A senior Powerscreen executive will resign following the disclosure of a £47 million black hole in one of the Northern Ireland-based engineering company's subsidiaries. The company's share price fell a further 26 1/2p sterling in London yesterday following revelations that information about problems in its Matbro subsidiary had been circulating in the industry as early as last November.
Meanwhile, the Irish Association of Investment Managers (IAIM) has written to Powerscreen chairman, Mr John Craig, requesting an urgent meeting. It wants him to meet its members and other shareholders in Dublin "as a matter of urgency".
Powerscreen's share price fell by more than 36p in Dublin yesterday, to finish at just above 224p in a sterling-denominated deal. Worried investors were reacting to reports that Matbro's competitors had known about problems in the subsidiary two months before
Powerscreen was forced to make a £46.7 million provision for the subsidiary. The company will now make a £10 million loss this year, instead of a projected £50 million pre-tax profit. Investors felt if the problems were common knowledge in the industry, Powerscreen management should have known about it.
Dealers estimated that around two million shares changed hands as worried investors scrambled to get out of the stock amid continuing uncertainty about the group's losses and the way its management has handled the issue.
Yesterday afternoon, Powerscreen announced that its sales and marketing director and board member, Mr Patrick Dooey was resigning with effect from March 31st. A spokesman said Mr Dooey had offered his resignation and this was accepted by the board. Sources said Mr Dooey had had overall responsibility for this subsidiary, one of 12 in the group.
Powerscreen announced it was appointing Mr Hubert Watson as a director of the Powerscreen board. He will assume responsibility for management of the Matbro business.
Powerscreen's auditor, KPMG, is examining the irregularities uncovered at Matbro, which occurred at its British operations. The company said last night it had appointed an independent firm of accountants to review KPMG's work.
Earlier, the IAIM's secretary general, Ms Ann Fitzgerald, said questions had to be raised about the appropriateness of KPMG undertaking the investigation.
The review by another accountancy firm will take place once the KPMG work has been completed. A spokesman for Powerscreen said a full public statement would be made on the findings. It is understood that Powerscreen moved to appoint independent consultants amid concerns there could be a conflict of interest. Powerscreen's share price has fallen from £6.50 to just over £2.
Reports published yesterday sparked off a rash of Powerscreen share selling.
Last night a spokesman for rival JCB confirmed that it had written letter to its dealers in November. The letter said the Matbro managing director had left.
It said Matbro, which competes with JCB Landpower in the specialist tractor market, was having problems obtaining engines for its machines and was making multiple discounted sales outside its dealer network.
Sources said it was normal practice for JCB to keep its dealers informed of any intelligence it received regarding its competitors. Ironically, JCB is tipped as a possible buyer of Powerscreen or the Matbro subsidiary should it be forced to sell.
