First Group Plc

FirstGroup plc

Annual Report and Accounts 2024

We are FirstGroup

FirstGroup is a leading private sector provider of public

transport. We provide easy and convenient mobility,

improving quality of life by connecting people and

communities. Our services are a vital part of society,

transporting customers for business, education, health,

social and leisure purposes. Our businesses are

at the heart of our communities, and the services

we provide also support the delivery of wider economic,

social and environmental goals.

Governance report

103

Corporate Governance report

104

Governance at a glance

106

Board

114

Nomination Committee report

116

Audit Committee report

123

Responsible Business Committee report

124

Remuneration Committee report

158

Directors’ report and

additional disclosures

161

Statement of Directors’ responsibilities

Financial statements

162

Independent auditor’s report

171

Consolidated income statement

172

Consolidated statement

of comprehensive income

173

Consolidated balance sheet

174

Consolidated statement

of changes in equity

175

Consolidated cash flow statement

177

Notes to the consolidated

financial statements

252

Group financial summary

254

Company balance sheet

255

Company statement of changes in equity

256

Notes to the Company

financial statements

260

Shareholder information

262

Glossary

Introduction

FY 2024 highlights

At a glance

Strategic report

Chairman’s statement

How our markets work

Our business model

Chief Executive Officer’s review

Chief Executive Officer’s Q&A

Our strategic framework

Key performance indicators

Business review

Financial review

Responsible business

Climate-related financial disclosures

Risk management

Viability and going concern

Our stakeholders

101

Section 172 statement

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

We have made considerable

progress in our financial

and operational performance

in FY 2024 as we continue

to transform and grow our

leading First Bus and First Rail

businesses. This is testament

to the resilience and capability of

our people across the Group and

leaves us well positioned to grow

and create further value for all

our stakeholders.

Graham Sutherland

Chief Executive Officer

Successful execution of the Group’s strategy

Read more on page 17

Continued focus on operational

delivery and driving modal shift

Enhancing the Group’s sustainability

credentials and accelerating

decarbonisation in First Bus

Further growth and diversification

of the Group’s portfolio



First Bus on track to achieve

10% adjusted operating profit

margin having grown

to 9.4% in H2 2024



West Coast Partnership awarded

National Rail Contract to October

2032 with core three-year term



Lumo has now carried more than

2.5m passengers since October

2021 launch and added 14% more

capacity over the last year



Landmark strategic joint venture

with Hitachi, Green Hire Purchase

Finance Facility and successful

applications for £16m ZEBRA 2

co-funding during the year



c.300 electric buses delivered

in FY 2024 and more than 300

charger outlets installed



Great Western Railway conducting

industry-first fast-charge

battery-only train trial



FirstGroup joined United Nations

Global Compact and First Bus

achieved Real Living Wage

employer status



York Pullman acquisition and

new Adjacent Services contracts

in First Bus



Formal applications submitted for

two new open access operations,

the extension of some of Lumo’s

services to Glasgow, and for

additional paths on Hull Trains

and Lumo



First Rail awarded TfL London

Cable Car contract and qualified

to bid for Elizabeth Line contract

Material increase in Group profit driven by continued progress in both

First Bus and First Rail further underpinning the Group’s strong balance sheet.

Highlights

of the year

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Highlights of the year

continued

Performance summary

FY 2024 (£m)

FY 2023 1(£m)

Cont.

Disc.

Total

Cont.

Disc.

Total

Revenue

4,715.1

–

4,715.1

4,755.0

4.0

4,759.0

Adjusted

operating profit/(loss)

204.3

(1.9)

202.4

161.0

(6.6)

154.4

Adjusted operating profit margin

4.3%

3.4%

3.2%

Adjusted profit/(loss) before tax

139.0

(2.2)

136.8

104.2

(6.3)

97.9

Adjusted EPS

16.7p

(0.3)p

16.4p

10.9p

(0.9)p

11.6p

Dividend per share

5.5p

3.8p

Adjusted net cash

64.1

109.9

Statutory

FY 2024 (£m)

FY 2023 (£m)

Statutory

Cont.

Disc.

Total

Cont.

Disc.

Total

Revenue

4,715.1

–

4,715.1

4,755.0

4.0

4,759.0

LGPS pension settlement and

related charges

(146.9)

–

(146.9)

–

Other operating (costs)/income

(4,521.7)

(5.3)

(4,527.0)

(4,601.1)

27.3

(4,573.8)

Operating profit/(loss)

46.5

(5.3)

41.2

153.9

31.3

185.2

(Loss)/profit before tax

(24.4)

128.7

Total comprehensive income/

(loss) for the period

49.0

(7.4)

EPS

(2.4)p

11.8p

Net debt

1,144.8

1,269.1

–

Bonds, bank and other debt

net of (cash)

(313.7)

(479.5)

– IFRS 16 lease liabilities

1,458.5

1,748.6

‘Cont.’ refers to the Continuing operations comprising First Bus, First Rail, and Group items. ‘Disc.’ refers to discontinued

operations, being First Student, First Transit and Greyhound US.

‘Adjusted earnings’ are shown before net adjusting items and excludes IFRS 16 impacts in First Rail management fee operations.

For definitions of alternative performance measures and other key terms, see the definitions section on page 262.

‘Adjusted EPS’ and EPS based on weighted average number of shares in the period of 662.9m (FY 2023: 739.8m) reflecting

the current year and prior year share buybacks.

‘Adjusted net cash’ comprises bonds, bank and other debt net of free cash (i.e. excludes IFRS 16 lease liabilities and

ring-fenced cash).

FY 2024 statutory operating loss before tax of £(24.4)m includes predominantly non-cash charges

of £146.9m relating to the Group’s termination of its participation in two Local Government Pension

Schemes during the period with an offsetting £161.0m gain in the Condensed Consolidated

Statement of Comprehensive Income.

Group revenue

Continuing operations

£4,715.1m

FY 2023: £4,755.0

Group adjusted operating profit

Continuing operations

£204.3m

FY 2023: £161.0m

Significant increase in Group

adjusted operating profit to £204.3m

(FY 2023: £161.0m) includes extra week

of trading and receipt of higher than accrued FY

2023 variable fees in First Rail (c.£13m)

Share buyback

Continuing operations

c.£117.6m

c.£117.6m returned to shareholders via

buyback programmes in FY 2024 (£19.3m

remains to be completed as at 10 June 2024)

Dividend per share

5.5p

FY 2023: 3.8p

Adjusted earnings per share

Continuing operations

16.7p

FY 2023: 11.6p

Adjusted EPS of 16.7p (FY 2023: 11.6p)

enhanced by repurchases of 80.6m shares

during FY 2024

Adjusted year end net cash

Continuing operations

£64.1m

FY 2023: £109.9m

Strong balance sheet position

Financial highlights

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Find out more about

FirstGroup online

London

York

Aberdeen

Edinburgh

Newcastle

Hull

York

Leeds

Shefﬁeld

Leicester

Ipswich

Slough

Basildon

Portsmouth

Glasgow

Cork

Galway

Belfast

Bristol

Manchester

Bradford

Stoke-on-Trent

Worcester

Penzance

Dublin

Weymouth

Plymouth

Crewe

Weston-super-Mare

Swansea

Cardiff

Truro

Bath

Norwich

Chelmsford

London

Birmingham

Southampton

Oxford

FirstGroup

FirstGroup is a leading private sector

provider of public transport. We have

a diverse portfolio of businesses including

bus, rail, coach and tram operations that

provide easy and convenient mobility,

improving quality of life by connecting

people and communities.

We provide efficient, reliable, safe and

increasingly sustainable transport links that

connect communities, and our services are

critical to ensuring local economies are vibrant

and robust.

FirstGroup’s four strategic pillars will

support us to drive value and sustainable

growth and lead the way in our sector.

Read more on page 34

1.14

passenger

journeys a day

depots

c.13,500

employees

c.4,800

buses

First Bus

21%

First Rail

79%

First Bus

37%

First Rail

63%

750,300

passenger

journeys a day

404

stations

c.15,500

employees

c.3,700

locomotives and

rail carriages

At a

glance

Approximate First Bus market share

of UK market outside of London (%)

Passenger revenue base

of First Rail operations (%)

Leisure

63%

Business

18%

Commuter

19%

First Bus

20%

Others

80%

Avanti West Coast (Avanti)

Great Western Railway (GWR)

South Western Railway (SWR)

Hull Trains

Lumo

First Bus operations

Revenue

(as % of Group)

Adjusted operating

profit (as % of Group)

Who we are

Our purpose

Our strategy

Business split

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Introduction

The last year has been a period in which

FirstGroup has continued to take strong and

positive steps along the evolutionary journey

since I became Chairman in August 2019. The

Group has continued to demonstrate progress

and has become a resilient, focused and

profitable business which is well positioned

to deliver further long-term growth and value

for all of our stakeholders.

The Group has leading positions in the bus and

rail sectors, a strong balance sheet, and we are

increasing the diversity of our revenue streams.

Our breadth of capabilities gives us a robust

platform to invest in growth opportunities and

enables us to lead the way as we play a critical

role in supporting economic and environmental

goals for the communities where we operate

across the UK and Ireland.

During the year the Group continued its focus

on operational delivery and driving a shift from

other modes of transport to bus and rail. I am

pleased that First Bus is on track to achieve our

previously stated ambition of a 10% operating

margin and is continuing to work towards our

decarbonisation targets, with around 300 new

electric buses delivered and more than 300

charger outlets installed in the year. The team

signed a landmark joint venture with Hitachi

focusing on the supply of 1,000 bus batteries

and executed a £150m Green Hire Purchase

Finance Facility for a similar number of bus

vehicle bodies. The team successfully applied

for government co-funding which will help

support the purchase of further such vehicles.

First Bus signed new Adjacent Services

contracts and also completed the acquisition of

York Pullman, opening up new opportunities in

North Yorkshire.

In First Rail, we were pleased to be awarded

a National Rail Contract (NRC) for West Coast

Partnership to October 2032 with a core

three-year term, and we are leading the way

with new customer and sustainability initiatives,

including a battery train trial for GWR and new

trains entering service for SWR.

The Group’s two open access rail operators go

from strength to strength in this exciting market

with Lumo having carried around 2.5m

passengers to date and Hull Trains adding 14%

more capacity since December 2022 to meet

demand. The Group has submitted applications

for two new open access services from London

to both Sheffield and Rochdale, and also to

extend Lumo’s services to Glasgow. First Rail

has also continued to diversify and grow its

earnings, including the award of the London

Cable Car contract. The division is also

shortlisted in the Elizabeth Line contract

bidding competition.

In last year’s Annual Report, I wrote about the

industrial relations challenges in the rail sector,

which have remained a feature during the year.

While I am pleased that there has been

progress with both the TSSA and RMT unions

accepting offers that have been put to them,

the Aslef trade union for train drivers continues

to call industrial action, to the detriment of

everyone involved in the sector. We continue

to work closely with government and other

partners to mitigate the effects on customers.

In recent months we have also heard competing

visions for the future of the rail sector from both

main political parties. Companies such as ours

bring private investment and focus on cost

control to the sector as well as driving passenger

demand. We know growth is key for the future

of the railway, which is why alongside other rail

companies we have long called for reform and will

continue dialogue with the parties. In the bus

sector, we work closely with local authorities in

partnerships that are delivering effective change

for customers. I am equally confident that in areas

where authorities choose to franchise, the Group

can use its decades of experience to support

them as a partner of choice. The landscape

of public transport has always evolved and

continues to do so. We will work closely

with whichever political party is elected in the

upcoming general election, with the goal of

providing competitive, sustainable and improved

services for passengers and communities.

