Morrisons in ‘£1bn share buyback’

Analysts at RBS said the Bradford-based grocer is also expected to announce a more generous dividend policy. They are predicting annual pre-tax profits of around £867m, up 13 per cent on last year.

Chief executive Dalton Philips is also expected to give a progress report on new initiatives.

Analysts at RBS said: “We believe that Morrisons has one of the strongest balance sheets in the sector. Through a combination of lowering its dividend cover target and buy-backs, we expect the group to announce £1bn of capital returns spread over the next two years.”

The prospect of the buyback follows the news that city watchdog the FSA is expected to look into share dealings by former Morrisons’ chairman Sir Ken Morrison after it came to light that a number of share sell-offs had not been declared over the past two years.

Morrisons said it had received notification of a number of share disposals between September 2009 and June 2010, during which time Sir Ken reduced his shareholding from 160.8 million ordinary shares, worth around six per cent of the company, to 24 million shares, worth around one per cent. Stock market rules state if you have a shareholding of over three per cent in a company you are meant to report any increase or decrease of one per cent.