pounds 46m hole in Powerscreen accounts

Shares in Powerscreen more than halved yesterday, wiping almost pounds 280m off the value of the company, after the Northern Ireland engineering group revealed that accounting irregularities at a subsidiary had blown a pounds 46.7m hole in its accounts and would push the group into the red in the current financial year.

The write-off, which one analyst described as "a shocker", stemmed from Matbro, a business making agricultural and building equipment which Powerscreen has owned since 1991. Facing pressure from continental European competitors as a result of the strong pound, Matbro's management mispriced products and offered refunds to customers to convince them to buy.

"They were gambling that the exchange rate would turn," said Barry Cosgrove, finance director. He said the managers also booked work done under warranty as revenue. All these steps allowed the company to overstate its revenues and profits.

Mr Cosgrove said the managing director of Matbro had left the company last year to join a competitor.

Powerscreen said the pounds 46.7m provision, which covers overvalued stock as well as overstated profits, would pull the company into a pounds 10m loss in the year to March 1998.

Analysts had previously expected the company to report profits of about pounds 48m, including a contribution of about pounds 10m from Matbro.

Mr Cosgrove said the majority of the pounds 46.7m loss had been run up during the current year's trading, though KPMG, the company's auditors, would conduct an in-depth investigation before deciding whether the previous year's accounts had to be restated.

Powerscreen said it was confident that the problems were confined to Matbro. The rest of the group continued to trade "at a level of profitability in line with market expectations".

Matbro was the only Powerscreen subsidiary which had access to the group's overdraft facilities, allowing it to mask the shortfall in its cash flow.

Powerscreen shares, which peaked at 762.5p last year, slumped 298.5p to 254p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate