Tesco unveils first dividend since accounting crisis

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Tesco was forced to scrap its dividend three years ago when an accounting mishap caused it to overstate its profits ahead of its interim results in 2014.

In the 26 weeks to August 26, the company saw a 3.3% rise in group sales to £25.2bn.

'We have for a long time liked the prospects of Tesco's new strategy under chief executive Dave Lewis which he says this morning is "firmly on track" to deliver.

"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", Lewis said.

Shareholders will be cheered by news that the supermarket giant has re-introduced a 1p per share interim dividend payment, the first time since 2014/15, equating to around a 3p dividend for the whole year.

Statutory revenue was up 3.7 per cent to £28.3bn while profit before tax rose from £491m to £562m.

Tesco agreed to pay a fine of £129m to the Serious Fraud Office earlier this year to avoid prosecution for its 2014 accounting irregularities scandal.

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He said: "It's a significant milestone in the recovery of the business and one which demonstrates the confidence we and the board have in our plans".

The company's increased optimism comes as it inches closer to clinching its deal with wholesaler Booker, in a £3.7bn acquisition first unveiled in January this year.

Tesco remains the largest of Britain's supermarket groups by a clear margin, having a market share of nearly 28 percent according to the latest industry figures.

ETX Capital analyst Neil Wilson said Tesco's drive to keep down prices was giving the company "an edge over the other big players in terms of coping with discounters", such as growing German players in the United Kingdom market, Aldi and Lidl.

Credit Suisse has sounded a downbeat note on Tesco (LON:TSCO), arguing that Britain's biggest grocer is most at risk from further growth of discounters. "While Sainsbury's tests a checkout-free payment app and Costcutter trials fingerprint payment, Tesco's new Tesco Pay+ is a much simpler yet effective move", he said.

The Competition and Markets Authority (CMA) is expected to report its provisional findings next month, with a final decision due in December.

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