INCE|Connect News

NEPI Rockcastle slumps on Viceroy report. The activist short-seller has accused the European property investor of

overstating profit from its investments in Romania.

Shares in NEPI Rockcastle fell sharply yesterday after activist short-seller

Viceroy published a report accusing the group of fraud and manipulation of its

accounts. The Central and Eastern European property group has denied the

allegations, saying Viceroy has made no approach for clarification.

In a report entitle Horsing around in the Stable , Viceroy said its

investigations had uncovered numerous inconsistencies within the group's

financial reporting and "major links to an established financial fraud". It

claimed the group was fundamentally overpriced when compared with peers, even

without taking the inconsistencies into account.

Viceroy shot to prominence in South Africa last December after publishing a

report on Steinhoff's financial gymnastics shortly after CEO Markus Jooste

quit and the furniture group admitted to holes in its financial accounts.

However, a report on Capitec earlier this year failed to hit the mark. Again,

it published the Capitec report without engaging with the bank's management.

NEPI Rockcastle is part of the Resilient stable of companies, which also

includes Fortress REIT and Greenbay Properties. The companies came under

scrutiny earlier this year after investors raised concerns over the premiums

they traded at and their cross-shareholdings. They were also accused of

insider trading and share price manipulation.

Viceroy said NEPI's merger Rockcastle last year was immediately followed by a

massive write-down of subsidiary loans reflecting uncollectible debt from

special-purpose vehicles. It said local filings for NEPI's Romanian

subsidiaries suggested a massive overstatement of company figures for the past

three years.

Taken with a purchase premium of ~80%, it's clear the only winners in this

transaction were Resilient Stable insiders," Viceroy said."Were NEPI to trade

in-line with peers we believe shareholders would face a 25% downside, however,

given the suspected extent of financial misrepresentation, we believe the

company's shares are worth substantially less."

NEPI Rockcastle said Viceroy had not approached it for comment or given it an

opportunity to respond to the allegations prior to the release of the report.

It said it had consistently proven transparency towards stakeholders and its

disclosures had been prepared in accordance with the "legal requirements and

best practices".

The report is based on numerous factual errors, misleading information and

false claims," NEPI Rockcastle said."The company is considering taking

measures to hold any parties accountable for presenting misleading

information."

The company's shares fell as much as 16% before closing 14% down at 99.14 rand.

> We are still in the process of analyzing the Viceroy Report on Nepi. Our

initial view is that the report is compelling as the conclusions drawn appear

to be justified. The report echos the concerns we had and continue to have

about the entire Resilient Group.

>

> -- Cy Jacobs (@Cy36ONE) November 28, 2018

> So after failing to drag down Capitec, the short-selling hyenas at Viceroy

are after NepiRock again. As ever, thin on evidence and high on emotive

language such as "massively overstated" and "criminal implications". I don't

own NRP but object to this predatory behaviour. https://t.co/OIs1HP1Gxe

>

> -- Karin Richards (@Richards_Karin) November 28, 2018

> Going through Viceroy's attack on NEPI. Market thrashing the shares. Down

13%. Need company's response to accusations of a disconnect between filings in

Romania and locally published numbers. In meantime investors will choose to

remain cautious. Another let down by Corp SA??

>

> -- David Shapiro (@davidshapiro61) November 28, 2018

L2D adds up Black Friday shoppers. Black Friday specials attracted 15% more visitors to Liberty Two Degrees'

shopping centres than last year.

Liberty Two Degrees (L2D) has been installing a new camera system at its

shopping centres so it can count how many visitors they attract. The Syenap

foot count system has already been installed at Sandton City and the results

show that 8.2% more shoppers visited the centre in the year to end-September.

It's also seen encouraging foot-count growth at its other centres. This Black

Friday, 15% more shoppers visited centres in its portfolio than last year.

