渾水做空歐陸集團（英）

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EurofinsScientific:OptimizedforMalfeasance 1

ForTwoDecades,Dr.MartinHasSiphonedMoneyfromEurofinstoBuildHisCommercialReal

EstatePortfolio 4

Eurofins’CashAccountingSeemsDesignedtoMaximizeConfusionandInaccuracy–ifNot

OutrightOverstatement 10

Eurofins’DeliberateChoicetoObscureSubsidiaryCashandApparentCashConfirmation

ProcessWeakness 10

Eurofins’LongHistoryofConfusingCashDisclosuresandComplexity 14

Eurofins’InternalControlsSeemShockinglyDeficientandDesignedtoEnableMalfeasance

(RatherthanTypifyingthoseofaCAC40Company) 17

EurofinsHasHadaLooseInternalFinancialReportingSystemPrimarilyBasedon

Spreadsheets 17

Eurofins’InternalAuditTeam,BasedinPoland,MightbeMoreCosmeticthanSubstantive.18

ConcernsAboutSegregationofEurofins’CashfromDr.Martin’sEntities 19

Eurofins’GovernanceisOptimizedforMalfeasance:SeeminglyCo-OptedExecutivesanda

WeakBoard 19

Eurofins’PossiblyToo-Good-to-be-TrueMetrics 21

Eurofins’QuestionableCapExGiveRisetoConcernsaboutMalfeasance,PossiblyIncluding

CoveringaCashHole 23

Eurofins’CapExAgainMakesitanOutlier 24

Counter-Intuitively,theLargerEurofinsBecomes,theSmalleritsAcquisitionsBecome 24

PotentialSlip-Up:2022AcquisitionofBioSantéinMartiniqueforReported~€81Million 25

EurofinsBuysRealEstatefromaQuestionableSellerWhoWasPossiblyaStrawIntermediary

27

AppendixA:SpainCashAccountingProvidesaUniqueWindowIntoGroupAccounts 30

AppendixB:AvTech–TheEarliestKnownInstanceofRealEstateAbuse(2005) 33

AppendixC:PersonnelData 35

Page4of35

ForTwoDecades,Dr.MartinHasSiphonedMoneyfromEurofinstoBuildHisCommercialRealEstatePortfolio

WebeginthesubstantiveportionofourreportbyfocusingonDr.Martin’syearsofimproperand

abusiverealestatetransactionswithEurofins.WebelievethatEurofinshasfarmorematerial

problemsthantheCREleakage,butduetothestraightforwardstructureofDr.Martin’spersonalholdings,theevidenceofrealestatemalfeasanceisquiteclear.Eurofins’suspectedfinancial

reportingmalfeasance,incontrast,isobscuredbyEurofins’extremecompartmentalizationandnumeroussmalldenominationtransactions.Further,giventheblatantnatureoftheseabuses,thefactslaidoutinthisrealestatesectionshouldanswerthethresholdquestionofwhetherDr.

Martinbelievesinwealthtransfer(asopposedtowealthcreation)intheaffirmative.

Dr.Martin’sCREportfolioconsistsof~36CREpropertiesasof2023.HeappearstohavenomeaningfultenantsotherthanEurofins.2HeacquiredmanyofthesepropertiesfromthesellersofbusinessestoEurofins–findingbusinesseswithrealestateforDr.Martintoacquire

reportedlywasafocusofEurofins’M&A.Eurofinssupposedlyoverpaidforoperating

businessesinordertosubsidizeDr.Martin’srealestatepurchases.Dr.MartinreportedlyrentedthesepropertiesbacktoEurofinsatgenerallyabovemarketrates.

BasedontheconsistentlyhighLTVsthatDr.Martinreceivedonmortgages,weconcludethatmortgagelendersviewedhisloanapplicationsasamplysupportedbyacombinationoflow

valuations(inourview,oftencomingfromhavingover-allocatedM&Aconsiderationto

Eurofins)andhighrentcashflowsbackedbyEurofins’creditprofile.ObtaininganLTVgreaterthan70%onaspecialtyindustrialorofficepropertyintheUnitedStatesisgenerallydifficult.3Usingeitherrecordedmortgagesorestimatingusingthebeginningfixedassetbalancesandthepurchaseprices,weestimatethatthemeanandmedianLTVsacross22CREassetsinDr.

