NEX.L Regulatory News (NEX)

National Express Trading Update

Overview

· We traded slightly above our previously guided base case as we closely manage customer relationships, contract details and service requirements throughout the pandemic:

o Our previously guided base case assumed revenue to be around 50% of pre-Covid 19 expectations until the end of August;

o Tight cost controls remain in-place driving positive EBITDA and cash flow.

· Further notable contract wins in the period demonstrate the enduring appeal of our service standards and approach:

o Provisionally awarded an up to nine year, 240 urban bus contract in Lisbon, Portugal;

o Won a five year, paratransit contract for up to 75 vehicles, in California, United States.

· Underlying liquidity position remains strong, broadly in line with the half year position.

Divisional operating highlights

ALSA

· ALSA continues to benefit from very strong customer relationships and does not have any revenue risk in over 40% of its contracts (principally 60% of regional and 100% of urban contracts). The proportion of contracts not at revenue risk will increase to 46% in 2021, with a full Casablanca network in operation. In its other contracts ALSA has a flexible model that closely aligns service to demand in discussion with customers.

· Post lock-down, ALSA's revenue has already grown back to 66% of last year, underpinned by these strong customer relationships. The financial performance of the Regional business has particularly improved over the last month, following enhanced agreements reached with contracting authorities.

· We have been provisionally awarded a seven year (with the option of a further two years), 240 urban bus contract in Lisbon, Portugal. The contract is worth €185 million over the initial seven years.

North America

· We are currently operating services on 65% of our school bus routes, through either a full 'traditional' or a 'hybrid' (a mix of in-school and at home learning) arrangement. Typically, 'hybrid' arrangements involve students attending school for between two or four days, per week.

· In total, we currently have agreements in place across school bus contracts that secures nearly 70% of our pre-Covid 19 revenue. We expect this figure to increase as we reach more agreements with customers in the coming weeks.

· Transit and shuttle performance varies by contract, but again because of strong customer relationships - especially in our biggest contracts - we are securing between 65-80% of pre-Covid 19 revenue and expect to continue to do so for the balance of the year.

· We have won a $40 million, five year, paratransit contract for up to 75 vehicles in Fresno, California. This is an asset-light contract, with vehicles owned, and facilities and fuel provided, by the customer.

· We continue to expect the increased interest from school boards to outsourcing their busing operations, and the financial challenges experienced by smaller operators, to provide further opportunities in the upcoming bid season.

UK

· Both our UK bus businesses have continued to see good passenger growth in recent weeks:

o In the West Midlands we are running 103% of last year's service and carrying 58% of the patronage;

o In Dundee, we are operating 92% of last year's service and carrying 61% of the patronage;

o In both businesses, costs are under-written by their respective national transport authority. The Department for Transport has confirmed the West Midlands arrangements will remain in place "until a time when the funding is no longer needed"; and, in Dundee, the current funding arrangement is in place until November, at least.

· We have added further coach services where social distancing restrictions still enable a commercial expansion in the network. We have been encouraged to see continued high demand for those services we are running.

Chris Davies, Interim Group Chief Executive and Group Finance Director, said:

"We continue to be pleased that our strong customer relationships are sustaining high levels of revenue during the pandemic's on-going uncertainty. We are grateful to our customers and the public authorities who have recognised the essential role our services play in maintaining the ability of people to get to work and to keep the economy functioning, even during such challenging times.

"This robust revenue collection and on-going tight cost control is underpinning positive EBITDA and cash flow projections. We are encouraged to see continued passenger growth across the Group, as our services provide safe and reliable services to those choosing to travel.

"We remain resolutely optimistic about the longer term opportunities for the Group. The enduring strength of our customer and stakeholder relationships during the pandemic demonstrate that our reputation for safe and excellent service has provided a crucial resilience as we navigate this uncertain period. In addition - as the recent contract wins in Lisbon and California demonstrate - they also provide the platform for future growth once we emerge from the pandemic."

Enquiries

National Express Group PLC

Maitland/AMO

Notes

Legal Entity Identifier: 213800A8IQEMY8PA5X34