Tencent-backed online publishing and e-book company China Literature has announced it anticipates a net loss in the first half of 2020, in a sharp contrast to net profits during the same period last year, according to a filing to the Hong Kong Stock Exchange on Monday.
The company attributed the expected losses to possible non-cash impairment of goodwill and trademark rights of between 3.7 billion yuan ($529 million) and 4.7 billion yuan resulting from its acquisition of Chinese digital production firm New Classics Media in 2018 and New Classics Media’s possible failure to meet its revenue goals during the period as the coronavirus pandemic took a toll on the film and television industry.
However, China Literature said that the possible impairment will not have significance impact on its operations, liquidity and compliance with debt covenants.
Last month, China Literature made peace with millions of authors who had voiced concerns over copyright and profit distribution by offering a three-tiered contract system giving authors greater control over how their intellectual property is licensed, and containing an agreement on sharing profits from any adaptations of their IP.
Contact reporter Ding Yi (email@example.com)