Chairman’s

statement

FirstGroup has a clear purpose to

provide efficient, reliable, safe and

increasingly sustainable transport links

that connect communities, and our

services are critical to ensuring local

economies are vibrant and robust.

David Martin

Chairman

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Chairman’s statement

continued

Our purpose and strategy

FirstGroup has a clear purpose to provide

efficient, reliable, safe and increasingly

sustainable transport links that connect

communities, and our services are critical

to ensuring local economies are vibrant and

robust. Public transport networks are the

lifeblood of successful towns and cities, and

they are essential to achieving global net-zero

carbon ambitions. The sector has a key part

to play to help resolve some of society’s most

important challenges, including climate change,

congestion and air quality.

The Group’s Executive team led by Graham

Sutherland has developed a new strategy

during the year, underpinned by four strategic

pillars which will drive the Group forward over

the next period. These are to deliver for our

customers day in, day out; encourage people to

switch from car and plane travel to bus and rail;

lead in environmental and social sustainability

and to grow and diversify our portfolio. The

strategy was developed with and agreed by

the Board during summer 2023, and all

divisional strategies across the Group are

aligned with this. You can read more about

the strategy on page 17.

Capital allocation and dividend

Following the completion of the sale of the

North American divisions, the Board concluded

that a well-capitalised, de-risked balance sheet

provides FirstGroup with the flexibility to

pursue its strategy to diversify and grow and

support returns to shareholders. As a result,

the Group adopted a balanced capital

allocation policy, including commitments to

decarbonise the First Bus fleet, maintain the

progressive dividend and to review targeted

investment in strategically and financially

accretive growth opportunities.

The £75m on-market share buyback programme

was completed during the year and we launched

a subsequent £115m programme in August 2023.

The Group continues to re-purchase bonds and

has also reduced pension exposure by removing

or fully insuring c.£1bn of gross pension liabilities

without requiring any cash.

In light of the Group’s financial performance

in FY 2024 and in line with our progressive

dividend policy, the Board has proposed a

final dividend of 4.0p per share which is subject

to shareholder approval at the Company’s

2024 AGM.

The Board and corporate activity

During FY 2024 an independent board

effectiveness review was undertaken, which

you can read more about on page 113. I am

pleased to report that this review concluded

that all Directors standing for re-election had

performed well and that the Board has an

appropriate skillset and composition following

the changes made over the preceding

two years.

This year’s financial results have been strong,

and we have made good strategic progress.

The Executive team have performed very well,

and Board members have provided strong

oversight. We held two Board meetings during

the year in cities where the Group operates

in order to allow Board members to meet

front-line employees and visit our operations

in those areas.

Sustainability

FirstGroup is committed to being the partner

of choice for sustainable and innovative

transportation solutions. Leading in environmental

and social sustainability is one of the four pillars

of the Group’s strategy and our commitment to

a zero emission trajectory for our vehicle fleets is

of the utmost importance. A second pillar of the

Group’s strategy places an emphasis on driving

a modal shift from cars and planes to cleaner bus

and train travel and with transport accounting for

more than a quarter of the UK’s total domestic

greenhouse gas emissions, it is vital that the

sector makes every effort to get people out

of cars and planes and onto buses and trains.

I am pleased to report that during the

year FirstGroup joined the United Nations

Global Compact and the Group was the

top performing bus and rail operator in

FTSE4Good Index, further enhancing our

sustainability credentials. We are making

good progress towards the First Bus 2035

zero-emission target and both Avanti and

SWR developed verified science-based

targets this year, following the Group’s lead

last year. This has also been the Group’s first

year reporting to the Transition Plan Taskforce

and I look forward to the publication of the

Group’s own transition plan later in 2024.

FirstGroup is a major employer across the UK

and also in Ireland and is committed to creating

a more diverse and inclusive business. The

First Connections programme was launched

this year offering further opportunities to those

female and ethnically diverse colleagues who

have taken part in the Step and Reach career

development programmes, and this year we set

new Group-wide diversity and inclusion targets.

I am also pleased to report that First Bus has

become the largest bus operator to gain Real

Living Wage accreditation.

The Board’s Responsible Business Committee

oversees the Group’s practices and

performance with respect to health, safety,

diversity and inclusion and sustainability,

including our transition to net zero. The

Committee has completed its second year

and you can read more about its activity

on page 123.

Our people

Our people are at the heart of our business

and we have continued to support them

through the challenging environment brought

about by inflationary pressures and industrial

action. I have been extraordinarily impressed

by the commitment and dedication that our

30,000 colleagues bring to the task of providing

the vital transport services on which millions

of our customers rely. On behalf of the Board

I would like to extend my sincere gratitude to

all of our employees for their hard work during

the year and for continuing to support our

customers and communities.

Conclusion

Transport is a vital and environmentally-friendly

sector which is essential to the economy and

plays a significant role in people’s lives, given

that people travel for a huge variety of business

and leisure reasons. FirstGroup is a cash

generative, well-capitalised business with a

strong balance sheet thanks to actions we have

taken in recent years. With leading positions

in the bus and rail markets, the Group has a

strong platform from which to develop and take

advantage of the opportunities that exist for

growth, including the development of additional

and adjacent services in both divisions and

open access in First Rail. The Board is

confident the transformation of the Group

undertaken since the sale of the North

American businesses is continuing to deliver

significant value for FirstGroup shareholders.

Changes in the political landscape will lead to

reform of the sector, no matter the result of the

general election, and this, coupled with the

diversification of the Group’s revenue streams,

will lead to a great number of opportunities

ahead of us. As a result I, and all the members

of the Board, remain very confident about the

Group’s future.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

How our

markets work

Bus and rail operators connect

people and communities and

play a critical role supporting

the country’s economic

and sustainability goals.

In a typical year, around 2.6 billion

passenger journeys are made

on bus services outside London,

generating approximately £4.4bn

in revenue.

Local bus services in the UK (with the exception

of London and Northern Ireland) have been

deregulated since the 1980s, with most

services provided by private operators,

although a small number of local authority-

owned operators still exist. The commercial

deregulated UK bus market is largely

competitive. Consequently, during a typical

year, a number of operators will enter and

leave the market.

For the majority of local bus services outside

franchises, operators set timetables and

fares on a commercial basis. A small

proportion of our local bus services are

operated for local authorities on a contract

basis, where commercial revenues are

insufficient to support the operations.

Bus operators’ revenues are principally derived

from fare revenue (passenger ticket sales and

concessionary fare schemes – reimbursements

by local authorities for passengers entitled to

free or reduced fares). Income is also generated

through tendered local bus services and

bespoke contracts for businesses or one-off

events, as well as tendered services for local

authorities such as Park & Ride schemes.

In addition, bus operators receive funding

including the Bus Services Operators Grant

(BSOG) – a partial fuel duty reimbursement

payment – in England, with similar schemes in

Scotland and Wales.

The UK Government’s National Bus Strategy

announced in March 2021 included a

multi-billion-pound funding package to deliver

a step change in bus services across England.

Bus Service Improvement Plans (BSIPs) were

introduced as part of the strategy. These are a

mechanism for local authorities to work closely

with their local bus operators and communities

to deliver simpler fares, improved services and

thousands of new green buses via either

local authority-led Enhanced Partnerships or

franchising. Funding has also been allocated

to schemes aimed at stimulating passenger

demand, including free travel for Under 22s

in Scotland and the £2 fare cap in England.

In support of the decarbonisation agenda,

Westminster and the devolved governments

have a number of co-funding grant schemes

that are aiding the industry’s investment in low

and zero emission buses.

£4.4

of annual revenue generated

by regional bus operators

2.6

passenger journeys are

made outside of London

a year

The UK’s regional bus market

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

How our markets work

continued

Partnerships and franchising

Demographics

Partnerships between operators and local

authorities are a core principle for the industry

and government to support service delivery,

minimise congestion and drive innovation

and investment.

Partnerships can take the form of partnerships,

such as Enhanced Partnerships, or franchising.

Under an Enhanced Partnership the local

authority commits to measures and facilities

and all operators are then bound to meet

certain standards of service. Facilities and

measures include bus priority lanes, bus stop

improvements, fare subsidies for particular

groups (e.g. under 25s or the unemployed),

new multi-operator or multi-modal ticketing,

better or new information including all-operator

apps, marketing campaigns and centralised

customer service.

Under the franchising model, potential

operators bid competitively for the right to

operate a bus franchise in accordance with

the local transport authority’s requirements,

including bus routes, services, timetables and

frequencies and service quality standards.

Contracts are typically issued for an operator

to run a package of routes within a particular

geographical area and will contain the terms

on which the authority wants to procure the

service. Once the contract comes into effect,

no other operators can run bus services on

the relevant routes unless the authority has

given its approval.

More people are using buses than ever before,

albeit less frequently with the new post-Covid

working patterns, as increased numbers

of young people and non-commuters are

taking advantage of the benefits of bus travel

as an affordable and sustainably conscious

transport option.

The ongoing digitisation of the industry is

providing much greater insight and data on

customer habits and allowing operators to

introduce more simple and tailored ticketing

solutions. Operators are also able to use

real-time customer information to better

understand their customers and their

journeys, allowing them to make decisions

to continuously improve their networks,

timetables and pricing to provide a better

customer experience.

Supportive government policies

Significant government recognition that

bus travel remains the most cost-effective

and quickest mechanism to achieve modal

shift from private car use, to lower

emissions, to improve congestion in

our towns and cities and to support

governments’ levelling-up agendas.

Digitisation

Digitisation is transforming the industry

giving operators increased visibility of

large numbers of customers, enabling

development of new propositions to

stimulate bus use.

Efficiency opportunities

Improved digital capabilities also provide

significant opportunities to optimise pricing,

improve service delivery and create more

efficient operations.

Favourable demographics

Demand growth opportunities exist in the

youth demographic where car ownership

is falling and customers are increasingly

environmentally aware.

Environmental benefits

Encouraging more people to use the bus and

introducing more environmentally-friendly

buses will create environmental benefits.

Market attractions

More young people

and non-commuters are

taking advantage of the

benefits of bus travel

as an affordable and

sustainably conscious

transport option.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

How our markets work

continued

£10bn+ industry revenue

More than £10bn of contract-backed

passenger revenue in a typical year through

around 20 major contract opportunities.

Consistent, resilient cash generation

The NRCs have no revenue risk and clear

performance-based fee opportunities,

with low capital intensity.

Regulated environment

Regulated environment, with limited

cost risk protected by annual budgeting.

High passenger numbers

Historically high levels of passenger

numbers across the UK pre-pandemic.

The UK’s rail industry

Passenger rail services are

primarily provided by private

Train Operating Companies (TOCs)

through contracts awarded by the

DfT or other government bodies.

There are currently 25 TOCs including

four open access operations in the

UK. There are currently four TOCs

operated by the UK Government’s

Operator of Last Resort and seven

contracted by devolved governments

other than the DfT.

National Rail Contracts (NRCs) were introduced

by the DfT during the pandemic to support the

industry. Unlike the previous system under

which operators undertook considerable

revenue and cost risk, the majority of the

revenue and cost risk resides with the DfT.