The shopping centre owner said by studying data analytics, it can better

understand customers' needs and preferences, enabling its centres to set

trends in the retail sector

In an investor update, it said it had seen a marked improvement in retail

vacancies over the period. Trading density at its centres rose 3.4% excluding

the Midlands Lifestyle Centre and Botshabelo Mall. Sandton City and Eastgate

both grew trading densities by more than 5%, with densities slipping slightly

at Nelson Mandela Square and declining by 5.6% at Melrose Arch. It said it was

continuing its engagement with the management of Edcon and was taking

proactive measures to reduce the exposure of its portfolio to the retail

group.

Although the Edcon brands in the portfolio continue to show positive trading

density growth, managing L2D's exposure to the market risks of Edcon remains a

high priority," L2D said.

In the office sector, the competitive environment, an oversupply of space in

the Sandton CBD and the weak economy remained a challenge. It said it was

making considerable efforts to attract the right tenants and retain existing

tenants. Office fancies declined to 8.7% in September from 9.7% in June.

L2D said it remained on track to deliver its forecast 60c distribution share

this year. It said its conversion from a collective investment scheme to a

corporate real estate investment trust (REIT) earlier this month improved its

structure to optimise shareholder value. The conversion resulted in the

cancellation of a PUT option by Liberty Group and the internationalisation of

the property management company. At the same time, it acquired 1.2 rand billion in

property assets from the Liberty Property Portfolio, funding it with debt. It

said the introduction of a conservative level of debt had enhanced its capital

structure, with a current loan-to-value of 116%.

The new leases concluded in the period are indicative of the continued strong

retail demand at the centres," L2D said. "The portfolio remains well

positioned for operational growth, supported by good quality underlying

property income and supplemented by yield-enhancing developments."

Its shares ended trade 4.3% higher at 7.50 rand.

SA is not Bidcorp’s China. Trying economic conditions and weak consumer sentiment are weighing on the

group's SA operations, but the UK, Europe and Australasia are performing

better.

South Africa and China have marred an otherwise positive start to Bidcorp's

2019 financial year. However, the multinational food services group says

disappointing showings from the two countries have been countered by better

performances from its UK, European and Australasian operations, supported by

economic growth and relatively benign food inflation.

In a trading update yesterday, Bidcorp said trading for the first quarter of

its 2019 financial year continued to be positive, with organic sales

continuing to grow. Currency volatility had impacted its performance though,

with constant currency results about 3.1% lower than the rand translated

results for the three months.

In Australia, its core foodservice business was doing well, and its fresh and

meat businesses were slowly improving. While New Zealand was continuing its

solid performance, top-line gains and margin improvements were being offset by

higher costs, particularly labour and the costs of recent increased capacity.

In the UK, good summer weather assisted activity levels despite increasing

stress in the casual dining space and lower consumer confidence, partly due to

the Brexit uncertainty.

The performances of the Netherlands, Belgium, Czech & Slovakia, Poland and

Italy stood out in Europe, although cost increases, particularly labour and

fuel, were having an impact in many economies experiencing full employment.

The group's operations in South Africa overall underperformed in what it said

were extremely trying economic conditions, characterised by stagnant GDP

growth and ongoing weak consumer sentiment. Greater China's financial

performance was also disappointing, but the business had reacted well in

recovering from the effects of dairy market supply dislocation and accordant

margin pressures and rising operating and logistics costs.

The group said it was still looking for a buyer for its discontinued Contract

Distribution business in the UK after a previous deal fell through. Although

the unit had reported an improved trading performance it remained loss-making.

Fundamental conditions within our global foodservice markets continue to

support organic growth and bolt-on opportunities remain in all our

geographical segments," Bidcorp said.

The group closed 2.1% down at 270.90 rand.

> Bidcorp trading update - Full of promises and inuendos. No numbers. No

saying how investors will react to this. I would say negative

>

> -- Bruno van Eck (@brunovaneck) November 28, 2018

NEPI Rockcastle slumps on Viceroy report. The activist short-seller has accused the European property investor of

overstating profit from its investments in Romania.

