C&C boss Patrick McMahon has resigned from the top job after the Bulmers cider, Five Lamps ale, and Tennent’s lager maker belatedly discovered a total of €17m of costs and charges the company’s financial reporting system had failed to detect in Ireland over the previous three years.
The drinks maker said €10m of the previously unreported costs related to the valuation of stock levels at its major manufacturing and packaging facility in Clonmel, Co Tipperary, but other items also included goods that were not invoiced, liabilities linked to discounts and glassware that were not accounted for, “together with additional items over the three-year period”.
“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,” the company told the stock market.
C&C said that Mr McMahon, who was previously the finance chief, had agreed to resign from the top job and will leave the company in September. “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,” the company said.
“Accordingly, he has informed the board that he will step down as CEO and as a director with immediate effect. The board, with regret, has agreed that it would be in the best interests of the Group for Patrick to do so,” C&C said. His severance payment “will be in line with his service agreement and the policy”, the company said.
As part of the crisis, Ralph Findlay has stepped down as company chair to become the new chief executive. Mr Findlay will be paid €702,000 before pension, benefits, and a potential bonus of 125% of his salary, C&C said.
London-listed C&C shares fell as much as 13% at one stage on Friday before clawing back some losses. Shares in the drinks firm, which are now valued at £655.8m (€770m), were badly hit by the pandemic and have struggled to recover ever since.
C&C said that trading was in line line with expectations and it still plans to pay a dividend of 3.97 cent per share, “reflecting strength of current and future cashflows”. It will also complete a plan to return €150m to shareholders through its 2027 financial year, it said.
“Set against a difficult market backdrop, we are pleased with the performance of our brands in FY2024 with Tennent’s and Bulmers continuing to gain share in Scotland and the Republic of Ireland respectively,” it said.