Corporate news releases

Pre-close Statement for the first half ending 30 June 2010
29 Jun 2010

National Express Group PLC ("National Express" or the "Group"), a leading international public transport group, operates bus and coach services across the UK, continental Europe/North Africa and North America, together with rail services in the UK.

National Express updates on trading for the first half year ending 30 June 2010, ahead of its Half Year Results which are scheduled to be announced on 29 July 2010.

Overview

Trading has continued in line with expectations through the second quarter of the year, building on the good start to 2010 reported in the first quarter interim management statement released on 5 May 2010. Revenue trends have been resilient, whilst progress on cost saving programmes and delivery of a stronger operational focus across the business has accelerated. As a result, 2010 first half normalised1 profit before tax is expected to show good progress over the prior year.

Spain

Spain continues to see an improving revenue trend in its long term concessions, with underlying2 passenger revenue in the first half expected to be broadly flat on 2009. Margin has improved with the benefit of network efficiency from a reduction in kilometres operated, whilst leveraging the flexible cost base. Recent reductions in services and investment by the domestic rail operator are expected to benefit our business going forward.

UK

Overall UK profitability continues to benefit from an improved margin in Rail, following the removal of the loss-making franchise last year. In UK Bus, reduced operating mileage is driving improved network efficiency and underlying revenue is only marginally lower year-on-year. The bus margin improvement plan is now underway, with a package of fare changes, targeted fleet investment, measures to reduce driver wage costs and consultation on reducing depot capacity all in progress. These measures are expected to start to benefit margin in the second half of this year.

Underlying revenue in Coach3 has grown 3 per cent year-on-year, benefiting from strong Easter and May holiday travel. First half margin will be affected by an increase in investment in marketing and new operations and services. In Rail, we welcome the government's review of franchising policy. The cancellation of the reletting process for our current franchises enables us to explore opportunities to continue to deliver our industry-leading rail performance beyond early 2011.

North America

In North America, the outlook for underlying revenue growth remains strong with over 1,600 new routes now secured for the new school year beginning in August/September 2010, giving a net addition of almost 750 routes after contract losses. With no erosion of bidding margin, this reflects the quality of service we deliver through our long-term customer relationships. Following refocusing of the previous transformation programme, over US$20 million of annual cost efficiencies have been identified, with the balance of our targeted US$40 million savings programme identified from fleet and scheduling optimisation plans. Initial delivery of actions is already improving margin, despite higher insurance and depreciation costs.

Financing and fuel hedging

Following the successful issue of our £225 million 10 year Sterling bond earlier in June, the Group has now received commitments from its core banking group to provide a committed unsecured £500 million revolving credit facility through to 2014, which is expected to close in July 2010, subject to final documentation. This would replace the current £800 million facility, allowing the Group to complete its refinancing ahead of schedule.

Of our hedgeable fuel consumption of 222 million litres, we are fully hedged for 2010 at an average price of 39 pence per litre, almost 90% hedged for 2011 at 41 pence and 35% hedged for 2012 at 42 pence, compared to an average price of 50 pence in 2009. This significantly reduces our shorter term exposure to oil price movements.

Comment

Commenting, Dean Finch, National Express Group Chief Executive, said:

"With fundamentally strong businesses across the Group, National Express now has a greater operational focus. The initiatives we have put in place will progressively improve our performance from the second half year onwards, driving earnings and cash generation."

Enquiries

National Express Group PLC
Jez Maiden, Group Finance Director
Nicole Lander, Group Director of Communications


0121 460 8657
0121 460 8401

Maitland
Neil Bennett / George Hudson

020 7379 5151

  1. Normalised profit before tax is measured for continuing operations before goodwill impairment, intangible amortisation and exceptional items
  2. Underlying revenue compares the current year with the prior year on a consistent basis, after adjusting for the impact of currency, acquisitions and disposals
  3. Express coach operation