The owner of Magners and Bulmers cider has parted with its chief executive after accounting mistakes led to the company taking a €17m charge.
Shares in the drinks company C&C Group fell 8% to 155.48p in early trading on Friday, the biggest faller on the FTSE 250 index, after the company announced that Patrick McMahon, who was chief financial officer during the time of the accounting shortcomings, had agreed to step down.
C&C said internal and external reviews had discovered a series of errors in its recent accounts. It will take an underlying profit adjustments charge of €5m, including a €1m adjustment charge for the 2023 financial year, a €3m adjustment credit for the 2022 full year and a €7m charge for the 2021 financial year. The adjustments relate to areas that include changes in the way it accounts for glassware.
It said its 2023 full-year accounts would now include an €12m exceptional charge with respect to onerous apple contracts, which was originally due to be recorded in the 2024 accounts, adding that the total value of the underlying and exceptional adjustments was €17m.
C&C said: “The group’s chief executive officer, Patrick McMahon, was chief financial officer during the periods to which these adjustments relate and acknowledges that the relevant shortcomings occurred at a time when he had overall responsibility for the group’s finance function.
“Accordingly, he has informed the board that he will step down as CEO and as a director with immediate effect.”
Ralph Findlay, the company’s chair, has become chief executive and is expected to remain in post for 12-18 months while a new boss is recruited.
Detailed internal and external reviews were launched after discrepancies were reported to C&C’s audit committee this year and an independent accounting firm was appointed to investigate.
C&C said: “In addition to accounting mistakes and errors of judgment underlying these [historical] 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.”
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The company, which is the largest drinks distributor to the UK and Irish hospitality sectors, also said the troubled installation of an upgraded enterprise resource planning IT software system in its Bibendum and Matthew Clark businesses had continued to weigh on its UK performance.
The company reported losses of €111m in the financial year ended February 2024 against pre-tax profits of €52m in the previous year.