Shadow Strategic Rail Authority

£238 million additional investment for passengers on Midland Mainline
_______________________________________________________________

date 10 August 2000
source Shadow Strategic Rail Authority
type Press release

A multi £ million investment package has been agreed for Midland Mainline
following the negotiation of an extended franchise by the Shadow Strategic
Rail Authority (sSRA) and National Express Group plc. The re-profiled
franchise payments mean that these benefits come with no subsidy from the
taxpayer for the rest of the extended franchise term.

Under the new franchise agreement, Midland Mainline passengers are to
benefit from a substantial package of improvements to their services, costing
approximately £238 million. In return the current ten year franchise term will
be extended by two years to April 2008.

The new franchise contract will also include a commitment to a 2%
improvement in performance (as measured by the sSRA's Public
Performance Measure, which monitors both punctuality and reliability.)

The key elements of the new deal are:

£60m investment in infrastructure
£135m investment in new rolling stock
£17m investment in a new East Midlands Parkway Station
£22m investment at stations
£4m investment in customer service and training
Sheffield services extended hourly to Leeds and three additional peak services
Profit sharing with SSRA above a pre-determined threshold

The investment programme will be achieved through the re-investment of the
premium which the company would otherwise have paid to the Government
for operating the franchise under the terms of the original contract.

Announcing the new franchise terms, Franchising Director and sSRA Chief
Executive Mike Grant said:

"The exciting new investment package that we have secured is excellent
news for passengers and their communities, who will benefit both from faster
journey times and new rolling stock.

"This substantial level of additional investment, coupled with new performance
targets will ensure improvement in the quality of service of what is already
accepted by passengers as a train operating company which performs well."

Phil White, Chief Executive of National Express said:

"Today's announcement is a good deal for passengers, staff and shareholders
- and is fully in line with our aim to make public transport the first choice travel
option. Since we won the Midland Mainline franchise in 1996, we have
introduced many service improvements and attracted many more passengers
- with double digit growth in passenger numbers recorded last year.

"Today, our railway network needs further investment to extend into the future
the levels of passenger growth experienced over the last 3 years. With more
of our rail franchises having longer terms and significant growth prospects, the
Group can invest to deliver train services which will meet our passengers' real
needs for the 21st century."

Notes to editors
1. The Midland Mainline franchise was awarded to National Express for a
10 year duration in April 1996.
2. Midland Mainline operates high speed and Turbostar train services
along the M1 corridor between London, the East Midlands and South
Yorkshire. The majority of Midland Mainline passengers are travelling
to and from London, but with growing numbers travelling between
intermediate stations along the route. There is a mixture of leisure,
business and commuter travel. A map of the Midland Mainline high
speed route is attached. [[not available]]
3. Under current track access arrangements there will be nil subsidy and
nil payment from January 2003.
4. Premium payment (£ m based on current prices )
2000 2001 2002 2003 2004 2005 2006 2007 2008
Existing arrangement 0.49 1.56 3.44 5.70 8.15 10.77 3.80 N/a N/a
Futurearrangement 0.49 0 0 0 0 0 0 0 0
5. Under clause 20 of the Franchise Agreement the Franchising Director
has powers to extend the duration of an existing franchise with the
incumbent up to a maximum of two years.
6. The extension to 2008 is conditional on delivery of key contractual
obligations to agreed dates otherwise the franchise will shrink back to
10 years.

Important Notice
This news release is issued by the Franchising Director and its contents have
been approved for the purposes of section 57 of the Financial Services Act
1986 by KPMG Corporate Finance.
KPMG Corporate Finance is a division of KPMG which is authorised to carry
on investment business by the Institute of Chartered Accountants in England
and Wales. This news release has been prepared for general information
purposes only and is not intended to form the basis of any investment
decision or constitute an offer or invitation to bid for any passenger rail
franchise or to acquire shares in a train operating company. Neither this news
release nor any copy of it should be taken into or distributed in Canada,
France, Japan or the United States except in accordance with an applicable
exemption. The distribution of this news release in other jurisdictions may be
restricted by law and therefore persons into whose possession this news
release comes should inform themselves about and observe any such
restrictions.
KPMG Corporate Finance is acting for the Franchising Director and will not
regard any other person as its client in relation to passenger railway
franchising or be responsible to anyone other than the Franchising Director for
providing the protections afforded to clients of KPMG Corporate Finance nor
for advising any other person on the contents of this news release or any matter referred to in it.

Railhub Archive ::: 2000-08-10 SRA-003