Operators earn an annual management fee

for service delivery, with the opportunity

to earn additional variable,

performance-based incentives.

Open access operators run services on

a different model from other TOCs, with

operators bearing all commercial risk and

opportunity. Operators are awarded Track

Access Agreements by the regulator the Office

of Rail and Road (ORR), typically for ten years,

with scope for renewal.

Open access routes are awarded where there

is a clear business case that they will promote

competition for the benefit of passengers,

generate sufficient new revenue and not

abstract revenue from current operators.

Operators make all commercial decisions

including ticket pricing, and set working

terms and conditions, and they have

financial protection for instances when

infrastructure is not available to them.

Rail track and infrastructure (including

signalling and major stations) are owned and

managed by Network Rail with TOCs typically

leasing rolling stock from leasing companies.

Some fares and prices (mainly peak time and

season tickets) are regulated and controlled

by government. Open access operators have

greater commercial flexibility in setting fares.

Rail markets are generally categorised into

four sectors: London and South East

commuter services, regional, and long

distance. Certain networks also offer sleeper

services. Parts of Great Western Railway (GWR)

fall into all four categories. South Western

Railway’s (SWR’s) customers are largely

commuters, Avanti West Coast runs mainly

long-distance inter-city operations, while Hull

Trains and Lumo cater to long-distance

travellers, underpinned by the leisure market.

The main competitor to rail in the UK is the

private car. On some passenger flows, there

is competition from other rail services and,

to a lesser extent, from long-distance coach

services and airlines. First Rail bids for

contracts against other current UK rail

operators and public transport operators

from other countries.

Open access identification

and mobilisation

Identify new routes

and timetable gaps

Develop business case including

timetable, journey times,

ﬂeet and resources strategy

Submit application to ORR

for review

ORR consultation with other

operators and Network Rail

Detailed performance

and revenue modelling

ORR approves and awards

Track Access Agreement

Mobilisation



6-12 months for existing contract

with rolling stock already in place



Off-lease rolling stock c.1 year



New rolling stock c.3 years

2–5 years

£10

of contract-backed passenger

revenue in a typical year

Market attractions

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Strengths and resources

Our people

Our c.30,000 employees are at the heart of

our business and have the skills, expertise

and knowledge to drive our future success.

Read more about open access on page 14

Our operations

Our business model

FirstGroup is a focused and resilient business. Our business model delivers value to a wide range of stakeholders by providing vital

transport services that connect people and communities and that are key to achieving society’s social, economic and environmental goals.

United

by our Values

Committed to

our customers

Supportive of

each other

Dedicated

to safety

Setting the

highest standards

Accountable for

performance

Deliver day in, day out

Drive modal shift

Lead in environmental

and social sustainability

Diversify our portfolio

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Graham Sutherland

Chief Executive Officer

Four strategic pillars to drive growth

I am extremely proud of what has been

achieved during my first two years as

Chief Executive Officer, as we continue to

transform our businesses and deliver for our

stakeholders. We have maintained our strong

balance sheet and have considerable scope to

grow further in First Bus and First Rail open

access. To achieve this, we have set out four

key strategic pillars that will drive the Group

forward. These are:

Deliver day in,

day out

Drive modal

shift

Lead in environmental

and social sustainability

Grow and diversify

our portfolio

Looking first at delivery, operational excellence

is at the heart of our strategy. We must continue

to strive to ensure the best possible customer

experience, consistently deliver reliability and

cost efficiency and implement price strategies

to enhance customer value, drive demand and

improve yield. This will enable us to continue to

win key contracts in both First Bus and First Rail

to maintain our positive earnings trajectory and

encourage more people to use our services.

To drive a step change from car and air travel

to bus and rail, we plan to add capacity in First

Rail’s open access operations and continue

to position the First Bus customer proposition

to drive demand, with a focus on encouraging

people to make the switch from private cars.

Leading in environmental and social sustainability

has long been a priority for the Group. We are

committed to the safety of our customers,

our employees and all third parties in contact

with our businesses. We are delivering on our

decarbonisation commitments and we will

always seek to support prosperity, growth and

green jobs in the communities that we serve.

We see this as a key differentiator of

FirstGroup’s proposition and increasingly

a driver of growth going forward.

Finally, the Group’s considerable balance sheet

capacity provides us with flexibility to take

advantage of value accretive opportunities to

further grow and diversify our portfolio. In First

Bus, we will pursue franchising and partnership

opportunities, expand our Adjacent Services

businesses and continue to evaluate a pipeline

of complementary inorganic growth

opportunities. In First Rail, we are actively

working to grow our open access businesses,

scale our Additional Services businesses,

bidding for non-DfT contracts and monitoring

opportunities for new open access contracts.

We have a huge wealth of experience and

expertise within our divisions and I believe

FirstGroup has a very exciting future.

We have a huge wealth

of experience and expertise

within our divisions, and

I believe FirstGroup has

a very exciting future.

Chief

Executive

Ofﬁcer’s

review

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

CEO’s review

continued

FY 2024 financial highlights

Looking now at our financial performance,

I am pleased to report another excellent set

of results for our 2024 financial year despite

continued economic and industrial

relations challenges.

Our divisions have performed well during the

year which, together with the positive impact

of the extra week of trading in FY 2024 and the

receipt of higher than accrued final FY 2023

variable fee awards in the DfT TOCs, has

resulted in a significant increase in our

adjusted earnings per share, from 11.6p

in FY 2023 to 16.7p in FY 2024.

We have also maintained our strong balance

sheet, ending the year with adjusted net cash

of £64.1m, having committed investment of

over £100m to the electrification of our bus

fleet and infrastructure, invested in our

landmark strategic decarbonisation joint

venture with Hitachi, acquired York Pullman

and returned almost £118m to shareholders

via our buyback programmes.

First Bus highlights

First Bus has continued to grow its revenues

and profit in FY 2024 as a result of further

growth in passenger volumes, improvements

in our operational and cost performance, lower

lost mileage and an increased contribution from

our Adjacent Services businesses, leaving us

firmly on track to reach our 10% adjusted

operating profit margin target in H2 2025.

Total revenue for the year was £1,012.2m

(FY 2023: £902.5m), reflecting strong

growth across the business.

In February 2024, we completed the acquisition

of York Pullman, a high-performing operator of

coaches and buses. The integration of the York

Pullman into First Bus is progressing well and

its addition to the First Bus portfolio will

enhance our operational footprint in the North

Yorkshire region and provide profitable growth

opportunities in the contracted and commercial

services markets. The adjacent bus services

market in the UK is considerable, and we are

actively reviewing a pipeline of opportunities

to grow the business and win further contracts.

First Bus decarbonisation

Aided by our strong balance sheet and

ownership of our depots, we are committing

significant investment in decarbonisation as we

progress towards our target of a zero emission

fleet by 2035. The electrification of our fleet

and infrastructure will further transform our

business and provide a number of value

accretive adjacent revenue streams.

We now have around 600 electric buses, about

13% of our fleet, and three fully electric bus

depots in England, with six further depots

across the UK partially electrified.

We have over 600 charger outlets and are

making use of smart charging software to

optimise our energy use and increase battery

efficiency and potentially extend battery life.

We are also making our charging infrastructure

available to third parties, with successful

arrangements underway with DPD, Openreach

and public services providers at four of our

depots. We have also recently opened a

purpose-built hub at our Summercourt depot

in Cornwall, providing direct access for the

public to eight rapid chargers.

Whilst electric vehicles result in operational

improvements that lower the service delivery

costs relative to diesel, the initial capital

investment for electrification is still

considerable. In addition to working with our

local authority partners to secure government

co-funding and committing Group capital, we

are forming strategic partnerships and securing

innovative financing. This is allowing us to

purchase electric buses and batteries with

increased efficiency and greater visibility of our

financial commitment and our strategic joint

venture with Hitachi will also allow us to retain

much of the residual value in the batteries as

they are replaced.

Looking ahead, in March 2024 we announced

that we had worked successfully with our local

authority partners to secure £16m through the

UK Government’s ZEBRA 2 co-funding scheme

to support bus and fleet decarbonisation

across four of our regions.

Following the completion of our latest ongoing

electrification projects, we will operate more

than 800 zero-emissions vehicles, c.18% of our

fleet. We have also bought power connections

to another 15 of our depots and construction

works are underway. This is a remarkable

achievement and is establishing us as leaders

in bus fleet and infrastructure decarbonisation.

First Bus – partnerships

and franchising

We have decades worth of expertise and

knowledge in delivering transport solutions

for our customers across the public transport

sector. We work closely with local authorities

across the UK in partnerships that are delivering

change for customers quickly and effectively.

We have seen this to full effect in Leicester

where, in partnership with Leicester City

Council and the city’s other bus operators, in

under a year we have achieved multi-operator

ticketing, streamlined timetabling of services

for all operators, improved real-time information for

passengers, increased reliability, and introduced

electric bus fleets and infrastructure.

A number of cities outside London have

expressed an interest in franchising, including

some where we don’t currently have operations.

In areas where authorities choose to progress

with franchising, we are confident that we will

be able to use our extensive experience to

support them. Despite not winning any large

contracts, we are pleased to be working with

Transport for Greater Manchester (TfGM) as

the selected operator of their new Bee Network

in Rochdale, maintaining our overall position

in Manchester. We have also supported TfGM

with the electrification of their Oldham depot

due to our expertise in this field.

Our landscape is always evolving and getting

more people to use the bus is a key part of

the modal shift pillar of our strategy. We will

continue to adapt our business to deliver

great value, and shape networks to suit

where and when people want to travel,

to serve communities and grow local

economies in a sustainable way.

Regardless of the model, close partnerships with

local government stakeholders are essential for

the thriving local bus networks we all want to

see, and we are committed to working with our

partners locally and nationally to achieve this.

of our First Bus

ticket transactions

are now digital

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

First Rail highlights

In First Rail, we continue to demonstrate our

capabilities and deep sector knowledge to

bring value to our passengers and to the

taxpayer, as we strive to improve customer

experience and to reduce the level of

rail subsidies.

Despite continued industrial relations

challenges during the year, our DfT TOCs have

reported an increase in adjusted operating

profit, to £105.6m (FY 2023: £93.3m), which

included an uplift of c.£13m as a result of the

variable fee payments agreed with the DfT for

FY 2023 being ahead of the amounts accrued

in the Group’s FY 2023 financial statements.

This achievement demonstrates how hard our

teams are working to deliver day in, day out,

in a challenging environment.

In May 2023 the DfT announced its decision not

to exercise its option to extend TPE’s National

Rail Contract (‘NRC’). The loss of the contract

was a huge disappointment for our team who

have all worked extremely hard to improve

services and to successfully recruit and train

more drivers than ever before. We supported

the DfT’s Operator of Last Resort in ensuring a

smooth transition for passengers, partners and

employees. We anticipate that we will receive

all remaining amounts due to be paid to the

Group in FY 2025, and our First Rail affiliate

services also continue to support TPE.

We were very pleased to have been awarded

a nine-year National Rail Contract for the West

Coast Partnership (‘WCP’) in September 2023.

The NRC has a minimum three-year core term

to October 2026.

