British Steel has reported a return to profit in its first year as an independent business and that its staff will return to full pay.

The firm has reported a £126m turnaround with pre-tax profit of £47m in the 12 months to March 31 this year. In the previous financial year its equivalent made a loss of £79m.

Annual turnover was £1.2bn and the volume of steel produced was 2.7m tonnes versus 2.9m tonnes in 2015-16.

The company - previously the long products division of Tata Steel - owns TSP Engineering in Derwent Howe, Workington, which employs 220 people.

It was purchased from the Indian conglomerate by private equity firm Greybull Capital last year.

This deal and the subsequent turnaround resulted in staff sacrificing three per cent of their pay for the year.

Chairman Roland Junck said: “The transformation in this business is remarkable and that is down to our remarkable people who have embraced, engineered and led change. They are the reason we can today reveal the best financial performance in the long products business since 2007 and they are the reason I have great optimism for the future of British Steel.

"I’m delighted to be able to confirm that our employees will return to full pay today having sacrificed three per cent of their salary to make last year’s sale and the turnaround plan possible.

“In 12 months we have started transforming from an inward-looking production hub into a profitable, more agile business by controlling costs, improving our product range and quality, and through strategic investments. After significant capital investment, we have made a small net profit and although it hasn’t been easy an entrepreneurial spirit is starting to flow through British Steel – it means we are fast becoming the efficient, customer-focused business we need to be."

This news came in a trading update from the company, where it also announced plans to invest £40m in the business in this financial year.

The company also said that staff would be able to take part in a share scheme.

“As we look to further grow the business it is important our employees, who have played such a vital role in the successful implementation of the turnaround plan, should share in our future success. I’m therefore delighted to set out the employee share scheme, an almost unique initiative in our industry to recognise their contribution.

“We’ve worked closely with our shareholders, customers, suppliers and Government and I’d like to thank everyone for their support as we look to build a sustainable future.”

The Derwent Howe site is one of the largest and most comprehensively-equipped manufacturing facilities in the UK. It offers design, fabrication, machining, fitting, assembly and testing with a floor capacity of 19,200sq metres.

The business is a key supplier to the nuclear, defence and security, oil and gas, industrial and steel making, and construction sectors.