C&C Group PLC has announced prior year accounting adjustments that are expected to be made in respect of inventory and balance sheet items. These adjustments represent an underlying operating profit adjustments charge of €5m, with a total value of adjustments (underlying plus exceptional) amounting to €17m. The adjustments relate to inventory-related matters at Clonmel, goods received not invoiced, the timing of release of customer discount liabilities, and change in accounting treatment of glassware, among other items.
The adjustments were 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. 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 the accounting mistakes and errors of judgment 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 organization behaviors fell short of the levels of transparency demanded and required. The Group is taking actions and improvements to the controls and governance frameworks to ensure that there is no repetition of these issues.
The Group's Chief Executive Officer, Patrick McMahon, has informed the Board that he will step down as CEO and as a director with immediate effect. The Board has agreed that it would be in the best interests of the Group for Patrick to do so. Ralph Findlay, the Chair of the Board, 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.
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. Patrick McMahon's remuneration and severance terms will be in line with his service agreement and the Policy.
The Group will ensure that the Company complies with all related legal and regulatory requirements. Further details relating to the underlying issues and the consequent actions and improvements to the controls and governance frameworks will be set out within the Group Audited Annual Report and Accounts, expected to be issued before the end of June 2024.