Interim Management Statement

The outlook for 2008 continues to be positive with substantialrevenue and earnings growth for the year being anticipated, in linewith management expectations. While no business is whollyimmune from current economic uncertainties, the Group’sdiversified nature, with bus and rail operations in 12 countries, a£12 billion order book, and more than 60 per cent of revenuesfrom government contracts, gives it a high degree of resilience andstability.

Business Performance

Arriva plc has continued to deliver a year of substantialgrowth. Group revenue increased by more than 57 per centyear-on-year in the nine months ended 30 September 2008, reflectinggrowth in mainland Europe and the effect of the CrossCountry railfranchise which began in November 2007. Across all threedivisions close attention to cost control has been maintained.

Year-on-year revenue in our mainland Europe division is up by 51per cent for the first nine months, reflecting acquisitions, newtender starts, and the impact of the euro strengthening againststerling.

In our CrossCountry rail franchise, like-for-like* passengerrevenues have increased by 11.9 per cent for the period from 6January to 11 October 2008. Arriva Trains Wales passengerrevenues have increased by 12.0 per cent for same periodyear-on-year.

In our UK regional bus business, revenue for the first ninemonths of the year has increased by 6.3 per cent year-on-year, andmileage in our London business has increased by 4.5 per cent.

Business Developments

In the UK, the introduction of more than 460 new buses intoservice during 2008 is continuing, representing an investment ofmore than £63 million.

We continue to work with the industry to make constructivecontributions to the remaining stages of the legislative processfor the Local Transport Bill. We support the Government objectiveof encouraging even closer partnership working between operatorsand local authorities to make productive investments in improvedservices.

In our UK Trains division, we have introduced the first of fiverefurbished High Speed Trains (HSTs) for our CrossCountryfranchise. In addition to providing much-needed capacity on routeswhich are experiencing heavy demand, the refurbished HSTs arere-engined to improve fuel efficiency, reliability and reduceemissions. The introduction of the HSTs, refurbishment of existingrolling stock, and the development of new customer-facing ITsystems for CrossCountry are all going to plan.

In mainland Europe, in July we significantly increased ourposition in the growing Madrid transport market, with theacquisition of De Blas, one of the largest privately ownedcontractors to the Madrid transport authority. Also in July, wecompleted our purchase of 80 per cent of Eurobus Invest, thelargest privately owned Hungarian bus group, which providesregional, urban and contracted bus operations in Hungary andSlovakia. In August we were awarded a seven-year Swedish railcontract (with a two-year extension option) to operate servicesbetween Goteborg and Orebro from mid-June 2009.

Financial Position

The group’s financial position remains robust with astrong balance sheet and strong operational cash flows. We havecontinued to see attractive investment opportunities and gearinghas increased since the half year as we have taken advantage ofthese opportunities.

We continue to manage fuel costs proactively. Our hedging policy isprotecting the group from material impact during 2008. The finalaverage price paid for fuel in 2008 is anticipated to be 28.2 penceper litre, before delivery and duty.

We now have 82 per cent of our anticipated 540 million litrefuel requirement for 2009 fixed in price, with additionally around14 per cent covered by indexation and 4 per cent remaining unfixed.The current average price fixed for 2009 is now 41.3 pence perlitre. Assuming the same volumes for 2010 we have so farfixed around 38 per cent of our anticipated requirement at anaverage price of 34.3 pence per litre. Excluding the CrossCountryfuel fix**, our position for 2010 is 27 per cent fixed at anaverage price of 39.4 pence per litre before delivery and duty.

* Estimated like-for-like passenger revenues for the re-mappedfranchise

** As reported previously, 75 per cent of the approximate 100million litre annual fuel requirement for CrossCountry remainsfixed at 26.5 pence per litre, until 2016