Update on Australia

National Express Group PLC
26 February 2002



26 February 2002




                           National Express Group PLC

                  Update on Australian Train & Tram businesses



Following its trading update of October 2001, National Express Group PLC ('
National Express') announces that it has reached an interim agreement with the
Victorian Government in Australia, which is expected to be signed this week, to
address key issues within its train and tram businesses in the State of
Victoria.



As a result of discussions with the Victorian Government, National Express,
which operates three out of the five franchises, and its fellow franchisees
Connex and Transdev have put their train and tram franchises on a stronger
financial platform through:



  • A total payment to the operators across all five franchises of A$41.6
    million (£14.9 million) to settle contractual claims and disputes arising
    from the privatisation in 1999 of the Victorian public transport system; and
  • A total one off payment to the operators of A$27.2 million (£9.7 million)
    across all five franchises to assist in the development of business recovery
    proposals. Such proposals will include incentive arrangements to boost
    patronage further.



National Express' share of the above payments is A$30.7 million (£11.0 million)
and A$15.2 million (£5.5 million) respectively.



These terms have been agreed with the Victorian Government subject to National
Express and its fellow franchisees doubling the total performance bonds to the
State of Victoria from A$105 million (£37.8 million) to A$210 million (£75.6
million).  On 1 July 2003 the performance bonds will revert to A$105 million
(£37.8 million).  National Express' performance bonds will increase from A$67
million (£24.1 million) to A$132 million (£47.5 million) until 30 June 2003.



In addition, the Victorian Government will continue discussions with the
franchisees on further business recovery proposals with the aim of completing
these by the middle of the year.



Commenting on the announcement Victorian Government Transport Minister, Peter
Batchelor said: 'We are seeking to improve our partnerships with the private
sector that will encourage the development of sustainable, stable businesses
while also delivering high quality, affordable services for the community and
value for money for taxpayers.'



Phil White, Chief Executive of National Express said: 'We updated shareholders
on the issues affecting our train and tram businesses in Melbourne back in
October. Since then, we have been working with the Victorian Government and our
fellow franchisees to improve the viability of our operations. These interim
arrangements put us on the required financial platform to tackle current issues
as well as providing additional funds to develop the business moving forward. I
am greatly encouraged by the progress that we have made with the Government and
look forward to working with all parties to conclude the longer term issues by
the middle of the year.'



                                    - ENDS -





For further information, please contact:


William Rollason, Finance Director
Nicola Marsden, Director of Group Communications
National Express Group PLC                                         020 7529 2000


Andrew Dowler/Ben Foster
Financial Dynamics                                                 020 7831 3113






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