Our open access operations have

outperformed expectations again in FY 2024

and have consistently recorded some of the

lowest levels of operator-related cancellations

in the industry. Lumo continues to offer

competitive fares and value to customers

and has now carried more than two and a half

million customers since its launch, many of

whom would otherwise have flown between

London and Newcastle or Edinburgh at a far

greater environmental cost. Its revenues increased

by 42% in FY 2024, driven by effective yield

and demand management, and seat capacity

utilisation has grown from 71% to 74%.

Hull Trains also had a very strong year, with

revenues up 40%, thanks to increased leisure

demand and significantly improving business

customer volumes. In response to increasing

demand, the team has added 14% more

capacity since December 2022, running ten-car

trains (typically a five-car service) at peak

demand times. Seat capacity utilisation

improved from 59% in FY 2023 to 69% in

FY 2024.

First Rail portfolio diversification

and growth

The huge success of our open access

operations has provided further evidence that

we have the experience and entrepreneurial

spirit to resolve challenges and innovate in the

rail sector for the future, adding capacity and

encouraging passengers back to the railway.

We are actively pursuing opportunities to build

on the success of Lumo and Hull Trains through

rolling stock efficiency improvements, adding

capacity to existing services and identifying

new routes and markets where there is capacity

and demand. We recently submitted an

application to the ORR for a new Hull Trains

London-Sheffield service, a new Lumo

Rochdale-London service, for the extension of

a number of Lumo’s daily services to and from

Glasgow, for an additional eighth return service

on Hull Trains between London and Hull and

for an additional, sixth return Lumo service

between London and Newcastle. These

applications, if successful, will more than

double our open access capacity.

We also continue to make use of our in-house

expertise to grow our First Rail Additional

Services businesses and GWR are conducting

an industry-first trial of a fast-charge

battery-only train, which included setting

a UK distance record for a battery train

without recharging earlier this year.

Our Additional Services businesses include

First Rail Consultancy, our bespoke contact

centre First Customer Contact, Mistral Data

and evo-rail. They delivered an 11% increase

in gross revenue to £133.5m in FY 2024,

compared to £120.0m in FY 2023.

We are also identifying and participating in

other UK opportunities. In March 2024, we

announced that we have been awarded the

contract to operate the London Cable Car by

TfL and we have been shortlisted with our bid

partner Keolis SA to bid for the Elizabeth Line

contract. We look forward to submitting a

compelling bid that demonstrates our collective

experience and breadth of capabilities.

Corporate activity and dividends

We have now received final First Transit earnout

proceeds of £65.3m and have continued to

opportunistically repurchase the Group’s

September 2024 6.875% bonds, of which

£96.2m remains outstanding as at 10 June

2024. We have also significantly reduced

or insured the Group’s gross pension liabilities

(excluding contract rail which reverts to

government at contract end), from £2.3bn

at the start of the year, to £1.4bn.

In light of the Group’s financial performance

in FY 2024 and in line with our progressive

dividend policy, the Board has proposed a

final dividend of 4.0p per share. Subject to

shareholder approval at the Company’s 2024

AGM, a final dividend payment of c.£24.3m, will

be paid on 23 August 2024 to shareholders on

the register at 19 July 2024. The total dividend

for the year paid and proposed is 5.5p per share

(FY 2023: 3.8p per share), an increase of 45%.

CEO’s review

continued

£37.7m

First Rail open access and additional

services Adjusted Operating Profit

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Leading in environmental and

social sustainability

I am pleased to report that we have seen

further recognition of the Group’s sustainability

credentials in FY 2024. In addition to joining

the UN Global Compact, we were once again

included in the S&P Global Sustainability

Yearbook, were one of only eight UK

companies to be included in the 2024 Clean200

list of top publicly listed companies worldwide

by clean revenue and were included in

Sustainalytics’ 2024 ESG Top-Rated

Companies List.

Our employees and customers remain at

the heart of everything we do. In FY 2024 we

successfully launched First Connections, a

personal development programme aimed at

female and ethnically diverse employees and

First Bus became the UK’s largest national bus

operator to become an accredited Real Living

Wage employer. In FY 2024, the Group raised

c.£200,000 for its charity partners, Samaritans,

Railway Children, and Macmillan, while our

DfT TOCs supported almost 100 community

funding projects, worth over £2m.

Looking ahead

Current trading and the Group’s outlook for

FY 2025 is in line with our expectations.

Positive free cash generation after c.£120m

of net cash capital expenditure in First Bus is

expected to result in a year end adjusted net

cash position in the range of £40-50m. This

includes the anticipated capex saving resulting

from the Hitachi joint venture, the completion

of the current share buyback programme and

is before investing in any potential inorganic

growth opportunities.

In First Bus, we expect to achieve progressive

growth in FY 2025 against FY 2024 as we

continue to benefit from the actions we have

taken to transform the business and drive

further growth in Adjacent Services. As a result,

we anticipate that we will achieve our 10%

adjusted operating profit margin in H2 2025.

The transformation of the First Bus business

is delivering stronger foundations with a

simplified, more efficient operating model.

We are set to benefit from electrification

efficiencies and adjacent revenue streams,

and from potential franchising, partnership

and inorganic growth opportunities. This

provides scope for sustained earnings growth.

Underpinning this, we believe that despite

short-term economic challenges, government

policy, favourable demographics and

environmental and societal trends will

support growth in the regional bus sector.

In First Rail, we expect the division’s financial

performance to be broadly in line with our

expectations in FY 2025, including growth

in open access and a normal level of variable

fee awards in the DfT TOCs (c.two thirds of

the maximum available).

Looking beyond FY 2025, despite political

uncertainty surrounding National Rail contracts,

we will maintain our focus on delivery and will

capitalise on opportunities to make use of our

extensive experience and expertise to grow our

UK open access business, scale our Additional

Services businesses and participate in other

UK opportunities.

If approved, the applications we have recently

submitted for new and extended open access

services could more than double our open

access capacity over the next three to five years.

If our application for the new Hull Trains service

between London King’s Cross and Sheffield is

successful, we anticipate that services could

commence in calendar year 2026, subject to

stakeholder agreement, and for the Lumo

Rochdale-London service, we currently

anticipate a start date in calendar year 2027.

Both Conservative and Labour parties have put

forward proposals for the future of the UK rail

industry. Although there are significant

differences, both parties are promoting the

development of a ‘guiding mind’ industry body,

named as Great British Railways in the

Government’s Plan for Rail. Labour have said

that if elected they will “fold existing private

passenger rail contracts into the new body as

they expire”. Looking at the industry as a whole,

the huge growth in passengers and significant

improvements to stations and rolling stocks

that private train companies delivered under

franchise agreements before the pandemic,

including those under our stewardship,

demonstrates that the UK rail industry works

best as a public-private partnership.

Furthermore, companies such as ours bring

private investment and focus on cost control

to an industry that needs it; our businesses

have saved more than £230m for the DfT in the

last two years alone.

We have been one of the largest UK rail

operators for more than 25 years, during which

we have worked successfully with a wide range

of partners under various forms of contract

types, and delivered a number of significant rail

infrastructure and fleet infrastructure projects.

We know that growth and innovation are key

for the future of the railway and are committed

to working with our government partners to

provide competitive, sustainable and improved

services for all passengers and communities.

We will also continue to monitor developments

in the European rail market where, as the

market opens up for competition, there are

opportunities for new open access entrants

with similar regulatory models to the UK.

When assessing any opportunity for the Group,

we have a disciplined capital allocation policy

and a strict set of criteria. We will always seek

to ensure that any opportunities we explore are

complementary to our existing portfolio and the

Group’s strategy, thoroughly assessed for risks

and opportunities and operated with a familiar

contractual, political and regulatory environment

with an appropriate balance of risk and reward.

Conclusion

FY 2024 has been another very successful year

for the Group, reinforcing our leading positions

and deep expertise in bus and rail. Our strong

results for the year are also great testament

to the dedication, expertise and resilience of

our employees at all levels across the Group,

and I am extremely proud and grateful to all of

our colleagues for their continued hard work

in support of our customers and communities.

Looking ahead, we have much more to do.

We will continue to transform our businesses,

build out adjacent electrification efficiencies

and revenue streams in First Bus and grow

and diversify our portfolio to deliver further

sustainable growth and support the UK’s

social, economic and environmental ambitions.

The Group’s strong balance sheet and cash

generative businesses provide considerable

flexibility and optionality for growth and

potential further capital returns to shareholders,

which will continue to be kept under review

by the Board.

CEO’s review

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

CEO’s review

continued

Case study

Using our experience and capabilities to innovate and create growth in the rail sector

FirstGroup operates two successful

open access rail services, Lumo and

Hull Trains. Launched in October 2021,

Lumo is a service between London

and Edinburgh, stopping at Stevenage,

Newcastle and Morpeth, with five

services each way per day. Our

Hull Trains service has been connecting

Hull and the Humber with London for

more than 20 years, with the number

of services increased from three a day

at launch to seven currently.

Open access operators take full commercial

risk and are solely responsible for generating

revenue and profit. Open access routes are

awarded where there is a clear business case

that the route will promote competition for the

benefit of rail users and will generate sufficient

new revenue without abstracting it from

current operators.

Our open access operations have

outperformed expectations over the last two

years, thanks to high demand and effective

yield management, with revenues increasing

by c.40% in the Group’s 2024 financial year,

versus the same period in 2023.

Our open access services have stimulated

passenger demand, and importantly driven

modal shift, getting people out of their cars

and off planes and on to rail transport. Lumo

was launched in 2021 to compete with air

travel on the East Coast Mainline, and by

November 2023 the service had carried

more than two and a half million passengers.

Hull Trains has seen a faster post-pandemic

passenger volume recovery than any other

operator and has added 14% more capacity

to its services since December 2022

to meet demand.

There are environmental benefits to our open

access services. Our Lumo service, which uses

an all-electric fleet of trains, results in 95%

fewer carbon emissions than when people fly

between the two capital cities, and Hull Trains’

new bi-mode fleet has lowered CO

emissions

by 65% compared to its previous fleet.

Open access operators are commercially

autonomous, and both Lumo and Hull Trains

have developed a culture of innovation and

customer focus.

For example, Lumo launched the UK’s first

semi-flex ticket in August 2023, which parallels

the freedom and flexibility often given by airline

tickets including a fee-free change of journey

and a pre-departure refund if plans change,

which is another step towards encouraging

a greener alternative to flying.

Furthermore, Hull Trains and Lumo are

extremely reliable operators, with some

of the lowest levels of self-cancellations

in the industry.

Both our services generate economic

benefits, not only by improving connectivity

nationally, but also to local communities.

Lumo employs c.100 people, with 90%

recruited through apprenticeships,

while Hull Trains has c.100 employees, mainly

from the local area, with a culture of career

development from within the organisation.

There is significant opportunity for our

open access businesses in the future, both

through expanding our existing routes and

through submitting new applications.

We have recently submitted applications

to the Office of Rail and Road (‘ORR’) for

a new Hull Trains service between London

King’s Cross and Sheffield, a new Lumo

Rochdale-London service, and for the

extension of some of Lumo’s services to

Glasgow, for an additional London-Hull

service on Hull Trains and an additional

London-Newcastle Lumo return service.

If all of these applications are successful

we could potentially more than double our

open access capacity over the next three

to five years.

Lumo and Hull Trains

were two of the best

performing operators

in the UK in FY 2024

c.40

Revenues increasing by c.40%

in the first half of the Group’s

2024 financial year

Introduction

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Read more on page 17

Leading the way with our new strategy

What led you to identify the four

strategic pillars?

