Lukang Culture Annual Report " Non Fidelity " There Is A Secret Help Or Help Relieve The Pressure Of Capital Turnover.

Wu Yi, director of Lukang culture, issued a "no fidelity" opinion on the 2019 annual report, which seems to be a serious attitude of the director. But in fact, it is a game between the two sides in the game, one side tries to make the opponent take the 47% stake in Tianyi TV, while the other side wants to further reduce the price or refuse to accept it. Behind this incident, the financial crisis of listed companies has been brought to light.

In April 28th, the Lukang culture, the main textile and film and television dual business, released its annual report in 2019. Its revenue and performance both slipped, down 35.49% and 1821.45% compared with the same period last year. However, such a poor annual report was challenged by Mr. Wu Yi, the director of the company. Comments on misleading statements or omissions.

Wu Yi's comment on the "fidelity" opinion of the Lukang cultural Yearbook is about the interest entanglement of the transfer of stock rights of Zhejiang Tianyi film and Television Limited company (hereinafter referred to as "Tianyi film"). After combing the relevant bulletin information of Lukang culture in recent years, the reporter of red week found that it is likely that a listed company will pull off the film and television business and cooperate with Huaibei in related aspects of the textile business. The drama of "breaking the wrist to ask for help".

Director's annual report "no fidelity"

At the beginning of its listing in May 2011, Lukang's cultural stock was referred to as "Lukang science and technology". After that, it was involved in the cultural industry due to its 100% stake in the century long Limited by Share Ltd, 51% stake in Tianyi TV and so on, and changed its name to "Lukang culture" in June 2016. However, the change of name, the removal of "technology" and "culture", and the development of the double main industry of textile and film and television did not bring long-term profits inflow into Lukang culture. On the contrary, the film and television culture industry became a "hot potato" after several years.

In April 28th, the 2019 annual report released by the Lukang culture showed that Mr. Wu Yi, the director of the company, issued written comments on the annual report as follows: "as a director, I am in a position of diligence to perform my duties, and I can not, for the time being, be able to report on the authenticity, accuracy and completeness of the 2019 annual report of the Lukang culture Limited by Share Ltd of Jiangsu, and there are no false statements, misleading statements or major omissions. Issue opinion. After I have finished the audit of Zhejiang Tianyi film and Television Co., Ltd., I will actively publish the opinions of the directors.

Such a statement seems to imply that the 2019 annual report released by Lukang culture may be suspected of false disclosure in the aspects of "authenticity, accuracy and integrity". At the same time, the disclosure of the 2019 annual report by the listed company in the 2019 audit of the controlling subsidiary of Tianyi film and television has also been inappropriate. Or it is his director's objection to the annual report's "no fidelity". After the publication of the annual report, Lukang culture immediately received the letter of Supervision issued by the Shanghai Stock Exchange.

"Red week" reporter in-depth study found that objection to the 2019 annual report is precisely the contradiction between the interests of directors Wu Yi and the other major shareholders of Lukang culture. According to the company's company, Wu Yi's name is Jiangxi Xinyu superior water resources management Co., Ltd. (referred to as "Xinyu good or good water"), and Xinyu's superior water is another shareholder of Tianyi TV.

In 2015, Lukang science and Technology (Lukang culture stock stock abbreviation) acquired 100% stake in Tianyi film and TV company at 360 million yuan valuation by 51% yuan in cash purchase and capital increase respectively, including 151 million 200 thousand yuan cash to purchase Tianyi film 42% equity, and 9% equity with cash 66 million 120 thousand yuan to Tianyi film and television, thereby realizing the holding of heaven and earth film and television, while the remaining 49% shares were Xinyu is good at holding water.

Lukang science and technology originally planned to buy the remaining 49% stake in Tianyi film, but due to changes in the operation of Tianyi television, in the announcement on the termination of major asset reorganization issued in July 5, 2016, the company said, "as of June 30th, the target company achieved 70 million yuan in performance for the whole year. In order to safeguard the interests of listed companies and maintain the rights and interests of their counterparties, after friendly consultations with their counterparties, they decided to terminate the acquisition.

What is interesting is that in November 2017, a year later, Lukang culture restarted its takeover intention, and released the announcement on the acquisition of 45% stake and related party transactions of Tianyi TV. The listed company acquired 45% stake in Tianyi TV in cash at 395 million yuan price, together with the previous acquisition of shares, holding 96% stake in Tianyi TV. According to the trading announcement at that time, Tianyi film net profit in 2016 was 62 million 659 thousand yuan, indeed, it did not achieve the performance of 70 million yuan in the whole year as predicted in 2016, and the net profit in 2017 1~9 was only 6 million 832 thousand and 300 yuan.

However, it is puzzling that in such a performance context, Lukang culture still bought 45% stake in Tianyi TV, and the offer price was also higher than the 360 million yuan valuation of its 100% stake when it was acquired in 2015. Of course, the Xinyu side of the trading side of the upper reaches of the good water, Wu Yi promised Tianyi film in 2017, 2018 and 2019 audited net profit of not less than 100 million yuan, 120 million yuan, 150 million yuan, otherwise the compensation party in accordance with the "equity transfer agreement" to Lukang culture to compensate; at the same time, also promised to purchase price for the purchase of not less than 50 million shares of Lukang culture stock.

