Icelandic investment firm Baugur plans to pay shareholders in Iceland Foods £150m after a strong year for the frozen food retailer.

Shareholders include Malcolm Walker, co-founder and chief executive of the chain, and Icelandic bank Kaupthing.

Investors were already paid off once this year, when Iceland paid off more than £70m of loan notes as well as refinancing debt.

The company is expected to have wiped out its debts by the end of the year. It is expected to announce substantial profit after posting £7m profit, excluding exceptionals, in the year to last March. It made a £25m loss the year before that.

Walker said underlying sales for the retailer were rising by more than 20% a year since he simplified its ranging.