Abstract: . . .  96. We think that the use of a range of 4-5% for the ERP is appropriate. We consider that such a range value strikes a reasonable balance between the various estimates that are available from using the above estimation OFFICE OF RAIL REGULATION • November 2006 129 Page 134 The Leasing of Rolling Stock for Franchised Passenger Services techniques. We have based the estimates at the end of this appendix on the midpoint of this range, i.e. 4.5%. Equity beta 97. A company's equity beta measures the correlation between the returns earned by shareholders from holding the stock of the company in question and the returns earned from holding stocks in the equity market. 98. Regulators and competition authorities often calculate betas by means of statistical regression analysis, particularly where the company or companies in question are listed and the activities that are coming under scrutiny make a reasonably large contribution to the market value of the listed parent company. An alternative to . . .
. . .  leasing ORR Blue Document Page 1 The Leasing of Rolling Stock for franchised Passenger Services Consultation on the findings of ORR's market study and on a draft reference to the Competition Commission 29 November 2006 Published by the Office of Rail Regulation Page 2 Page 3 The Leasing of Rolling Stock for Franchised Passenger Services Contents Executive Summary.............................................................................................1 1. Introduction....................................................................................................7 . . .
. . .  revalued assets – the value of the MOLA assets as they are currently recorded in the accounts of the ROSCOs. 23. The first two asset valuation measures used by the DfT, whilst using an annuity, rather than straight-line, method of calculating depreciation, correspond closely to the two methods used in our accounting analysis. 24. Because profitability estimates for the whole of the ROSCOs' MOLA fleets are not available on a replacement cost basis, in terms of results presented, the remainder of this document focuses mainly on results calculated using the other two bases, our views regarding the usefulness of MEA asset valuations notwithstanding. 25. We have not carried out a sufficiently detailed review of the depreciated replacement cost analysis carried out by the DfT to enable us to reach a view as to whether this represents the most appropriate means by which to arrive at MEA values. We consider that carrying out our own MEA analysis would be inappropriate within this study given the weight . . .
--3000,3,500,2798,241984