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National Express CFO on his road to recovery

Jez Maiden, group FD of National Express Group

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So much can change in four months, especially in the world of finance. Jez Maiden, group finance director of National Express, understands this. But he could never have anticipated that the capital markets would turn upside down in two short seasons. But change they did to the extent that a job offer in June 2008 may have been viewed somewhat differently had it been proposed in December 2008.

Nonetheless, that June Maiden had handed in his resignation as FD at Northern Foods and had accepted the group FD role at National Express, which was a profitable but highly geared company – but then so were many others at that time. When he came to take up his new post in November 2008, however, the world was a different, more complicated place.

Although National Express’s debt levels weren’t dissimilar to many public companies at the time (it had debt levels of around 3 to 3.5 times EBITDA in the summer of 2008) the market view of debt had radically altered. As everyone now knows, “Lehman’s happened”, causing banks to stop lending to companies and to each other, resulting in the first credit crunch in almost 100 years.

“The world changed significantly from a situation where having a company with strong profitability but relatively high debt was fine to where that was problematic. The company was the same. The macroeconomic environment changed,” Maiden says.

A week before he was about to start his CEO called him to say the business was fully drawn on its bank facilities. “We suffered enormously by having big exposure, in debt terms, to the euro and the dollar at a time when sterling was dropping very rapidly. That had put the company under tremendous strain. So when I joined we went through five or six steps in a long process of survival.”

Running on empty

Fortunately Maiden, aged 51, is a seasoned FD having been finance chief at Northern Foods, British Vita and Britannia Building Society before disembarking at National Express. Still, he says no one was prepared for the block on liquidity.

“That was the first time in my career that I could remember liquidity being so difficult to come by, and while you’ve got committed facilities. You’ve got to think about that refinance in 18 months’ time.”

In the past, he says, CFOs would have negotiated another facility or extended their existing one but that option was no longer possible. “Lehman destroyed liquidity and you had to work with the resources your banks were committed to,” he says.

Knowing this, the first thing he and the CEO did was to get a handle on cash and debt and cut back on spending. To manage this he put in place a process around weekly cash management and cash generation. They also began selling off “surplus” assets including a London bus business “which wasn’t core” and tackled the issue of getting out of a “very unprofitable rail contract” – the East Coast Rail franchise, which not only annoyed the Labour government at the time but also cost the company almost £100 million and damaged its reputation.

As if that wasn’t enough to contend with Maiden was achieving this against a backdrop of “quite a lot of management change”. Three weeks after the finance chief joined there was a change of chairman and within six months Richard Bowker has quit as chief executive. New boss Dean Finch joined in February 2010. Finch however had a background in public transport and so brought with him deep expertise and knowledge about the industry.


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