Is the film and television company's change in accounting policies an industry innovation or a worrying customer capital chain

After Huace Film and Television and Hualu Baina, two TV drama companies changed their accounting policies.

Original title: "Changes in Film and Television Companies·Finance" Four TV drama companies have reduced bad debt accruals, although their recent results are better than, are they not worried about customer capital chains?

On June 29 and 30, New Culture and Great Wall Film and Television successively issued announcements to adjust the accounting estimates of accounts receivable.

Since the TV series "No. 1 Share" Huace Film and Television entered the A-share market in 2010, there have been few precedents for listed TV series companies to change their accounting estimates. Now four companies have changed their accounting estimates in a row. What does it mean?

It is more intuitive to use a set of data to explain it. In 2016, the net profits (attributable to net profits, the same below) of the seven TV series listed companies were Huace Film and Television> Hualu Baina> Ciwen Media> New Culture> Huanrui Century> Great Wall Film and Television> Tangde Film and Television, divided into 478 million yuan, 378 million yuan, 290 million yuan, 265 million yuan, 256 million yuan, and 179 million yuan.

If re-ordering is carried out according to the unified adjusted accounting policy, Huace Film and Television, Hualu Baina, New Culture, and Great Wall Film and Television can respectively increase the profits for this period by tens of millions of yuan. The above ranking may also change a lot as a result.

However, in the long run, the reduction in provision for bad debts will undoubtedly test customers 'ability to repay, especially among the top five customers of a listed company,"LeE-based" companies have also emerged.

As the proportion of bad debt accruals dropped, Huace Film and Television's net profit increased by 100 million this year?

The change began with Huace Film and Television, the leader of TV series, and the controversy also began with Huace

. On the last day of the first quarter of 2017, Huace Film and Television released the "Announcement on Changes in Accounting Estimates of Accounts Receivable". Due to the non-traceability of accounting changes, the new accounts receivable accrual ratio will be used from 2017.

The specific changes are as follows: for accounts receivable within one year, the proportion of bad debts accruing has been reduced from 5% to 1%; it has remained unchanged for 1 to 2 years, both at 10%; in 2 to 3 years, it has dropped from 50% to 30%; the company has split the original "more than 3 years"(the accrual ratio is 100%) into two periods, of which 50% has been accrued for 3 to 4 years, and 100% has been accrued for more than 4 years.

It is worth mentioning that the company's 2016 annual report and the first quarterly report for 2017 had not been released when the announcement was released. Therefore, it was impossible to calculate the 2017 quarterly report of Huace Film and Television after the above changes through the details of accounts receivable at the end of 2016. report impact. However, this change still sparked controversy in the media over Huace's adjustment of profits.

According to Huace Film and Television's 2016 annual report data, accounts receivable were 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 book balance of accounts receivable using the age analysis method was 2.515 billion yuan, and nearly 200 million yuan in bad debt provision was made in accordance with the original accounting standards.

What do new accounting changes mean? The reporter calculated based on the details of accounts receivable in 2016 and found that if accounts receivable within one year and 2 to 3 years were accrued according to the new adjusted ratio, the bad debt reserve of more than 80 million yuan could be reduced, and the current period Profits can also benefit from it.

Gao Yuan, secretary of the board of directors of Huace Film and Television, denied in an interview with reporters that he had changed the accounting estimates to adjust profits. In his view, Huace Film and Television's previous accounting policies were relatively conservative and did not reflect the company's true financial situation. Today's changes are even more true.

According to Huace Film and Television's 2016 financial report results, Huace Film and Television's operating income during the reporting period was 4.445 billion yuan, and accounts receivable accounted for 64.66% of its revenue. In absolute terms, the company's accounts receivable increased by 928 million yuan last year, while revenue increased by 1.788 billion yuan during the same period. This means that more than half of the company's increased revenue did not receive cash, which means that the quality of operating income growth has been compromised.

Specifically, the one with the largest arrears is Beijing Aiqiyi Technology Co., Ltd., with an amount of 446 million yuan, accounting for 14.36% of the total accounts receivable. The largest one is the licensing fee for the online communication rights and broadcasting rights of the TV series "The Legend of the Condor Heroes", which is 360 million yuan. Ranked second is the "LeTV" company that has recently exposed capital chain problems, with arrears of 363 million yuan; the third is Hunan Radio and Television, with 196 million yuan; the fourth is Anhui Radio and Television, with 180 million yuan; and the fifth is Feihu Information, with 140 million yuan.

