Capex (capital expenditure) per share

Ideally a company should, over time, be generating a positive cash flow out of which to fund its dividend payments, as well as its capital expenditure. Company REFS already shows cash flow per share, and also shows the dividend per share which this cash flow must fund. To complete the picture, and to enable the cash flow to be properly assessed, we need to know the amount of cash needed to fund essential capital expenditure which the business requires in order to stay alive. This is shown separately as 'capex per share'.

In this context we need to identify capital expenditure (Capex) which the company must incur in order to maintain its operating assets, and which it cannot either avoid or defer. For the purposes of assessing cash flow we should therefore ignore discretionary capital expenditure, for example amounts identifiable as relating to property which could otherwise be leased or rented.

Capex per share is based on information taken from the company's published cash flow statement. The net cash outflow attributable to investment in fixed assets, other than amounts attributable to property, is divided by the weighted average number of ordinary shares in issue during the year. The calculation of capital expenditure can be summarised as follows:

ASSET PURCHASES (UNLESS SHOWN AS PROPERTY)

- ASSET SALES (UNLESS SHOWN AS PROPERTY)

= CAPITAL EXPENDITURE

The per share calculation is then made as follows:

CAPITAL EXPENDITURE (£)

----------------------------------------- X 100p = CAPEX PER SHARE (p)

WEIGHTED AVERAGE SHARES IN ISSUE

Capex per share can be subject to adjustment for a variety of reasons falling into the following three categories:

share capital changes which give rise to share price adjustment factors accounting periods which are greater or less than 12 months in duration requiring annualisation.