Powerscreen losses could rise to £65m

Difficulties at Northern Ireland engineering group Powerscreen increased last week after it admitted problems at other subsidiaries besides Matbro. Powerscreen warned its original estimate of £10m pre-tax losses for the full-year was inadequate; it now expects them to top £65m. Analysts had forecast profits of between £40-£50m before the company’s first warning in January. Now […]

Difficulties at Northern Ireland engineering group Powerscreen increased last week after it admitted problems at other subsidiaries besides Matbro.

Powerscreen warned its original estimate of £10m pre-tax losses for the full-year was inadequate; it now expects them to top £65m.

Analysts had forecast profits of between £40-£50m before the company’s first warning in January.

Now the company says two other subsidiaries, Brown Lenox and Royer, had overstated the value of certain assets. Provisions to cover this overstatement at the two companies, which make stone crushing equipment, will amount to £11.5m this year, Powerscreen said.

This is on top of a £14m provision for a more ‘prudent’ accounting policy, £7.5m of reorganisation costs and other claims against the company, believed to concern alleged patent infringements.

Powerscreen’s latest trading statement was issued after a meeting with its auditors KPMG, which conducted a lengthy review of the alleged accounting irregularities at Matbro. These arealready being investigated by the Serious Fraud Office.

The group now faces a probe by the Stock Exchange after a large sale of shares a day before it revealed the extent of its problems.

It emerged on Wednesday that one of Powerscreen’s institutional shareholders had offloaded 670,000 shares at a substantial discount on the last day of trading before the markets closed for the Bank Holiday.

Powerscreen said it would consider further disposals. It has already sold Matbro to US tractor maker John Deere.