal is done for USA Gov to resume.

Macy - I agree with you btw. Yup, Jan for next cut for sure. No way Bailey will shift course within the 6 weeks to the Dec MPC (bar some kind of massive external/global shock to the economy).

I think these elevated rates will trigger further hikes of the unemployment rate, one which Labour Gov will struggle to grapple with politically... not to mention rising personal & company insolvencies. By time May comes around Reeves could be saying 'the war on inflation has been won'; only to find by then unemployment might just be closing in on the 6% level!

The most significant issue for us in UK is £ is much too strong for the true wealth level of the nation - lets be frank there's no growth here in UK. At some point in the near-mid future rates are going to have to come crashing down very sharply, since right now Bailey is holding the £ too high and is allowing citizens to keep on consuming imported goods at prices which are much too cheap. That commodities bubble is going to pop IMV - DYOR

Still I'm content with holding & buying more SSPG - as it's heavy into the global growth engines of the world i.e. Asia.

When rates do come down, they're now much more likely to fall rapidly into a 1.75-2.25% landing zone IMO - DYOR

I think history will likely judge Bailey in poor light. I think he'll cause inflation to fall through the floor with these much too elevated rates + far too strong £!

I think we'll see the SP here slip downwards into the high 130p's-low 140p's as the market digests the news. I'll be holding & accumulating mind, as thats been my plan here all along and I've prepared for this exact scenario 👌

When

"30-40% lower spending" - head in the clouds lol