(Alliance News) - C&C Group PLC on Friday said Chief Executive Patrick McMahon would step down after accounting errors during his tenure as chief financial officer led the firm to adjust prior year financial figures.

Dublin-based drinks maker C&C, best known for its cider brands Magners and Bulmers, said the total

value of the adjustments in aggregate represent an underlying operating profit charge of EUR5 million. This covers the period 2021 to 2023.

In addition, C&C expects to record an exceptional prior year charge with respect to onerous Apple contracts of EUR12 million in financial 2023 which was initially expected to be recorded in financial 2024.

The total value of the adjustments is EUR17 million.

Shares in C&C fell 6.7% to 157.80 pence in London on Friday morning.

C&C said the adjustments relate inventory related matters at Clonmel, goods received not invoiced , the timing of release of customer discount liabilities and change in accounting treatment of glassware together during the three year period.

C&C said an independent accounting firm was appointed to investigate the relevant issues and to determine any potential financial impact.

"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 in a statement.

C&C said it would publish further details to the underlying issues and the consequent actions and improvements to the controls and governance frameworks that have been made before the end of June.

The company stressed there is no change to the group's expected earnings for financial 2024 to 2027.

C&C explained McMahon was CFO during the period to which the adjustments relate and acknowledges the relevant shortcomings.

As a result, he he decided to step down as CEO, a decision C&C accepted "with regret."

McMahon will stay with the business until the end of September to facilitate a smooth transition.

Current Chair Ralph Findlay has been appointed CEO with immediate effect and is expected to stay in post for between 12 and 18 months, subject to the timing of the recruitment of a long-term successor.

In addition, C&C published unaudited figures for the year to February 29. C&C expects the audited results to be released before the end of June.

C&C expects to report a pretax loss of EUR111 million, swinging from a profit of EUR52 million, reflecting a EUR125 million goodwill impairment. This relates to a reduction in intangible assets associated with the C&C Brands in the UK.

Underlying operating profit is expected to be in line with market expectations, C&C said.

Revenue is seen edging down 2.4% to EUR1.65 billion from EUR1.69 billion.

C&C said trading in the first quarter of the current financial year has been "encouraging and is in line with our expectations."

"The group is well placed to take advantage of the critical summer period ahead, including the Euro '24 tournament which includes the participation of the Scottish and English football teams," it added.

At this stage there is no change to expected earnings for financial 2025 and future years, C&C remarked.

Reflecting its strong balance sheet, C&C said it planned a new EUR15 million share buy back, beginning in September, part of proposals to return EUR150 million to shareholders between financial 2025 and 2027.

By Jeremy Cutler, Alliance News reporter

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