Shares in NEPI Rockcastle fell sharply yesterday after activist short-seller

Viceroy published a report accusing the group of fraud and manipulation of its

accounts. The Central and Eastern European property group has denied the

allegations, saying Viceroy has made no approach for clarification.

In a report entitle Horsing around in the Stable , Viceroy said its

investigations had uncovered numerous inconsistencies within the group's

financial reporting and "major links to an established financial fraud". It

claimed the group was fundamentally overpriced when compared with peers, even

without taking the inconsistencies into account.

Viceroy shot to prominence in South Africa last December after publishing a

report on Steinhoff's financial gymnastics shortly after CEO Markus Jooste

quit and the furniture group admitted to holes in its financial accounts.

However, a report on Capitec earlier this year failed to hit the mark. Again,

it published the Capitec report without engaging with the bank's management.

NEPI Rockcastle is part of the Resilient stable of companies, which also

includes Fortress REIT and Greenbay Properties. The companies came under

scrutiny earlier this year after investors raised concerns over the premiums

they traded at and their cross-shareholdings. They were also accused of

insider trading and share price manipulation.

Viceroy said NEPI's merger Rockcastle last year was immediately followed by a

massive write-down of subsidiary loans reflecting uncollectible debt from

special-purpose vehicles. It said local filings for NEPI's Romanian

subsidiaries suggested a massive overstatement of company figures for the past

three years.

Taken with a purchase premium of ~80%, it's clear the only winners in this

transaction were Resilient Stable insiders," Viceroy said."Were NEPI to trade

in-line with peers we believe shareholders would face a 25% downside, however,

given the suspected extent of financial misrepresentation, we believe the

company's shares are worth substantially less."

NEPI Rockcastle said Viceroy had not approached it for comment or given it an

opportunity to respond to the allegations prior to the release of the report.

It said it had consistently proven transparency towards stakeholders and its

disclosures had been prepared in accordance with the "legal requirements and

best practices".

The report is based on numerous factual errors, misleading information and

false claims," NEPI Rockcastle said."The company is considering taking

measures to hold any parties accountable for presenting misleading

information."

The company's shares fell as much as 16% before closing 14% down at 99.14 rand.

> We are still in the process of analyzing the Viceroy Report on Nepi. Our

initial view is that the report is compelling as the conclusions drawn appear

to be justified. The report echos the concerns we had and continue to have

about the entire Resilient Group.

>

> -- Cy Jacobs (@Cy36ONE) November 28, 2018

> So after failing to drag down Capitec, the short-selling hyenas at Viceroy

are after NepiRock again. As ever, thin on evidence and high on emotive

language such as "massively overstated" and "criminal implications". I don't

own NRP but object to this predatory behaviour. https://t.co/OIs1HP1Gxe

>

> -- Karin Richards (@Richards_Karin) November 28, 2018

> Going through Viceroy's attack on NEPI. Market thrashing the shares. Down

13%. Need company's response to accusations of a disconnect between filings in

Romania and locally published numbers. In meantime investors will choose to

remain cautious. Another let down by Corp SA??

>

> -- David Shapiro (@davidshapiro61) November 28, 2018

Zapiro: EFF Incendiary.

SA is not Bidcorp’s China. Trying economic conditions and weak consumer sentiment are weighing on the

group's SA operations, but the UK, Europe and Australasia are performing

better.

South Africa and China have marred an otherwise positive start to Bidcorp's

2019 financial year. However, the multinational food services group says

disappointing showings from the two countries have been countered by better

performances from its UK, European and Australasian operations, supported by

economic growth and relatively benign food inflation.

In a trading update yesterday, Bidcorp said trading for the first quarter of

its 2019 financial year continued to be positive, with organic sales

continuing to grow. Currency volatility had impacted its performance though,

with constant currency results about 3.1% lower than the rand translated

results for the three months.

In Australia, its core foodservice business was doing well, and its fresh and

meat businesses were slowly improving. While New Zealand was continuing its

solid performance, top-line gains and margin improvements were being offset by

higher costs, particularly labour and the costs of recent increased capacity.

