The Investment Column: Powerscreen problems

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The Independent Online


POWERSCREEN, the Northern Irish group which was rocked by an accountancy scandal last January, yesterday sold the business that was blamed for all the problems.

Matbro's assets were offloaded for pounds 7m, which pales into insignificance when you consider that the "irregularities" are likely to cost the company at least pounds 46.6m in the year just ended, pushing the whole group about pounds 10m into the red in the year to the end of March.

The group's auditors, KPMG, found cash-flow problems at Matbro, caused by mispricing products and excessive discounts. plans to write to its shareholders shortly, but for the time being it is keeping details of the auditors' findings under its hat. Yesterday the shares rose 8.5p to 190p, but are still worth less than a third of the 625p at which the company placed 3 million new shares to help fund a couple of acquisitions just before Christmas.

Matbro was the group's star performer. There are vague rumours of an opportunistic bid for while the shares are depressed, and the City is still expecting the company to make pounds 30m in the year to March 1999, equal to earnings of 24p a share. But until the company is able to explain just what went on, and confirm that the damage has been confined to Matbro, it requires a real leap of faith to buy the shares.