Media Centre

Half Year Results for the six months ended 30 June 2009

30 Jul 2009

National Express Group PLC, a leading international public transport group, operates bus and coach services across the UK, Spain and North America, and rail services in the UK.

Headlines

A resilient first half performance, despite challenging trading conditions, with success delivered in managing our operations and generating strong cash flow to reduce debt. Improved clarity over exit from the loss-making East Coast rail franchise.

Financial Results*

• Continuing revenue up 4.4% to £1,424.5 million (2008: £1,364.8m)
• Normalised** profit before taxation from continuing operations down 42% to £55.7 million (2008: £95.3m), reflecting trading loss of over £20 million on East Coast rail franchise
• Normalised diluted earnings per share of 27.8 pence (2008: 42.8p)
• Loss for the period of £36.6 million (2008 profit: £35.9m), including provision for East Coast rail exit
• Operating cash flow of £145.7 million represents conversion of profit into cash of almost 200 per cent
• Net debt reduced by over £200 million to £977.5 million (2008 year end: £1,179.8m), primarily as a result of Group’s self-help programme, delivering key leverage ratio of 3.2 times at 30 June 2009 (2008 year end: 3.5x)
• Committed, undrawn debt facilities and cash total £373.2 million as at 30 June 2009 (2008 year end: £200.0m)
• Interim dividend passed as part of debt reduction focus

Operational performance

• Cost saving programme on target to deliver planned £40 million annualised savings by year end
• Cash management programme delivering strong cash generation, with 40% reduction in capital investment and improved working capital management, leading to substantial debt reduction
• Resilient profit performance in UK Bus & Coach, and in Spain, despite challenging economic conditions; initial progress in North America cost performance with further near term opportunities identified
• Robust profit performance in UK Rail, other than in loss-making East Coast franchise, control of which is expected to be reassumed by the DfT later in 2009; c2c has become the best performing train operator ever in the UK and East Anglia has recorded its highest punctuality figure since the current franchise began in April 2004***

Strategic update

• Focus on the development of the Group’s core Bus and Coach operations in the UK, Continental Europe and North America, while maximising value and opportunity in UK Rail and considering strategic choices and funding options
• Concentration on organic development in the current climate
• Additional cost efficiencies and productivity improvements to be delivered by year end, in excess of £10 million annually
• Group prioritises the continued strengthening of its balance sheet and the reduction of net debt

Outlook

• Stable platform for performance delivery and progressive improvement across the Group’s Bus & Coach businesses
• Continuing opportunities to build on resilient performance of Bus & Coach businesses in the UK and Spain, with further identified cost reduction programmes, continuation of cash management initiatives and through North America improvement programme
• Fuel hedge expected to deliver year on year savings of over £25 million in 2010
• Exit from East Coast rail expected to occur during second half of the year

Commenting on the results, Executive Chairman, John Devaney, said:

“Like all businesses, we are taking the necessary steps to manage the challenges of the current economic environment. The majority of our businesses have traded solidly through the first half, despite the challenging conditions.

“Our strategy remains clear – we will continue to deliver a more customer-driven strategy but with additional emphasis on reducing net debt, strengthening the balance sheet and making cost savings.

“Going forward our focus will be on our market-leading Bus and Coach operations in the UK, Spain and North America, while continuing to deliver excellent performance in our remaining rail franchises. This clear focus and the actions we are taking give us substantial confidence in the future of the Group.”

Enquiries:

Notes:

* Comparative values are first half 2008 except where otherwise stated.
** Normalised results are the statutory results excluding profit or loss on the sale of business, exceptional profit or loss on sale of non-current assets and charges for goodwill impairment, intangible asset amortisation, exceptional items and tax relief thereon.
*** c2c achieved a Public Performance Measure (PPM) of 95.8% on a moving annual average basis to 27 June 2009, the best punctuality performance ever recorded by a UK train operator. East Anglia achieved a PPM of 90.7% on a moving annual average basis to 27 June 2009, the highest recorded PPM since the start of the franchise in 2004.
The 2008 results have been restated for the final purchase price allocation in relation to 2007 acquisitions and restated for the presentation of Dot2Dot as a discontinued operation, as outlined in the Annual Report and Accounts 2008.

There will be a presentation for investors and analysts at 0830 on 30 July 2009 at the City Presentation Centre, 4 Chiswell Street, London EC1Y 4UP.

A webcast will be available at www.nationalexpressgroup.com

View the full press release in PDF format.

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