Interim Results - Part 1

National Express Group PLC
5 September 2000

PART 1

                        

                          NATIONAL EXPRESS GROUP PLC

                                Interim Results
                     for the six months ended 30 June 2000
                                       
Financial Highlights

-  Turnover up 36.0% to £911.3m (1999: £670.1m)
-  Operating  profit, before exceptionals and goodwill, up  46.7%  to  £67.5m
   (1999: £46.0m).
-  Normalised profit before taxation up 10.5% to £50.4m (1999: £45.6m)
-  Normalised,  fully  diluted earnings per share up 15.3%  to  30.1p  (1999:
   26.1p)
-  Interim dividend up 13.0% to 6.5p (1999: 5.75p)
-  EBITDA interest cover of 5.3 times
-  Strong cash generation from continuing operations of £47.2m (1999: £45.0m)
-  Net debt at 30 June 2000 £415.3m (1999: £51.9m)
-  Settlement of Atlantic Express litigation in the USA
-  Proposed disposal of UK airports

Operational Highlights

-  Recommended £165.8m cash and share offer for Prism Rail - 90% acceptances;
   subject to OFT approval
-  60%  increase  in  US  school bus operations to  8,800  buses  through  the
   acquisition   of   School   Services   &   Leasing   Inc   for    £136.7m  
   - completed on 31 August
-  Rebalancing of UK trains portfolio:
   -  Prism  -  adding  two  busy  London commuter  businesses,  including    
   c2c franchise to 2011 and Stansted Express
   - Midland Mainline franchise extension to 2008
   - Submission made to sSRA for Central Trains franchise
- 1% growth in bus passengers for third consecutive year
- 12%  increase in passenger rail revenues across division - above  industry
  average for third successive year
- 66 new trains now in service out of total order of 122
- £8.5m investment in Smartcard business

Commenting on current trading and prospects, Chairman Michael Davies said:

'  2000  has  started  well and this has continued into the  important  summer
season with all divisions reporting increased passenger numbers.

We  have  continued to deliver on our strategy for growth in key markets.   In
the  UK  our recommended offer for Prism and the extension to our fast-growing
Midland  Mainline  franchise has begun the process  of  rebalancing  our  rail
portfolio.   We  have also submitted a proposal to the shadow  Strategic  Rail
Authority for a new 20 year franchise for our Central Trains business. In  the
USA   our   acquisition  of  SSL  has  increased  our  school  bus  operations
significantly and has given us critical mass in the Mid-West of the  USA.   In
Australia  the  acquisition  of  Blue  Ribbon  has  expanded  our  Sydney  bus
operations.

We  have  decided  to  dispose  of  our UK airports.  They  are  high  quality
operations with good growth prospects but we do not believe that the levels of
investment needed to make the division significant in the context of the Group
would  yield  satisfactory  returns for our shareholders.  As  a  result,  the
division  is  becoming increasingly less core to the ongoing business  of  the
Group as a whole.

The  UK  Government's ten year transport plan, which will provide  much-needed
public  sector  funding  for key sectors of the public  transport  market,  is
welcomed.   It  will complement the high levels of investment planned  by  the
private  sector which are aimed at improving services to make public transport
a much more attractive travel option.

We  will concentrate on integrating all of our new businesses over the  coming
months  in  order  to  extract maximum value from them. In  addition,  we  see
opportunities  for further profitable growth in all of our markets.  With  our
strong  cashflows and significant financial headroom - which will  be  further
strengthened following the disposal of our UK airports - we are confident that
the outlook for National Express Group remains very encouraging.'

For further information please contact:

Phil White, Chief Executive
William Rollason, Finance Director
Helen McCorry, Group Communications Manager
National Express Group                       020 7529 2000

Nicola Marsden/Steve Jacobs
Financial Dynamics                           020 7831 3113



                                       

                                       
                          NATIONAL EXPRESS GROUP PLC
                                       
                                Interim Results
                     for the six months ended 30 June 2000

Chairman's Statement

This  has  been  another successful six months for National Express.  We  have
again  delivered  strong financial results with record numbers  of  passengers
using our services.

