Euroopt
Recently there have been many posts in relatively popular media along the lines of “Euroopt gives 30% of its revenue to fund the security forces.” Eurotorg* is being added to various company blacklists, and people are starting to boycott the chain's stores. Let's try to work out whether these claims are justified.
International rating agencies and auditors
Eurotorg raises financing on the international market, so it is overseen by international auditors and receives credit ratings from the top US rating agencies. Below are Eurotorg's current credit ratings (source: ir.eurotorg.by/investor-centre/debt-investors/credit-ratings):
In 2019 Eurotorg's Eurobond placement was named “Debut of the Year” on the Russian market by the respected information agency Cbonds (source: ru.cbonds.info/news/item/1263221). Eurotorg also publishes IFRS statements audited by a Big Four firm, usually KPMG. The statements and audit reports can be found here: ir.eurotorg.by.
This level of disclosure and scrutiny by specialists from the major agencies suggests that if Euroopt had questionable ties between its owners and the country's political figures, it would immediately become public. So far there are no such undeniable facts. We decided to look at the company more deeply ourselves and search for clues.
Public record
Employees note that the company has not punished staff for expressing their political views. The company has never publicly supported any political figures.
Structure
We looked at the company's structure to try to find questionable links. The information came primarily from the company's statements (ir.eurotorg.by).
Company structure 2014–2017
In 2017 Eurotorg LLC had two beneficial owners: Vladimir Vasilko and Sergei Litvin, the founders of the company.
Company structure 2018
In 2018 the company was preparing for an IPO and restructured. CURGIL VENTURES LIMITED (Cyprus) was renamed EUROTORG HOLDING PLC, and the shareholder structure changed: two more people became beneficial owners — Alexander Litvin and Andrei Zubkov (the company's CEO).
Company structure 2019–2020
The Cypriot companies were replaced by companies from the Virgin Islands. Denison Finance kept its stake (49.75%); LITINVEST LIMITED (49.75% of EUROTORG HOLDING) was replaced by Eurobin Investment (48.75%) and Banjo Estates Limited (1%). STORASS LIMITED (0.5%) was replaced by Gilber Finance (0.5%).
Financial indicators
The next image shows the income statement of EUROTORG HOLDING PLC for 2019. We chose 2019 because it was the peak of economic growth, so Eurotorg should have shown relatively good results that year. Even in 2019, with revenue of almost BYN 5 billion, net profit was just BYN 42.8 million — a net margin of 0.9%.
Perhaps the cost of funding questionable needs is already built into operating costs, which is why net profit is so small. Let's look at the profitability of comparable companies: if they fund no one, their profit should be higher than Eurotorg's. We collected data on similar food retailers and compared them with Eurotorg.
As you can see, all the companies in the comparison sample have the same low net margin, so there can be no question of 30% of revenue going to fund any organisations. Even a further 5% increase in costs could cause serious financial difficulties.
Conclusion
Our review found no questionable links in Eurotorg's structure. The company is closely watched by leading credit and audit specialists, so any questionable facts would immediately become public. Moreover, the company's margin is so thin that even minimal additional costs would put it in a difficult financial position, let alone a third of its revenue. Many media outlets have brought a lot of important information to light in the past, but that is no reason to believe everything they publish.
Notes
*Eurotorg is the name of the legal entity that owns the Euroopt store chain.
Translated from Russian. First published in the “Belarusian Issuers” Telegram channel. Charts and screenshots are in Russian. This is not investment advice.