Arriva plc: pre-close trading statement

• UK Bus division continues to trade strongly with clear focus on cost control
• Mainland Europe has substantially absorbed increased fuel costs, and benefited from the full year effect of acquisitions
• Lower UK Trains passenger revenue growth, reflecting economic conditions

Leading European transport services group Arriva plc has today issued the following pre-close trading update.

Our UK Bus division has continued to trade strongly, helping to offset the impact of an increase in fuel costs during the first half of 2009. Adjusted for the same number of trading days, revenue has increased by 5.2 per cent in the five months to the end of May. We have reduced commercially operated mileage by 3.3 per cent during the period to control costs whilst maintaining the viability of our network for future growth in the medium and longer term. Mileage growth in our contracted London business, which accounts for around a third of the division by revenue, was 3.4 per cent.

Our Mainland Europe division has substantially absorbed the fuel cost headwind so far in 2009, benefiting from the full year effect of acquisitions. Excluding the impact of exchange rate fluctuations, revenue to the end of May grew 10.4 per cent, including 6.7 per cent from acquisitions. The reported results will reflect the impact of a stronger euro relative to the same period of 2008.

In our UK Trains division* passenger revenue has grown in both franchises, although the rate of growth has eased. At Arriva Trains Wales, passenger revenue growth to the end of May was 8.7 per cent, after allowing for timetable changes in December. Passenger revenue growth for the CrossCountry franchise for the same period was 2.4 per cent.

The anticipated increase in fuel costs of around £60 million across the group, in the full year, has been reported previously. Steps have been taken to reduce the fuel cost impact on 2009 results and our forward fuel price fixing policy will enable us to recover some £30 million in fuel costs for 2010. We have also previously reported that economic conditions make it difficult to predict with accuracy the short to medium-term trends in passenger demand and that passenger revenue growth of around 10 per cent in CrossCountry, from a 2008 base of £319 million, would be required to maintain 2008 levels of profitability. Revenue protection becomes available to CrossCountry from 2011.

The group results for the six months will reflect the lower revenue growth rates in CrossCountry, and are otherwise expected to be broadly in line with management's overall expectations.

David Martin, chief executive, commented: "Arriva's strategy, featuring geographic and market diversity, and a high proportion of revenue derived from medium and long-term government contracts, continues to provide the group with a high degree of stability and resilience in a difficult economic climate, and I remain confident that the group will continue to demonstrate the delivery of long-term value to shareholders."

The group is scheduled to release interim results for the half year to 30 June 2009 on Thursday 27 August.

* In our UK Trains division and common with all other UK rail operators, Arriva is experiencing, from April 2009, significant reductions in track access charges and corresponding impacts on franchise support payments and/or premium payments as a result of the Rail Regulator's review of access charges for Control Period 4 (CP4), which runs from 2009/10 to 2013/14. The economic impact of these adjustments is expected to be broadly neutral as they affect both the revenue and the costs of Arriva's franchises in similar measure.