In  July,  we announced a recommended cash and share offer for Prism Rail  PLC
('Prism'), which valued Prism at £165.8m.  This acquisition will bring us  two
busy London commuter operations and the fast-growing Stansted Express. We also
extended our Midland Mainline franchise to 2008. These developments have begun
the  process  of  rebalancing  our  train portfolio  -  reducing  the  overall
percentage  of  subsidy  income and increasing  the  percentage  of  passenger
revenue,  thereby  allowing us to benefit more in the  future  from  the  high
levels  of  growth in passenger numbers experienced across the industry  since
privatisation.

We  have  invested  further in the important USA market  by  acquiring  School
Services  and  Leasing Inc ('SSL') - consolidating our position as  a  leading
operator of student transport services.

Financial results

Turnover  for  the six months to 30 June 2000 was up 36.0% to  £911.3m  (1999:
£670.1m).  Operating profit, before exceptional costs and the amortisation  of
goodwill,  increased  by 46.7% to £67.5m (1999: £46.0m).  Profit  before  tax,
goodwill and exceptional costs was up 10.5% to £50.4m (1999: £45.6m).

Exceptional  costs  were £20.9m (1999: £5.9m) which includes  the  payment  of
£16.5m in full and final settlement -and with no admission of liability  -  of
the  outstanding litigation brought against us in the USA by Atlantic  Express
Transportation Group Inc ('Atlantic Express') in 1998.

Diluted  normalised earnings per ordinary share increased by  15.3%  to  30.1p
(1999: 26.1p).

At  30  June,  EBITDA  interest  cover was 5.3  times.  Cash  generation  from
continuing  operations during the first six months remained strong  at  £47.2m
(1999:  £45.0m). Net debt at 30 June was £415.3m (1999: £51.9m) and net assets
were £278.1m (1999: £243.5m). Gearing at 30 June was 149% compared with 21% at
the same time last year.

Dividend

An  interim dividend of 6.5p per ordinary share - up 13.0% on the 1999 interim
dividend  of  5.75p - will be paid on 27 October 2000 to shareholders  on  the
register on 29 September 2000.

Board Change

Alun  Cathcart  has decided to resign from his post of non-executive  director
and  deputy  chairman with effect from 4 September 2000  as  a  result  of  an
increase  in  his  other business commitments. Alun has  been  a  director  of
National Express Group PLC since 1992 and deputy chairman since 1998  and  the
Board  wishes to thank him for the major contribution he has made to the Group
over these years.

Current Trading and Outlook

2000  has started well and this has continued into the important summer season
with all divisions reporting increased passenger numbers.

We  have  continued to deliver on our strategy for growth in key markets.   In
the  UK  our recommended offer for Prism and the extension to our fast-growing
Midland  Mainline  franchise has begun the process  of  rebalancing  our  rail
portfolio.  We have also submitted a proposal for a new 20 year franchise  for
our  Central Trains business to the shadow Strategic Rail Authority (sSRA) and
expect  a conclusion in the first half of next year. We believe that  with  an
enhanced trains division comprising franchises with longer tenures and  higher
levels  of  passenger revenue we can make a major contribution to  the  sSRA's
objectives for improving the UK's passenger rail services, sustaining the high
levels  of  growth  experienced  in the rail  industry  in  recent  years  and
delivering good returns to our shareholders.

In  the  USA the acquisition of SSL for £136.7m, which completed on 31 August,
has  increased the size of our school bus fleet by 60% and given  us  critical
mass in the important Mid West region.

In  Australia  we  continue to make good progress  with  our  train  and  tram
franchises  in  Melbourne and in February we added to our  bus  operations  in
Sydney through the acquisition of Blue Ribbon for £4.0m.

We  have  decided  to  dispose  of  our UK airports.  They  are  high  quality
operations with good growth prospects but we do not believe that the levels of
investment needed to make the division significant in the context of the Group
would  yield  satisfactory  returns for our shareholders.  As  a  result,  the
division  is  becoming increasingly less core to the ongoing business  of  the
Group as a whole.

We  welcome  the UK Government's ten year transport plan, which  will  provide
much-needed  public  sector funding for key sectors of  the  public  transport
market.   This  will complement the high levels of investment planned  by  the
private  sector which are aimed at improving services to make public transport
the first choice travel option and encouraging more people to use it.

