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Wednesday 07 February, 2001

Shadow StrategicRail

SRA Halts Replacement Process

Shadow Strategic Rail Authority
7 February 2001

SRA Halts Replacement Process For Central Trains Franchise

The Strategic Rail Authority (SRA) announced today that it was halting
negotiations on the replacement of the Central Trains franchise with the two
companies who had submitted proposals - National Express Group plc and Group 4
Falck Global Solutions Ltd.

The SRA recognised the parties' efforts, but was not satisfied with the value
of the proposals it had received in response to its original invitation in
March 2000.  In addition, a number of policy issues relating to franchise
replacement remain to be resolved with the Passenger Transport Executives

Mike Grant, Chief Executive of the SRA, confirms that the current incumbent
franchisee, National Express, is committed to meet the terms of the existing
franchise agreement until its expiry in 2004.  He has also secured the
agreements of the company on the restructuring of the franchise to separate
Cambrian Coast and Central Wales (Aberystwyth) line services for inclusion in
the new Wales & borders franchise.

Commenting on today's announcement, he said:

'When the replacement process got underway last spring, we made it clear that
any detailed proposals from Group 4 and National Express would have to be
competitive. Otherwise, the franchise would continue to run its remaining

'In the event, we took the view that neither party's proposals would have
delivered the benefits passengers are looking for. We have always said that we
would not agree longer franchises unless we were satisfied that they offered
sufficient benefits to passengers and taxpayers.

'Up until the formal expiry date in April 2004, the SRA planned to continue
with investment in the area served by the franchise with infrastructure
improvements (IOS schemes) it has negotiated with Railtrack, and we are happy
to consider local improvements under the Rail Passenger Partnership fund put
forward by the company and the local authorities it serves.

'Irrespective of today's announcement, proposals arising from the work we have
commissioned in the West Midlands capacity study will continue to be
progressed and the outputs taken account of in any future franchise.

Notes to Editors:

1.   Central Trains operates an extensive network of inter-urban, urban and
rural services in the East and West Midlands, as well as into Wales, East Anglia
and Lincolnshire.  In the West Midlands, local services are supported by Centro
(the West Midlands PTE).

2.   The Central Trains Franchise started on 2 March 1997 and runs for seven
years and one month.  Central Trains is part of National Express Group plc.

3.   National Express Group plc operates nine franchises as well as West
Midlands Travel, the principal bus operator in the Birmingham travel to work

4.   Central Trains has introduced 33 new Turbostar trains since National
Express Group plc took over the operation of this network.

5.   Central Trains was identified as an area for replacement negotiations on 8
March 2000.  Replacement was to be on the basis of the existing franchise, with
an option to include or exclude services which extend north west and west of
Shrewsbury, including those that extend into Birmingham.  Proposals were to
include, within the franchise, provision for the creation of a separate business
unit focussed on the West Midlands travel to work area.

6.   Centro, the West Midlands Passenger Transport Executive, are co signatories
to the Central Trains franchise agreement.

Media Enquiries:  SRA Press Office  0207 654 6339/6294/6234/6387

More news and information about the SRA can be found on our website -

Important Notice This news release is issued by the Franchising Director and
its contents have been approved for the purposes of section 57 of the
Financial Services Act 1986 by KPMG Corporate Finance. KPMG Corporate Finance
is a division of KPMG which is authorised to carry on investment business by
the Institute of Chartered Accountants in England and Wales. This news release
has been prepared for general information purposes only and is not intended to
form the basis of any investment decision or constitute an offer or invitation
to bid for any passenger rail franchise or to acquire shares in a train
operating company. Neither this news release nor any copy of it should be
taken into or distributed in Canada, France, Japan or the United States except
in accordance with an applicable exemption. The distribution of this news
release in other jurisdictions may be restricted by law and therefore persons
into whose possession this news release comes should inform themselves about
and observe any such restrictions. KPMG Corporate Finance is acting for the
Franchising Director and will not regard any other person as its client in
relation to passenger railway franchising or be responsible to anyone other
than the Franchising Director for providing the protections afforded to
clients of KPMG Corporate Finance nor for advising any other person on the
contents of this news release or any matter referred to in it.


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