In the UK, good summer weather assisted activity levels despite increasing

stress in the casual dining space and lower consumer confidence, partly due to

the Brexit uncertainty.

The performances of the Netherlands, Belgium, Czech & Slovakia, Poland and

Italy stood out in Europe, although cost increases, particularly labour and

fuel, were having an impact in many economies experiencing full employment.

The group's operations in South Africa overall underperformed in what it said

were extremely trying economic conditions, characterised by stagnant GDP

growth and ongoing weak consumer sentiment. Greater China's financial

performance was also disappointing, but the business had reacted well in

recovering from the effects of dairy market supply dislocation and accordant

margin pressures and rising operating and logistics costs.

The group said it was still looking for a buyer for its discontinued Contract

Distribution business in the UK after a previous deal fell through. Although

the unit had reported an improved trading performance it remained loss-making.

Fundamental conditions within our global foodservice markets continue to

support organic growth and bolt-on opportunities remain in all our

geographical segments," Bidcorp said.

The group closed 2.1% down at 270.90 rand.

> Bidcorp trading update - Full of promises and inuendos. No numbers. No

saying how investors will react to this. I would say negative

>

> -- Bruno van Eck (@brunovaneck) November 28, 2018

L2D adds up Black Friday shoppers. Black Friday specials attracted 15% more visitors to Liberty Two Degrees'

shopping centres than last year.

Liberty Two Degrees (L2D) has been installing a new camera system at its

shopping centres so it can count how many visitors they attract. The Syenap

foot count system has already been installed at Sandton City and the results

show that 8.2% more shoppers visited the centre in the year to end-September.

It's also seen encouraging foot-count growth at its other centres. This Black

Friday, 15% more shoppers visited centres in its portfolio than last year.

The shopping centre owner said by studying data analytics, it can better

understand customers' needs and preferences, enabling its centres to set

trends in the retail sector

In an investor update, it said it had seen a marked improvement in retail

vacancies over the period. Trading density at its centres rose 3.4% excluding

the Midlands Lifestyle Centre and Botshabelo Mall. Sandton City and Eastgate

both grew trading densities by more than 5%, with densities slipping slightly

at Nelson Mandela Square and declining by 5.6% at Melrose Arch. It said it was

continuing its engagement with the management of Edcon and was taking

proactive measures to reduce the exposure of its portfolio to the retail

group.

Although the Edcon brands in the portfolio continue to show positive trading

density growth, managing L2D's exposure to the market risks of Edcon remains a

high priority," L2D said.

In the office sector, the competitive environment, an oversupply of space in

the Sandton CBD and the weak economy remained a challenge. It said it was

making considerable efforts to attract the right tenants and retain existing

tenants. Office fancies declined to 8.7% in September from 9.7% in June.

L2D said it remained on track to deliver its forecast 60c distribution share

this year. It said its conversion from a collective investment scheme to a

corporate real estate investment trust (REIT) earlier this month improved its

structure to optimise shareholder value. The conversion resulted in the

cancellation of a PUT option by Liberty Group and the internationalisation of

the property management company. At the same time, it acquired 1.2 rand billion in

property assets from the Liberty Property Portfolio, funding it with debt. It

said the introduction of a conservative level of debt had enhanced its capital

structure, with a current loan-to-value of 116%.

The new leases concluded in the period are indicative of the continued strong

retail demand at the centres," L2D said. "The portfolio remains well

positioned for operational growth, supported by good quality underlying

property income and supplemented by yield-enhancing developments."

Its shares ended trade 4.3% higher at 7.50 rand.

Zapiro: EFF Incendiary.

