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Molson Coors shares fall after a bookkeeping error has been discovered



Molson Coors warned of "material weaknesses" in his financial statement after the brewery found accounting errors stemming from the $ 12 billion deal he had made with British SABMiller three years ago.

Shares fell by 9.5 percent to noon in New York after the company – whose brands include Blue Moon, Carling and Cobra – revised financial results and also reported lower demand for beer in the US and Canada.

Executive directors say that accounting problems were created by purchasing a 58-percent stake that the company did not have in MillerCoors, its joint venture with SABMiller. The agreement opened the way for SABMiller to take over by Anheuser-Busch InBev.

The Company identified problems with previously issued financial statements arising from treatment of so- Deferred Tax Duties (DTL) – Taxes that are due but not yet paid – in a joint venture.

The deferred tax liability and the profit tax expense for 2016 were underestimated. This meant that the net profit the company announced for that year was almost $ 400 million higher than it was supposed to be.

The problem of next year is further complicated by the decline in US tax revenue. For 2017, the company has lowered its net profit by more than $ 150 million. Taking all together, the company claims, it underestimated the value of DTL at its $ 248 million balance and as a result overestimated its total capital for the same amount.

"There was a material weakness in not designing and maintaining effective controls over the completeness and accuracy of the calculation and disclosure of the effects of the acquired interest on income tax," the company filed with Securities and Stock Exchange Commission.

The Board and the members of the Audit Board evaluate the "policies and procedures pertaining to the calculation of profit tax", is stated in the submission.

Molson Coors has reported accounting problems with quarterly results that have undergone pressures on mass caterers. The industry faced the sharp competition of the brewery. More consumers are also deciding on wine and alcohol.

Net sales in the last three months of 2018 fell by 6.2 percent compared to the same period last year to $ 2.42 billion. This reflected a drop in sales in the US by 7 percent, a fall of 8.8 percent in Canada and a fall of 1.9 percent in Europe.

Net income fell sharply to $ 76 million from $ 717 million in last year's quarter, when the results dropped in US tax breaks. Adjustment for disposable items, however, the company recorded a profit of 84 cents per share, compared to 62 cents last time.

Mark Hunter, executive director, said cost savings helped isolate the company from lower North American demand and higher inflation pressures than expected. Molson Coors plans to cut costs by $ 200 million this year.


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