Talks with Morrison boost Ocado shares Shares in Ocado surged on Thursday morning after it emerged that the web-only grocer might help Wm Morrison build its own internet business. Morrison, the fourth-biggest British supermarket chain, said it would launch a UK online grocery service by the end of January 2014 in an attempt to catch up with web-savvier rivals. It is in talks with Ocado that could lead to it licensing Ocado's "intellectual property and operating knowledge" for this planned expansion, although it could yet choose a different approach. The potential tie-up was disclosed as Morrison published annual results that were hurt by its lack of a meaningful presence both online and in convenience stores, another source of sales growth for its rivals. Dalton Philips, Morrison chief executive, did not elaborate on his web plans, saying he did not want to tip off rivals. Now is the right time to get into this market. It's accelerating and we can see a route through to profitability," he said. The talks did not involve Morrison buying Ocado or taking a stake in the online-only grocer, Ocado said, nor would a deal impinge on Ocado's existing partnership with Waitrose. Ocado has been the subject of recurrent takeover talk. Shares in the company were trading 18 per cent higher at 161.9p in late morning trading on Thursday, having risen 30 per cent at one point. Morrison was 1 per cent up at 274.6p. As well as making its belated online grocery debut in the UK, Morrison is accelerating its push into convenience stores. It now expects to have 100 such outlets by the end of the current financial year, up from 12 at the start of the year. Last month it said it had bought 49 sites for convenience stores that were previously occupied by Blockbuster, the failed DVD rental chain. Morrison said capital expenditure this year would increase by £100m to £1.1bn, with some of the impact of the push into online and convenience offset by a more limited expansion of its big supermarkets. The group's sales for the year to February 3 were £18.1bn, up 3 per cent on the previous year. However, like-for-like sales - a measure that strips out new store openings - were 2.1 per cent down, excluding fuel sales and VAT. Mr Philips admitted this was disappointing. Its pre-tax profit was £879m, down 7 per cent. On an underlying basis, pre-tax profit fell 4 per cent to £901m. Analysts at Panmure Gordon said the annual pre-tax profit was in line with reduced expectations. The strategic update is, we think, reasonable. Much needs to be done, but at least Morrison has joined the party," they added. Diluted earnings per share rose 2 per cent to 26.57p. It increased its total annual dividend 10 per cent to 11.8p. Ocado also issued its own trading statement on Thursday, showing that sales in the 12 weeks to February 24 were up 14.4 per cent year on year.