Example

Capex Plan Example

A 200-person manufacturing company in Coventry with £12M revenue. The Finance Director is building a 3-year capital expenditure plan for board approval. The company needs to invest in new production equipment, warehouse expansion, and IT infrastructure to support the growth plan.

Example data

Financial model

Capex Item
FY2026
FY2027
FY2028
Useful Life
Production Equipment
£420k
£180k
£250k
10 years
Warehouse Expansion
£350k
--
--
25 years
IT Infrastructure
£120k
£80k
£90k
5 years
Vehicles
£65k
£45k
£50k
4 years
Total Capex
£955k
£305k
£390k
--
Annual Depreciation
£182k
£234k
£282k
--
Production Equipment

FY2026 includes a major CNC machine purchase (£280k) and tooling upgrades (£140k). The machine enables a new product line expected to generate £500k annual revenue by FY2028.

Warehouse Expansion

One-off £350k investment to add 2,000 sq ft of warehouse space. This is a leasehold improvement depreciated over the remaining 25-year lease term.

Annual Depreciation

Depreciation increases from £182k to £282k over three years, which reduces EBITDA-to-operating-profit conversion. Important to model for P&L impact and tax planning.

Formulas

Key formulas

fxDepreciation = Capex / Useful Life (Straight-Line)

Each asset is depreciated on a straight-line basis over its useful life. The £420k production equipment creates £42k annual depreciation over 10 years.

fxCumulative Depreciation = Prior Year + New Asset Depreciation

As new assets are added each year, total depreciation rises. By FY2028, the company carries £282k of annual depreciation from assets purchased across all three years.

fxNet Book Value = Original Cost - Accumulated Depreciation

Track NBV for each asset category to understand when replacement capex will be needed and for balance sheet reporting.

Analysis

What makes this example good

Three-year horizon aligns with strategic planning cycle
Useful life specified for each category enables accurate depreciation
Depreciation impact on P&L explicitly modelled
Mix of growth capex (equipment, warehouse) and maintenance capex (IT, vehicles)
Each investment linked to a business case or revenue opportunity

Customisation

How to adapt for your business

1

Add a "maintenance vs growth" classification for each capex item

2

Include the business case (expected ROI) for each major investment

3

Add a cash flow timeline showing when payments are due

4

Model the tax benefit of capital allowances (Annual Investment Allowance)

5

Include a leasing vs buying analysis for major equipment decisions

Common variations

  • --IT-focused capex plan for software companies
  • --Property capex plan for retail or hospitality businesses
  • --R&D capitalisation schedule for technology companies
  • --Rolling capex forecast updated quarterly

FAQ

Frequently asked questions

An item is typically capitalised (treated as capex) if it has a useful life of more than one year and exceeds your capitalisation threshold (commonly £1,000-5,000). Revenue expenditure (repairs, maintenance) is expensed immediately on the P&L.

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