After the completion of the acquisition, the Lukang cultural 2017 annual report shows that Wu Yi holds about 41 million 919 thousand and 600 shares, becoming the fifth largest shareholder of the listed company, and later continues to increase holdings. From the latest issue of earnings report (2020 quarterly), Wu Yi holds 61649148 shares to become the third largest shareholder. In addition, Wu Yi became director of Lukang culture in May 11, 2018.

In theory, Tianyi film net profit in 2017 1~9 is only about 6800000 yuan, while the net profit of commitment is as high as 100 million yuan. Such a big gap is not easy to achieve. But it turns out that Tianyi film net profit in 2017 has been miraculously realized 132 million 223 thousand and 700 yuan, much larger than the net profit of the year's promise. It is regrettable that in the second years after the completion of the acquisition (2018), Tianyi film net profit dropped to 99 million 90 thousand and 200 yuan, but failed to achieve a performance pledge of 120 million yuan.

It should be noted that in the initial takeover report, Xinyu's superior water and Wu Yi did not indicate that the performance of Tianyi film and television company could be accumulated when making performance commitments. However, in December 14, 2019, it issued a notice on the transfer of some stake and related transactions of the controlling subsidiary company: "in 2017 and 2018, Tianyi film and television realized net profit. 132 million 223 thousand and 700 yuan, 99 million 90 thousand and 200 yuan, complete the profit promise. " Obviously, this is calculated by accumulative net profit of two years, and the conclusion of "achievement completion rate 105.14%" is obtained, and it is obvious that there is some ambiguity in the reasonableness of this algorithm.

What is surprising is that in 2019, Tianyi film and TV reported a sharp decline in business income, and business performance has already seen a loss (up to September 30, 2019, it has accumulated a deficit of 41 million 800 thousand and 600 yuan). Moreover, the company also predicted that there was uncertainty in the performance of Tianyi film and television 2019. The original trading partner of Xinyu, Wu Yi, is likely to need to make a commitment to the original performance. Cash compensation can be used to exempt the listed company from the 2019 performance pledge of Xinyu and Wu Yi, which no longer need to bear the responsibility of performance undertaking compensation. Obviously, it is necessary to give up the economic compensation rights. This practice not only damages the interests of listed companies, but also damages other shareholders' interests.

A further analysis by the "red weekly" reporter found that the listed company's choice of giving up the performance promise compensation is likely to be related to its urgent transfer of the 47% stake in Tianyi film and television. The contents of the December 14, 2019 announcement showed that Lukang culture and Xinyu Shang Shan Shui, Mr. Wu Yi signed the agreement on the transfer of shares of Zhejiang Tianyi film and Television Co., Ltd., and intends to sell 47% stake in Tianyi film and television to Xinyu, and the transaction price is 408 million 900 thousand yuan. After the completion of the equity transfer, the share of Lukang culture holding Tianyi TV shares decreased from 96% to 49%.

In order to let Xinyu's "good luck" to return to the "Tianyi" film and television, the announcement put forward that, in addition to the exemption of performance commitments, the transfer of the 47% stake in Tianyi film and television company's 408 million 900 thousand yuan consideration arrangement will be paid in four phases at the end of each year from 2019 to 2022. In addition, a total of 1 billion 58 million 706 thousand and 700 yuan of loan principal and interest is owed to Lukang's culture, which will be repaid in five installments until the end of 2024.

It is worth noting that in September 30, 2019, although the total assets of Tianyi movie and television company had 1 billion 824 million 987 thousand and 900 yuan, its owner's equity was only 336 million 308 thousand and 300 yuan, with the operation capacity of Tianyi film and television (up to September 30, 2019, a loss of 41 million 800 thousand and 600 yuan). There is great uncertainty whether it can repay loans and pay the purchase amount on time. More importantly, Wu Yi said in the Lukang cultural year 2019 annual report that "no fidelity" means that the film is no longer of high value, and whether it is willing to repurchase the 47% stake in Tianyi TV according to the agreement price is a great suspense.

"Break the wrist" to seek help or relieve the pressure of capital turnover

From the end of 2019, at the end of the year, the agreement on equity transfer of Zhejiang Tianyi film and television company was released. The terms of the 47% equity interest of Lukang culture transfer Tianyi film were obviously somewhat "loss", which is reflected in at least the exemption of the 2019 performance compensation. But now that there is a "loss", why is the listed company eager to sell the 47% stake in Tianyi TV? What about it?

In November 23, 2019, the listed company issued a notice on the shareholders' signing of the framework agreement on share transfer and the proposed change of the actual controller, announcements that the actual controller Qian Wenlong and the main shareholder Miao Jin Yi, Xu Qun, Yuan Aiguo, Huang Chunhong, Zou Guodong, Zou Yuping and Huaibei construction Investment Holding Group Co., Ltd. (referred to as "Huaibei construction investment") signed the "share transfer". Framework agreement, if the agreement can be carried out smoothly, the latter will hold 5.1086% of the listed company's Lukang culture and share 20.5440% of the voting rights of the listed company. The real controller will also be changed to the Huaibei state people's government's state-owned assets supervision and Administration Commission.