During the last two years, I have seen our

businesses continue to make excellent

progress and to deliver day in, day out,

despite a challenging external

environment. This is thanks to the

extremely experienced, capable,

hard-working and ambitious people we

have across FirstGroup at all levels, and

I am very excited for our future as I know

we have considerable opportunities to

continue to develop our platform and to

grow further, underpinned by our strong

balance sheet.

To achieve this, we have identified four

key strategic pillars to drive us forward.

Delivering for our customers must be at

the heart of everything we do; we must

encourage more people to make the

switch from car and plane travel to bus

and rail; we must maintain our leading

position in environmental and social

sustainability; and we must grow and

diversify our portfolio to create more

value and ensure that our business

remains resilient. I am confident that

if we consistently deliver on all four of

these strategic pillars, we will create even

more value and sustainable growth for

the benefit of the Group, our people,

the communities we serve, and all of

our stakeholders.

How did you develop the strategy

and how are you implementing your

new strategy across the Group?

The strategy was agreed at our Board

meetings in the summer of 2023. We

followed a structured process to develop

our strategies at both Group and

divisional level and to ensure they are

aligned. We first assessed our external

environment and its implications on the

Group, looked at our capital position

and constraints, filtered and prioritised

opportunities, and confirmed our financial

and non-financial ambitions. We then

developed our main Group strategic

priorities and established our key

divisional strategic priorities aligned

to those of the Group.

I now use the four pillars as the basis of

my reports to the Board ahead of every

meeting. The four pillars of our strategy

have also been fundamental in our

internal management conferences during

the year, and we have continued to

communicate about the pillars in our

internal and external messages since

the autumn.

We will leverage our key

strategic drivers to create

value-accretive sustainable

growth, underpinned by

our strong balance sheet

and disciplined capital

allocation policy.

Graham Sutherland

Chief Executive Officer

Chief

Executive

Ofﬁcer’s

Q&A

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

We will lead in environmental and social

sustainability through the electrification

of our bus fleet and infrastructure to

close the cost and funding gap that still

currently exists between electric and

diesel buses, and unlock what we

believe is significant adjacent value.

In First Rail, we will continue to deliver

environmentally-friendly train travel,

stimulate demand and identify

underserved markets to drive

modal shift and to support prosperity,

growth and green jobs in the

communities we serve.

Why is diversification

important?

Diversifying our portfolio is critical,

both in our core and affiliate markets.

We must invest to ensure our business

is resilient and to create sustainable

growth and value for all of

our stakeholders.

To do this, we will pursue partnership

and franchising opportunities in

First Bus and in First Rail we will grow

our open access businesses and bid

for non-DfT contracts. We are also

making use of our deep expertise

and capabilities in both First Bus

and First Rail to scale and grow

their affiliate businesses.

Read more on page 48

What role does innovation play in

supporting the Group’s strategy?

I firmly believe that innovation is key

to further improving our performance,

delivering the best possible services for

our customers and ensuring we remain

market leaders in bus and rail. We are

already doing a great deal in this area

and have plenty of scope to do more.

In First Bus, we have more granular

customer data than we have ever had,

and coupled with this, we are using

new and innovative software tools.

These are helping us to improve our

service delivery, increase efficiencies

and implement pricing strategies

to enhance customer value,

drive demand and improve yield.

We are also rapidly establishing

ourselves as leaders and true

innovators in bus fleet and infrastructure

decarbonisation. We have formed a

landmark joint venture with Hitachi and

signed a pioneering Green Hire Purchase

Finance Facility for buses during the year.

This will provide greater financial visibility

and capital efficiency and by making use

of smart technologies we will be able to

extend the life of our batteries, ensure we

use power as efficiently as possible and

unlock adjacent electrification revenue

streams such as the use of our charging

infrastructure by third parties.

In First Rail, the huge success of

our two open access operations has

demonstrated that we have the expertise

to innovate and create growth in the

rail sector. We are managing yield

effectively, implementing successful

targeted marketing campaigns and

delivering good value, reliable services.

All of our train operating companies

are also benefiting from our affiliate

businesses, including Mistral Data,

and we are now successfully marketing

these products to other operators and

manufacturers. Finally, earlier this year

we began a successful trial of a

battery-only train, part of which

included setting a UK battery train

distance record without recharging.

What does ‘deliver day in, day out’

mean for your businesses?

Not only do millions of people rely on us

to keep them moving safely and on time,

every day, but delivering a consistently

reliable service is also crucial to protecting

and growing our core UK business.

In First Bus, by delivering reliable

services, data-driven operational and

cost efficiencies and customer-centric

marketing and pricing strategies we will

drive profit growth, retain and win key

contracts. In First Rail, by focusing on

operational excellence, we will maximise

the variable fees and revenue

incentivisation in our National Rail

Contracts, build on the success of our

open access businesses and establish

ourselves as a credible operator to bid

for non-DfT contracts.

Why is modal shift

a separate pillar?

We believe that favourable demographics

and changing attitudes to public

transport will support growth in bus and

rail travel. Modal shift also offers a huge

opportunity for us to increase volumes

and drive asset utilisation which will

positively affect our bottom line.

How does the new strategy

reinforce the Group’s commitment

to sustainability and

responsible business?

As one of the largest rail and regional

bus operators in the UK, we have a huge

responsibility to deliver vital services

that connect people and communities,

to support economic growth and help

lower emissions.

We have ambitious net zero targets and

must continue to work hard to deliver

them. This is key to our strategy and

will realise environmental, social and

economic benefits not only for the Group,

but for all of our stakeholders and the

country as a whole.

Leading the way with our new strategy

continued

CEO’s Q&A

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

FirstGroup’s four strategic pillars,

introduced at the end of 2023, will

support us to drive value-accretive

sustainable growth and lead

the way in our sector. They are

underpinned by our strong balance

sheet and disciplined capital

allocation policy.

Deliver day in,

day out

Deliver a consistently safe and

reliable customer experience

Read more on page 24

strategic

Our

pillars

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Del

Deliver

day

in,

day

out

Our strategic framework

continued

Deliver a consistently safe and

reliable customer experience

Pricing strategies

to enhance customer

value, drive demand

and improve yield

Operational excellence

to improve customer

experience, reliability

and cost efficiency

Win/extend key

contracts in First Bus

and First Rail

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Deliver day in, day out

Innovating for our customers

and communities

We are focused on operational excellence

as we deliver vital services for our communities

and partners. We strive to provide a consistently

safe and reliable customer experience,

implement pricing strategies to enhance value,

drive demand and improve yield, and to win

and extend contracts in both Bus and Rail.

9.4%

First Bus H2 2024 adjusted operating profit

margin (FY 2024: 8.3%; FY 2023: 6.5%)

96%

First Rail Lumo and Hull Trains

customer satisfaction

£117.6m

returned via share buyback in FY 2024

Providing the best possible

services for our partners

and communities

In First Bus, we will continue to drive

operational, cost and network efficiencies,

evolve our pricing strategy to enhance

customer value, drive demand and improve

yield, and progress the decarbonisation

of our fleet and infrastructure.

In First Rail, we will maximise the variable

performance-based fees in DfT contracted

operations and continue to deliver savings

for the DfT, build on the success of our open

access operations and grow our Additional

Services businesses.

Read more about our principal risks

on page 85

Read more about our KPIs

on page 30

FY 2024 highlights



First Bus reported an adjusted operating profit

margin of 9.4% in H2 2024



Over £100m invested in First Bus

decarbonisation as we progress towards the

First Bus 2035 zero emissions fleet target



Award of West Coast Partnership National Rail

Contract in September 2023



First Rail’s DfT TOCs received final FY 2023

variable fee awards c.£13m ahead of

amount accrued



Hull Trains and Lumo are two of the most

reliable train operators in the UK (2.2% and

2.0% of trains cancelled for any cause

according to ORR Jan-Mar 2024 data)

FY 2025 objectives



Achieve an operating margin of 10%

in First Bus in H2 2025



Continue the implementation of the

Prospective software across

First Bus operations to drive further

operational efficiencies



Grow the First Bus market share in Adjacent

Services and participate in attractive

franchising and partnership opportunities



Evaluate pipeline of value-accretive growth

opportunities in line with Group’s disciplined

capital allocation policy



Focus on delivery on our First Rail National

Rail Contracts



Actively pursue and execute opportunities to

grow our First Rail open access businesses



Scale the First Rail Additional

Services businesses

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Case study

First Bus recently signed a three-year

partnership with Prospective, an artificial

intelligence (AI) company whose software

can automatically generate optimal timetables,

schedules and real-time fleet instructions. The

software allows full timetables to be created or

adjusted and buses to be scheduled in minutes,

a process that would typically take days to

complete. Passengers have experienced

improved service quality, with punctuality

improving considerably in many cases.

Prospective’s software can also be used to

identify where bus priority interventions such

as parking enforcement and restrictions,

bus lanes, priority signals and traffic removal

would have the biggest impact on travel times.

Using AI

our bus services

to improve

We’re not only looking

to drive improvements for

our existing customers, but to

make bus an affordable, more

reliable and attractive part of

everyone’s everyday transport

mix. The results we’ve

achieved in West Yorkshire

and the West of England have

been incredible in such a

short space of time, but we’re

only scratching the surface

of its potential. We’re excited

to roll out this software and

see the benefits it brings

to our customers.

Simon Pearson

First Bus Chief Commercial Officer

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Drive

modal

shift

Our strategic framework

continued

Drive a step change from

car and air travel to bus and train

Add capacity to

rail open access

businesses

Increase First Bus

adjacent services

where car is becoming

less attractive

Reposition First Bus

customer proposition

to drive demand/focus

on car usage

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Drive modal shift

Growing demand

for bus and rail

We are entering the next phase of our

development as we aim to drive a step

change from car and air travel to bus and

train. This will be supported by increasing

capacity in our open access rail operations

and focusing on our First Bus proposition

to drive demand and increase usage.

increase in First Bus passenger volumes

(excluding the extra week in FY 2024)

74%

Seat capacity utilisation on Lumo

in FY 2024 (Hull trains: 69%)

2.5 million

Lumo has now carried more

than 2.5 million passengers

since launching in October 2021

FY 2024 highlights



First Bus have won and extended a number

of key Adjacent Services contracts during

the year



First Bus passenger volumes (excluding the

extra week in FY 2024) grew by 7% compared

to FY 2023



Hull Trains has added 14% more capacity

since December 2022, by introducing ten-car

services to match growing demand (typically a

five-car service)



Lumo has now carried more than 2.5 million

passengers since its launch in October 2021

FY 2025 objectives



Focus on First Bus service offering to

encourage more people to use the bus



Identify further opportunities to grow our

Adjacent Services portfolio in First Bus

and grow patronage on our services



Grow our First Rail open access operations

to serve areas where there is proven demand,

and as a result, drive modal shift to train travel

Driving modal shift from car

and air travel to bus and train

We are repositioning our core customer

proposition in First Bus and First Rail to

stimulate demand, focusing on car usage.

This includes improving and scaling our

services to match and grow demand,

increasing the First Bus share in adjacent

services markets where car travel will

not work in the future, and building

on the success of our First Rail open

access operations through efficiency

improvements, adding capacity and

identifying new routes and markets

with capacity and demand.