Martin’sportfolioexceeds90%.(ItappearsthatDr.Martinowns~36CREassetstiedtoEurofinsasatyear-end2023,butsufficientdatawasunavailablefortheremainderofhisportfolio.)

2Dr.Martin’sholdingcompany,AnalyticalBioventuresS.C.A.,owns~33%ofEurofinsScientific,2whichit

consolidatesinitsfinancialstatements.2Asof2020—thelastyearforwhichconsolidatedfinancialstatementsfromAnalyticalBioventuresareavailable—AnalyticalBioventures’revenuewassubstantiallyidenticaltothatof

Eurofins,whichmeansthatAnalyticalBioventuresgeneratednomeaningfulrentalrevenueotherthanfrom

Eurofins.BecauseAnalyticalBioventuresconsolidatesEurofins,itwouldhaveeliminatedrentpaymentsfromEurofins.

3See

https://www.lev.co/blog/loan-to-value-ratio-ltv

Page5of35

Financial

Statement

Year/Year

ofPurchase

Est.Loan-to-Value

(LTV)

AnalyticalBioventuresentity

Est.MortgageAmount

LancasterNewHollandRealEstateInc

KalamazooQualityWayOneInc.***

ShandonRealEstateInvestmentLtd

AtlantaMountain

IndustrialRealEstateInc****

DaytonRouteRealEstateInc*****

DesMoinesRealEstateInc***

PomonaCorporateDriveRealEstateInc

FresnoJacquelynAvenueRealEstateInc*****

VejenInvestA/S

SmedeskovvejInvestA/S

OrnjebregvejInvestA/SValFleuriRealEstate

InvestSARL

WindhofRealEstateInvestSARL

NiefernInvestGmbH,Hamburg

EbersbergGewerbeparkNord-OstInvestGmbH*K?lnWesseling

RheinbogenInvestGmbH

Robert-Koch-Stra?e

InvestGmbH*/**

HamburgNeul?nder

KampInvestGmbH**ReichenwaldeInvest

GmbH,Hamburg

BehringstrasseInvestGmbH

JenaSIGSaaleInvestGmbH

2011

2005

2016

2015

2007

2009

2014

2017

2005

2005

2012

2013

2022

2008

2015

2009

2017

2013

2008

2012

2006

85%

163%

67%

89%

83%

157%

200%

92%

78%67%96%

80%

93%

97%

104%

90%

115%

92%

87%

94%

97%

20.2

2.8

0.3

19.5

2.8

5.5

21

3.5

317.97.5

6

4.6

1.8

1.2

3.2

14

15

1.8

5

0.7

Est.PurchasePrice/Est.

OriginalFixedAsset

Amount

23.8

1.7

0.5

22

3.4

3.5

10.6

3.8

40

12

8

7.6

5

1.9

1.2

3.5

12.3

16

2

5.3

0.8

Page6of35

HermannDebrouxRealEstateInvestSRL

90%

5

4.5

2014

Numberofassets

AverageLoan-to-ValueMedianLoan-to-Value

22

101%

92%

(AlloftheaboveareMuddyWatersResearchestimatesusing,whereapplicable,acombinationofcountypropertyrecords,aleadingrealestate

industrydatabase,andsubsidiaryfinancialstatements.Wheresubsidiaryfinancialsareused,weassumeeachentityonlyhousesoneasset,inlinewithwhatappearstobeDr.Martin’shistoricalpractice.Mortgageamountsmayincludefirstandsecondmortgages.SubsidiaryfinancialswereusedforEuropeanassets.AleadingrealestateindustrydatabaseandcountyrecordswereusedforU.S.assets.See“Note”formoredetail.

