Shares in engineering group Powerscreen International slumped by nearly half - wiping £250m off its market value - after accounting irregularities were found at a subsidiary.

The company, which recently announced strong half-year results despite the strong pound, said an investigation by auditors KPMG revealed problems in the cash flow budgets at its industrial machines business Matbro.

Directors said they would need £46.7m to cover the problem and warned of a £10m loss when it reported final results in March.

Powerscreen lost £255.4m of its stock market value, slicing it roughly in half to £257.7m against more than £513m on Monday.

By mid-morning shares had fallen 277½p to 275p.

The Northern Ireland-based company said the discrepancies would have no impact on the remainder of the group and that it continued to trade at a "level of profitability in line with market expectations".

Chairman John Craig said: "We are very concerned that this subsidiary, which has an excellent product range and reputation, has necessitated such a provision to be made against profits.

"However, the Powerscreen directors are confident that these problems are confined to Matbro and have been addressed with all speed and with the utmost vigour."

Powerscreen, located in Dungannon, said the irregularities involved the mispricing of machines to try to compete in European markets, unauthorised discounts offered to customers, inaccurate and misleading recording and discounting of Bills of Exchange and warranty costs.

The company said the police were not involved and that it was too early to talk about resignations after KPMG presented its report to the board yesterday.