Read more about our principal risks

on page 85

Read more about our KPIs

on page 30

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Case study

Enhanced bus

with Leicester City Council

partnership

In May 2022, an eight-year Enhanced

Partnership Plan and three-year funded

Scheme was launched in collaboration with

Leicester City Council, First Bus and other

operators. With c.£100m of private and public

funding secured for the Scheme, the optimised

multi-operator network ensures frequent and

reliable services for customers. First Bus,

working in conjunction with the Council and

other operators, has also worked on a range

of complementary projects designed to make

a more efficient and accessible service for

passengers with real-time information displays

and an integrated website, additional bus lanes

throughout the city and various fare offers.

The Partnership has an ambition for the whole

city network to be electric by 2030. To date,

approximately £60m has been invested in

electric buses and infrastructure in the city,

as illustrated at the recent analyst and investor

site visit to our Leicester depot.

By the end of 2023, 116 electric buses were

in operation from four charging depots, saving

over 5,000 tonnes of CO

and by July 2024,

over half of the city’s network will be electric.

Bus travel will not only be the environmental

choice for customers, but also the most reliable

mode of transport to navigate the city, with an

estimated increase in modal share for bus, to

32% by 2025.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Lead

social

environmental

sustainability

Our strategic framework

continued

Deliver our net zero commitments and

support prosperity, growth and green jobs

in the communities we serve

Build out electrification

adjacent revenue

opportunities

Secure innovative

financing and continue

First Bus fleet and

infrastructure

decarbonisation

Support prosperity,

growth and green jobs

in the communities

we serve

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Lead in environmental

and social sustainability

A focus on sustainability

We are focused on delivering on our

commitments, working to support growth

and green jobs in the communities we serve

and investing in and securing innovative

financing for bus decarbonisation to meet

our 2035 target and build out adjacent

electrification opportunities.

Zero emission

First Bus now has three fully electric

bus networks and c.13% of its fleet

is zero emission

65%

Hull Trains has decreased CO

emissions

by 65% following introduction of new

bi‑mode fleet in 2019

Real Living Wage

First Bus is the UK’s largest national

bus operator to receive Real Living

Wage employer accreditation

FY 2024 highlights



c.13% of the First Bus fleet are zero emissions

vehicles, and we have three fully electrified

depots in England, with six further depots

across the UK partially electrified



Hull Trains has reduced CO

emissions

by 65% following the introduction of a

new bi-mode fleet in 2019



A journey on Lumo’s 100% electric fleet

emits 21 times less carbon than a journey

by petrol car



£100m strategic decarbonisation joint

venture with Hitachi and £150m Green Hire

Purchase Financing Facility to support

First Bus electrification



First Bus received Real Living Wage

employer accreditation



FirstGroup joined the UN Global Compact



The Group was the only UK bus and train

company listed in S&P’s Sustainability

Yearbook in FY 2024

FY 2025 objectives



Progress the electrification of the First Bus

fleet and infrastructure and unlock adjacent

earnings streams, including third party

charging at our depots



Continue the GWR fast-charge battery-only

train trial in First Rail



Publish the first Group-wide climate transition

plan in line with the Transition Plan Taskforce

Disclosure Framework



Maintain strong relationships with our

communities and charitable partners



Develop new and diverse talent through

our apprenticeship, recruitment and

retention schemes

Delivering on our decarbonisation

commitments and supporting

our people and communities

We are rapidly establishing ourselves as

a leader in decarbonisation as we progress

towards our commitment of a zero emissions

bus fleet by 2035 and support industry aims

of removing all diesel-only trains from service

by 2040.

We are successfully electrifying our bus fleet

and infrastructure, including through our

landmark strategic partnership with Hitachi.

In Rail we are demonstrating our expertise as

we lead an innovative FastCharge battery-only

train trial. We are also actively supporting

growth and job creation in our communities.

Read more about our principal risks

on page 85

Read more about our KPIs

on page 30

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Case study

On 1 April 2024, First Bus gained Real

Living Wage (RLW) employer accreditation.

As a result, colleagues across the UK business

in various roles will benefit from a rise in

wages. Although the RLW accreditation does

not require employers to include apprentices,

we will also raise our apprentices’ wages

to the RLW level over the next 18 months,

recognising the value we place on a diverse

and inclusive apprenticeship population.

New environmentally friendly

Avanti West Coast fleet

First Rail is delivering a £350m project

for the DfT which will see a fleet of ten

seven-car electric trains and 13 five-car

bi-mode trains introduced across the

Avanti Network, with the ability to switch

seamlessly between electric and diesel

power. The fleet upgrade is an integral

part of Avanti’s net-zero ambitions given

that it will deliver substantial carbon

emissions savings. It will also help us

deliver on our wider commitment to

transform the customer experience

and to a more sustainable operation.

Living Wage

employer

First Bus, the UK’s

largest national bus

operator, to be accredited as a

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

our

Diversify

Invest to grow and diversify

our portfolio and ensure our

business is resilient

Our strategic framework

continued

Bus franchise and

partnership opportunities

and new rail open access

opportunities

Selective M&A

opportunities

Expand adjacent

services and affiliate

businesses in First Bus

and First Rail

Pursue non-DfT

rail contracts and

other opportunities

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

Diversify our portfolio

Strengthening

our business

We aim to invest to grow and diversify our

earnings and ensure our business remains

resilient in the long term. Our pipeline

of opportunities is growing as we look at

bus franchising and partnerships, rail open

access opportunities, other rail contracts,

and expanding Adjacent Services in

Bus and Rail.

FY 2024 highlights



Acquisition of York Pullman with profitable

growth opportunities in adjacent services

and contracted markets



First Bus awarded Rochdale franchise

contract by Transport for Greater Manchester



Award of an eight-year contract to operate

the London Cable Car on behalf of TfL



First Rail qualified as one of four bidders with

partner Keolis SA to bid for the Elizabeth Line

TfL contract



Open access applications submitted to ORR

for a new Hull Trains service between London

King’s Cross and Sheffield, for a new Lumo

Rochdale-London service, for the extension

of some of Lumo’s services to Glasgow and

additional paths on Lumo and Hull Trains

FY 2025 objectives



Evaluate pipeline of complementary, value

accretive bus Adjacent Services and inorganic

growth opportunities



Participate in attractive franchising and

partnership opportunities in bus



Grow the First Rail open access portfolio

through enhancing existing services and

identifying new routes where there is

proven demand



Scale our First Rail Additional Services

businesses, including marketing them

outside of our Train Operating Companies

Growing and diversifying

our businesses for the future

In First Bus, we are actively pursuing

attractive opportunities in Adjacent Services,

franchising and partnerships.

In First Rail, we are working to grow our open

access businesses and scale our additional

services offerings, including marketing them

to other industry participants. We are also

pursuing further opportunities, including

bidding for TfL contracts.

Read more about our principal risks

on page 85

Read more about our KPIs

on page 30

£219.8m

First Bus has grown its Adjacent Services

revenue to £219.8m (FY 2023: £175.1m)

£133.5m

First Rail Additional Services gross revenue

rose to £133.5m (FY 2023: £120.0m)

Cable Car

Eight‑year London Cable Car

contract awarded in March 2024

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our strategic framework

continued

In February 2024, the Group acquired

York Pullman, a high-performing business

with five well-established coach services

brands. It provides home-to-school and

college contracted services, private hire

operations and the operation of local bus

routes on behalf of several local authorities,

complementary to First Bus’ operations in York.

The acquisition fits with the Group’s growth

and diversification strategy as it will provide

profitable growth opportunities in adjacent

contracted services and commercial markets,

with the opportunity for development into

other locations across the UK.

Award of London

Cable Car contract

In March 2024, the Group was awarded

the contract by TfL to operate the London

Cable Car that links the Greenwich Peninsula

with the Royal Docks area on the north bank

of the River Thames. It will be operated

by First Rail from June 2024 for an initial

five-year term, with the option for the

contract to be extended for another three

years. The addition of the cable car to our

portfolio will allow us to make use of the

First Rail team’s extensive expertise and

experience to grow and diversify, including

through participating in TfL tenders.

Case study

Acquisition of

York Pullman

Bus Company

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Key performance indicators

The Group and our divisions

focus on a range of financial

and non-financial KPIs linked

to our four strategic pillars to

measure progress and evaluate

performance over time.

We have indicated alongside each KPI

which strategic pillar or pillars are linked to it.

In many cases, there is a link to more than

one of the strategic pillars.

Please see the strategic pillars key below.

KPIs used in the calculation of variable

remuneration in FY 2024 are marked

REM

Key to our strategic pillars

Deliver, day

in, day out

Drive

modal shift

Lead in environmental

and social sustainability

Diversify

our portfolio

Financial KPIs

Group revenue (£m)

Continuing operations

£4,715.1m

Group revenue reflects the overall size

and health of the business driven by

passenger volumes and funding receipts.

FY 2024

FY 2023

FY 2022

FY 2021

First Bus

OA/Other Rail

FY 2020

DfT TOCs

4,715.1

4,755.0

4,591.1

4,318.8

4,021.8

Revenue from continuing operations decreased

marginally to £4,715.1m (FY 2023: £4,755.0m).

Strong performance in First Bus and the First Rail

open access operations, as well as growth in the

DfT Train Operating Companies was offset by the

impact of the expiry of the TransPennine Express

National Rail Contract at the end of May 2023.

The Group also benefited from an extra week

of trading in FY 2024 at First Bus.

Group adjusted operating profit (£m)

REM

Continuing operations

£204.3m

Group adjusted operating profit is a

measure of our ability to extract value

from our revenue and manage costs.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

204.3

161.0

106.7

112.2

81.3

Adjusted operating profit from continuing

operations was £204.3m (FY 2023: £161.0m).

First Bus benefited from increased passenger

volumes, improved driver availability and data-led

operational and commercial improvements, which

more than offset ongoing inflationary pressures

and lower funding levels. In First Rail, open

access operations performed strongly and the

DfT TOCs’ financial performance was ahead of

expectations owing to higher than accrued final

variable fee awards for FY 2023.

Adjusted EPS (pence)

REM

Continuing operations

16.7p

Adjusted EPS summarises the overall

financial performance of the Group and

profit attributable to shareholders.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

16.7

11.6

1.6

6.8

(2.8)

Adjusted EPS for the continuing business

increased from 11.6p to 16.7p due to strong

growth in First Bus and First Rail open access

EBIT, the higher than accrued final variable fee

awards in the DfT TOCs.

Adjusted net (debt)/cash (£m)

REM

£64.1m

The level of net cash/(debt) in the business

influences our ability to invest and finance

the business.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

64.1

109.9

(3.9)

(1,490.9)

(1,413.2)

-1,500 -1,250 -1,000

-750

-500

-250

250

The Group’s adjusted net cash as at

30 March 2024, which excludes IFRS 16 lease

liabilities and ring-fenced cash was £64.1m.

Read more on page 124

’Adjusted Operating profit’ is shown before

net adjusting items.

’Adjusted EPS’ is shown before net adjusting

items, excludes IFRS 16 impacts in First Rail

management fee operations and uses

the weighted average number of shares in

the period.

‘Adjusted net cash’ is bonds, bank and other

debt net of free cash (i.e. excludes IFRS 16

lease liabilities and ring-fenced cash).

