Tesco overstated H1 profits by estimated £250 million
New Group CEO Dave Lewis says he expects Tesco to ‘operate with integrity and transparency’ as investigation commences
22 September 2014
During the final preparations for its interim results, Tesco has identified an overstatement of its expected profit for the half year, further adding to the retailer’s woes surrounding falling earnings. In a statement, Tesco plc said this was principally due to the accelerated recognition of commercial income and delayed accrual of costs.
On the basis of preliminary investigations into the UK food business, the board of Tesco believes that the group profits for the six months to 23 August 2014 were overstated by an estimated £250m. Some of this impact reportedly includes in-year timing differences. Tesco said work is ongoing to establish the extent of these issues and what impact they will have on the full year.
Tesco’s board has asked Deloitte to undertake an independent and comprehensive review of these issues, working closely with Freshfields, the group’s external legal advisers.
The group has said it will provide a further update at its interim results, which will now be announced on 23 October 2014.
According to Dave Lewis, Group CEO: “We have uncovered a serious issue and have responded accordingly. The chairman and I have acted quickly to establish a comprehensive independent investigation. The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.”