Amountsarerounded.Millionsoflocalcurrency,unlessotherwisenoted)

*Note:Estimatedloanbalanceisthetotalliabilitiesbalanceasthesefinancialstatementslackedspecificdisclosuredetailingthemortgaged

amount;however,inthefollowingyears,itemizeddetailwasavailable,andmortgageamountsweredisclosed,whichcomprisednearlyallthe

totalliabilitiesbalance.Weassume,therefore,thebeginningtotalliabilitiesis~100%aloansecuredbyrealestate.**Note:Duetoanincreaseof~3x-4xinfixedassets,thelistedyearisusedasthebeginningyear,whichisoneyearfollowingtheoriginalfixedassetbalance.Although

fixedassetsandliabilitiesarereportedintheyearprior,thesignificantexpansionislikelysuggestiveofthefullycapitalizedloan-to-value,andthereforeweconsiderthelistedyearasanappropriateassessmentofLTV.***Note:includesdatapercountyrecordsandleadingrealestate

industrydatabase.Liabilitiesincludeafirstmortgageaswellasasecondmortgageassumedontheasset~9monthspostpurchaseinthecaseofKalamazooand~14monthslaterinthecaseofDesMoines.Thesecondmortgagesmayhavebeenunderwrittenduetoincrementaldevelopment

oftheassets;however,thespecificsofanyrelatedequitycontributionfromDr.Martinareunknown.****Note:includesdatapercountyrecords

andleadingrealestateindustrydatabase.AtlantaMountainincludesbothloanssecuredbyrealestateprovidedbyafinancialinstitutionandwhatappearstobegovernmentfundingsecuredbyrealestate.EstimatedpurchasepriceistotalinvestedamountpertheDecideDekalb

DevelopmentAuthorityAnnualReport,available

here*

****Note:includesdatapercountyrecordsandleadingrealestateindustrydatabase.

Dr.MartinappearstohavebeencovertlyenrichinghimselfbypeelingoffrealestateportionsofEurofins’M&Atransactionsasearlyas2005.Inthatyear,EurofinsacquiredAvTechLabsforanundisclosedamount(seeAppendixB).Asshownabove,soonthereafter,Dr.Martinobtained

twomortgagesonthepropertyforacombined163%LTV.In2011,EurofinsfoldedAvTechintoLancasterLaboratories,whichithadacquiredfromThermoFisheronApril5,2011for$200

million.4ThreemonthsafterEurofinsclosedonLancasterLaboratories,Dr.MartinreceivedasignificantCREassetfromthetransaction.ThepropertyregistryshowsthatthreemonthsafterEurofinsboughtLancasterLaboratories,Dr.MartinboughtthepropertyfromEurofinsthroughhisdirectholdingcompany,LancasterNewHollandRealEstate,Inc.(”LNH”)for$23.75

million.Indicatinganabusivetransaction,Dr.Martinwasthenabletoobtaina~85%LTVmortgageontheproperty.5,6

However,itisplausiblethatDr.MartinpaidEurofinsnothingatallfortheLancastersite:

WequestionwhetherDr.MartineveractuallypaidEurofinsthe$23.75millionfortheLancasterproperty.Eurofins’2011AnnualReportcontainsnodisclosureofaRelatedPartytransaction

remotelysimilartothesaleoftheLancasterpropertytoDr.Martin,yetwewouldexpecttosee

4"EurofinsacquiresLancasterLabsfromThermoFisherfor$200mm”,

/deals/201110024.

5LancasterCountyDeed,6-29-2011.Document#5938598.

6CorporateMortgageLancasterCounty,Recorded7-1-2011,Transaction#3084639,Intrument#5938601.

Page7of35

one.Incontrast,the2012AnnualReportdisclosesthatDr.MartinboughtabuildinginGermanythatyear:

2011RelatedPartyDisclosure:2012RelatedPartyDisclosure:

InthecaseoftheLancasterproperty,itappearsthatEurofinsfundedexpansionswhileDr.

Martinincreasedtherentchargedforthelargerfacilities.Asoftheendof2011,Lancasterwas~23,000m2.In2012,Eurofinsannounceda~7,200m2expansionfor$17million.7The2012

netincomeofLNHwas$266,000.In2014,thenetincomejumpedto$780,000.In2017,

Eurofinsannounceda~16,000m2expansionfor$59million.8LNH’s2016netincomehadbeen

$909,000;itjumpedto$1.2millionin2019.In2023,Eurofinsannounceda~4,900m2expansion.9WelookforwardtoseeinghowmuchthatbenefitsDr.Martin’sfinances.

