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National Express sees full results in line with market expectations

Last updated: 08:00 21 Dec 2009 GMT, First published: 09:00 21 Dec 2009 GMT

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In a pre-close trading statement, National Express Group PLC (LSE: NEX) said underlying revenue trends have stabilised in the fourth quarter and its full year profit is expected to be consistent with previous guidance. According to executive Chairman, John Devaney the transport operator has resolved its significant issues.


"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”, John Devaney commented, “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”


Last week the FTSE250 constituent revealed a 90.47% take-up of its fully-underwritten £360 million rights issue. As a result the company said it will achieve a more robust capital structure and significantly reduce debt to an appropriate level.


In addition to the capital restructuring, the UK headquartered transport group has also completed a cost reduction programme to deliver £50 million of annualised savings and appointed Dean Finch as new Group Chief Executive in the fourth quarter.


National Express exited its loss-making East Coast rail franchise in November 2009; it will continue to operate its other two rail franchises until the respective contract termination dates in 2011. Its UK Coach business has returned to revenue growth, with a 4% increase in the fourth quarter, while its UK Bus operations have remained resilient with revenue growth at 2% for the year to date.


The last twelve months have been challenging for National Express with above-average debt causing uncertainty as the group became the subject of several merger proposals. In November the company said at £1.1 billion, the level of net debt was above the UK transportation sector average. According to National Express the unprecedented turmoil and disruption in global financial markets severely curtailed the availability of debt funding.


One month earlier, the CVC Capital Partners private equity group decided not to make an offer for National Express. Subsequently National Express came under pressure from some of its Major shareholders after it turned down a merger proposal from transport rival Stagecoach Group (LSE: SCG).

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