Over the coming months we will be concentrating on integrating all of our  new
businesses  in  order to extract maximum value from them. In addition  we  see
opportunities  for further profitable growth in all of our markets.  With  our
strong  cashflows and significant financial headroom - which will  be  further
strengthened following the disposal of our UK airports - we are confident that
the outlook for National Express Group remains very encouraging.

Michael Davies
Chairman
5 September 2000

Chief Executive's Review of Operations

2000  has  started  well for National Express Group. We have consolidated  our
position  as a leading international public transport group and over  half  of
our  36,000  staff are now employed in the USA and Australia.  We  have  again
delivered  strong financial results and each of our businesses  has  attracted
record  numbers  of passengers by improving the quality of their  services  in
line  with  our  overall aim to make public transport the first choice  travel
option.

The  addition of Prism and the extension of our Midland Mainline franchise has
enabled  us to begin to rebalance our trains portfolio by reducing the overall
percentage  of  turnover  from  subsidy and  increasing  the  percentage  from
passenger  revenues. We would like to secure more rail franchises with  longer
tenures and significant growth prospects and play a leading role in the future
development of the railway industry.

We  operate  the  largest single area bus network in the UK with  Travel  West
Midlands,  but our share of the overall UK bus market remains relatively  low.
We  are  therefore in a strong position to take advantage of opportunities  to
expand in this important market sector to achieve critical mass in large urban
areas,  building  on our expertise and knowledge of managing large  urban  bus
networks.  We  will  also  continue to exploit all  opportunities  to  develop
further in our key USA and Australian market sectors.

Buses

For  the  third  successive  year, Travel West  Midlands,  attracted  1%  more
passengers onto its services. Turnover for the division was up 1.3% to  £99.1m
(1999:  £97.8m) and operating profit before exceptionals increased by 7.2%  to
£25.2m  (1999: £23.5m). Cashflow for the division remained strong. Fuel prices
have  been fixed until December 2001, removing the adverse impact of increased
fuel costs on the business.

Growth  in passenger numbers was achieved in a difficult operating environment
caused  by  the  substantial rebuilding of Birmingham City  Centre.  Increased
demand  continued to be stimulated by improvements to all of our services  and
particularly  from  the ongoing success of the Quality  Partnerships  we  have
launched  right  across  the West Midlands. All schemes  continue  to  deliver
double digit growth on pre-launch levels.

We  believe  that road congestion is the largest single remaining  barrier  to
attracting  substantially higher number of passengers onto buses.  Eliminating
the impact of road traffic congestion on our operations is the primary goal of
our  £30m infrastructure investment programme, which is currently underway  in
the  West Midlands. To date, £15m has been allocated to improve the 'Big Five'
causes  of  substantial congestion in West Midlands - long  term  construction
projects which have the potential to decrease significantly traffic congestion
across  the  region. Feasibility studies for these projects  are  underway.  A
further  £5.3m  has also been allocated to a number of smaller projects  which
are  expected to be completed by 2002. We have already committed £1.4m to four
construction  projects which are currently in progress. This has been  matched
with  £2.7m by our local authority partners. The application of the  remaining
£8.3  million  of the total fund has yet to be agreed with our partners.  When
completed, these projects will significantly increase the reliability  of  our
services - and the attractiveness of travelling by bus in the West Midlands.

During the first half of 2000 we invested £8.5m in a 20% shareholding in  Pre-
payment Cards Limited (PCL). We are working with the other PCL shareholders  -
Stagecoach,  First  Group,  Sema and ERG - to  encourage  the  adoption  of  a
smartcard  system which can be used by all public transport users  nationwide.
We  will  be  developing a smartcard pilot project for use  on  our  buses  in
Coventry  during 2001 and we anticipate extending it into our trains  division
during 2001.

In  August  we  disposed of Travel London, which operated our two  London  bus
routes, in order to concentrate on our core markets.

Five  million passenger journeys have been made on the new Midland Metro since
it  began  operating  in June 1999. These volumes were lower  than  originally
forecast   due   mainly  to  technical  difficulties  with   the   trams   and
infrastructure which affected service levels. These are now being resolved and
overall passenger satisfaction with the new system is high.

