Smiths Group agrees new pensions funding deal

Smiths said it has finalised the triennial valuation of its pension scheme, with the total annual contribution to TI Group Pension Scheme now falling from £16m in 2015 to £3m in full year 2017 and 2018.

The company has agreed to pay off the remaining deficit over the next three financial years, which will reduce its cash costs for 2016.

Chief financial officer Chris O'Shea said: "I am pleased to have concluded the discussions with both UK pension schemes. We now have certainty on our pension funding requirements for the next three years, which will lead to additional free cash flow of around £50m per annum.

"The group's pension liabilities have been de-risked significantly, and we will continue to work with the various trustees on opportunities to further de-risk our schemes in a cost effective manner. The additional free cash flow will underpin our ability to invest in attractive growth opportunities and to support dividend growth in line with the long-term growth in underlying earnings."

At 1056 GMT, Smiths shares were up 0.6% to 1,008p.