Controversial short seller Viceroy targets Capitec AGAIN! Read explosive letter to its auditors here

EDINBURGH — US-based short seller Viceroy has nailed a number of South African companies, with reports painting a picture of dodgy accounting. A small firm of researchers, Viceroy picked on Steinhoff first. It released analysis outlining oddities in Steinhoff International’s financials a day after the retailer unexpectedly admitted to accounting irregularities. Viceroy reports have also been blamed for driving down the share prices of Aspen, Africa’s biggest generics drugmaker, and real estate investment trusts such as Resilient Reit, Nepi Rockcastle, Fortress Reit A and B. Earlier this year, Viceroy released a report on Capitec, calling it a wolf in sheep’s clothing. Capitec fought back – and it is doing so again. After Viceroy issued this open letter to Capitec’s audit committee, the Capitec share price fell before recovering. Viceroy has accused Capitec of being a loan shark and outlines how it is tweaking various numbers to make its position look better than it is. – Jackie Cameron

Viceroys Capitec FY 2018 earnings analysis

Viceroy Research founder Fraser Perring Photographer: Christopher Goodney/Bloomberg

It is our belief that Capitec management have continued to mislead investors since our previous correspondence with the company.

End-of-financial-year announcements in 2018 are reflective deteriorating business conditions and corroborate the continuity of several intentionally misleading accounting practices we have reported in the past.

We have again entertained Capitec’s invitation to field questions regarding its business.

An open letter to Capitec’s Audit Committee is below:

In this instance, we are addressing the audit committee with our concerns, as they relate to broader financial reporting transparency and flawed management analysis, corroborating our previous analysis of unsustainable business practices.

Our continued review of Capitec’s practices and financial results leads us to believe management’s delivery of analysis to stakeholders is extremely misleading, and not at all reflective of declining business fundamentals.

This report will follow issues we have raised in previous reports and correspondence with management. You can find all of these reports on our website.