The board of Powerscreen is fully to blame for the debacle that saw the company's stock market value halved this week, its chief executive, Mr Shay McKeown, has said. He was speaking yesterday after revelations earlier this week that the group will post a £10 million sterling loss instead of a projected £50 million pre-tax profit this year.
On Tuesday Powerscreen announced that it is making a £46.7 million provision against pre-tax profits in the current year, following the discovery of irregularities in its subsidiary Matbro Ltd.. It is expected that a number of job losses will follow.
"someone else," "Mr McKeown told The Irish Times, "but the board is responsible for what happened."
Mr McKeown said the extent of the problems at Matbro, which he said occurred at the subsidiary's facility in Tetbury, England, and not at the Matbro facility in Dungannon, Co Tyrone, was still being assessed.
He said it was ironic that Matbro was the only one of Powerscreen's 12 subsidiaries which was forecast to make pretax profits in excess of £10 million this year, on a turnover of £100 million. The company manufactures tractor units with telescopic arms for the agricultural and construction industries.
He said a new management team had been put in place last November. While preparing the accounts for the year to the end of December last, "what had seemed like a cashflow problem then became an auditing problem". He said Powerscreen's auditors KPMG completed a report on the matter last Saturday, a board meeting was held on Monday and the markets were informed on Tuesday.
In its statement to the London and Dublin stock exchanges, Powerscreen blamed a combination of underpricing of machines, an unauthorised discount offered to customers and inaccurate and misleading recording and discounting of bills of exchange warranty costs.
Mr McKeown said Powerscreen was still trying to establish how long the practice had been going on. He said it had not shown up in the previous audit or in the management figures.
Asked if the company was taking legal action against any of its advisers or staff, he said it was not. Mr McKeown said the previous managing director had left Matbro in Tetbury last November and had exercised his 20,000 share options. "We parted on good terms and everything seemed fine then," he said.
He said in one sense Matbro could have been a victim of the fact that it was a company which was growing too quickly.
Mr McKeown said Powerscreen had ring-fenced the company and, hopefully, it would reach break even by 1999, on a reduced turnover of £35 million. He said it would involve job losses. The company employs people in Dungannon and in Tetbury (170), but was unable to specify a figure.
Mr McKeown said there had been some production and design problems on two of its machines. The company exports to Britain, Europe and the US. He added that it would take another three to four weeks to establish exactly what happened.
Asked if he could reassure shareholders, he said the company was not even thinking about its share price right now. Asked if he and other senior executives should resign, he replied that they were not considering their personal positions.
