Dniprooblenergo AGM Results: No Dividends

Shareholders in Dniprooblenergo (DNON) approved the company’s financial results for 2006: sales of USD 1.18 bln or 38% growth yoy; and net income of USD 4.0 mln (compared to net losses of USD 1.8 mln in 2005). Shareholders decided not to pay dividends and direct the company’s net income to cover retained losses. Alexander Paraschiy: The decision not pay the dividends looks natural, as the company has huge accumulated losses (USD 110 mln) that has DNON’s book value in the red (USD -34.6 mln). Despite an increase in net income, the company’s profitability remains low due to the current tariff policy (net margin of EBITDA is 2.3%, net margin is 0.3%). A change in tariff policy would be a big trigger for the stock.