7

/eurofins-us/media/447648/papressrelease072512.pdf

8

/biopharma-services/product-testing/news-events/press-releases/governor-wolf-

announces-350-new-jobs-with-expansion-of-eurofins-facility-in-lancaster-county/

9

/business/local_business/eurofins-plans-new-building-more-workers-at-route-23-

campus/article_1563c0b4-e83a-11ed-95d6-d3e8d66f05ab.html

Page8of35

FormeremployeesstatedthatEurofinssoughttoacquirebusinesseswithrealestateforDr.Martintobuy:

“Realestate,forGilles,isanexternalrevenuestream...Sothefinalobjectivewastohavestateoftheartfacilitiesownedbyhimandrentedbackusuallyabitover-averagely[sic]andcombinedwithourleasingpricesbacktothebusinessunit...Andthenusually,

Eurofinsacquiresboth[therealestateandoperatingbusiness]andtheninternallysendsbackandforthinvoicingandtransactionstoshiftthem...”10

“Mostofthetimeinthe,inanacquisition,therealestateisincluded,anditbecomes

propertyofEurofinsorindeedresoldthroughtherealestatecompanythatGillesowns...whiletheassetsarethenresoldintoGilles’realestatecompany,[unintelligible]arentalcontractisbeingdrafted...”11

Dr.MartinappearstohaveshiftedacquisitioncoststoEurofinstosubsidizehisrealestatecosts:

Becausethesellingshareholdersofanoperatingbusinessthatownsrealestatecareonlyaboutthetotalamounttheyreceivefortheentirepackage,Dr.MartinreportedlyhadEurofinspay

morethanitshouldhaveforoperatingbusinessessothathecouldpaybelowmarketpricesfor

therealestate.Eurofinswilldefenditselfbystatingthatin(likely)eachcase,ithadan

independentrealestatevaluationperformedtoensurethatDr.Martinwaspayingafairprice.MuddyWatershasamulti-yearpublicrecordofskepticismofthe“independence”offirms

performingvaluationsforpubliccompanies.12Realestate,withitsheighteneddegreeofsubjectivity,isideallysuitedforvaluationsthatprovidefigleavestocoverabusive

transactions.13TwoformeremployeescorroboratedthatDr.Martingenerallypaidbelowmarketpricesforrealestate,includingthisquote:14

“Theseevaluations,valuationsofrealestate,usuallyarebelowmarket...experiencehasshownthatGillesusuallygothiswaywithaslightlylower—whenIsayslightlylower,anywherebetween5and10%belowmarketvaluation...”15

10ConversationwithSourceB.

11ConversationwithSourceA.

12Seenumerousreportsavailableat

/research/

13See,fore.g.,

/wp-content/uploads/2022/12/MW_VIVION_12142022.pdf,

/wp-content/uploads/2023/03/MW_VIVION_20230328.pdf,

/wp-content/uploads/2023/08/MW_VIVION_20230804.pdf,

/wp-content/uploads/2023/11/CPIPGR_20231121_Part1.pdf,

/wp-content/uploads/2024/01/CPI_Part-II_20240122.pdf,

/wp-content/uploads/2024/01/CPI_Part-III_20240125.pdf,

/wp-content/uploads/2024/04/CPI_MWQuestionsForCPIPGApril2024Call.pdf

14SourcesAandB.

15SourceB.

Page9of35

Dr.MartinapparentlyoverchargedEurofinsforrents:

FormerseniorexecutiveswithwhomwespokestatedthatEurofinsgenerallypaidabovemarket

rentstoDr.Martin.Dr.Martinappearstohaveextractedundulylargerentdepositsfrom

Eurofins.Further,weunderstandthatEurofinsgenerallypaidfortheoperatingexpensesontheproperties,furthersweeteningDr.Martin’seconomics.

Belowarequotationsfromtheknowledgeableformerexecutivesregardingtherentlevels:

“[RentpaidtoDr.Martin]wasabigburdenforcompanies.Iwouldputitlikethis,youknow,ifyou’relookinginto,thetargetis23acquisitions,20%margin...pre-acquisitionandanassetcouldbegenerating20%EBITmarginsproposedacquisition,butevena

margincouldgetcutinhalfduetovariouscosts,includingoverheadrent...So[thereal

estate]wasacquiredbyhiscompanyandthenleasedbacktotheoperation...theannual

rentalcostsareveryhighbecauseGilleswanted,orEurofinswantedtohaveitpaidbackwithin[unintelligible]time...”16

“[Therewere]acoupleoffileswhereifyoulookedatthepriceatwhichtherentwas

unreasonable,indicatingthatitwasnotrisingaccordingtowhatthemarketpricesweredoing...”17