However, as of now, there is still no substantial progress in the equity transfer agreement. The reason is that the precondition for the agreement on stock transfer framework is not satisfied, including obtaining the consent and approval of all relevant parties of the government department and the transaction parties.

According to the announcement on the reply to the Shanghai stock exchange inquiry letter issued in April 28, 2020, the transfer of shares was slow because it was affected by the overall development environment of the industry, and a large loss could occur in 2019, resulting in a significant impairment of goodwill and a continuing risk of impairment of related assets. Huaibei construction investment and relevant departments of the Huaibei government have carefully assessed the company's proposal to divest or shrink the film and television business and properly handle related assets. At present, it is more difficult for the company to dispose of related assets. "

It is not difficult to see that Huaibei construction investment and Huaibei government departments do not recognize Lukang's culture of textile and film and television dual main business, and only want to introduce the textile business to Huaibei. It is precisely because of this requirement that Lukang culture made a small concession in the process of transferring the stake in Tianyi television and wanted to divestiture the film and television business as soon as possible.

The announcement of the supplementary agreement of the framework agreement on share transfer issued by the listed companies at the end of 2019 shows that if the equity transfer agreement has not been signed by the two parties before June 30, 2020, the stock transfer agreement will be terminated when the precondition of the agreed framework of the share transfer agreement is not satisfied.

"Red week" reporter in-depth study found that Lukang culture eager to sign a framework agreement with Huaibei, the surface is to transfer its textile business to Huaibei, but in fact, in order to ease the pressure of capital turnover of listed companies. For example, in the process of transfer of shares, Huaibei construction investment wholly-owned subsidiary Huaibei Central Lake belt construction investment and Development Co., Ltd. (referred to as "Huaibei Central Lake belt") intends to invest in Lukang culture through the way of non-public offering, so that the total amount of funds raised by Lukang culture can not exceed 499 million 987 thousand and 800 yuan (including 499 million 987 thousand and 800 yuan), and the net proceeds raised after deducting the issuance cost will be all. It is used to supplement liquidity.

Lukang's cultural capital is obviously tight. According to the company's financial data, in the past three years (2017~2019) operating income was 4 billion 111 million yuan, 4 billion 780 million yuan and 3 billion 35 million yuan under the scale, the company's annual account money only 473 million yuan, 402 million yuan and 564 million yuan, visible cash on hand is not much, most of the current assets are stranded in accounts receivable and inventory. China (as shown in the schedule) has affected the efficiency of capital turnover.

At the same time, Lukang's cultural capital turnover pressure is also reflected in the high debt ratio. The latest quarterly report released in 2020 shows that the asset liability ratio is as high as 73.80%, and liabilities totals up to 4 billion 426 million 899 thousand and 900 yuan. Similarly, the asset liability ratio at the end of each three years (2017~2019) has reached 58.15%, 60.69% and 69.70% respectively, showing a rising trend year by year.

It is worth noting that the current liabilities are the biggest part of the pressure on capital turnover. Not only in the first quarter of 2020, Lukang's current liabilities amounted to 4 billion 207 million yuan, but it also exceeded 3 billion yuan at the end of each three years, and even approached or exceeded the corresponding operating income scale. As shown in the schedule, the current liabilities at the end of 2019 were 3 billion 529 million yuan higher than those of the corresponding year. 3 billion 35 million yuan.

Under such pressure of capital turnover, the performance of Lukang culture has also deteriorated significantly in recent years. Although operating income increased in 2018 than in 2017, the net profit decreased from 310 million yuan to 71 million yuan, a decrease of 77.08%, showing a situation of no increase in profits. In 2019, with a significant decrease in operating income, net profit was a huge loss of 954 million yuan, a decrease of 1444.29% over the same period last year, and the main reason for the loss was the huge contribution of the company's film and television sector. The loss of 95 million 789 thousand and 100 yuan, 353 million 359 thousand and 800 yuan and 213 million 976 thousand and 400 yuan in the reporting period of Italian TV, century long, and Internet Movie and television lost three yuan in the total of three film and television companies. In 2020, under the influence of the new crown pneumonia epidemic, the film and television sector of the company is likely to suffer huge losses, which is unbearable for Lukang culture.

Under such double pressure of turnover and performance, Lukang culture has to borrow power from outside, otherwise the operation of the company is likely to get worse. However, Huaibei construction investment and other related aspects are only optimistic about the original textile business of Lukang culture, not optimistic about its subsequent acquisition of film and television business. In order to obtain cooperation with Huaibei construction investment and bring more liquidity, the listed company has made such a big concession that Wu Yi wants to return the stock of Tianyi TV and Xinyu. If such a practice is suitable for the shareholders of the listed company and the two tier market shareholders, we need to weigh it well.