Cees and desist

24 February 2003

The Dutch supermarket giant s past of acquisitionled growth has finally caught up with it. Ahold s bad disclosure and terrible cash conversion led investors to smell a rat. Was the board asleep on the job?

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Ahold, the Dutchlisted supermarkets giant, said it would restate 2001 and 2002 earnings by an amount that may exceed $500m. Its chief executive, Cees van der Hoeven, and chief financial officer, Michael Meurs, will resign.

The changes are mainly due to overstatements of income related to promotional allowance programs at US Foodservice, the food distribution arm acquired by Ahold. These irregularities are still being investigated.

Ahold has also asked forensic accountants to investigate the legality of certain transactions and the accounting treatment thereof at its Argentine subsidiary Disco. The group cannot currently quantify the full financial impact of this.

The group will also restate its historical financial statements so as to proportionally consolidate certain businesses. The decision to proportionally consolidate was made on the basis of information that had not previously been made available to the company's auditors, it said.

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