The Chief Executive of Tesco Stores Limited has sent an apology to all of its staff for the overstatement of profits that led to an internal investigation, almost three years ago.
David Lewis states: “The issues that occurred in 2014 are a matter of sincere regret for everyone associated with Tesco.
“On behalf of the PLC Board and the Executive Committee, I would like to apologise to everyone who has been affected.”
Approved by the court on 10th April, Tesco’s UK subsidiary business – Tesco Stores Limited – has entered a Deferred Prosecution Agreement with the Serious Fraud Office, meaning that Tesco will not be prosecuted.
Tesco is set to pay a penalty of £129 million for false accounting between February and August, 2014.
Tesco Stores Limited has also agreed with the UK Financial Conduct Authority to set up a compensation scheme, for people who bought shares between 29 August and 19 September 2014.
This time-frame covers the period between the trading statement, which overstated their expected profits up until the date when the issue was identified.
Those investors would have been given a trading statement from 29th August with misleading information which gave a better assessment of Tesco Stores Limited’s performance than what was true.
Tesco later issued the corrected statement on 22nd September, which claimed to have mistakenly overstated profits by around £250 million, however, the investigation showed the overstatement to be £326 million.
David Lewis continues “It is important to remember that this investigation covers historic practices, which are not a feature of our business today.”
Tesco has transformed its business over the last two and a half years; making extensive changes to the business’s leadership, partnerships with suppliers, structures, financial controls, and the way Tesco buys and sells.
Lewis claims: “The changes we have made since 2014, plus the fact that we cooperated fully and openly with the investigation, are major reasons why we have been able to bring this matter to a close.”
Lewis finishes: “Through our actions, we are showing that the business has now moved on.
“Thanks to the work of colleagues across our business, the feedback we are getting from our stakeholders has been improving day by day, week after week, year on year.”