Trains

Trains  division  had  another  good  six  months.  Total  turnover  including
franchise receipts was up 2.0% to £466.1m, (1999: £457.1m) despite a  decrease
in  subsidy  of £15.3m (1999: £11.5m) and operating profit before  exceptional
costs increased by 6.9% to £14.0m (1999: £13.1m).

Passenger  revenues were up 12.1% on the same period last  year  -  above  the
national average for the third successive year.

A  further 19 new trains were delivered in the first six months, bringing  the
total  number of new trains in service on our networks to 66, out of our total
order of 122. Gatwick Express' entire fleet will be replaced by the end of the
year.

Against a background of significant growth in passenger rail volumes over  the
last  five years, with a further 50% growth anticipated in the next 10  years,
we  have  begun  to  reshape our trains division. We have  received  over  90%
acceptances for our recommended offer to acquire Prism, the largest  dedicated
operator  of  train  services  in  the  UK,  and  it  has  now  been  declared
unconditional  as  to  acceptances. Subject to  OFT  approval,  we  anticipate
completion  by  the  middle of September. The acquisition will  add  two  busy
London  commuter  businesses - c2c (formerly LTS) and West  Anglia  -  to  our
existing  portfolio, both of which serve markets with strong growth prospects.
It  will  also add Stansted Express, serving the UK's fastest-growing airport,
which  will  complement our Gatwick Express business and enhance  our  Airport
Express marketing alliance with BAA plc.

On 10 August, we announced that we had agreed with the sSRA to extend our
fast- growing  Midland Mainline franchise to 2008 and became the first  operator
 to take  advantage  of  a  non-competitive franchise extension  opportunity. 
The agreement  will accelerate investment in Midland Mainline. The total
franchise premium of £33m, which we would have paid to the Government during the
life of the franchise, will now be invested directly into Midland Mainline. In
return, we  will  invest  £39m  in  a package of service improvements  for 
passengers including  station  redevelopments across  the  franchise  and  East 
Midlands Parkway Station to create a multi-modal park and ride facility adjacent
to the M1  motorway. We have also agreed to establish the UK's first customer
service academy dedicated to the rail industry.  The agreement also introduces
one  of the  first profit-reinvestment arrangements with the sSRA. From 2004 
onwards, up  to  40% of profits earned over and above an agreed threshold will 
be  re-invested  back  into Midland Mainline to improve further the  quality  of
 the operation.

We  have  submitted innovative proposals for a new 20 year franchise  for  our
Central Trains business and expect to conclude negotiations in the first  half
of 2001.

Eurostar had a good six months with passenger volumes increasing by 9.3%  year
on  year.  As  a result our share of the losses for the first six  months  was
lower than expected, at £1.0m. We expect this improvement to continue for  the
year as a whole.

Coaches

Turnover  for  the  coach division was up 7.6% to £80.8m  (1999:  £75.1m)  and
operating  profit  was  maintained at £1.6m  (1999:  £1.6m).  Coach  passenger
numbers were up 8% - the sixth successive year-on-year increase.

We continue to focus on meeting our customers' increasing demand for dedicated
'turn  up  and go' inter-city shuttle services and improving the accessibility
of  tickets  and service information. Today a quarter of our coach  passengers
are  using  our  higher  margin shuttles and 20% of  sales  were  through  our
'GoByCoach.com' web-site and telephone call centres. We have started  to  make
further improvements to the efficiency of our call centres by centralising the
operations and we are well on track to meet our target of 50% of sales through
either the internet or by telephone within three years.

We invested further in our fast-growing airport coach business, 'Airlinks'. We
expanded  our  operations  around  the key  London  airports  by  winning  new
contracts  and  making  two  small  acquisitions,  further  consolidating  our
position as the premier airside and landside airport coach services company in
the UK.

Eurolines,  our European coach business, continues to contribute well  to  the
division's results.

Airports

Airports  turnover was £15.0m (1999: £16.0m) and operating  profit  was  £4.0m
(1999: £4.5m). Underlying operating profit, excluding the £1.0m impact of  the
loss of duty free, was up 11.1%.

