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     2365  0 Kommentare Eurofins Responds to Muddy Waters Report

    Regulatory News:

    Eurofins (Paris:ERF):

    The management of Eurofins is aware of a short seller report made by Muddy Waters, LLC, (MW) a firm that potentially stands to gain in the event of a decline in Eurofins’ share price. To the best of Eurofins’ knowledge, Muddy Waters has never participated in Eurofins investor events, nor has it ever directly engaged with Eurofins to gauge the correctness or relevance of their assumptions, hypotheses and inferences, which would have enabled the avoidance of spreading inaccurate, irrelevant or misleading information and the twisting or spinning of facts to maliciously disparage the Company and its management.

    Upon a first review of their claims, it is Eurofins’ view that the entirety of the allegations and insinuations contained therein is either inaccurate, irrelevant, biased and/or misleading.

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    Some of the most blatantly wrong and/or misleading allegations include:

    • Making an unsuitable comparison between Eurofins’ purchase of BioSanté in Martinique to investments in travel and tourism, when actually the multiples for this acquisition were in line with the lower range in the sector and it has proven to deliver accretive margins since then.
    • Citing some specific local GAAP requirements in how to report cash and equivalents in condensed local statutory accounts filings to build a story about potential double-counting of cash at Group level, when all these intercompany transactions are eliminated in the Consolidated financials, and cash amounts are systematically audited at both local and consolidated levels based on bank confirmations and other controls with all required communication between accounting teams and auditors.
    • Using the post transaction address of the buyer (Eurofins) instead of the registered address of the seller and using wrong values to falsely paint the purchase of Permitted Development Investments No. 9 by Eurofins from unrelated real estate developers as a deliberate act to facilitate a markup of the property via a straw buyer.
    • Alleging that spreadsheets are extensively used for reporting and with “unacceptably loose internal controls” when the Company has actually utilised for many years recognised technologies such as Microsoft Dynamics, Microsoft Great Plains, IBM Cognos and Coupa.
    • Highlighting that the ratios of revenues per employee and cost per employee are higher than some companies active in the TIC sector, and therefore claiming that they would be too good to be true, while there are obvious geographical and type of service and sector served mix effects (i.e., Rest of the World accounts for less than 20% of Eurofins consolidated revenues, compared to between 40% and 50% for peers cited in the report due to their much higher China exposures), as well as fundamental differences between Eurofins and TIC activities such as:
    1. Eurofins is mostly focused on testing and not on inspection and certification (I&C) activities which require much higher labour intensity (i.e., lower revenues per employee).
    2. Compared to I&C, Testing requires highly skilled staff and generates higher revenues per employee.
    3. Eurofins activities are much more focused (over 30%) on more scientifically advanced testing services for the biopharmaceutical sector.

    Most wrong and misleading allegations by MW have already been addressed at length by Eurofins in multiple disclosures following previous disparaging short sellers reports but, as always Eurofins will provide detailed refutations and facts in due course about the long list of insidious allegations in the report. Some of the MW comments refer to facts that occurred 10 to 20 years ago when Eurofins had much less access to capital and higher indebtedness relative to its profitability. It has been already widely disclosed that Eurofins would not have been able to acquire all the laboratories buildings performed by the holding of its main shareholder at that time without exceeding acceptable financial leverage ratios. Instead, it favored investing organically and inorganically in the growth of the Group at much higher returns than if these amounts had been invested in buildings. The growth of Eurofins revenues, profits and enterprise value since 2005 should provide sufficient confirmation of this but Eurofins will provide more analysis of these matters too. As previously disclosed, all real estate transactions with related parties were done at arm’s length terms and of course all buildings were paid for by their owner.

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    Eurofins Responds to Muddy Waters Report Regulatory News: Eurofins (Paris:ERF): The management of Eurofins is aware of a short seller report made by Muddy Waters, LLC, (MW) a firm that potentially stands to gain in the event of a decline in Eurofins’ share price. To the best of Eurofins’ …

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