Vivion’s numbers don’t add up. Actually.


Vivion is a Luxembourg-based actual property firm with a €3.7bn portfolio of funding properties throughout Germany and the UK.

It is usually the latest target of feared brief vendor Muddy Waters.

The US hedge fund and its pugnacious founder Carson Block are finest recognized for publishing brief experiences dissecting the funds of public firms, so FT Alphaville was intrigued to see the agency shorting the bonds of a intently held personal enterprise as an alternative.

The report on Vivion is lengthy and probes many elements of its enterprise, from associated get together transactions involving controlling shareholder Amir Dayan to the occupancy charges of its core properties. Vivion on Thursday issued a brief riposte stating that Muddy Waters’ report “accommodates quite a few factual inaccuracies” and that it “intends to reply to the report shortly”.

Within the meantime, nonetheless, FT Alphaville has found one factor that does seem to include a transparent inaccuracy: Vivion’s personal stability sheet.

The primary part of Muddy Waters’ report questions the validity of a collection of shareholder loans, flagging a collection of obvious discrepancies with the balances reported on the holding firms above Vivion.

FT Alphaville determined to try how Vivion reported the shareholder loans in its stability sheet. Right here’s a desk of Vivion’s non-current liabilities taken from its interim monetary statements for the primary half of 2022 (the numbers are in 1000’s of euros, with the left-hand column representing 30 June 2022 and the right-hand column 31 December 2021):

Have you ever noticed the error?

Vivion’s calculation of non-current liabilities for June 30 is inaccurate. As an alternative of the €3,961,851,000 listed, the road gadgets really sum to €3,691,851,000. This means that Vivion acquired its 6 and 9 muddled up.

The error doesn’t seem to circulate by the remainder of the stability sheet, because the sum of Vivion’s whole liabilities and fairness incorporates the proper €3,691,851,000 determine. Nevertheless it seems to be a serious mistake to the tune of €270mn in an important a part of the corporate’s monetary statements. It additionally suggests the numbers have been inputted manually given the seeming fat-finger mistake on swapping the 6 and the 9.

The standard query in these form of conditions is: why did the auditor not catch this?

The easy reply is that the monetary statements are unaudited. 

The extra nuanced reply, nonetheless, is that they have been “reviewed” by the Luxembourg department of KPMG. The audit agency concluded that nothing got here to its consideration that indicated that the accounts have been “ not ready, in all materials respects, in accordance with IAS 34, “Interim Monetary Reporting”, as adopted by the European Union.”

Whereas not an audit, KPMG stated it nonetheless entails some extent of checking the books:

A evaluate of condensed consolidated interim monetary info consists of creating inquiries, primarily of individuals liable for monetary and accounting issues, and making use of analytical and different evaluate procedures. 

FT Alphaville requested KPMG Luxembourg concerning the error and it responded:

We’ll inform the corporate concerning the obvious transposition error of their interim monetary statements. We now have no additional remark in view of our shopper confidentiality obligations.

We requested Vivion for some context across the error and the corporate offered us with the next assertion:

The desk in query had two digits transposed within the subtotal for non-current liabilities. This was merely a clerical error which was right within the subsequent publication of our EMTN reporting, dated 11 November 2022. Each paperwork have been signed off by our auditors.

Is that this a secular typo or an error that’s indicative of wider points with Vivion’s monetary reporting? We think about that the corporate’s supporters and sceptics may attain reverse conclusions.

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