One million passengers used East Midlands Airport during the first half. Cargo
tonnage was up 41% following the introduction of additional operations by  TNT
and  UPS  and  the  commencement of operations from the new  DHL  distribution
centre in April. This joint investment is one of the largest facilities of its
type  in  Europe  and, with the new extension to the runway, strengthens  East
Midlands' position as one of Europe's leading air cargo facilities.

The development of the Pegasus Business Park continued. Powergen has relocated
to  its new premises on the site, Holiday Inn Express hotel began to trade  in
August and a planning application was submitted for the construction of a  new
Radisson hotel.

On  April  1,  we  began operating Stewart Airport, New  York  State's  fourth
largest airport. We have strengthened the management team who have started  to
implement  the growth plans that we have been working on since we  were  first
named as preferred partner in 1998.

USA

Turnover for the first six months was £135.2m and operating profit was £16.6m,
representing  the  first  full  six  months  of  contributions   from   Durham
Transportation  and  ATC Group. This represents 11.6% growth  in  turnover  by
these companies compared with the same period last year.

The  £136.7m  acquisition of SSL was completed on 31 August. This  acquisition
has  consolidated our position as the third largest student transport operator
in  the USA, with a total fleet of 8,800 school buses, an increase of 60%. SSL
also  gives  us  critical mass in the important Mid-West region  of  the  USA.
Before  the  amortisation of goodwill, this acquisition  will  be  immediately
earnings-enhancing. It also provides further scope for additional  integration
with our existing USA operations.

The programme to consolidate the back-of-house functions in our North American
businesses is now complete, excluding SSL, and will deliver annual savings  of
at least £2.0m.

In  both  the  school  bus and public transit sectors we have  extended  major
contracts,  including ATC's Las Vegas contract which has been extended  for  a
further  two years. We anticipate further growth of this fixed route  contract
in the fast growing city of Las Vegas.

Looking  forward, we will continue to concentrate on converting more contracts
from  the public to the private sector. We are also focusing on the geographic
areas  to  the west of the Mississippi River which we believe present  better-
quality  growth opportunities due to the continuing demographic movement  away
from  the  North  East. We will also continue our strategy of  making  bolt-on
acquisitions where these strengthen our positions in local areas.

Australia

We  made  progress in Australia in the first six months of this year. Turnover
was  £115.1m and operating profit was £6.1m.

In our train and tram operations in Melbourne and across the State of Victoria
passenger   numbers   were  up  6%  on  pre-privatisation  levels,   exceeding
expectations.   The  introduction  of  new  services  and  ticket   promotions
contributed  to  this  success,  replicating our  proven  success  in  growing
patronage.

The Victorian Government's first punctuality and reliability reviews, covering
the  period  to  the end of March, show that all three of our franchises  have
improved since privatisation, a performance of which we are proud. We continue
to  work  on improving the overall quality and reliability of our services  as
this is the best way to encourage sustainable growth in passenger numbers.

Orders  for 62 new trains on Bayside and 59 new trams on Swanston,  which  are
due   to  come  into  service  from  2002,  have  been  placed  with  Siemens.
Negotiations for the new trains on V/Line continue as the Victorian Government
is  conducting  a feasibility study for introducing high speed trains  on  the
V/Line network.

In  the  bus division we have strengthened our management team and  they  have
delivered  an  improved  operating  performance.  Margins  improved  as   cost
efficiencies were implemented with improved scheduling and a clearer focus  on
operational performance. Overall, passenger numbers increased by 2.1% on  last
year's levels due to improved service quality and 28 new low-floor easy access
buses were introduced during the period.

In  February  we acquired Blue Ribbon, for £4.0m. Blue Ribbon operates  school
bus  services to the north of Sydney, has a fleet of 160 vehicles and  employs
200  people.  There  continue  to  be good opportunities  to  expand  our  bus
operations  both by acquisition and organically, through the addition  of  new
routes.


Phil White
Chief Executive
5 September 2000


  
  Copies  of  the interim statement may be obtained from the Company Secretary
  at 75 Davies Street, London W1K 5HT.


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