Tesco 's (TSCO) 2014 accounting scandal continues to haunt it. The supermarket chain has agreed to pay a £129m fine to the Serious Fraud Office to avoid prosecution. It will also set up an £85m compensation scheme for investors and bondholders to satisfy the Financial Conduct Authority, after agreeing to a finding of market abuse.
In September 2014, Tesco revealed it had misstated profits during the first half of that year, to the eventual sum of £326m. This was a month after management announced it expected trading profit during the six months to mid-August to be in the region of £1.1bn. The group reported a £6.3bn loss in 2015.
According to the group's auditor, KPMG, the compensation scheme is open to shareholders who purchased net company stock between 29 August and 19 September 2014. However, those affected will have to prove there was "genuine economic loss" during that timeframe. Each retail investor will be entitled to compensation of 24.5p per share purchased, plus interest at 4 per cent per year. The figures were calculated on the difference in the share price between market close on Friday 19 September 2014 and market close on Monday 22 September 2014.
Tesco shares didn't really budge in response to this news, even more impressive given a partial shareholder revolt over the impending merger with wholesale business Booker (BOK). Schroders (SDR) and Artisan Partners, who own 9 per cent of the supermarket chain between them, have expressed their dissatisfaction with the deal. They argue that management needs to focus on the company's own recovery first. Both Tesco and Booker shareholders have yet to vote on the deal, with few irrevocable acceptances achieved so far.