“Theleaserateswouldbeabovemarket...Idon’tthinkwegetfavorableterms...”18

“[Dr.Martin]forcesyoutoactuallyaccepthisleasingagreement,wherealeaderwouldsay,No,look,I’mnotprofitable.Letmefindsomethingelse...”19

AtthetimethatDr.MartinwasbuyingtherealestateportionsofcompaniesEurofinsacquired,Eurofinswasmisleadinglytellingitsinvestorsthatitwasnotacquiringrealestatebecause

buyingrealestatewould“immobilizecapital...atlowratesofreturn”.20,21Followingthe2019

ShadowfallResearchshortreport,EurofinsseeminglyceasedallowingDr.Martintopurchase

newrealestate.22EurofinsclaimsthatthedecisiontopurchaseitsownrealestatewasdrivenbytheadoptionofIFRS16,butwethinkitwasmoreduetoconcernsofheightenedscrutinycausedbyShadowfall.NordoesitappearthatEurofinsturnedoveranentirelynewleafinits

relationshipwithDr.Martin’sCRE.ThereisaEurofinsleaseinPomona,Californiaunder

whichEurofinscontinuestopayrenttoDr.Martinforanentirebuildingwhileitseeminglyuses

16ConversationwithSourceC.

17ConversationwithSourceD.

18ConversationwithSourceK.

19ConversationwithSourceB.

20EurofinsScientificAnnualReport2018,Pg.68.

21EurofinsScientificAnnualReport2019,Pg.87.

22

/wp-

content/uploads/2019/01/Eurofins_ShadowFall_Research_Report_FINAL_16_Oct_2011.pdf

Page10of35

onlyhalf.23Makingthisparticularlyegregious,Dr.Martin’sholdingentityreportedannual

lossesonthisbuildingin2015and2016whenHSBCwasa-likelytheonly-tenant.Inotherwords,EurofinsmustbepayingsignificantlymorethanHSBCdid,andisusingonlyhalfthespaceinthebuilding.

AtleastfourformerseniorEurofinsexecutivesstatedthatoneofEurofins’acquisitionstrategieswastobuycompaniesthathadrealestateDr.MartincouldacquireforleasebacktoEurofins.24

Eurofins’CashAccountingSeemsDesignedtoMaximize

ConfusionandInaccuracy–ifNotOutrightOverstatement

Eurofins,whoseBUsareoftenauditedbyfirmsunaffiliatedwithitsconsolidatedfinancial

auditorDeloitte,routinelyhasitssubsidiariesreportCash&Equivalentsbalancesininconsistentmanners,andofteninwaysthatlikelydisguisethatthereisverylittleactualcash.Eurofinshasalonghistoryofproblematicaccountingforitscash,causingustobelievethatifthereisa

problemwithitscashbalances,itcouldbewelloveradecadeinthemaking.Tounderstandthe

peculiaritiesofEurofins’cashaccounts,itisnecessarytounderstanditscashpoolingarrangements.

Eurofins’DeliberateChoicetoObscureSubsidiaryCashandApparentCashConfirmationProcessWeakness

EurofinsphysicallypoolsitsBUs’cash,primarilyinoneLuxembourgentity,EurofinsFinance

LuxembourgS.àr.l,(“EurofinsFinance”)asweunderstand.Ofthe€486.6millionconsolidatedCashandEquivalentsEurofinsreportsasofFY2022,€137.2million(or28.2%ofthetotal)is

showninthe2022accountsofEurofinsFinanceLuxembourgS.à.r.l.Weunderstandthatmost

BUshavetheirexcesscashsweptdailytotheaccountsoftheirNationalServiceCenter(“NSC”).Itappearsthatentitiesgeneratingtensofmillionsofeurosofannualrevenueareroutinelyleft

withsix-figurecashbalancesatyear-end.TheNSCsinturnupstreammuchofthecashtotheLuxpoolingentity.Perthepubliccompanysegmentreporting,weunderstandtheLuxpoolingentitywouldbereportedunderGroupServiceFunction(“GSF”).

