Sims Metal Management Announces Market Update: Impact Of UK Restructuring On Fiscal 2013 Results
SYDNEY, Australia and NEW YORK, May 14, 2013 (GLOBE NEWSWIRE) -- Sims Metal Management Limited (the "Company") (NYSE:SMS) and (ASX:SGM) announces today that in connection with the UK inventory investigation and the recently announced management changes in its UK Metals and UK Sims Recycling Services ("SRS") businesses, and the restructuring strategies being implemented, there will be significant items recorded against its Fiscal 2013 results. The significant items that have been identified arise in connection with decisions to redefine the scope and inventory flows of the Company's UK processing facilities and, as described below, include further inventory write-downs, provisions for landfill costs and recognition of other impairment charges.
The impact of inventory write-downs and associated landfill provisions is estimated to be circa $45 million in the second half of Fiscal 2013. These provisions relate in part to strategies being implemented to rebase and enhance the ongoing competitive commercial profile of the business by marketing slow moving inventories more quickly and, in other instances, to landfill certain lower value material in the furtherance of operational efficiencies. This is in addition to the previously announced inventory write-downs, bringing the total inventory write-downs to be circa $61 million for Fiscal 2013.
In connection with the UK restructuring, determinations are also expected to be made that the carrying value of certain fixed assets will exceed the value of their projected cash flows. Consequently, there is expected to be impairment charges related to fixed assets of circa $42 million. It is also expected that certain leased facilities will be discontinued as part of the restructuring initiatives. The impairment charge as it relates to facility leases is circa $20 million. Additionally, there will be provisions for other significant items of circa $8 million.The significant items described above and to be recorded in the second half of Fiscal 2013 are, in the aggregate, expected to be circa $115 million.
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