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18 Dec 2008

Pre-close trading statement

  • Group revenue growth of approximately 50 per cent anticipatedfor the full year
  • Significant full year earnings growth, as expected

Leading European transport services group Arriva has built on astrong first half of the year, and has advanced in all threedivisions. We are confident of reporting considerable revenue andearnings growth for the full year, in line with managementexpectations.

Trading

Our UK Trains division hascontinued to demonstrate robust growth in both franchises.Passenger revenue for Arriva Trains Wales is up by 11.4 per centfor the year to 6 December 2008, and passenger revenue forCrossCountry for the same period is up 11.6 per cent on theequivalent services last year*. This represents passenger revenuegrowth in the eight weeks ending 6 December 2008, of 8.8 per centand 10.3 per cent respectively.

Our UK Bus division has continued to grow, through increasedpassenger numbers, increased contract mileage in London, andacquisitions. Passenger revenue growth for the first 47 weeks ofthe year has remained at 6.3 per cent, and mileage growth in ourLondon business has remained at 4.5 per cent. This year hasbenefited from our fuel hedging policy which has held fuel pricesbroadly unchanged from 2007.

Significant growth in mainland Europe has continued, withyear-on-year revenue up by around 50 per cent for the 11 months to30 November, reflecting acquisitions, new tender starts, and theimpact of the euro strengthening against sterling, all of whichhave also contributed to an increase in net debt.

Outlook

The macro-economic outlook for2009 inevitably creates some uncertainty regarding future rail andbus passenger revenue. In addition, as previously highlighted, 2009presents the specific challenge of a significant increase in thecost of fuel** across the group. We continue to manage costsstringently and, where appropriate, match our services closely todemand. Looking further ahead, fuel costs will be lower in thefirst half of 2010 compared to 2009.

Against an increasingly tough general economic background,Arriva is a resilient business, with bus and rail operations in 12countries, a £12 billion order book (as of 31 December 2007),and more than 60 per cent of revenues from governmentcontracts.

Preliminary results for the full year ending 31 December 2008are due to be announced on Thursday 5 March, 2009.

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

** We have fixed 85 per cent of our fuel requirements for 2009(now anticipated to be 522 million litres) at an average price of42.4 pence per litre before delivery and duty, at current exchangerates, compared with an average price of 29.2 pence per litre paidin 2008. Approximately 13 per cent is covered by indexation, andtwo per cent remains unfixed. This represents a year-on-yearincrease in the cost of fuel of approximately £60 millionacross the group. For 2010, assuming a similar 522 million litrefuel requirement, we have so far fixed around 51 per cent at anaverage price of 36.2 pence per litre, at current exchange rates. Afurther 13 per cent, at this time, is anticipated to be covered byindexation. Excluding the CrossCountry fuel fix, our position for2010 is 43 per cent fixed at an average price of 40.3 pence perlitre. 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. Fuel costs, on alike-for-like basis, are anticipated to be approximately £15million lower in the first half of 2010 compared to 2009.