BUSINESS LIVE: Water groups reveal investment plans; YouGov agrees fresh financing

Businesses, including Heathrow, say the UK is missing out on spending from Chinese tourists returning to Europe.

Hundreds of bosses have urged the Chancellor to re-introduce a VAT-free shopping scheme.

London-listed stocks are trading higher this morning, with defence firm BAE Systems jumping to the top of the FTSE 100 after winning a contract to build attack submarines.

BAE Systems has added 2.2 per cent after Britain awarded the defense firm a £4billion contract as part of the AUKUS programme with Australia and the United States to build attack submarines.

The broader aerospace and defense sector has added 1 per cent.

Pennon Group has added 4 per cent and United Utilities is up 2.3 per cent after the water companies outlined their respective investment plans.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘United Utilities is putting its money where its mouth is. The group provides water and wastewater services across the Northwest of England and is planning to invest a mammoth £13.7bn into cleaning up its act across 2025-2030, which it even describes as an ambitious and stretching target.

‘Replacing over 925km of pipes is no mean feat, but once complete this should drastically reduce the amount of sewage being spilt into our rivers and seas – something which utility companies have been heavily criticised for in the news lately.

‘A huge investment like this will support around 7,000 new jobs in the Northwest of England, as well as support more than 1 in 6 customers struggling to pay their bills.

‘But all this begs the question of where the money’s coming from. It looks like £1.35bn of the cash will come from issuing new equity shares, which will have the effect of watering down existing shareholders’ ownership in the company.

‘Just shy of £4bn will come from issuing debt and this should keep the group’s gearing level at around 63%, towards the top of the group’s target range. This might cause some issues and uncertainty for investors in the short term. But today’s investment plan will increase United Utilities regulatory asset base by around 50%. Given that the revenue United Utilities is allowed to earn is based on this figure, it should help bring cash in the door over the long term.’

Polling company YouGov has secured €280million of fresh debt financing, which the firm plans to use to help fund the takeover of GfK’s Consumer Panel Business.

YouGov announced the intended acquisition of the business, for a headline purchase price of €315million.

Alex McIntosh, chief finance officer, said:

‘This new facility will provide additional financing for our proposed acquisition of GfK’s Consumer Panel Business and provide further firepower for investing in our strategic growth plan. We thank our lenders for their continued support.’

BAE Systems has been awarded £3.95billion in funding by the Ministry of Defence for a submarine programme.

Yesterday, Defence Secretary Grant Shapps said the money would ‘drive forward the development of the most powerful attack submarines ever operated by the Royal Navy’.

Water group Pennon and United Utilities have joined industry peers in revealing plans for billions of pounds in infrastructure investment, amid concerns Britons’ water bills could rise by more than £150 a year to fund the move.

Water companies have set out a five-year plan to prevent 140,000 sewage overflow spills per year.

Providers will invest £96 billion in the second part of the decade — almost double the current levels — in proposals companies say will pay for 10 new reservoirs, cut leaks and stop the equivalent of 6,800 Olympic swimming pools-worth of sewage spills.

Industry body Water UK said private firms had agreed to more than double the number of households that will receive financial support, rising by 2.0 million to 3.2 million, as the sector looks to address public anger over sewage being pumped into beaches and rivers during storms.