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STV shortens pension schemes repayment plan

STV has underlined its improved financial strength by shortening the repayment plan on its legacy pension schemes from 18 to 11 years.

The broadcaster will raise its annual payments from this year's £5.5 million to between £7m and £7.75m from next year to 2025, after agreeing a deal with the trustees of its television and publishing final salary pension schemes.

Rob Woodward, STV's chief executive, said: "The pension scheme valuation agreement provides certainty to both the group and the schemes' trustees and demonstrates the continued commitment of the group to support the schemes."

Jane Anscombe, analyst at Edison Research, said the deal was "a reflection of the company's much greater financial strength than that at the time of the previous valuation" while the increased payments were already in analysts' estimates.

Three years ago STV cut the liabilities of the Caledonian Publishing Pension Scheme, acquired during its ownership of The Herald and Evening Times newspapers, by £5m after a mortality research exercise.

The other scheme is the Scottish & Grampian Television Retirement Benefits Scheme, and their combined deficits have narrowed from £135m at the start of 2012 to £83m on March 31 this year, from a combination of increases in asset value and the deficit funding payments.

But on the IAS 19 basis of valuation, which uses corporate bond yields rather than gilts to project liabilities, the schemes show a modest surplus of £1.3m, as shown in the STV accounts.

Ms Anscombe said: "The next triennial valuation will be in 2015 and if real interest rates rise (as we expect) then the pension funding deficit will fall again."

She also expects the group's net debt to fall further in 2015.

Shares have been on a strong run but closed down 8p, or two per cent, at 360p.

Edison yesterday also published its annual outlook for STV, increasing its profit estimates.

Ms Anscombe said: "STV is capitalising on a favourable advertising backdrop, strong brand identity and the high level of interest in Scotland with the upcoming referendum as well as the Commonwealth Games."

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