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February 14, 2013
18:31 EDTSMSSims Metal sees $78M write down of inventory for UK business
Sims Metal Management announced on January 21 that the Board of Directors had established a Special Committee to investigate inventory valuation issues in the company's UK business. The Committee has now concluded its assessment of the impact of the UK inventory write-down. The Committee has determined that a write-down of inventory of $78M will be required, versus a preliminary assessment of circa $60M. The write-down adjustment has been independently verified by the company's external auditor PricewaterhouseCoopers. $16M of the inventory write-down will impact first half FY13 results, and the balance will be reflected in restatement for prior periods results. Additionally, the company advised the market on January 21 that a triggering event had occurred which would necessitate an impairment assessment of goodwill as of December 31, 2012. The impairment charges related to goodwill and other intangible assets are, in the aggregate, $354M. $291M of this impairment charge relates to North America Metals and will be recorded against the Fiscal 2013 result. $63M of the impairment charge relates to UK Metals and UK SRS and will be reflected in the restatement of results for prior periods. As of December 31, 2012 the company's net debt to total capitalisation, post goodwill and other intangible asset impairments, was 13%. The company currently believes that it will restate its results for the periods of Fiscal 2012, 2011, and 2010.
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