GOTHAM CITY RESEARCH’S OPINIONS

  • Aurelius’ shares are worth no more than €8.56 per share, implying at least -88% downside to its current share price.
  • Aurelius may face similar scrutiny as Philip Green did in the UK, who was accused of systematically plundering BHS.

SUMMARY OF FINDINGS

  • We were unable to reconcile 43% – 100%+ of Aurelius’s reported earnings to the sum of its subsidiaries’ earnings.
  • 2015 contingent liabilities, as calculated by the sum of its parts, seem understated by 46% or more.
  • Aurelius’ income from negative goodwill accounts for over 120% of 2011-2015 earnings.
  • Similarly high levels of negative goodwill preceded a permanent -95%+ collapse in the share price of Arques AG, whose business model seems identical to Aurelius’.
  • Aurelius claims to be a “good home for companies” yet nearly 60% of portfolio companies entered insolvency after Aurelius sold them, per our review.
  • Our estimate of NAV is 80%-90% lower than Aurelius’ unaudited and DCF-based NAV.
  • Aurelius has never received an unqualified audit opinion on its audited financial statements.
  • CEO Dirk Markus, a former Finance executive of Arques is also the CFO of Aurelius, according to Hauck & Aufhauser.
  • Aurelius’ executives sold €169 million of shares in December 2016 (40% or more their stake) at €52.5 per share. The prevailing market price was €59 that day.
  • Aurelius has been accused of illegal conveyance (and found guilty in some cases) in its business dealings (Einhorn case, EDS case).
  • Aurelius “abstains” from providing negative goodwill-related disclosures “because it believes that they can lead to economic disadvantages.”
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