Regarding London Biscuits Again

Got the following comments. ;-)

• Companies make capital expenditure all the time. Care to explain your fuss over the plants and machinery issue?

London Biscuit again?

Seriously I do not understand why the interest but for what's it's worth, let me share my flawed way of thinking on London Biscuit once more.

Yes normally, capital expenditure is required.

But is this the case for London Biscuit?

Let's call the Property, Plant and Equipment issue as PPE.

But why did I state this issue? Yes, why did I highlight this issue?

As I was reading London Biscuit's Annual Report 2009, I glanced through the Cash Flow statement.

See the loss from disposal of investments in 2008 and 2009?

See the loss of disposal of PPE (Property, Plant and Equipment) in 2009? And in 2008, it made a gain from disposal of PPE.

What does this suggest to me?

This tells me the company is wheeling and dealing in PPE (Property, Plant and Equipment)!!!

And the lower section of the cash flow confirmed my suspicion.

How?

• Purchase of property, plant and equipment 32.395 million vs 24.929 million
• Proceeds from disposal of property, plant and equipment 19.107 million vs 11.548 million

Isn't that a lot?

And here's a new compiled table.

The PPE column indicates the value stated in London Biscuit's balance sheet.

The Buy PPE column indicates total purchase of PPE.

The Sell PPE column indicates total disposal of PPE.

I have no numbers for 2010 because the fy 10 Q4 earnings just shows a summary figure. Have to wait for London Biscuit annual report release in December.

How?

Since fy 2006, London Biscuit purchase and disposal of PPE is rather significant isn't it?

So would it not be wrong for me to declare that it appears that London Biscuit is wheeling and dealing in PPE?

ps: question: the PPE used to indicate what value? How reliable is the PPE when there is significant purchase and disposal of PPE each year?

ps: London Biscuit share is 'now' enlarged to 96.104 million, many thanks to the CRAZY ESOS where 17.969 million new shares were issued. Oh, London Biscuit is saying it's paying 'less' dividend, yes? Is this what they mean by more men means less share?

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ps: dedicated to Solomon:

pg 53 of London Biscuit's 2009 Annual report. This is what 314.627 million worth of PPE consists of...