Donetskgirmash Sales Down 11%, Net Income Up 9%.

Concorde Capital: Donetskgirmash (DOGM) overstated its sales by USD 12.2 mln last year by including exports of steel and aluminum that were not produced by the company. DOGM’s adjusted real revenues dropped 5% in 2005 to USD 40.0 mln – in line with our projections. The decrease in DOGM’s revenues is due to the under-financing of coal mines in the first half of 2005. The company’s net income made up USD 1.7 mln last year, turning positive after reporting net losses in the first two quarters of the year. We expected the company to disclose zero net income in 2005 due to transfer pricing involving Ukrvuglemash a DOGM managing company. These reported figures reveal greater transparency.