The full financial catastrophe that has befallen Northern Ireland engineering group Powerscreen International will be revealed tomorrow when the group reveals its long-delayed results for the year to the end of March.
Analysts have predicted that Powerscreen will report a loss of around £65 million sterling but there will be greater interest in what chairman Mr John Craig and chief operating officer Mr Hubert Moore have to say about current trading, the programme of asset disposals and the future prospects for a debt-ridden company which has totally lost the confidence of investors.
The delay in competing the accounts for the 1997-89 year has been attributed to auditors KPMG concentrating on the Matbro debacle which was the main reason for Powerscreen's plunge from one of the stock market's top performing companies to a financial disaster whose activities in the Matbro affair are now being investigated by the British Serious Fraud Office.
Powerscreen's difficulties began last January when it was revealed that financial irregularities at its Matbro subsidiary would result in massive write-offs and losses for the year of £10 million sterling. This announcement was preceded in December by an £18 million placing of Powerscreen shares with Irish institutions, but the value of those shares plunged as Powerscreen slumped in response to the announcement of a £46.7 million provision against Matbro.
It subsequently emerged that some of Powerscreen senior management had been aware of the Matbro irregularities before that the share placing, and this has led to deep anger among the institutions who provided the £18 million in equity funding and who are now seeking repayment.
In March, Powerscreen chief executive Mr Shay Mackeown and finance director Mr Barry Cosgrove resigned after the board lost confidence in the two men. Mr Hubert Moore was appointed chief operating officer and spearheaded a move to sell of various assets to reduce Powerscreen's huge debt burden.
Throughout this period, Powerscreen's auditors KPMG were investigating the Matbro irregularities with a London firm of lawyers brought in to investigate the legal situation. Subsequently, KPMG issued a damning report which concluded that serious mismanagement at Matbro was responsible for the losses and that senior Powerscreen management were aware of the situation in late 1997, months before the placing of shares.
Later it was disclosed that the Serious Fraud Office was investigating the situation.
The Powerscreen situation deterioration further in late May when the company issued a warning, revising up the forecast 1997-98 losses from £10 million to £65 million. That statement also made it clear the problems at Powerscreen went far beyond Matbro, with huge write-offs also being required in other areas.
The asset disposals began in May with the sale of the Matbro business - but not the plants - to an American engineering group for £7 million sterling. Later, Geith International was sold to a management buyout group for £8.4 million while the British group Hadleigh is expected to buy CPV in Monaghan. Earlier this month, SDC Trailers in Toomebridge was sold for a total of £6.75 million.
