British Steel's financial position has been challenged after auditors warned there was “material uncertainty” about the troubled company's ability to operate without an injection of fresh capital from its Chinese owners. This raises questions about its financial foundation.
Moore Kingston Smith's auditor also abruptly resigned days after the company released its delayed 2021 financial statements. This auditor had only been appointed a year ago.
Any shake-up in British Steel's future could threaten many jobs at Britain's second-largest steelmaker, which employs 4,500 people. This will be further pain for the UK steel industry, where Tata Steel is grappling with plans to close two blast furnaces at its Port Talbot steelworks in Wales. The Indian-owned company's decision will result in the loss of up to 2,800 jobs and has been condemned by community unions as a “devastating blow”.
In its financial results, released more than a year after they were announced at Companies House, the auditor said British Steel was the “ultimate parent company” that saved the company from collapse in March 2020. He warned that more funding from Jingyo was needed.
The company's directors said they were confident they would have sufficient funding for the next 12 months (effectively until the end of 2022), but auditors said the company could continue to operate without a further cash injection from its Chinese owners. It said there was “significant uncertainty” about whether it could continue operating.
This comes after the Scunthorpe-based company slumped to a loss of £51m in 2021, after reporting a profit of £268m in the same period a year earlier. be. Part of the reason was a sudden spike in energy costs in October of that year, which the company said resulted in “significant losses.” Adverse impact on product margins.”
Auditors also warned that they were not “satisfied” with the existence of £45.8m worth of shares, despite attempts to verify them through “alternative means”.
Moore Kingston Smith resigned from the role just days after the release of the worrying report and a year after his predecessor, Mathers, resigned over a disagreement over fees, according to a filing with Companies House. It was revealed that he had resigned.
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British Steel did not respond to requests for comment.
