Tesco is to resuming paying a dividend to shareholders, two years after it was forced to stop payments when the retailer became embroiled in an accounting scandal relating to a £263m ‘black hole’ in its accounts, which has resulted in three former executives currently facing fraud charges
In its interim results for the first half of 2017/18, the company stated: ‘Reflecting the improved performance in the business and the board’s confidence in the plans that we have set out, today we are announcing the restoration of the dividend.
‘The interim dividend has been set at 1.0 pence per ordinary share.
‘We anticipate a broadly one-third, two-thirds split between the interim and final dividend and intend to reach our targeted cover of around two times earnings in the medium term. The interim dividend will be paid on 24 November 2017 to shareholders who are on the register of members at close of business on 13 October 2017.’
The results showed Tesco’s statutory revenue up 3.7% to £28.3bn, while profit before tax was up £491m to £562m, and operating profit was £885m. Group operating profit before exceptional items was up 27.3% to £759m.
Dave Lewis, Tesco chief executive, said: ‘We are continuing to make strong progress. Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago.
‘Today’s announcement that we are resuming our dividend reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders.’
Former Tesco UK finance director Carl Rogberg, along with ex- Tesco UK managing director Christopher Bush, and former UK food commercial director John Scouler are all on trial currently at Southwark Crown Court. They each face one charge of fraud by abuse of position and one of false accounting relating to the lead-up to the company’s reporting of its 2014 half year results.
The trial is ongoing and yesterday the jury heard evidence from the prosecution that Tesco could have faced an accounting black hole of £600m in 2014 if accounting practices had continued, while two members of the finance team had resigned over concerns about the accounting practices in use. The trial continues and is expected to last 13 weeks.
Report by Pat Sweet
