Questions raised about British Steel’s finances | Steel industry

British Steel’s financial position has been challenged after auditors warned of “significant uncertainty” over whether the troubled company will be able to operate without an injection of fresh capital from its Chinese owners. Questions are being raised.

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 add further pain to the UK steel industry, where Tata Steel is grappling with plans to shut down two blast furnaces at its Port Talbot steelworks in Wales. The Indian-owned company’s decision will lead to the loss of up to 2,800 jobs and has been condemned by community unions as a “devastating blow”.

In its financial results, published 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. It warned that it needed more funding from Jingyo.

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 they could continue to operate the business without a further cash injection from its Chinese owners. He said there was “significant uncertainty” about whether it could continue.

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.

British Steel did not respond to requests for comment.