Semir Clothing Prices Fall Ready To "Play Tricks" A Number Of Financial Data Anomalies

The acquisition of KIDILIZ group made Semir's clothing revenue increase, but it did not bring much vitality to its performance. In 2019, half a year, it had to turn back to "save" performance by abnormal huge stock impairment. The abnormal relationship refers to the authenticity of its financial data.

Recently, Semir clothing revealed its semi annual report in 2019, operating income of 8 billion 219 million yuan, an increase of 48.57% over the same period last year, and realized net profit of 722 million yuan, an increase of 8.2% over the same period last year. On the whole, it handed in a fairly good report card, but the "red week" reporter in-depth study found that its huge inventory impairment returned to the abnormal location, and cash flow and revenue data are questionable.

　　 The road of expansion is blocked and long.

In the first half of 2019, Semir's clothing revenue increased by 48.57%, but its net profit increased by only 8.2%. A large part of the income growth is due to the fact that Semir apparel wholly bought the European children's wear brand KIDILIZ group in October 2018. According to the divisional information disclosed in the financial report, in 2019 1-6, the KIDILIZ business achieved a business income of 1 billion 483 million yuan, accounting for 18.18% of Semir's clothing, and a 6 billion 673 million yuan revenue for the Sen Ma business. Therefore, the increase in its revenue this year is closely related to the KIDILIZ business.

Semir clothing is currently implementing a multi brand strategy, with the exception of adult casual wear products based on Semir brand. The main brand of children's wear is Barbara. Last year, the acquisition of KIDILIZ group seems to open up overseas high-end children's clothing market. However, the operation of KIDILIZ is not very good. From the point of data disclosure, the number of stores closed by KIDILI group reached 90 in the first half of 2019, while the number of newly opened shops was only 40, and the number of stores was greatly reduced.

Performance, in 2018 10~12 months, only three months time KIDILIZ gross profit loss of up to 48 million 835 thousand and 800 yuan, and Semir clothing in more than half a year after running for more than six months, still can not stop, in the first half of 2019, its total profit loss expanded to 113 million yuan, also dragged down the overall performance of Semir clothing, and then led to Semir's dress this period, there is no revenue growth, net profit growth is mediocre. From this point of view, Semir clothing extension of overseas children's clothing area of the road can be described as "road resistance and long".

　　 Doubts about the reversal of depreciation

Fast fashion clothing is affected by the trend of fashion. With the rapid change of fashion trend, the price of old products tends to fall faster. If a large quantity of goods can not keep pace with the trend, the value of products will be greatly reduced. The turnover rate of Semir clothing from 2016 to 2018 was 3.46, 3.38, 2.78, showing a significant downward trend, indicating that its inventory situation is not optimistic. According to the 2019 China Daily, the stock of Semir clothing is as high as 4 billion 200 million yuan, accounting for 28.36% of total assets.

The clothing industry enterprises at the end of the year are preparing for the low price of the overstock of the inventory, but it is the usual practice in the industry. But what is fishy is that the Semir's dress allowance has been reversed. Statistics show that, at the end of 2018, Semir apparel made an asset impairment provision for its own assets, amounting to 867 million yuan, a new high in recent years, an increase of 86.13% over the previous period.

The asset impairment provision mainly includes inventory, investment real estate, fixed assets and goodwill, and the largest amount is loss of inventory price, amounting to 557 million yuan, up 28.37% over the previous period. At the same time, regardless of whether Semir's clothes were concentrated in the same time point, whether the performance of "bathing" was suspected, it was interesting that in the first half of 2019, it returned to the stock price reserve of 434 million yuan, mainly for the reversal of the decline in inventory prices.

In this regard, in its 2019 semi annual report, it was said that the inventory of goods sold on the basis of stock price depreciation had been implemented in the current period. However, in 2017 and 2018, the reversal amount of Semir clothing inventory depreciation was 330 million yuan and 464 million yuan respectively, while in 2019 only half a year, the amount of reversal was 434 million yuan.

Ingeniously, according to the accounting standards, enterprises should prepare for the sale of inventories by lowering the price of inventories, which should be carried forward and reduce the current operating cost. This means that the cost of the inventory will be reduced in the first half of 2019, thereby affecting its gross profit margin. Data show that in the first half of 2019, the gross profit margin of Semir apparel was 44.84%, a record high in recent years, and its gross profit margin was 38.36%, 35.51% and 39.78% respectively from 2016 to 2018. At the end of 2018, a huge amount of price reserve was set up just after the last six months. It seems that the operation can not get rid of the suspicion of "financial regulation". I am afraid that the company needs to make a reasonable explanation.

Abnormal operating cash flow

In addition to the abnormal return of inventory impairment, cash flow of Semir clothing has also been abnormal for many years, which requires investors to be vigilant.

