C&C plunges after chief executive quits amid accounting errors

Shares in C&C slumped on Friday after the drinks maker said its chief executive resigned and the company restated three years of its earnings resulting in an underlying charge of €5 million.

Patrick McMahon, who had been in the top job for barely a year, left with immediate effect, the company said in a statement.

“Prior year accounting adjustments are expected to be made in respect of inventory and balance sheet items,” C&C said while insisting there was no change to the group’s expected earnings for 2024-2027. The adjustments, which represented an underlying operating profit adjustments charge of €5 million, would “impact previously reported financial statements,” it said.

The company’s shares fell 10.2 per cent in early trading in London to 152 pence.

Mr McMahon was chief financial officer from May 2020 until he handed over the financial function in March this year.

He was ran the finance function “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,” the company said in a statement. “It has been agreed that he will remain as an employee until the end of September to facilitate a smooth transition.”

Company chairman Ralph Findlay has been named chief executive “to ensure continuity of executive leadership,” the company said. He is expected to hold the office for between 12 and 18 months until a successor is named, it added.

The firm, which counts Bulmers cider in Ireland and Magners in the UK among other brands, said the restatements comprised a €1 million adjustment charge in 2023, a €3 million adjustment credit in 2022 and a €7 million 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 €12 million which was initially expected to be recorded in 2024. The total value of the adjustments (underlying plus exceptional) is €17 million, it said.

The company also published unaudited full year results more than two weeks after they had been originally scheduled. C&C announced it was delaying the results due to accountancy issues last month.

The company said it expects net revenue of €1.65 billion for the full 2024 year, which would be down 2 per cent on last year. Operating profit before exceptional items is expected to be €60 million and overall earnings before exceptional items, finance income and expense, tax, depreciation and amortisation charges are anticipated to be €94 million, it said. The firm is taking a €150 million exceptional charge, driven mainly by goodwill impairment on its UK brands.

“Set against a difficult market backdrop, we are pleased with the performance of our brands in full year 2024 with Tennent’s and Bulmers continuing to gain share in Scotland and the Republic of Ireland respectively,” the company said.

C&C said it was “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.”

“Whilst we remain cautious about the consumer outlook for the year, the market dynamics indicate that consumers are seeking affordable treats including visits to pubs and restaurants,” it said.