Stirol Releases 2006 IFRS Accounts

According to Stirol’s (STIR: SELL) IFRS financials, the company posted a 11.9% increase in net sales to USD 502.2 mln. Organic products (mainly polystyrene) revenue increased 40.3% yoy, its share in total sales grew from 6.6% to 8.3%. Contrary to 2005, consolidated accounts now include OJSC StirolBiotech, as Stirol accumulated 53% of the company. In the meantime, Stirol posted a 73.1% drop in EBITDA to USD 34.4 mln, and a 67.4% drop in net income to USD 31.5 mln. The company’s PP&E increased by USD 70 mln (+62.6%), while cash and term deposits reduced from USD 280 mln to USD 247 mln (down 11.6% yoy). VAT receivables grew 3.6x to USD 40 mln and were financed by short term borrowings, which grew 4.0x to USD 88 mln. According to auditors, in 2006 Stirol did not comply with certain covenants under loan agreements with VTB (previously Moscow Narodny Bank) and BSTDB. The covenants were waived in late 2006 and in March 2007, while loan agreements were amended to toughen control over the company’s capability to service and repay debt.