After the accounting changes in accounts receivable, Huace Film and Television's 2017 quarterly report responded more directly. Although the company's revenue dropped by 11.67% year-on-year, its net profit increased by more than 23%. Shenwan Hongyuan Research Report analyzed the above data: In the first quarter of 2017, Huace Film and Television achieved a total profit of 180 million yuan, of which asset impairment losses were reversed to 140 million yuan, accounting for 78% of the total profit. Excluding the impact of this factor, the net profit realized by the company's content sector is about 30 million yuan. The large reversal of asset impairment losses is mainly due to changes in the operating environment, resulting in certain distortions in the previous bad debt accrual ratio. This factor is expected to have a positive effect of about 100 million yuan on the 2017 net profit.

In fact, in addition to Huace Film and Television, Hualu Baina, which also followed the new accounting policy in this year's quarterly report, also saw changes. According to the company's quarterly report data, the company's asset impairment losses during the reporting period were negative 59.6014 million yuan, a decrease of 435.4% from the previous period of 17.7704 million yuan. The company achieved a miracle of 60.08% net profit growth while revenue decreased by 25.26% year-on-year.

With the changes in the performance of Huace Film and Television and Hualu Baina, New Culture and Great Wall Film and Television have also recently issued announcements to change their accounting estimates. The specific impact will be reflected in the semi-annual report and the third quarterly report respectively. However, because the business volume is relatively small, when the adjustment of accounting policies of Great Wall Film and Television and New Culture is reflected in total profits, it may not be as significant as Huace Film and Television.

Customers 'ability to repay is still a worry."LeTV" appears among the top five customers

. Behind the changes in accounting estimates of four TV drama listed companies is the rapid development of the entire TV drama industry. In its change announcement, each listed company mentioned the development prospects of the TV drama industry and the solvency of its top five customers. However, every time film and television reporters combed the data, they found that in fact, the TV drama company did not disclose too much about the specific situation of the top five customers in its financial reports, and not all of the top five customers announced at the same time were "worry-free" in paying debts.

According to data from Everbright Securities Research Institute, the volume of TV drama copyright transactions in 2010 was 5.9 billion yuan. In 2015, this figure reached 22.2 billion yuan, with an average annual increase of more than 55%. Subdividing the 2015 TV drama copyright sales data, including 15.7 billion yuan in TV channel transactions and 6.5 billion yuan in new media channel transactions. In 2016, the purchasing power of new media (mainly video websites) will undoubtedly increase.

"The Legend of Ruyi" at 9 million yuan per episode,"Win the World" and "Nirvana in Fire 2" at 8 million yuan per episode are all sky-high prices offered by video websites. In addition to the five major satellite TV stations, the "Internet side" composed of the three major video websites Youku, iQiyi, and Tencent Video, and the four video websites Mango TV, LeTV Video, Sohu Video, and PPTV have long become the main force of buying TV series productions.

The reporter sorted out the top five major sales customers of seven TV series listed companies, including Huace Film and Television, Hualu Baina, etc., and found that based on the content disclosed, the purchasing power of video websites is amazing. Taking Huanrui Century's 2016 annual report as an example, Tencent has the highest closing balance among the company's arrears.

Most of the video websites with "rich fathers" have the financial support of BAT, and the confidence to be willing to spend a lot of money naturally makes many TV drama production companies happy. However, video websites do not pay and deliver dramas with one hand, and the unpaid arrears enter the accounts receivable account, and the snowball of accounts receivable is getting bigger and bigger, and risks naturally arise.

Not all local tycoon video websites are smooth sailing. Since the beginning of 2017, LeTV has been in trouble with asset problems. LeTV videos, which used to be wasting money to fight for copyright, have also ended the road of burning money. Every film and television reporter noticed that in Huace Film and Television's 2016 financial report, Xizang LeTV Information Technology Co., Ltd.(hereinafter referred to as Xizang LeTV) ranked second in the amount of accounts receivable, with a book balance of 363 million yuan, accounting for 11.68% of the balance of accounts receivable.

According to the above-mentioned annual report data, Xizang LeTV is Huace Film and Television's largest customer, with a transaction volume of 582 million yuan between the two. In this way, only 37.63% of Huace Film and Television sold to Xizang LeTV's film and television works were successfully repaid.