Cheers as Mars InSight spacecraft lands on Red Planet. by Laurent BANGUET / with Kerry SHERIDAN in Tampa

The dramatic arrival of the $993 million spacecraft -- designed to listen for

quakes and tremors as a way to unveil the Red Planet's inner mysteries, how it

formed billions of years ago and, by extension, how other rocky planets like

Earth took shape -- marked the eighth successful landing on Mars in NASA's

history. "Touchdown confirmed," a mission control operator at NASA said, as

pent-up anxiety and excitement surged through the room, and dozens of

scientists leapt from their seats to embrace each other. "It was intense and

you could feel the emotion," said NASA administrator Jim Bridenstine, in an

interview on NASA television afterward. Bridenstine also said President Donald

Trump and Vice President Mike Pence had watched on television and called to

congratulate the US space agency for its hard work. "Ultimately, the day is

coming when we land humans on Mars," Bridenstine said, adding that the goal is

to do so by the mid 2030s. The vehicle appeared to be in good shape, according

to the first communications received from the Martian surface. But as

expected, the dust kicked up during the landing obscured the first picture

InSight sent back, which was heavily flecked. France's Centre National

d'Etudes Spatiales (CNES) made the Seismic Experiment for Interior Structure

(SEIS) instrument, the key element for sensing quakes. The principal

investigator on the French seismometer, Philippe Lognonne, said he was

"relieved and very happy" at the outcome. "I've just received confirmation

that there are no rocks in front of the lander," he told AFP. Next, InSight

must open its solar arrays, as NASA waits until later in the afternoon to

learn if that final, crucial phase went as planned. The spacecraft is meant to

be solar-powered once it reaches the surface of Mars. - Entry, descent,

landing - The spacecraft is NASA's first to touch down on Earth's neighboring

planet since the Curiosity rover arrived in 2012. More than half of 43

attempts to reach Mars with rovers, orbiters and probes by space agencies from

around the world have failed. NASA is the only space agency to have made it,

and is invested in these robotic missions as a way to prepare for the first

Mars-bound human explorers in the 2030s. "We never take Mars for granted. Mars

is hard," Thomas Zurbuchen, NASA associate administrator for the science

mission directorate, said on Sunday. The nail-biting entry, descent and

landing phase began at 11:47 am (1940 GMT) at NASA's Jet Propulsion Laboratory

in Pasadena, California, home to mission control for Mars InSight, and ended

one second before 1953 GMT. A carefully orchestrated sequence -- already fully

preprogrammed on board the spacecraft -- unfolded over the following several

minutes, coined "six and a half minutes of terror." Speeding faster than a

bullet at 12,300 miles (19,800 kilometers) an hour, the heat-shielded

spacecraft encountered scorching friction as it entered the Mars atmosphere.

The heat shield soared to a temperature of 2,700 Fahrenheit (about 1,500

Celsius) before it was discarded, the three landing legs deployed and the

parachute popped out, easing InSight down to the Martian surface. - Goal: 3D

map of inner Mars - InSight contains key instruments that were contributed by

several European space agencies. France's CNES made the SEIS instrument, while

the German Aerospace Center (DLR) provided a self-hammering mole that can

burrow 16 feet (five meters) into the surface -- farther than any instrument

before -- to measure heat flow. Spain's Centro de Astrobiologia made the

spacecraft's wind sensors, and three of InSight's seismic instruments were

designed and built in Britain. Other significant contributions came from the

Space Research Center of the Polish Academy of Sciences and Astronika and the

Swiss Institute of Technology. "It is wonderful news that the InSight

spacecraft has landed safely on Mars," said Sue Horne, head of space

exploration at the UK Space Agency. Together, the instruments will study

geological processes, said Bruce Banerdt, InSight's principal investigator at

the Jet Propulsion Laboratory. By listening for tremors on Mars, whether from

quakes or meteor impacts or even volcanic activity, scientists can learn more

about its interior and reveal how the planet formed. The goal is to map the

inside of Mars in three dimensions, "so we understand the inside of Mars as

well as we have come to understand the outside of Mars," Banerdt told

reporters. DM

Cheers as Mars InSight spacecraft lands on Red Planet. by Laurent BANGUET / with Kerry SHERIDAN in Tampa

