News of problems at Powerscreens's Matbro engineering subsidiary was circulating in the industry a month before the Dungannon group raised more than £18 million in a share placing with Irish investors, it has emerged.

Rival company JCB informed its dealers of difficulties at Matbro last November - two months before last week's shock disclosure by the group that it would have to take a £46.7 million sterling write-off at the subsidiary, the Financial Times reports today.

On December 17th, Powerscreen placed three million shares through Goodbody Stockbrokers at 625p (530p sterling) mainly with Irish institutional investors to fund the £7 million sterling acquisition of SDC Trailers in Northern Ireland.

Those three million shares placed at 530p sterling have now lost well over half their value after last week's announcement. Powerscreen shares yesterday fell 30p on the London market to a 12-month low of 225p sterling.

According to the Financial Times, Mr Jonathan Tapp, UK sales manager for JCB Landpower, wrote in a letter to his dealers in November that Mr Eddie Holmes, Matbro managing director, had left.

Matbro was having problems obtaining engines for its machines, he added, and was making multiple discounted sales outside its dealer network.

Powerscreen's chief executive, Mr Shay McKeown, was not available last night to comment, while a spokesman for the company pointed out that KPMG was already conducting an inquiry. "While the KPMG investigation is ongoing, it would be inappropriate to comment pending the outcome of those investigations," he told The Irish Times.

Powerscreen directors said last week there was no reason to suspect Matbro's mispricing problems at the time of Mr Holmes's departure.

These latest disclosures will put further pressure on the Powerscreen board, and investors in last December placing will, no doubt, want to know why the board was apparently unaware of the problems at Matbro even though they were being discussed within the industry.

(Additional reporting by Financial Times)