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Key performance indicators

continued

Responsible business KPIs

Scope 1&2 emissions

(tCO

REM

695,213

tCO

Measures the success of our actions

to combat climate change and improve

local air quality by delivering low and zero

emission mobility solutions and infrastructure

for our customers and communities.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

695,213

684,633

739,650

704,365

957,407

During FY 2024, we have continued to drive

carbon efficiencies across our operations,

progressing towards our Science Based Targets,

to reduce Scope 1 and 2 GHG emissions by 63%

by FY 2035. The slight increase in carbon

emissions over the past year was partly due to an

increase in traction and bus depot electricity

consumption, as well as a higher electricity

emission factor compared to FY 2023.

Carbon intensity

(tCO

e/£m revenue)

REM

159

tCO

e/£m

Normalised measure of our Scope 1, 2, 3 (limited)

and out-of-scope emissions, calculated as tonnes

of carbon dioxide equivalent per £m of revenue.

Also linked to the Group’s Revolving

Credit Facility.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

159

169

185

265

Carbon intensity per £m revenue has improved

due to ongoing decarbonisation efforts across

the Group, indicating a de-coupling of

GHG emissions from business growth.

Zero emission buses

(% of fleet)

REM

13.0%

of bus fleet

Indicates the speed of investment in

decarbonising our bus fleet. Also linked

to the Group’s Revolving Credit Facility.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

13.0

6.0

3.3

1.1

0.3

The number of zero emission buses in our fleet

continues to increase in line with our ambition to

achieve a 100% zero emission bus fleet by 2035.

TransPennine Express was transferred to being

run by the Department for Transports ’Operator

of Last Resorts on 28th May 2023. Our carbon

KPIs for all prior years were decreased to

reflect this change.

Scope 3 is limited to categories: waste, water,

business travel, and upstream transportation

and distribution.

Key to our strategic pillars

Deliver, day

in, day out

Drive

modal shift

Lead in environmental

and social sustainability

Diversify

our portfolio

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Key performance indicators

continued

Responsible business KPIs

continued

Social value – community

investment (£m)

£1.4m

Measures the Group’s contribution

to local communities using the London

Benchmarking Group (LGB) model which tracks

direct cash contributions, employee volunteering

time, in-kind support, and leverage including

employee, customer and supplier contributions.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

0.62

1.4

1.58

1.32

2.91

Leverage

Cash

Time

Gift-in-kind

This year we contributed over £1.4 million to

the communities we serve. Our three divisional

charity partners Railway Children, Macmillan and

Samaritans are supported through gift-in-kind

advertising spaces and other donations, and

other community-based charities are supported

via employee matchfunding, volunteering,

payroll giving and other donations.

Employee lost time injury rate

(per 1,000 employees)

9.88

Measures the number of lost time injuries

per 1,000 employees per year.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

8.97

9.70

7.68

10.68

9.88

There was an increase in the lost time injury rate

(LTIR) by 10%. There were two main causes

for the increase: slips, trips, and falls in both

divisions, and road traffic collision (RTC) related

incidents in the First Bus division. The Group’s

safety plans are concentrating on these areas

to reduce risks and maintain a safe working

environment for all employees.

Passenger injury rate

(per million journeys)

4.57

Historical data is restated annually to incorporate

the most accurate information for the last

36 months.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

4.57

4.60

4.88

4.99

6.84

There was a 1% reduction in passenger injuries

in FY 2024. This improvement reflects several

initiatives focused on raising awareness,

educating employees, and utilising technology

to ensure a smooth journey. Emphasising

customer-centricity remains a priority for

both divisions.

Key to our strategic pillars

Deliver, day

in, day out

Drive

modal shift

Lead in environmental

and social sustainability

Diversify

our portfolio

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Operational performance KPIs

First Bus mileage (m)

166.5m

This is mileage operated to run commercial

services, contracts services and mileage

between depots and the start and end of routes.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

166.5

168.2

185.1

164.9

215.3

First Bus mileage reduced slightly in FY 2024,

to 166.5m in FY 2024 (FY 2023: 168.2m).

Our focus in FY 2024 has remained on using

our industry-leading data tools to deliver better

quality mileage by aligning services to demand,

implement smarter fares and drive operational

and cost efficiencies to offset lower government

funding and the high inflationary environment.

First Bus Total operated mileage (%)

98.6%

This measures bus miles operated as

percentage of timetabled bus miles.

It is an important indicator of service

to customers and contract fulfilment.

FY 2024

FY 2023

FY 2022

FY 2021

FY 2020

98.6

96.3

96.7

99.2

98.4

50%

60%

70%

80%

90%

100%

There has been an improvement in performance

in FY 2024 driven by improved driver availability

and the successful implementation of

efficiency measures.

First Rail Public Performance Measure (%)

This measures % of passenger trains punctual

at final destination

by financial period and

moving annual average (MAA). Punctual is defined

as arriving at the final destination within five

minutes of the planned timetable for London

and South East, Regional and Scottish operators,

or within ten minutes for long distance operators.

Source: Network Rail

Key performance indicators

continued

Key to our strategic pillars

Deliver, day

in, day out

Drive

modal shift

Lead in environmental

and social sustainability

Diversify

our portfolio

South Western Railway

Hull Trains

Lumo

Great Western Railway

TransPennine Express

Avanti West Coast

UK average

86.7

84.5

77.3

85.6

83.2

69.2

86.3

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Business review

FY 2024

£m

FY 2023

£m

Change

Revenue

1,012.2

902.5

109.7

Adjusted operating profit

83.6

58.4

25.2

Adjusted operating margin

8.3%

6.50%

180bps

EBITDA

148.1

120.9

27.2

Adjacent Services revenue

219.8

175.1

44.7

Passenger volumes (m)

424.4

390

Operational mileage (m)

166.5

168.2

-1%

Revenue per mile (£)

6.08

5.36

13%

Net operating assets

580.2

511.9

68.3

Net capital expenditure

129.4

121.8

7.6

Return on capital employed

11.5%

8.3%

320bps

Return on capital employed is a measure of capital efficiency and is calculated by dividing adjusted operating profit after tax

by average year end assets and liabilities excluding debt items.

First Bus revenue increased by 12% to £1,012.2m

(FY 2023: £902.5m), mainly due to higher

passenger volumes, further performance

improvements and increased driver numbers

resulting in lower lost mileage. This offsets

a c.£40m reduction in funding. Total

passenger revenue increased to £769.1m

(FY 2023: £660.0m), with revenue per mile

up by 13%.

Despite ongoing inflationary pressures,

adjusted operating profit increased by

£25.2m to £83.6m (FY 2023: £58.4m),

achieving an adjusted operating profit margin

of 9.4% in H2 2024, and 8.3% for the full year

(FY 2023: 6.5%). The division’s financial results

for FY 2024 include an extra week which added

c.£1.4m of adjusted operating profit.

Revenue from Adjacent Services increased

to £219.8m in FY 2024 (FY 2023: £175.1m),

reflecting a number of contract extensions and

the contribution of Airporter and Ensignbus

which were acquired by the Group in FY 2023.

Excluding the extra week in FY 2024,

passenger volumes increased by 7% compared

with the prior period, with total mileage down

2.9%. Volumes in FY 2024 benefited from

improvements in service reliability, the free

travel for Under 22s scheme in Scotland and

the £2 fare cap in England which has grown

patronage, mostly in markets with longer

journey fares that were typically much more

expensive previously.

The £2 fare cap in England was extended until

31 December 2024 to provide further support

for customers and encourage more people

to travel by bus. Under the scheme, operators

agree a reimbursement schedule in advance

with the DfT based on the projected cost to the

operator for charging a flat £2 fare for journeys

that would otherwise have cost more. Under

the Scottish Government’s Under 22s scheme,

operators are reimbursed a proportion of the

cost of a full adult fare.

The return on capital employed increased to

11.5% in the year (FY23: 8.3%). This reflects

improvement in adjusted operating profit,

partially offset by the accelerated investment

in the decarbonisation of the fleet that is

anticipated to increase future profitability due

to lower operating costs and the benefits of

adjacent revenue streams.

Operational delivery

Our focus in FY 2024 has remained on using

our industry-leading data tools to deliver better

quality mileage by aligning services to demand,

implement smarter fares and drive operational

and cost efficiencies to offset lower government

funding and the high inflationary environment.

During the year, we continued our efforts to

widen and enhance our recruitment reach

and training processes, launching various

apprenticeship schemes including our first ever

such scheme for bus drivers, and we continue

to invest in our workforce to improve working

conditions and provide enhanced benefits.

We are also making significant investment

in upskilling and developing our engineers

to maintain our zero emission fleet and

infrastructure. We recruited c.600 new drivers

during the year (a net increase of just over 6%

compared to last year) which contributed to us

running an improved 98.6% of our scheduled

mileage (FY 2023: 97.4%).

Inflationary pressures continued in FY 2024.

Costs increased due to inflation by c.6%,

principally in wages where there was an

8% average increase in driver pay awards,

but these cost increases were more than

offset by fare pricing changes of c.£53m and

network and operational efficiencies of c.£21m.

We continue to make

good progress, and at

the same time, grow our

business and establish

ourselves as a leader in

bus fleet and infrastructure

electrification.

First

Bus

Janette Bell

Managing Director, First Bus

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Business review

continued

We were proud to be the UK’s largest national

bus operator to become an accredited Real

Living Wage employer in April 2024, meaning

that more than a thousand employees across

the UK will benefit from a rise in wages.

We have fuel and electricity hedging

programmes in place to mitigate in-year cost

inflation and overall volatility of fuel and energy

costs, and these programmes continue to

evolve as we transition the First Bus fleet to

zero emissions.

Using industry-leading data and tools

to transform our service delivery and

customer offering

Using real-time, granular data, we are now able

to better understand our customers and their

journeys. As a result, we can make commercial

decisions which continuously improve our

networks and timetables and to introduce new

ticketing options that better match demand and

customer preferences. First Bus was also the

first nationwide operator to offer contactless,

Tap On Tap Off payment on all of our buses,

and c.80% of our ticket transactions are

now digital.

We are also using data and software tools to

improve our service delivery. During FY 2024,

we rolled out Prospective, an AI platform,

to all of our local business units. The platform

enables automated, data-led timetables,

allowing us to accurately predict congestion

and journey times and plan reliable timetables

based on granular data.

Drivers and the control centre teams can also

communicate in real time to rectify and address

issues as they unfold before implementing

contingencies to alleviate pinch points around

the network in certain scenarios. We have

prioritised routes where improvements would

have the greatest effects, and where we have

made use of the platform, customers are

seeing an immediate increase in punctuality

and reliability, with the added benefit of

reduced lost mileage with fewer journeys

needing to be adjusted.

In addition to Prospective, we are using

Optibus to optimise our bus schedules

and driver rosters. Alongside our on-bus

technology, data feeds into our operational

systems, our customer apps and real-time

screens, informs our drivers and provides

tracking information that allows us to analyse

and improve performance. In addition, with

Optibus, we have developed a module that

allows us to optimise our schedules when

we have a mixed fleet of diesel and electric

vehicles, further reducing diesel mileage.

More people are using the bus than ever

before. Our aim is to encourage these

new customers to make more trips by bus,

whilst also increasing bus use overall, and

we will continue to develop our insight-driven

customer-centric strategy and to achieve this.

Growing our share of the

Adjacent Services market

Our Adjacent Services business provides

services including workplace shuttles for large

infrastructure projects, manufacturers and

distribution companies, airport and airline

contracts and rail replacement services.

Revenue from Adjacent Services grew

further in FY 2024, to £219.8m from £175.1m

in the prior year.

