SYDNEY, Australia and NEW YORK, Jan. 20, 2013 (GLOBE NEWSWIRE) -- Sims Metal Management Limited (the "Company") (ASX:SGM) (NYSE:SMS) advises the market that it has identified that the carrying value of inventory in its UK business is materially overstated. The inventory in question is predominately associated with the Company's Recycling Solutions business at Long Marston and Newport. Based on information received by Senior Management and the Board, the Company currently believes the inventory adjustment to be circa $60 million and relates to both changes in the assessment of the net realizable value of certain stock and to book to physical adjustments. The preliminary findings indicate the situation has arisen in the context of control failures and potential fraudulent conduct by local and regional plant management responsible for technology and downstream processing systems in the UK.
A Special Committee (the "Committee") of the Board has been formed to take responsibility for the investigation that is in progress. The Committee is headed by Chairman Geoff Brunsdon and includes Gerald Morris, Jim Thompson, Heather Ridout and John DiLacqua. As well as Group CEO Daniel Dienst and Group CFO Rob Larry, the Committee is working closely with the Company's external auditor PricewaterhouseCoopers ("PwC"), and its legal counsel Baker & McKenzie.
The detailed investigation is being performed by the Company's Group internal audit team in conjunction with PwC reporting to the Committee. The immediate priority of the Committee is to determine the amount of the adjustment and impact on the Company's accounts. The Committee will also be responsible for understanding where the breakdowns in the Company's control environment occurred, what initiatives will need to be taken to improve those controls, as well as overseeing the implementation of the recommendations it makes. The Committee will also determine what action will be taken in relation to any employees or third parties determined to be responsible. The Committee will have access to whatever external support it requires.