Tesco opens £85m compensation scheme

Tesco said on Wednesday that it will open a compensation scheme for around 10,000 eligible shareholders and bondholders who were misled by a trading statement in August 2014 which overstated the company's half-year profits.

The scheme, which was announced on 28 March and agreed with the Financial Conduct Authority, will compensate investors who were net purchasers of Tesco shares or certain Tesco listed bonds between 29 August 2014 and 19 September 2014.

Each net purchaser of shares will be entitled to compensation of 24.5p per share purchased, plus interest at 1.25% per annum if the net purchaser is an institutional investor or 4% per annum if the net purchaser is a retail investor.

Tesco has appointed KPMG to administer the compensation scheme, with oversight from the FCA, which estimates that the scheme will cost Tesco up to £85m.

Danny Cox, chartered financial planner at Hargreaves Lansdown, said: “Compensating investors is the final chapter in the accounting saga and Tesco is keen to put this episode behind them, especially as CEO Dave Lewis has got the business moving in the right direction despite challenging market conditions. Stronger trading, particularly in the UK, means that after a 2 plus year absence, Tesco is planning to restore its dividend this year.

“Investors who have not yet made a compensation claim are now on the clock to submit their claims or receive nothing.”

At 0807 BST, the shares were up 1% to 186.10p.