The dramatic arrival of the $993 million spacecraft -- designed to listen for

quakes and tremors as a way to unveil the Red Planet's inner mysteries, how it

formed billions of years ago and, by extension, how other rocky planets like

Earth took shape -- marked the eighth successful landing on Mars in NASA's

history. "Touchdown confirmed," a mission control operator at NASA said, as

pent-up anxiety and excitement surged through the room, and dozens of

scientists leapt from their seats to embrace each other. "It was intense and

you could feel the emotion," said NASA administrator Jim Bridenstine, in an

interview on NASA television afterward. Bridenstine also said President Donald

Trump and Vice President Mike Pence had watched on television and called to

congratulate the US space agency for its hard work. "Ultimately, the day is

coming when we land humans on Mars," Bridenstine said, adding that the goal is

to do so by the mid 2030s. The vehicle appeared to be in good shape, according

to the first communications received from the Martian surface. But as

expected, the dust kicked up during the landing obscured the first picture

InSight sent back, which was heavily flecked. France's Centre National

d'Etudes Spatiales (CNES) made the Seismic Experiment for Interior Structure

(SEIS) instrument, the key element for sensing quakes. The principal

investigator on the French seismometer, Philippe Lognonne, said he was

"relieved and very happy" at the outcome. "I've just received confirmation

that there are no rocks in front of the lander," he told AFP. Next, InSight

must open its solar arrays, as NASA waits until later in the afternoon to

learn if that final, crucial phase went as planned. The spacecraft is meant to

be solar-powered once it reaches the surface of Mars. - Entry, descent,

landing - The spacecraft is NASA's first to touch down on Earth's neighboring

planet since the Curiosity rover arrived in 2012. More than half of 43

attempts to reach Mars with rovers, orbiters and probes by space agencies from

around the world have failed. NASA is the only space agency to have made it,

and is invested in these robotic missions as a way to prepare for the first

Mars-bound human explorers in the 2030s. "We never take Mars for granted. Mars

is hard," Thomas Zurbuchen, NASA associate administrator for the science

mission directorate, said on Sunday. The nail-biting entry, descent and

landing phase began at 11:47 am (1940 GMT) at NASA's Jet Propulsion Laboratory

in Pasadena, California, home to mission control for Mars InSight, and ended

one second before 1953 GMT. A carefully orchestrated sequence -- already fully

preprogrammed on board the spacecraft -- unfolded over the following several

minutes, coined "six and a half minutes of terror." Speeding faster than a

bullet at 12,300 miles (19,800 kilometers) an hour, the heat-shielded

spacecraft encountered scorching friction as it entered the Mars atmosphere.

The heat shield soared to a temperature of 2,700 Fahrenheit (about 1,500

Celsius) before it was discarded, the three landing legs deployed and the

parachute popped out, easing InSight down to the Martian surface. - Goal: 3D

map of inner Mars - InSight contains key instruments that were contributed by

several European space agencies. France's CNES made the SEIS instrument, while

the German Aerospace Center (DLR) provided a self-hammering mole that can

burrow 16 feet (five meters) into the surface -- farther than any instrument

before -- to measure heat flow. Spain's Centro de Astrobiologia made the

spacecraft's wind sensors, and three of InSight's seismic instruments were

designed and built in Britain. Other significant contributions came from the

Space Research Center of the Polish Academy of Sciences and Astronika and the

Swiss Institute of Technology. "It is wonderful news that the InSight

spacecraft has landed safely on Mars," said Sue Horne, head of space

exploration at the UK Space Agency. Together, the instruments will study

geological processes, said Bruce Banerdt, InSight's principal investigator at

the Jet Propulsion Laboratory. By listening for tremors on Mars, whether from

quakes or meteor impacts or even volcanic activity, scientists can learn more

about its interior and reveal how the planet formed. The goal is to map the

inside of Mars in three dimensions, "so we understand the inside of Mars as

well as we have come to understand the outside of Mars," Banerdt told

reporters. DM