Powerscreen finance chief attended crucial Matbro meeting
THE finance director of the Northern Ireland engineering group Powerscreen International attended a meeting to discuss pricing problems at the companys specialist tractor subsidiary, Matbro, more than two weeks before the parent company issued shares without announcing the difficulties, the Financial Times reports.
It was nearly another two months before the pricing problems and other “malpractices,” for which Powerscreen is taking a £46.7 million provision, were announced publicly.
The newspaper says the presence of finance director Barry Cosgrove at the meeting suggests the board were aware there were serious difficulties at Matbro before the share placing. Matbros new managing director James Nicholson-Smith told the sales meeting that their prices were uneconomically low and they were told to cancel prices for existing orders.
Losses and the £46.7m charge against the present financial years profits to cover losses at the subsidiary from mispricing, problems with warranty payment and unauthorised discounting of bills of exchange, were announced on 27 January. Powerscreens share price collapsed.
Powerscreen said that issues such as the boards knowledge of events would be examined in a report being compiled by its auditor KPMG but it would not comment on the new claims.
One share issue buyer Des Doran, director of investment for Ireland, at Standard Life, called for an investigation into whether shareholders who bought the shares should be compensated. Powerscreen management have previously said the company had no way of knowing there was a problem at Matbro at the time of the issue.
- Financial Times 23/03/98 page 25