Thecashpoolingkicksoffaseriesofcashmovementsandaccountingentries.TheoperatingentitybooksareceivableuponupstreamingcashtotheNSC.TheNSCbooksapayable,but

23Eurofinsoccupiesthefirstfloor,andinacommercialrealestatedatabase,Eurofinsislistedasalandlordlookingtorentoutthesecondfloor.TheAnalyticalBioventuressubsidiarythatownsthepropertyisPomonaCorporateRealEstateInc.(”PCRE”),whichpursuanttoInternationalAssetsFinance’sLuxembourgfilings,hasconsistently

reported~$500,000annualprofitssince2017.In2015and2016whenHSBCwasa-ifnotthesole-tenant,PCREreported~$500,000inannuallosses.

24SourcesJ,B,G,andH.

Page11of35

whenitupstreamsthecash,italsobooksareceivable.WhenEurofinsFinancereceivesthecash,itbooksapayable.WhenBUsreceivecashbackforoperations,theirreceivablebalancesare

reduced.Sofar,theforegoingisunremarkableand,webelieve,typicalofhowcompaniesthatpoolcashmoveandaccountforcash.Theissueishowthesereceivablesareclassifiedwhentheentitiespreparetheiraccounts.

Itappearsthatasageneralpractice,many–ifnotthesubstantialmajority–ofEurofins’~1,000+entitiescombinethesereceivablesintotheirCashandEquivalentsaccountlineitemwhenthey

preparetheirfinancialstatements.Thisbecomesevidentwhenlookingatthefinancialsof

Eurofins’Spainentities.ThenotestomostSpainentities’financialstatementshelpfullydisclosetheportionsofthecashaccountsthatarerepresentedbyreceivables.Basedonourreviewof30Spanishentities’financials,itappearstousthatapproximately90%oftheirCashand

Equivalentsarerelated-partyreceivables(SeeAppendixAfordetailonSpainCashand

Equivalents.)BasedonourconversationswithformerseniorBUemployees,itseemsreasonabletoextrapolatethatsimilar“real”cashtonominalcashratiosgenerallyexistacrosstheEurofins’structure.

ThefirstproblemisthatthedisclosuresofreceivablestorealcashinSpainseemstobethe

exception–inotherwords,Eurofins’entityfinancialsgenerallydonotseparatelydisclosecash

frominter-companyreceivables.WeareunawarewhySpainhasthisdisclosure,butin

reviewinghundredsofEuropeanentities’financials,wefoundaUKentitycalledEurofinsBLCLeatherTechnologyCentreLtd.(“BLC”)thatillustratesthepotentialtoconfuseDeloitte.Webelievethatgenerally,otherlargecompaniesthatusecashpoolinghaveseparatebalancesheetaccountsforinter-companyreceivables,ratherthancombiningthemwithrealcash.25Havingseparatebalancesheetaccountsforcashandinter-companyreceivableswouldmaximize

accuracyandclarity.Therefore,Eurofins’deliberatechoicetocombinethetwoseemsdesignedtoconfuse.

Thesecondproblem,whichisasignificantconcernofours,isthatthereisapparentlyalackofdirectinterfacebetweentheconsolidationlevelauditorandoperatingentitiesduringthecashconfirmationprocess.Webelievethisgreatlyincreasestheriskthattheconsolidationlevel

auditorfailstodetectreceivablesthatarebookedascash.InspeakingwithaformerseniorfinancemanagerofalargeAmericanBU,weweretoldthatduringthecashconfirmation

process,hisBUdidnotinterfacewithDeloitte(theconsolidationlevelauditor)-inotherwords,theBUhadnocustodyofthecashconfirmationprocedures.Rather,thecashconfirmation

processwasreportedlyhandledbytheNSC.CuttingBUleadersoutoftheauditprocessseemstobeacontradictiontoDr.Martin’sphilosophyofdecentralizingmanagement.Regardless,weconsiderthisworkflowapotentiallymaterialweaknessintheauditprocedures,particularly

25Seefore.g.,BureauVeritasConsumerProductsServicesSpainSLU,BureauVeritasIberiaSL,BureauVeritasInspeccionyTestingSLU,BureauVeritasSolutionsIberiaSLU.

Page12of35

giventhatthereportingofcashaccountsseemsintendedtoobscure(orinflate)realcash.InthecaseofBLC,thecashaccountingseemstohaverecentlygoneawry.Thiscouldbethetipoftheiceberg.

