The losses incurred by Powerscreen's Matbro subsidiary and errors which arose from improper accounting in previous years led to losses of £74 million at the Dungannon-based engineering group in the year ended March 31st, 1998.
The company's long-awaited results showed that it racked up a pre-tax loss of £47.6 million last year, compared with a profit of £15.8 million the previous year, while losses resulting from adjustments made to results in earlier years totalled £26.2 million.
The overall figure was ahead of the £65 million loss previously signalled by the company because of increased provisions for legal claims and other costs of £2.5 million and further Matbro provisions amounting to £7.2 million.
Losses at Matbro came to £50.2 million, including professional fees of £4 million, and along with £15.6 million of prior year adjustments, totalled £65.8 million.
However, if Matbro and the non-recurring exceptional items are excluded, the company's underlying businesses recorded an operating profit of £25.6 million, while turnover from continuing operations rose by 17 per cent to £253 million. The company also said current trading remained "satisfactory".
"Despite the difficulties of the past eight months, all of our businesses have rebuilt dealer, customer and supplier confidence," executive chairman Mr John Craig said.
Although sterling remains strong and businesses like Brown Lenox and Benford are being affected by the collapse of the Asian market, Powerscreen remains upbeat about the future.
"We anticipate that the trends of the five months of 1998/99 will continue despite the continued strength of sterling and the economic difficulties in Asian and South African markets. We expect that this will lead to a satisfactory outcome for the year," he said.
Chief operating office Mr Hubert Watson also points out that Moffett, the Monaghan vehicle producer, acquired last September, only contributed results for six months of the year. It generated an operating profit of £2.4 million in that period and continues to perform well in the current year, Powerscreen said.
With its disposal programme well under way, Powerscreen now plans to devote most of its efforts to developing its core crushing and screening businesses including extracting greater synergies from its subsidiary companies. In the past, these were managed independently so savings in areas like insurance, purchasing and production were not generated while the company did not have standardised information technology systems throughout.
The company is also giving considerable attention to beefing up its finance function which came in for heavy criticism in the KPMG report on what went wrong at Matbro. Under its new finance director Mr John Kennerley, Powerscreen is putting together a dedicated finance team including a treasury and internal audit function.
Powerscreen is also considering moving its corporate headquarters, including its finance and legal teams, to England while maintaining its manufacturing base in Northern Ireland.
Mr Kennerley says Powerscreen may decide to use a London firm rather than an Irish one to carry out its audit "to give us some distance". Powerscreen plans to put a resolution to its shareholders concerning the appointment of new auditors at the annual meeting in London at the end of October.
The company's share price took some heart from yesterday's results, rising by 15p to close at 82.5p on the London Stock Exchange. But some analysts remained cautious about the prospects for the reduced business going forward.
