Dniprooblenergo Shareholders Recognize 2007 Operating Performance as Poor

At their AGM on April 30, Dniprooblenergo (DNON: HOLD) shareholders (i.e. the National Energy Company (NC ECU)) recognized the management’s performance in 2007 as unsatisfactory, due to failure to fulfill the company’s 2007 financial plan. Shareholders replaced the company’s supervisory board for people loyal to the current President of the NC ECU. Shareholders decided to not pay dividends. Alexander Paraschiy: In 2007, Dniprooblenergo showed positive financial results: net income grew 42% yoy to USD 5.6 mln, outperforming the planned amount by 6%. We link the criticism of Dniprooblenergo’s management to the conflict between the NC ECU and the management. Dniprooblenergo’s CEO has close relations with DTEK, which is currently in conflict with Privat group, and the latter effectively controls the NC ECU. We expect the new supervisory board to replace the company’s top management in the nearest future. The company’s current MCap is close to its implied RAB, we confirm our HOLD recommendation.