Sims takes $430m in writedowns THE world's largest recycler Sims Metal Management has revealed more than $430 million in writedowns, setting itself up to post a massive first half loss. The writedowns are connected to possible fraud and the poor performance of the business. Sims will write down the value of inventory at its British operations by $78 million after uncovering a possible case of fraud last month. It will also take a $354 million hit from impairment charges related to its UK and US operations. Of the $432 million in writedowns, $307 will cut into the company's first half earnings results due on Friday, February 22. The company's shares slumped by 11 cents, or one per cent, to $10.85, and its current market capitalisation of $2.2 billion compares to $7.69 billion when the global financial crisis hit in 2008. Sims posted a loss of $556.5 million for the first half of 2011-12, due to $614 million in writedowns on badly performing acquisitions made before the GFC. It told investors in December that continued challenging market conditions in metals and electronics recycling had forced it to reduce its forecast to between $87 million and $97 million in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA). A $63 million impairment charge will be taken in relation to UK Metals and UK Sims Recycling Solutions, with the other $291 million for North America Metals. "The committee's investigations have revealed that the primary root cause for breakdowns in the company's control environment can be attributed to the failure to adequately supervise operations (including inventories), responsibly safeguard assets, and failure to maintain adequate controls over financial reporting relating to inventory," Sims said in a statement.