D&A much higher than capex

**imecige** · 01-28-2016,

Ocado issued it's half year results 2 days ago and there's been alot of news in the press about the fact it's made it's first ever real profit (7.4m) in the last decade.
On the CF statement its showing 23.4m of d&a etc and 17.6m in capex. PPE on the balance sheet has only gone up by 2.1m. Trade receivables have gone up 2.6m on the BS but are showing as 8.7m on the cash flow statement. They are capitalizing 7.4m of development costs which are roughly the same amount every year. I can't seem to make the numbers add up, but notice that they say that the sale & leaseback deal had a 5m positive impact on ebitda as they claim it back from Morrisons (below).

**imipkliq** · 01-29-2016,

Doh, just had a look after i'd actually written it down it all seems to add up now. I must write it down in future. Have i got this right ?

17.6m in capex + capitalizing of 7.4m = 25m capex

vs

23.4m of d&a + 2.1m increase in PPE = 25.5m. (During the period, the Group acquired intangible assets of ?0.5 million)

**infoqayaaxeja** · 02-01-2016,

I get the impression quite alot of U.S traders are trading Ocado on the long and short side so i hope it is not out of place on here.
I've since found a ''presentation'' PDF accompanying Ocado's half year results on their IR website, and it looks as though the Morrisons side of the biz actually made a loss of 0.1 mill PBT after subtracting depreciation and interest. So after all my bumbling and going around in circles maybe my skepticism was well founded?
This whilst also taking the statements about EBITDA from the half year results ;

injentisk · 02-01-2016,

Not sure. Maybe i should use the Greenwald method on this stock that Jae did the article on?In the end i thought D&A plus capitalized development costs was a good representation of maintenance capex for this company??
In the UK i'm noticing more and more that tech companies that use EBITDA in the headline numbers can often be a red flag as they are likely capitalizing development costs to improve profit numbers.
An even bigger possible red flag can be something like EBITDA4 (ie an explanation in note 4). I'm still learning with accounts but i suspect most retail investors just can't be bothered to look into things like EBITDA4. I always get the impression that a lot of times us small investors are not meant to understand too much in these annual reports so they are like puzzles where you have to look for the whiff of any dead bodies??
But the accompanying PDF was very helpful with this company as it was what i was looking for with regards to ''underlying cash flow'' and ''core trading activity''.

**inuosoqawijoz** · 02-02-2016,

had a response to this but then I just noticed this was an online market. (I was going to suggest visiting stores to visually see if they look "crisp" or "dingy".

I think D&A is, on average, probably an OK measure of maintenance CAPEX. I know Buffett likes to add it back in and then come up with his own estimate. I think you have to know a good deal about the company and industry to make that kind of call. That's why I'm curious if there's anyone that's worked out some industry figures

Thread: D&A much higher than capex

Thread Tools

Display

D&A much higher than capex

Posting Permissions