Confirmation of SDN pension p

RNS Number : 2673J

ITV PLC

26 March 2010

 



ITV plc confirms SDN pension partnership and new pension funding agreement

ITV and the Trustee of the main section of the ITV Pension Scheme (the "Scheme") have concluded a Partnership (the "Partnership"), backed by SDN, and, as a consequence, ITV's pension deficit on a funding basis is reduced by £124 million. 

In addition, ITV and the Trustee have agreed the level of deficit funding contributions ITV will make to the Scheme through to 2014.     

SDN pension partnership

Under the Partnership arrangements, ITV has committed to making a payment to the Scheme of up to £150 million in 2022, if and to the extent that the Scheme remains in deficit.  In addition, the Partnership will make an annual distribution of £8.4 million to the Scheme for 12 years from 2011. 

The Partnership's interest in SDN will provide collateral for these payments. SDN's revenues, profits and cashflows will continue to be consolidated in ITV's accounts and ITV will retain day-to-day operational control of SDN.   

Having acquired the partnership interest, ITV's pension deficit on a funding basis is reduced by £124 million (effectively reflecting the present value of the annual distributions and the £150 million payment).  The agreement does not impact the deficit calculated on an IAS 19 basis. 

Deficit funding contributions

ITV has also agreed with the Trustee the level of contributions to the Scheme through to 2014. 

From 2011, ITV will make deficit funding contributions of £35 million per annum. 

From 2012, ITV's annual contribution will be increased by £5 million, unless during the previous year ITV has implemented initiatives which reduce the Scheme's deficit by at least £10 million, compared with the level absent such initiatives.

In addition from 2012, if ITV's reported earnings before interest, tax and amortisation ("EBITA") before exceptional items exceed £300 million, ITV will increase this contribution by an amount representing 10% of EBITA over the threshold level. 

These arrangements supersede ITV's previous commitment to make annual contributions of £30 million per annum through to 2013, ahead of the next valuation of the Scheme due in 2011.  As a result of the agreements announced today, no further change is expected in ITV's committed contributions to the main section of the pension scheme before 2015. 

Ian Griffiths, ITV's Group Finance Director, said:

"Over the last 18 months, ITV has made significant progress in strengthening its balance sheet and managing its pension risk.  Today's agreement materially reduces ITV's pension deficit on the basis which drives our cash funding and confirms the contributions ITV will be making to the main section of the pension scheme through to 2014.  It represents a positive deal for members of the defined benefit pension scheme and for ITV's shareholders."   

Graham Parrott, Chairman of the Trustee of the ITV Pension Scheme, said:

"The Trustee has worked closely with ITV over the last several years to strengthen further the funding position of the Scheme.  This agreement provides increased security and improved funding to the Scheme, whilst recognising that members' best protection lies in the enduring strength of the ITV covenant going forward." 

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ITV plc

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Notes to editors

1.   ITV has been advised on this transaction by Deloitte, Lovells and Slaughter and May.

2.   At 31 December 2009, ITV's pension deficit on an IAS 19 basis was £436 million, after a credit of £110 million to reflect actions taken during 2009; on a funding basis, the deficit was estimated to be approximately £550 million. 

3.   SDN Limited is a digital terrestrial television multiplex licence-holder wholly owned by ITV.  In 2009, SDN revenues were £44 million (2008: £33 million). 

4.   The next formal valuation of the Scheme is scheduled to take place as at 1 January 2011. 

 

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