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National Express (NEX)

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Monday 21 December, 2009

National Express

Pre Close Trading Statement

RNS Number : 4471E
National Express Group PLC
21 December 2009
 



National Express Group PLC


Pre Close Statement



National Express Group PLC ("National Express" or "the Group"), the international public transport operator, today releases a pre-close trading update ahead of the year ending 31 December 2009.


Summary


Trading has continued in line with the trends reported in the third quarter Interim Management Statement on 22 October 2009, with full year profit expected to be consistent with the previous outlook.


Overall, the underlying revenue* trend has stabilised in the fourth quarter, in line with the previously reported rate. Both the UK and Spain continue to deliver a strong operating performance, with cost efficiencies offsetting areas of revenue weakness. Action in North America will start to address continued underperformance in operational cost management, while revenue has declined as expected on previous lower contract renewals.


During the fourth quarter, the Group has successfully delivered its key objectives:


We have successfully completed a strongly supported rights issue to achieve a more robust capital structure and significantly reduce debt to an appropriate level;

We have resolved our outstanding rail issues, by completing the exit from the loss-making East Coast franchise in November 2009 and with the UK government indicating that the Group will continue to operate its remaining two rail franchises to their normal termination dates in 2011**;

We have appointed Dean Finch as Group Chief Executive, to focus on delivering our future strategy; driving cost efficiency, maximising cash generation and selectively growing the business where value is enhanced.


These developments have built on our earlier success, with annualised cost savings of £50 million secured in 2009 and strong organic cash generation reducing underlying debt.


Performance


UK Coach has returned to underlying revenue growth, of 4%, in the fourth quarter, with successful marketing and yield management offering even better value for our customers. Our new Birmingham coach station has opened for business, delivering a major improvement in customer experience. UK Bus underlying revenue growth has remained resilient at 2% year to date, despite the ongoing impact of higher regional unemployment. Fares are being held, to support customer retention and encourage travel, and we have optimised route coverage to protect profitability. In Rail, reduced demand in East Anglia continues to be offset through revenue support. The final element of the 2009 UK cost reduction programme has been announced, to deliver the Group's full £50 million of annualised savings, and placing the UK business in a stronger position for 2010.


Encouragingly, in Spain the rate of underlying revenue decline has improved to 5%, although economic conditions remain challenging. Urban operations have been relatively stable, while there are signs of improvement in regional travel revenue. In long distance travel, operating kilometres have been reduced to match lower demand. Extensions of several concessions have been secured for a period of 10 years, reflecting a commitment by regional authorities to bus transport as a more efficient and sustainable solution.


As expected, revenue in North America has declined with the start of the new school year, reflecting previous lower contract renewals. Performance in managing costs, particularly from double-running in the centralisation of operations, has been disappointing, impacting margin. This will benefit from a stronger management action plan to be rolled out in 2010, supported by tailoring of the Business Transformation programme to optimise cost and benefit.


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


"This has been a challenging year for National Express but, as it draws to a close, I am pleased that we have tackled and resolved our significant issues. We have eliminated the loss-making elements of our rail business and restored our balance sheet through a well-supported rights issue. National Express will enter 2010 on a sound basis, enabling our new Group Chief Executive Dean Finch and the team to focus on improving the performance of our market-leading businesses and delivering shareholder value."



Enquiries:


National Express Group PLC


Jez Maiden, Group Finance Director

020 7506 4324

Nicole Lander, Director of Communications

0121 460 8401



Maitland


Neil Bennett/George Hudson

020 7379 5151



Notes:


* Underlying revenue compares the current year with the prior year period on a consistent basis, including adjusting for the impact of currency translation, acquisitions and disposals, together with the estimated impact of advance travel.


** The UK Department for Transport said in an announcement on 26 November 2009 that its "objectives are best served by terminating NXEA's franchise in 2011". The NXEA and c2c franchises are scheduled for normal termination in March and May 2011 respectively.




This information is provided by RNS
The company news service from the London Stock Exchange
 
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