MPAC Mpac Group Plc

RNS No 800j
MOLINS PLC
8th July 1997

LANGSTON INVESTIGATION AND GROUP TRADING UPDATE

Langston Investigation

On  23  April 1997 the Board of Molins PLC ('Molins') announced that  it  had
identified  certain  accounting irregularities at  The  Langston  Corporation
('Langston'),  Molins' wholly-owned corrugated board machinery subsidiary  in
the  USA.  It also announced that it had instructed Price Waterhouse  LLP  to
work  with  KPMG  Audit  Plc, the Group's auditors, to conduct  an  immediate
investigation  and to report on the precise nature of the irregularities  and
their  financial  effect.  The investigation is now  complete  and  its  main
conclusions are as follows:

(i)    a  large  number  of  irregularities, most of which were  individually
       quite  small, accumulated over a number of years into an overstatement
       of  net  assets  at 31 December 1996 of #8.7m (compared with  reported
       consolidated net assets of the Group of #106.1m);

(ii)   the  irregularities related mainly to the overvaluation of  inventory,
       the  deferral  of  costs  and provisions,  and  the  overstatement  of
       debtors;

(iii)  no  evidence has been uncovered of any misappropriation of  Langston's
       assets;

(iv)   certain  accounting practices were deployed at Langston in the  United
       States  at  various times which resulted in incorrect accounts,   were
       contrary to Group policy and were concealed from Group management.

The  announcement of 23 April included a preliminary indication  of  the  net
financial  effect  of  the  irregularities  of  #4.4m,  which  was  based  on
information  available  at that time.  The final outcome  is  larger  as  the
range,  number  and  complexity  of the irregularities  was  greater  than  a
preliminary  assessment could reveal, especially in the  areas  of  inventory
evaluation and the treatment of costs and provisions.

Owing  to the large number of transactions involved, the Board believes  that
the  cost  of  allocating the adjustments precisely between the  years  would
outweigh  the benefit.  However, KPMG Audit Plc agrees that the overstatement
of  profit  in  1996 was less than #3m (net of tax: #1.9m), against  reported
Group profits of #33.4m (net of tax: #24.9m).

The  total  adjustment, which amounts to US$20.8m (#12.2m)  before  tax,  and
US$14.8m (#8.7m) net of tax, will, together with related investigation costs,
be treated as an exceptional charge in the Group's 1997 accounts.

Commenting  on  the  outcome of the investigation,  the  Chief  Executive  of
Molins, Mr Peter Harrisson, said:

"We  acted  decisively to replace the management and conduct  an  independent
investigation  as  soon  as  the  irregularities  at  Langston  came  to  our
attention.  We have now received a comprehensive report from Price Waterhouse
LLP,  which  has  enabled us to quantify the financial effects  and  identify
measures which will be implemented to prevent any recurrence."


Group Trading Update

Tobacco Machinery
The  tobacco  machinery division started the current year with a more  normal
order  book compared with the exceptionally strong position at the  beginning
of  1996.   Although order intake for original equipment  has  been  slow  in
recent months, the immediate outlook is more encouraging.  Levels of activity
were  satisfactory throughout the first half with the exception of Molins  do
Brasil.   Weak  demand  has  taken  this operation  into  loss  and  prompted
restructuring to reduce costs, incurring a one off charge of #1.5m.  Progress
has  been  made elsewhere, but the negative factors in Brazil mean  that  the
division's contribution to operating profits in the first half is  likely  to
be somewhat less than the #11.6m reported for the first half of 1996.

Corrugated Board Machinery
The  Langston business has inevitably been distracted during the  process  of
the  investigations.  However, orders have continued to be received at a fair
rate when considered against the background of weak market conditions.  Sales
in  the first half were substantially lower than in the comparable period  of
1996,  which  benefited from a much higher opening order book, while  margins
continued  to  be  under pressure as is usual at this  stage  of  the  cycle.
Against this background, the corrugated board machinery division seems set to
report  a small operating loss (before the exceptional item arising from  the
Langston  investigation) as compared with the reported, but now known  to  be
overstated, profit of #1.6m for the first half of last year.

Packaging Machinery
Sandiacre achieved satisfactorily higher volumes in the first half,  although
margins  were affected by the strength of sterling.  Langen had a slow  start
to  the  year, but an increasing order book, especially in the main  Canadian
operation, is encouraging.  The packaging machinery division should achieve a
rather  higher  operating profit in the first half of  1997  than  the  #0.8m
reported a year ago.

Group
For  the  first  half  of  the  year, Group profit  before  tax  (before  the
exceptional  item)  is  likely to be significantly lower  than  the  somewhat
overstated  #13.6m reported a year ago, reflecting not only  the reversal  in
Langston's results but also the costs of restructuring in Brazil.  After  the
exceptional  charge in respect of Langston, the Group will report  a  pre-tax
loss for the first half.  Despite this, the balance sheet remains strong  and
the  Directors expect to declare a maintained interim dividend  of  6.5p  per
share.

Looking  forward, prospects for the tobacco machinery division in the  second
half  are satisfactory.  With progress anticipated in the packaging machinery
division,  and  some  recovery  expected in the  corrugated  board  machinery
division,   the  Group is looking for the second half results to  be  broadly
comparable with those achieved in the second half of 1996.

The interim results will be announced early in September.

Enquiries:         Mr Peter Harrisson (Chief Executive)
                   Mr Peter Grant (Group Finance Director)
Tel:               0171 638 9571
Date:              8 July 1997

END

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