C&C Group CEO to step down after accounting errors discovered

7th Jun 2024 07:05

(Sharecast News) - C&C Group shares plunged on Friday after the drinks maker said chief executive Patrick McMahon would be stepping down after accounting errors in the last three years when he was chief finance director.

The company, which makes brands such as Magners cider and Tennents beer, said corrections to the accounts would result in an aggregate underlying operating profit adjustment charge of €5m. Shares fell 8.35% in early trade.

Chair of the board Ralph Findlay has been appointed Group CEO with immediate effect "to ensure continuity of executive leadership" and is expected to remain in post as for between 12 and 18 months.

C&C released unaudited results for the year to February 29 revealing a loss before tax of €111m compared with a profit of €52m a year earlier. The results, originally slated for May 23, had been delayed while investigations were carried out.

"The adjustments have been made following detailed internal and external reviews of inventory and balance sheet reconciliations after discrepancies were notified to the audit committee earlier this year," C&C said in a statement on Friday.

"An independent accounting firm was appointed to investigate the relevant issues and to determine any potential financial impact and the time period over which the issues extended."

"In addition to accounting mistakes and errors of judgement underlying these historic issues, it is clear from the reviews undertaken that there were failures in the group's reporting framework and that in parts of the organisation behaviours fell short of the levels of transparency demanded and required such that opportunities were missed to identify and appropriately address the relevant issues."

C&C said it would release more detail within the group audited accounts which is expected to be issued before the end of June 2024.

The restatements comprised a €1m adjustment charge in 2023, a €3m adjustment credit in 2022 and a €7m adjustment charge in 2021.

In addition, the company is expecting to record an exceptional prior year (2023) charge with respect to onerous apple contracts of €12m which was initially expected to be recorded in 2024. The total value of the adjustments (underlying plus exceptional) is €17m, it said.

Reporting by Frank Prenesti for Sharecast.com