BLC’sfinancialsillustrateourconcernthatEurofins’cashaccountscouldcontainmaterialerrorsduetothe–deliberatelyimposed–complexityofitsstructureandaccounting.BLC’s“CashatBankandinHand”accountshowsaCY2022balanceof￡1.2million.26Itsstatedaccounting

policydefinescashnarrowly,andprecludescountingreceivablebalancesasCash&Equivalents.

However,adetaileddisclosureinthesameaccountscontradictsthatbyshowingBLCdoesin

factincludepoolingreceivablesasCash&Equivalentsinanamountof￡1.073million.Inotherwords,BLC‘srealcashisonly￡124,000outof￡1.2million.

BLChasaclearconflictbetweenitscashaccountingpolicyanditsactualcashaccounting.

Whilethedeltainthiscasewasonly~￡1.1million,thistypeofconfusionisunnecessaryand

whenmultipliedacrossmorethan1,000entities,couldleadtodoublecountingmaterialamountsofcash.

BLC’s2022BalanceSheetshowingCashof￡1.2million:

26EurofinsBLCLeatherTechnologyLimitedFinancialStatements2022.

Page13of35

BLC’s2022cashaccountingpolicyseemstomatchthestandardunderstandingofCash&Equivalents:

However,detaileddisclosurefromthe2022accountsshowsthatintercompanyreceivablesfrompoolingwereactuallyincludedinCash&Equivalents:

Thelarger,notmutuallyexclusiveimplication,isthatthereisanaccountingproblemforthecash,presumablycausedbytheconfusingwayEurofins’entitiesconflateinter-company

receivableswithrealcash.Fromtheaforementionedfacts,weinferthattheauditorsofthe

variousentitiesarefailingtosynchronize.WhileDeloitteauditstheconsolidationlevel,manyoftheoperatingentitiesareauditedbyfirmsoutsidetheDeloittenetwork,asinthecaseofBLC,

whichusesMazarsLLPasitsauditor.Thequestionishowwidespreadisthisconfusion,

specifically:Towhatextentdoreceivablesgetcountedascashattheconsolidationleveltherebydouble-countingcash?

Page14of35

ReturningtoourviewthatEurofinsdeliberatelyeschewsintuitiveandclearcashreporting,andthatitsstructureisunnecessarilycomplex,weagainconcludethatEurofins–anditscash

accountinginparticular–isoptimizedformalfeasance.

Eurofins’LongHistoryofConfusingCashDisclosuresandComplexity

Infra,wehighlightillustrationsofthisproblemgoingbackasfaras2011.Weshowhow

Eurofins’notestoitsowncashdisclosureshaveoftenbeenflexible,confusing,orunclear,andwealsodemonstratethateventheCompany’sownauditorsseemtohavebeenconfusedbyitsaccounting,asevidencedbyDeloitte’s2023reclassificationofbalancesheetaccountsof~€682million.

InJune2023,Deloitteadmittedinanauditmattertohavingmiscategorizedaquantityofapproximately€682millionintheprecedingyear’saccounts.27Deloitteindicatedthatits

revisionwouldlowerbothamountsowedbydebtorsandtocreditorsby~€682millioninthe

republishedfinancialstatements.28Thisseemstoustobeanextraordinarysum.IfafirmwithDeloitte’sresourcesmakesmistakesofthismagnitude,itissurelyevidenceofconsiderableauditrisk,confusionintheaccounts,andpossiblefinancialmanipulation.

OurresearchhasuncoveredastringofquestionablecashaccountingdisclosuresthatwebelievearelikelymisstatementsintheCompany’scashbalances.

In2023,Eurofinschangedtheaccountingpolicyfor“CashandCashEquivalents”initspubliccompanyaccounts.Despitepeers,includingBureauVeritas,alsousingcashpooling,itdoesnotincludethesamelanguageinitsaccountingpolicyasEurofinsdoes.Specifically,seebelow,

whereEurofinsnowrecordsitsCashandcashequivalents“netifanenforceable...”Thiswouldnotappeartorelatetoroutine,day-to-day,bankoverdraftbecauseEurofinsreportsthatitcarriesaminimaloverdraftbalanceatyear-end.

Eurofinsdisclosurein2022:

Eurofinsdisclosurein2023:

Newin2023

27EurofinsInternationa