Metal and electronics recycler Sims will take a AUS$432m (£288m) write-down.
Following an investigation launched in January into overvalued inventories, the firm said it found inadequate procedures and possible fraud at two UK sites.
It will write-down AUS$78m (£52m) or 29% of the value of the firm’s UK inventories. The write-down is made up from AUS$63m from electronics recycling and AUS$15m from ferrous trading.
The Australia-US firm, will also take a goodwill impairment charge of AUS$354m (£236m) across its global businesses, including AUS$63m relating to the firm’s UK metals and electronics divisions.
An inventory count at the UK Sims Recycling Solutions (SRS) WEEE and metals sites at Long Marston and Newport, and further verification at other European sites, found only the two UK sites were affected.
Sims blamed the overvaluations on a “failure to adequately supervise operations” and “failure to maintain adequate controls over financial reporting”.
The statement released on Friday (15 Feb) added: “Internal audit failed to perform end-to-end walk-throughs involving transactions associated with new plants and technologies in the UK. Additional control failures identified include, failure to test inventory adjustments, failure to identify and halt accumulations of excessive levels of inventories, and failure to successfully integrate IT systems in the UK. The Committee has also identified allegations of potential fraud in the UK, which are being further investigated.”
The company said there would be changes in staffing, culture and controls in its UK division.
In December the firm cut by 20% its forecast underlying EBITDA (earnings before interest, taxes, depreciation, and amortization) for the first half of fiscal 2012/13 following an assessment of intake volumes.
It predicted continuing weak intake volumes across all regions.
In August 2012 the firm reported a full year loss of AUS$521m (£348m).
Sims has 42 sites in the UK, operates in more than 260 locations globally and employs more than 6,300 people.
The company is due to report its first half 2013 results on 21 and 22 February.