According to the results of the report, the total business income of Semir clothing in 2018 amounted to 15 billion 719 million yuan (Table 1), of which 1 billion 505 million yuan of overseas income did not need to consider the value added tax, and the domestic income applicable tax rate was reduced from 17% to 16% in May 1, 2018. For prudential consideration, 1-4 months were calculated by 17%, and 5-12 months were calculated according to 16%.

According to the principle of financial accounting, the scale of tax revenue will be reflected in the financial statements of the same scale of cash inflows and receivables and receivables and other operating claims increase or decrease.

In the balance sheet, at the end of 2018, the total amount of receivable and accounts receivable of Semir clothing reached 1 billion 953 million yuan, an increase of 531 million yuan compared with the 1 billion 422 million yuan of the same items at the end of 2017. Among them, the provision for bad debts of accounts receivable and accounts receivable increased by 56 million 188 thousand and 400 yuan compared with the previous period. After calculating the influence of bad debt preparation factors, the actual increase of the receivable debt receivable was 587 million yuan, which means that 587 million yuan of business income is reflected in the increase of operating creditor's rights. Therefore, after deducting the new operating creditor's rights from tax revenue, about 17 billion 570 million yuan will be reflected in the current operating cash inflow.

Further look at its consolidated cash flow statement. In 2018, the cash received by Semir costumes "selling goods and providing services" was 18 billion 145 million yuan, which included 42 million 230 thousand and 300 yuan in the amount of advance account receivable. After excluding this effect, the amount of cash inflow related to the current sales revenue reached 18 billion 103 million yuan, which was 534 million yuan more than our accounting results, and it was not known where the 534 million yuan cash inflow came from.

In the same way accounting for the first half of 2019, there are still huge differences. In 2019, Semir realized its operating income of 8 billion 219 million yuan, and the applicable tax rate of domestic revenue dropped from 16% to 13% in April 2019, and its monthly tax revenue is about 9 billion 193 million yuan. At the end of 2019, its receivables and accounts receivable decreased by 412 million yuan compared with the previous period after excluding the bad debt preparation, which means that the corresponding cash increased in that year, so the total amount and the total tax revenue amounted to 9 billion 605 million yuan, which would be reflected in the inflow of cash flow. In the same period, the amount of cash received from "selling goods and providing services" was 9 billion 61 million yuan, and the amount of cash inflow related to current revenue was 9 billion 39 million yuan, excluding the increase of 22 million 460 thousand and 600 yuan in advance accounts receivable, which was 566 million yuan less than the 9 billion 605 million yuan accounting results mentioned above.

It should be noted that the discrepancy may also be caused by the transfer and discount of Semir's clothing receivable endorsement. It is interesting to note that Semir apparel disclosed its unused notes in the earnings report, and the amount of notes receivable in 2018 and the first half of 2019 was zero. What causes the cash flow of hundreds of millions of dollars over the years? Perhaps companies need to give specific explanations.

Purchase and cash flow mismatch

Not only the abnormal data of business income, but also the abnormal amount of Semir clothing purchase data.

In 2018, the purchase amount of Semir clothing to the five largest suppliers was 1 billion 72 million yuan (2, for example), accounting for 9.88% of the total annual purchases. The total purchasing amount was 10 billion 850 million yuan in this year, and the relevant value-added tax rate was reduced from 17% to 16% in May 2018, and the monthly amount of tax included can be estimated to be 12 billion 622 million yuan.

In the cash flow statement, in 2018, the cash paid for the purchase of goods and services was 12 billion 992 million yuan, which included an increase of 68 million 855 thousand and 100 yuan in the current prepayment. After the sum was removed, the amount of cash payments related to current purchases amounted to 12 billion 923 million yuan. The amount of cash outflow in the current period is more than 301 million yuan, which means that Semir clothing not only pays for the current purchase amount, but also pays back the previous purchase arrears, so it will be reflected in the reduction of operating debts.

As a matter of fact, in 2018, the operating liabilities of Semir clothing did not decrease, but the total amount of notes payable and accounts payable amounted to 3 billion 58 million yuan, an increase of 781 million yuan compared with the 2 billion 277 million yuan in the same period at the beginning of the project. The difference was 1 billion 82 million yuan between the increase and the decrease of one yuan and 301 million yuan.

The same logic calculation of Semir clothing 2017 procurement data, there are still exceptions. In the year, the amount of procurement of the five largest suppliers was 956 million yuan, accounting for 12.13%, and the total purchase amount was 7 billion 878 million yuan. Considering the value added tax rate that it applied to 17% in the year, the total amount of tax paid procurement was about 9 billion 217 million yuan.

In 2017, the amount of cash paid for the purchase of goods and services was 9 billion 52 million yuan, and the amount of cash payments deducted from prepaid accounts amounted to 7 million 994 thousand and 900 yuan. The cash expenditure related to current purchases amounted to 9 billion 60 million yuan, which was 157 million yuan less than the amount of tax paid purchase. In theory, the amount would be reflected in the increase in operating liabilities. However, at the end of 2017, the accounts payable and accounts payable increased by 751 million yuan over the previous period, which was more than 594 million yuan over the theoretical value.