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The information contained in these press releases and statements was accurate, in all material respects, at the time of issuance. However, Continental Aerospace Technologies GmbH assumes no obligation to update the information to reflect subsequent developments.

Oct. 09, 2006
Thielert: Further rebuttals to fraud allegations

  Hamburg, Germany – On Thursday, 5 October 2006, fraud allegations against Thielert AG were made public by the Schutzgemeinschaft der Kapitalanleger - SdK (Capital Investors' Protection Association). The source of the allegations concerned are criminal charges that have been filed anonymously and still remain anonymous. They were leaked not only to the SdK but also to selected media. Thielert AG denied the allegations that very same day and announced further rebuttals.

The basis of the accusations against Thielert AG is a special audit carried out on its accounts receivable. As described correctly by the SdK, the document concerned is an interim report prepared dated 27 May 2005. This interim report was incomplete and provisional. Naturally, the audit activities in respect of the accounts receivable went ahead within the framework of the audit of the financial statements for 2004 and were concluded with the award of the auditors’ approval by BDO Deutsche Warentreuhand auditors as at 30 August 2005. The audit was therefore in no way interrupted, it was merely decided to forgo the preparation of a final report. This final report was replaced by the auditors’ unqualified opinion. As a requirement for issues an unqualified opinion, the auditor has to have adequate security of the accounts receivables concerned.

In the case of the allegedly fictitious accounts receivable, we have achieved a realisation ratio of 87 per cent, as can be seen from the following table (all amounts in EUR thousand.):

Net position of accounts receivable as at 31.12.2004 as per balance sheet: 24,036
./. unfinished products reported according to PoC method*: 5,786
Net position of accounts receivable as at 31.12.2004 without unfinished products: 18,250
Position of account receivables from 2004 and earlier as at 31.12.2005: 6,422
Position of accounts receivable from 2004 and earlier as at 30.09.2006: 2,309
Ratio of realisation: 87%

The accounts receivable and other assets shown in the half-year report for 2006 amounting to EUR 67.4 million include cash at banks of EUR 15.1 million as well as other accounts receivable and assets totalling EUR 4.4 million. Trade receivables thus amount to EUR 47.9 million (including percentage of completion) and not in excess of EUR 50 million, as reported by the SdK. As far as the development of the accounts receivable between 31 December 2005 and 30 June 2006 is concerned, we can herewith state that the amount concerned has only risen by EUR 2.6 million.

In contrast to the assumption expressed by the SdK, the company did not have an influx of capital amounting to EUR 62 million from its flotation. As can be seen from the annual report for 2005, the company generated net funds of EUR 55.5 million from its flotation after the deduction of all costs. After the repayment of its consortium loan and various participating interests, the company was left with net cash at banks amounting to EUR 18.2 million with effect of 31 December 2005 (all details can be seen in the annual report for 2005).

Frank Thielert comments: "We are confident that our good products and excellent market position will enable us to press ahead with our successful strategy in both our civil and military sectors. We regret that our shareholders have suffered losses due to the distribution of these unfounded accusations. We will do everything in our power to defuse the allegations as quickly as possible." To this end, the company and its auditors will be cooperating closely with the state prosecutor’s office and the German Financial Services Supervisory Authority (BaFin).

Furthermore, Thielert AG has filed charges against persons unknown as the company’s shareholders have suffered significant losses as a result of the dissemination of the allegations. The possibility of taking legal action against the SdK is also currently being examined as the SdK’s irresponsible publication of its statement, without naming or even knowing the source concerned, triggered the sharp fall in the price of Thielert shares.

* In accordance with the so-called percentage-of-completion method prescribed by the International Financial Reporting Standards, such products as have been ordered but are still unfinished are to be reported under accounts receivable, despite the fact that no invoice may have been issued yet and, as such, no payment can have been received.


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