Resilient share price slides, faces damning allegations

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Resilient share price continued its free fall, plummeting by 6% as the market reacted to a statement the Property group issued on Tuesday. Resilient share price continued its free fall, plummeting by 6% as the market reacted to a statement the Property group issued on Tuesday.

The share price of Resilient, the listed property group slid on the JSE on Wednesday after the company announced a statement on Tuesday.

The property group facing damning allegations of shady dealings, has begun a process to restate its financial results going back to 2017.

Its share price continued its free fall, plummeting by 6% to R55.40 on Wednesday morning as the market reacted to a statement the company issued at 5.45pm on Tuesday.

Resilient said it was restating its interim results for the six months to end-December released on January 26 to change the way it accounted for its black economic empowerment (BEE) trusts, the Siyakha Education Trust 1 and Siyakha Education Trust 2.

The restatement resulted in Resilient’s total liabilities increasing by R6.8bn as Siyakha’s debt was moved to its parent company’s books. This resulted in Resilient’s total liabilities increasing to R20bn from the previously reported R13bn.

The transfer of Siyakha to Resilient’s books saw its total assets growing to R59.8bn from R56bn.

The Siyakha trust has been at the centre of controversy with various fund managers accusing Resilient of loaning it money, which was used to inflate the share prices and trading volumes of Resilient, along with its associated Reits Fortress, Nepi Rockcastle and Greenbay.

Resilient was accused of doing this so as to artificially get its share included in the JSE’s top 40 index whose constituents are bought by numerous exchange-traded funds (ETFs) and other passive investment products.

Resilient said in Tuesday evening’s statement that legal and accounting experts it consulted said that under International Financial Reporting Standards (IFRS) rules, it controlled Siyakha.

Market watchers said the restatement also calls into question the audit opinion of Resilient’s external auditor Deloitte Africa, which has signed off on the group’s financial results since 2009. This comes at a time when audit firms are being caught in accounting scandals, including Deloitte’s own audit of Steinhoff and African Bank.

“The exact same information that is available today was available when they [Deloitte] signed off on the results. It wouldn’t be a surprise if the company would have to relook at other prior financial statements. We cannot rely on the audit profession to give us what they are paid to do for investors and shareholders,” said Garreth Elston, an analyst at Golden Section Capital.

Deloitte Africa CEO Lwazi Bam, said the audit firm didn’t opine on Resilient’s restated interim results as they were issued unaudited.

Bam said in reevaluating the consolidation of the Siyakha trusts, Deloitte sought advice from its legal counsel on provisions in the trusts’ deed and documentation provided by Resilient and it sought an independent accounting opinion on the matter. “On the basis of this reevaluation, we concluded that, on balance, there was no longer sufficient persuasive evidence that Resilient was not required to consolidate the trusts based on the relevant accounting standards.”

Cy Jacobs, the founder of 36ONE, said Resilient’s restatement validates its extensive work on the affairs of the property group. “The fact that the company’s own auditor, undoubtedly prompted by our analysis, sought legal counsel that agrees with our assertions, is the first and clearest indication of the strength of our analysis.”

Read more on:

Listed Property / REITs  |  Fortress Income Fund  |  Resilient Property Income Fund  |  Steinhoff International  |  Siyakha Education Trust  |  Garreth Elston  |  Greenbay Properties  |  Nepi Rockcastle  |  Deloitte Africa  |  Lwazi Bam  |  African Bank  |  Cy Jacobs
Nedbank Corporate and Investment Banking

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