Regarding the solvency of LeTV in Xizang, Gao Yuan, director secretary of Huace Film and Television, said in an interview with every film and television reporter that he was "not worried". In his view, LeEco's current financial problems will not affect Huace Film and Television. Gao Yuan said: "Huace's main customers are major domestic first-line TV stations and major video websites. They have good credit, strong repayment ability, and accounts receivable risks are controllable. Looking at its past financial records, the probability of occurrence of accounts receivable risks is extremely low."

Of course, accounts receivable are not unique to Huace Film and Television alone. However, as the TV drama company with the highest output, Huace Film and Television is undoubtedly facing the greatest pressure. According to its 2017 quarterly report, the company's accounts receivable have exceeded the 3 billion mark, exceeding the total accounts receivable of Huanrui Century, Tangde Film and Television, Ciwen Media, and Great Wall Film and Television.

The reporter noticed that except for Huace Film and Television, which announced its top five sales customers and the top five accounts receivable, seven TV drama listed companies, including Hualu Baina, New Culture, and Ciwen Media, rarely disclosed the details of their sales customers. A well-known brokerage media analyst bluntly said in this regard: "The imperfect disclosure of information on sales customers by listed companies will also raise doubts about the solvency of their top five customers."

Everyone has adjusted it. Where's Ciwen? Secretary of the Board of Directors: Reporters will

review the data considering accounting changes and found that after this accounting policy change, from Huace Film and Television, Hualu Baina to Great Wall Film and Television and New Culture, the accounts receivable ratios of these four companies have been accrued using the age analysis method. It is basically close to that of Tangde Film and Television and Huanrui Century.

Huace Film and Television's change in accounting estimates is just one example of the film and television production company's response to changes in the industry. The Daily Economic News compiled relevant targets in the film and television production industry in which Huace Film and Television is located, including several listed companies including Hualu Baina, Huanrui Century, and Great Wall Film and Television. After comparison, it was found that the changed accounting policies of Huace Film and Television are similar to other competitors in the industry.

At the beginning of this year, every film and television reporter wrote an article to sort out and analyze the 2016 performance of the above-mentioned seven TV series listed companies, ranking them according to net profit indicators. They are Huace Film and Television> Hualu Baina> Ciwen Media> New Culture> Huanrui Century> Great Wall Film and Television> Tangde Film and Television, with net profits of 478 million yuan, 378 million yuan, 290 million yuan, 265 million yuan, 265 million yuan (slightly lower than New Culture), 256 million yuan, respectively. 179 million yuan.

It is worth mentioning that if the ranking is re-ordered according to the unified adjusted accounting policy, the above ranking will change a lot. In terms of accounts receivable in a single year, Huace Film and Television, Hualu Baina, New Culture, and Great Wall Film and Television can increase profits by tens of millions of yuan respectively, which shows the huge impact of changes in accounting estimates on the company's statements.

A media fund buyer who did not want to be named bluntly said in an interview with reporters that taking Huace Film and Television as an example, the adjusted accounting estimates made the company's profits more obvious, and from the report point of view, the industry status of the leading TV drama company.

The above-mentioned buyers said that funds rarely exclude the impact of differences in accounting estimates when making company analysis. However, under the business model of the TV drama industry, accounts receivable are often large in amount and increase significantly year by year. Adjusting accounting estimates has an impact on the company's financial report. The impact cannot be ignored.

According to the above-mentioned people, except for Ciwen Media, the above six TV series listed companies are equivalent to standing on the same starting line. Comparing their 2017 results under the adjusted accounting estimates will be relatively objective and true.

Everyone has adjusted it, what will Ciwen Media think of it? "We'll think about it." Ciwen Media Secretary Chen Mingyou in an interview with reporters said, In his opinion in the other six TV drama production companies accounts receivable accrual ratio is roughly the same situation, Ciwen Media currently used accounting estimation policy is relatively conservative, However, such accounting policy makes Ciwen Media and other companies compared with the loss of comparability, In the performance of the performance is also relatively suffer, In this case, Ciwen Media will also consider the next accounting changes.

At the same time, Chen Mingyou also affirmed the logic of several other companies adjusting accounting estimates. In his opinion, for TV series production companies, with the increase of TV series copyright prices, supplemented by the increasingly powerful purchasing power of TV stations and video websites, the previous accounting policies are indeed relatively conservative and cannot truly reflect the company's performance. Today's accounting adjustment is also caused by the environment, and the adjustment represents the development and innovation of the industry.

Editor: Mary