Tobacco machinery and corrugated board-maker Molins has had its share price savaged twice in the past six weeks.
The first blow followed word of an orders-slowdown with its final results and last week there was a report of accounting irregularities leading to over-stated profits at Langston, the US corrugated arm.
The share price has been slashed to around 650p against a year’s high of £10.
The Langston affair goes back some years. `Costs which should have been charged year on year to Langston’s profit and loss account were instead transferred to the balance sheet which became increasingly over-stated,’ said Peter Harrisson, chief executive .
But no cash went from the company, and he sees no threat to dividends.
Molins has set up an accountants’ probe to establish the exact nature of the irregularities.
The company proposes to take the whole hit of the over-stated profits – £7.4m pre-tax; £4.4m after tax-relief – as an exceptional in the 1997 accounts. After tax relief, the hit relating to last year (£1.1m) was less than 5% of reported net profits.
This year’s pre-tax forecast has been revised down by around £10m to £24.5m.