Prior Year Accounting
Adjustments and Directorate Changes
This announcement contains inside
information.
Dublin, London 7 June 2024:
C&C Group plc ('C&C' or the 'Group') announces that, as
reflected in the financial update RNS released this morning, prior
year accounting adjustments are expected to be made in respect of
inventory and balance sheet items. There is no change to the Group's
expected earnings for FY24-FY27, however they do impact previously
reported financial statements as summarised below.
Prior Year Accounting Adjustments
These
adjustments in aggregate represent an underlying operating profit
adjustments charge of €5m. By year, the restatements
comprised a €1m
adjustment charge in FY2023, a €3m adjustment credit in FY2022 and
a €7m adjustment
charge in FY2021. In addition, the Group is
expecting to record an exceptional prior year (FY2023) charge with
respect to onerous apple contracts of €12m which was initially
expected to be recorded in FY2024. The total value of the
adjustments (underlying plus exceptional) is €17m. There will
clearly also be an impact on the unaudited FY2024 Interim Results,
details of which will be set out in the FY2025 Interim Results in
October.
These adjustments relate principally
to five items, inventory related matters at Clonmel
(€10m charge),
goods received not invoiced ("GRNI") (€3m credit), the timing of
release of customer discount liabilities (€3m credit), change in accounting
treatment of glassware (€1m charge) together with additional items
(net €nil) over the three-year period in question.
These adjustments are set out in more detail in
the Summary of FY2024 Financial Performance (Unaudited) update
announcement released separately this morning. Neither that
announcement, nor the financial information set out in this
announcement, is, nor is it intended to be, a preliminary statement
of annual results given they each contain unaudited financial
information which has not been agreed with the auditors as would be
required for a preliminary statement of annual results.
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. 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. The issues that were identified were
then considered in detail by both the Group's Audit Committee (the
'Committee') and the Board, as part of the finalisation of the
Group's FY2024 Annual Report and Accounts.
The Board and Audit Committee have
considered the background to these items in detail, including
representations and accuracy of information provided to the
external auditors and to the Committee and the Board at the time
the items arose and in subsequent financial years. 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. Further details relating to the
underlying issues and the consequent actions and improvements to
the controls and governance frameworks that have been and are being
taken to ensure that there is no repetition of these issues will be
set out within the Group Audited Annual
Report and Accounts which is expected to be issued before the end
of June 2024 and the Board will also ensure that the Company
complies with all related legal and regulatory
requirements.
Directorate Changes
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. The Board, with regret, has
agreed that it would be in the best interests of the Group for
Patrick to do so. It has been agreed that he will remain as an
employee until the end of September to facilitate a smooth
transition. The Group thanks Patrick for his contribution and
service over many years.
In addition to his duties as Chair
of the Board, Ralph Findlay has been appointed Group CEO with
immediate effect to ensure continuity of executive leadership. It
is expected that he will remain in post as Group CEO for between 12
and 18 months, subject to the timing of the recruitment of
Patrick's long-term successor with the relevant search to commence
in the autumn.
In light of his appointment as Group
CEO, Ralph Findlay has stepped down as Chair of the Nomination
Committee and the Senior Independent Director, Chris Browne, has
been appointed Chair of the Nomination Committee with immediate
effect.
Executive
Arrangements
All remuneration arrangements for
Ralph Findlay are consistent with the terms of the Directors'
Remuneration Policy approved by shareholders at the AGM in July
2021 (the 'Policy'). As Group CEO, Ralph Findlay will receive an
annual base salary of €702k, a pension allowance of 5% of salary in
line with the contribution available for the Group's employees, a
benefit allowance of 7.5% of salary and maximum annual bonus
opportunity of 125% of salary.
Patrick McMahon's remuneration and
severance terms will be in line with his service agreement and the
Policy.
END
Contacts
C&C Group plc
Email: investor.relations@candcgroup.ie
Investors, Analysts & Media
FTI
Consulting
Jonathan Neilan / Paddy
Berkery
Tel: +353 86 231 4135 / +353 86
6025988
Email: CandCGroup@fticonsulting.com
About C&C Group plc
C&C Group plc is a leading,
vertically integrated premium drinks company which manufactures,
markets and distributes branded beer, cider, wine, spirits, and
soft drinks across the UK and Ireland.
· C&C Group's portfolio of owned/exclusive brands include
Bulmers, the leading Irish cider brand and Tennent's, the leading
Scottish beer brand; as well as a range of fast-growing, premium
and craft ciders and beers, such as Heverlee, Menabrea, Five Lamps
and Orchard Pig. C&C exports its Magners and Tennent's brands
to over 40 countries worldwide.
· C&C Group has owned brand and contract
manufacturing/packing operations in Co. Tipperary, Ireland
and Glasgow, Scotland.
· C&C is the No.1 drinks distributor to the UK and Ireland
hospitality sectors. Operating through the Matthew Clark, Bibendum,
Tennent's and Bulmers Ireland brands, the Group has a market
leading range, scale and reach including an intimate understanding
of the markets it serves. Together this provides a key
route-to-market for major international beverage companies.
C&C Group plc is an Irish
incorporated FTSE 250 company headquartered in Dublin and is listed
on the London Stock Exchange.