Germany Difference between proceeds from disposal and sum of sales prices

[Lena]

I am relatively new to accounting and doing some research on investment behaviour by unregulated energy utilities.

I am currently looking at a utility's investing cash flows which contain categories like "capital expenditure on intangible assets/ppe/investment property", "proceeds from sale of intangible assets/ppe/investment property", "capital expenditure on acquisitions", "proceeds from divestitures".
I searched in the annual reports for details on individual purchases of assets, acquisitions and sales of assets and subsidiaries. I took the purchase prices or sales prices (proceeds) and added them up according to the categories in the investing CFs . I expected the amounts to be lower or equal than those in the CF statement, as the utilities probably don't list all transactions in detail.

However, the sum of sales prices are sometimes quite a bit greater than the proceeds from disposal in the CF statement. What could be the reason? What did I get wrong?
My understanding was that the investing CFs include total proceeds, not only gain or loss from disposals.

 

[Fidget]

Possibly just a timing difference between the sale and the actual cash received. Cash flows are based on actual cash coming and going. So whilst a sale can have an absolute value, cash received in respect of it might come in over x amount of time, so you're unlikely to be able to match sales to cash flows.

As an aside, a gain or loss on disposal is a depreciation adjustment rather than a cash flow.

 

[Lena]

Hi Fidget, thank you.
OK, but is there any way that I can match the two? Or is there any other way that I can estimate how much of the investment and divestment activity in a specific year I have captured by the list of the individual sales and purchases? They surely dont list all (do they?) but I would like to know if Im far off.
One idea... how about comparing the changes in the balance sheet with the purchase and sales prices plus/minus the gains/loss on disposal and purchases of assets? If thats correct, I would still have the problem that some utilities dont list gains and losses separately for each of the categories... Let me know, thank you!

 

[Fidget]

Without being privvy to an organisation's finance systems, you're unlikely to be able to get to the level of detail you seem to be looking for. When it comes to finances, companies tend to only publish what they need to publish. One of the main reason for that is because they don't want prying eyes - like yours - getting to know too much detail about their operations, although it's more that they don't want to give too much away to their competitors.

Something that's crossed my mind though... when you say you know the 'sale price' of the assets, where are you getting that from? Just wondering if you're using the disposal figure in the fixed assets schedule in the notes to the accounts but aren't taking away accumulated depreciation, which would explain why the 'sales' price is significantly higher than proceeds of sale.

 

[Lena]

Hi Fidget, YES, as I said, I know that they don't disclose it all, but I'd like to know if the sum of the sales prices is like 20%, 50% or 90% of their total divestitures - you know what I mean?

On your second point, could you elaborate, that sounds interesting! So, as explained earlier, proceeds from sale and capital expenditure are the items in the cash flow statement. The "sale prices" and "purchase prices" (of which I then take the sum for each year and compare it with the CF items) are mentioned in a scattered way all over the annual reports, some for example in the "major events" section, some in the "scope of consolidation" section in the notes to the financial statements.

 

[Fidget]

Do you have link to any of the annual reports you're looking at?

 

[Lena]

Yes, here you go: www.rwe.com/web/cms/mediablob/en/289858/data/289708/1/rwe/investor-relations/reports/archive/2004/blob.pdf

 

[Lena]

Fidget, anyone?