The investigation of Wessanen's accounting practices was instigated after a €14 million adjustment to the balance sheet for its US unit Tree of Life North America in the second quarter. The charge,'possibly should have been reflected in TOL NA's results over 2001 and 2002', according to the group, and the resulting investigation led to costs of €5.5 million, compounding its substantial losses connected to this unit during 2003.
Wessanen also launched a restructuring programme, dubbed Operation Phoenix, leading to the loss of 300 jobs in the US and costs worth €28 million. And after losing several key contracts in the US and Europe as a result, operating profits fell from €125 million in 2002 to losses of €51.2 million in 2003, with sales down 14.7 per cent.
Chief executive Ad Veenhof confirmed however that the outlook for the first quarter of 2004 would be fulfilled and said that expected earnings before interest, taxes, goodwill amortisation and exceptionals would reach at least €70 million for the year.
And TOL NA's accounting and financial departments are to be reorganized into a centralised operation.
Veenhof added yesterday: "The investigation clearly indicates the necessity to adjust behaviour, procedures and processes in the accounting area at TOL NA. It revealed issues that needed to be resolved in order to secure reliable financial statements. The fact we have already embarked on far-reaching remedial actions revamping the controls and training in the company and making changes at senior and middle management level, proves to be the right decision."
CFO Koos Kramer will stay on until a successor is found.