Is Huace Film and Television unreasonable to beautify its performance? LeEco owes 370 million yuan in bad debts of 4.8 million yuan

strong > actual profit declines / strong >

according to reports, Huatze Film and Television achieved 1.751 billion yuan in operating income in the first half of the year, an increase of 13.11% over the same period last year. Although the net profit belonging to the shareholders of the parent company also reached 275 million yuan, the year-on-year growth rate was only 1.21%. If the impact of non-recurring gains and losses is taken into account, the net profit deducted from the shareholders of the parent company is only 225 million yuan, down 8.3% from the same period last year.

in terms of breakdown, online drama sales remained the main source of revenue for Huatze Film and Television in the first half of this year, up 38.99% from the same period last year to 1.437 billion yuan, accounting for 82.07% of total revenue. The above financial figures are similar to last year's annual report. According to the 2016 annual report of Huatze Film and Television, the company's operating income rose 67.27 percent year-on-year to 4.445 billion yuan, while the net profit belonging to the shareholders of the parent company grew by only 0.63 percent to 478 million yuan.

for this earnings report, China International Capital Corporation analyst Meng Wei said that Huatze Film and Television's "performance is flat in the lower limit of the forecast, and the net profit growth rate slows down due to the decline in gross profit margin."

however, a film and television analyst at Wanhe Securities said, "in order to seize the market share of the new payment era and video websites, the production costs of some companies driven by market transformation have increased significantly, resulting in an increase in income without increasing profits. However, with the premium paid by the broadcast platform for high-quality film and television and the audience's willingness to pay, the increase in income is only temporary and does not conform to the long-term market law."

in addition, carding found that all expenses of Huatze Film and Television increased by a large margin in the first half of the year. Among them, financial expenses increased by 125% over the same period last year, and management expenses also increased by 57.66% compared with the same period last year. According to insiders, the increase in Huatze film and television consulting fees stems from the fact that listed companies start a "second venture" and hope to change their organizational structure so as to introduce an internationally renowned consulting team.

semi-annual report shows that the gross profit margin of online drama sales in the first half of 2017 was 25.83%, down 16.22% from the same period last year. In addition, the gross profit margin of cinema box office, advertising and economic business also declined to varying degrees.

strong > Letv owes 368 million yuan to withdraw bad debts 4.8 million / strong >

semi-annual report shows that the accounts receivable of Huatze Film and Television has further increased to 3.235 billion yuan, of which Xizang and Letv became the largest arrears party during the reporting period. As of the end of June 2017, Xizang and Letv's accounts payable to Huatze Film and its holding subsidiary reached 368 million yuan, accounting for 10.88% of the balance of accounts receivable of Huatze Film and Television. The provision for bad debts was 4794521.85 yuan.

it is reported that Huatze Film and Television only set aside 4.79 million yuan for bad debts to Xizang Leeco, which has a huge return risk, in the first half of 2017, with a bad debt ratio of 1.3 percent. This ratio is even lower than the 1.59% provision for Shenzhen Tencent computer Systems Co., Ltd. Financial people said that the provision for bad debts of accounts receivable is relatively loose in half a year. "the semi-annual report has not been examined by accountants, and some accounting treatments are the actions of enterprises. In the end, the impact on the company should be based on the annual report, that is, the audited figures." The implication is that Huatze Film and Television's preparation for the handling of bad debts of Xizang and Letv's accounts receivable has not been examined by accountants, and there is no guarantee of rationality.

for such an "careless" standard for the calculation of bad debts, Huatze Film and Television has given the following explanation: "at present, the company has consulted with Leeco and relevant third parties, and has formed a preliminary settlement intention: for unbroadcast plays, the company intends to re-issue to a third party, while rescinding the original release contract, and it is expected that the price to be issued to the third party will exceed the original release price. For joint investment projects, it is proposed to share the project income payable by the company to Leeco to offset the company's accounts receivable to Xizang and Letv. If all the above preliminary plans are implemented, the balance of the company's receivables to Xizang and Letv is expected to not exceed 172 million yuan. After deducting the share of other investors, the amount attributed to the company is expected to not exceed 80 million yuan.

at present, the parties concerned are still in friendly negotiations on the details, and an agreement is expected to be reached in the third quarter. The above-mentioned accounts receivable of Xizang and Letv are not expected to have a significant adverse impact on the company. "

beautify the performance has a criminal record bad debt provision ratio, a reduction in net profit by 100 million?

according to the Daily Business News, on the last day of the first quarter of 2017, Huatze Film and Television issued a "notice on changes in Accounting estimates of accounts Receivable". Because of the untraceability of accounting changes, the new proportion of accounts receivable will be used from 2017.

the specific changes are as follows: for accounts receivable within 1 year, the proportion of bad debts is reduced from 5% to 1% for 1 to 2 years, both are 10% for 2 to 3 years, from 50% to 30%. The company divides the original "more than 3 years" account period (the provision ratio is 100%) into two periods, of which 50% for more than 4 years is 100%.

it is worth mentioning that the company's annual report for 2016 and the first quarterly report for 2017 were not released at the time of the announcement, so at that time, it was not possible to calculate the impact of the above changes on the first quarterly report of China Strategy Film and Television in 2017 through the details of accounts receivable at the end of 2016. However, this change still triggered controversy in the media about Huatze's regulation of profits.

according to the 2016 annual report of Huatze Film and Television, accounts receivable is 2.874 billion yuan, accounting for 27.68% of the total assets, an increase of more than 40% compared with 1.946 billion yuan at the end of 2015. Among them, the aging analysis method is used to calculate the book balance of accounts receivable for bad debts, and nearly 200 million yuan for bad debts is set aside in accordance with the original accounting standards.

what does the new accounting change mean? According to the detailed calculation of accounts receivable in 2016, it is found that if accounts receivable within 1 year and 2-3 years are calculated according to the new adjusted proportion, the provision for bad debts of more than 80 million yuan can be reduced, and the profits of the current period can also be benefited. In response, Secretary Dong of Huatze Film and Television denied changing accounting estimates in order to adjust profits. In his view, Huatze Film and Television's previous accounting policy was relatively conservative and could not reflect the real financial situation of the company, but now the changes are more real.

after the accounting change of accounts receivable, Huatze Film and Television reported a more direct response in the first quarter of 2017. although the company's revenue decreased by 11.67% compared with the same period last year, the net profit increased by more than 23%.

Edit: mary