Svitlo Shakhtarya Triples Charter Fund, 2005 Results Better Than Expected.

At their AGM on June 10 the shareholders of the Kharkiv Machine Building Plant “Svitlo Shakhtarya” (HMBZ) voted to increase the company’s charter fund threefold. The subscription for existing shareholders will be made on August 15-31 2006, all are allowed to subscribe for the leftover shares on September 1-08. HMBZ’s performance last year was better than we projected, as government-financed orders in 2H06 were higher than we expected. Last year HMBZ posted a 5% increase in sales to USD 40.2 mln, 11% above our projections. EBITDA grew by 13% to USD 13.2 mln, 21% above our projections, and net income increased by 28% to USD 9.4 mln, 35% above our projections. HMBZ management has been complaining that no state-financed orders having come this year, and says that their absence is the reason behind the company’s 15% decrease in production in January-May. Nevertheless, according to preliminary results for 1Q06, HMBZ net revenues grew by 8% yoy to USD 8.0 mln, accompanied by a significant increase in profitability: EBITDA grew by 55% yoy to USD 2.0 mln, net income increased by over four times to USD 1.6 mln. The company’s management does not plan any significant increases in production in 2006, and is hoping state-financed orders will pick up in 2H06 and boost sales.