Our central sales and bidding team is focused

on maximising commercial return through

longer-term, higher-value contracts and in

FY 2024 we successfully extended a number

of our key contracts and won new contracts.

The business has also been bolstered by the

acquisition of Ensignbus and Airporter in

FY 2023 and York Pullman in FY 2024.

The adjacent bus and coach services market

in the UK is considerable, and we continue to

review a number of opportunities to grow the

business and win further contracts leveraging

our national footprint and successful track

record in managing large customers effectively.

We are also increasingly bidding for contracts

with businesses focused on lowering carbon

emissions where we are very well placed to

compete, given our leading capabilities in

bus fleet and infrastructure decarbonisation.

Partnerships and franchising

A number of cities outside London where

we operate have expressed an interest in

franchising, in addition to some where we do

not currently have operations. In areas where

authorities choose to progress with franchising,

we are confident that we will be able to use our

extensive experience of delivering high-quality

bus services to support them.

We are pleased to be working with Transport

for Greater Manchester (TfGM) as one of the

operators within their new Bee Network. In

June 2023, we were awarded two contracts

in Rochdale as part of the second tranche

of TfGM’s franchise programme and were

subsequently awarded contracts to operate

services for six schools as part of this franchise

operation. We have also supported TfGM with

the electrification of their Oldham depot due to

our expertise in this field.

The majority of the local authorities in the areas

in which we operate currently have enhanced

partnerships in place, where the local transport

authority commits to measures and facilities,

and all operators are then bound to meet

certain standards of service. Under these

partnerships, all parties work together to

achieve bus reform quickly and effectively.

We have seen this to full effect in Leicester,

where in partnership with Leicester City Council

and the city’s other bus operators, we have

achieved multi-operator ticketing, streamlined

timetabling of services for all operators,

increased reliability and improved real-time

information for passengers. Alongside this,

First Bus has delivered a fully electric

bus fleet and operation in the city, having

worked together with the council to secure

ZEBRA co-funding.

Our landscape is always evolving, and getting

more people to use the bus is a key part of

the modal shift pillar of the Group’s strategy.

We will continue to adapt our business to

deliver great value, and shape networks

where and when people want to travel,

to serve communities and grow local

economies in a sustainable way.

Regardless of the model, close partnerships

with local government stakeholders are

essential for the thriving local bus networks

we all want to see, and we are committed to

working with our partners locally and nationally

to achieve this.

£219.8m

Revenue from Adjacent Services

grew further in FY 2024

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Business review

continued

Leading in bus fleet and infrastructure

decarbonisation

We are rapidly establishing ourselves as

a leader in decarbonisation as we progress

towards our commitment of a 100% zero

emission bus fleet by 2035, underpinned by

our strong balance sheet and the ownership

of our depots.

We invested over £100m in decarbonisation

in FY 2024 and now have c.600 zero emission

buses, c.13% of our fleet, and three fully

electric depots in England, and six further

depots across the UK partially electrified.

We have now installed solar panels at 24

of our depots to power lighting, heating and

engineering bays, reducing costs and demands

on the local grid. We are also making good

progress securing power for our sites and are

identifying a number of ways to optimise our

overall energy use. These include reducing our

energy consumption at certain times to avoid

spikes in consumption, scheduling our charging

in cheaper hours and depending on the next

day’s route requirements as well as energy

trading/grid support services.

We now have more than 600 charging outlets

across our sites and have successful third party

charging arrangements underway with DPD,

Openreach and various public services

providers at four of our depots. We have also

recently opened a purpose-built hub at our

Summercourt depot in Cornwall, providing

direct access for the public to eight

rapid chargers.

In November 2023, we announced our landmark

£100m strategic joint venture with Hitachi to

finance up to 1,000 electric bus batteries, and in

January 2024 we announced that we had signed

an innovative £150m Green Hire Purchase

Finance Facility with a syndicate of three UK

banks to support the purchase of up to 1,000

electric bus bodies. These initiatives allow us to

purchase electric buses and batteries targeting

increased battery efficiency, potentially extend

battery life with the use of smart charging

software, and, under the terms of the Hitachi

joint venture we will retain much of the residual

value in the batteries as they are replaced with

material second-life value.

Looking ahead, through our option to

participate in a small non-controlling interest

in Hitachi ZeroCarbon (‘HZC’), we will

have the opportunity to create future value,

leveraging our experience in significant fleet

electrification as HZC delivers market-leading

decarbonisation solutions to transport

operators worldwide, applying our

joint experience.

Through the Hitachi joint venture, to date c.400

electric bus batteries have been acquired for

First Bus and we are working in partnership

with HZC to mobilise various depots to make

use of their battery and charging and

management services. HZC have also recently

announced that they have been chosen as

a principal partner in Gridserve’s Electric

Freightway project, which will see at least

140 electric Heavy Goods Vehicles integrated

into a charging network across key motorway

charging sites and more than ten commercial

depot charging locations.

In March 2024 we announced that we had

worked successfully with our local authority

partners to secure £16m through the UK

Government’s ZEBRA 2 co-funding scheme to

support bus and fleet decarbonisation across

four of our regions.

Following the completion of our latest ongoing

electrification projects, we will operate more

than 800 zero emission vehicles, c.18% of our

fleet. We have also bought power connections

to another 15 of our depots and construction

works are underway. In addition, we are

working with two of our vehicle manufacturers

on diesel re-power projects to convert diesel

vehicles to electric at the point of the diesel

engine change (generally midway through the

life of the bus), which if successful will be an

incremental part of our decarbonisation strategy.

We are now seeing the benefits of operating

fully electric bus depots and have no doubt that

the electrification of our fleet and infrastructure

will further transform our business and provide

a number of value accretive adjacent revenue

streams. It will allow us to standardise and

reduce the size of our fleet to drive efficiency

and lower engineering costs whilst delivering

the same mileage, and by making use of smart

charging software we will be able to optimise

our energy use, increase battery efficiency

and potentially extend battery life.

Looking ahead

In FY 2025, we expect to achieve progressive

growth against FY 2024. We will continue

to benefit from the actions we have taken

to transform the business and further

growth in Adjacent Services, making steady

progression towards a 10% adjusted operating

profit margin, which we anticipate we will

achieve in H2 2025.

Looking further ahead, the transformation of

the First Bus business is delivering stronger

foundations with a simplified, more efficient

operating model. We are also set to benefit

from electrification efficiencies and adjacent

revenue streams, and from potential inorganic

franchising, partnership and inorganic growth

opportunities. This provides scope for revenue

and earnings growth. Underpinning this,

we believe that despite short-term economic

challenges, government policy, favourable

demographics and environmental and

societal trends will support growth in

the regional bus sector.

600

We have more than 600 charging outlets

across our sites and have successful

third party charging arrangements

underway

with DPD, Openreach

and various public services providers

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Business review

continued

We are focused on

operational delivery, building

on the success of our open

access operations, seeking

new contract opportunities

and scaling our Additional

Services businesses.

Steve Montgomery

Managing Director, First Rail

FY 2024

£m

FY 2023

£m

Change

Revenue from DfT TOCs

3,609.2

3,805.6

(196.4)

Revenue from open access and additional services

233.2

190.8

42.4

Intra-divisional eliminations

(104.0)

(103.2)

(0.8)

First Rail Revenue

3,738.4

3,893.2

(154.8)

Adjusted operating profit from DfT TOCs

105.6

93.3

12.3

Adjusted operating profit from open access and Additional Services

37.7

31.5

6.2

First Rail adjusted operating profit

143.3

124.8

18.5

Passenger journeys (m) – DfT TOCs

271.6

261.2

10.4

Passenger journeys (m) – open access operations

2.7

2.2

0.5

Passenger journeys (m) – total

274.3

263.4

10.9

The First Rail division reported total revenue

of £3,738.4m in FY 2024 (FY 2023: £3,893.2m).

The division’s open access operations

contributed £99.8m in revenue for the period,

an increase of 41% against the prior year

(FY 2023: £70.8m). The division’s Additional

Services businesses delivered gross revenue

of £133.4m (FY 2023: £120.0m) before

intra-divisional eliminations, and adjusted

operating profit of £3.3m (FY 2023: £11.9m).

During H1 2024, the final variable fee payments

due for the FY 2023 fiscal year from the DfT

TOCs were agreed with the DfT at a rate ahead

of the amounts accrued in the Group’s FY 2023

financial statements (c.£13m). As a result, the

DfT TOCs reported an increase in adjusted

operating profit for the full year, to £105.6m

(FY 2023: £93.3m). The division’s statutory

operating profit for FY 2024, rose to £143.3m

(FY 2023: £124.8m).

At the beginning of FY 2024, the variable fees

metrics were updated to place a greater

weighting on quantified measures, rather than

qualitative measures that rely on a subjective

assessment of an operator’s performance and

these are now assessed on a bi-annual basis

by the DfT.

The Group does not anticipate a material

impact on overall, final variable fee awards

and net income as a result of these changes.

Rail attributable net income from the

DfT TOCs – being the Group’s share of the

post tax management fee income available

for distribution from the GWR, SWR and

WCP contracts with the DfT – was £39.5m

(FY 2023: £38.7m). The Group receives an

annual inter-company remittance from

the DfT TOCs reflecting the post-tax net

management and performance fees from the

prior year. These become payable up to the

Group in the second half of the financial year

following completion of the management

fee-based operations’ audited accounts for

the period to which the fee relates.

As a result of high passenger booking

volumes and positive yield management,

including inflationary increases in fares that

were partially offset by inflationary cost

pressures, the division’s open access

operations – Hull Trains and Lumo – delivered

a further increase in adjusted operating profit,

to £30.0m (FY 2023: £19.6m).

To address energy cost inflation and mitigate

the long-term impact of electricity costs, our

TOCs are members of industry buying groups.

For our open access operations, electricity

costs represent a material proportion of their

total costs, and these have increased by

c.71% in FY 2024 to £13.2m. Electricity costs

are expected to decrease from these peak

levels with recent reductions in energy prices.

Continued focus on delivery

in our DfT TOCs

Our three DfT TOCs operate under NRCs,

under which the DfT retains substantially

all revenue and cost risk (including for fuel,

energy and wage increases). There is a fixed

management fee and the opportunity to earn

an additional variable fee. The punctuality and

other operational targets required to achieve

the maximum level of variable fee under the

contracts are designed to incentivise service

delivery for customers. During FY 2024 the DfT

introduced some revenue upside potential for

operators, with a Revenue Outturn Mechanism

(‘ROM’) within the quantitative variable fee

metrics. The ROM represents an incremental

fee opportunity for the Group if we are able to

grow the revenues of the NRC contracts within

certain thresholds.

In September 2023 we were awarded an NRC

for the WCP which is a partnership between

FirstGroup (70%) and Trenitalia UK Ltd (30%).

WCP comprises Avanti West Coast and

West Coast Partnership Development (WCPD),

the shadow operator for the HS2 programme,

which involves the development, mobilisation

and eventual operation of high-speed services

under Phase 1 of the HS2 programme.

The NRC is for nine years, to October 2032,

with a minimum three-year core term

to 18 October 2026.

First

Rail

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Business review

continued

Our team at Avanti West Coast, and everyone

connected with the train operator, are all

working hard with a singular focus on delivering

the service that customers expect. We have

reached an agreement with trade unions on

the incremental use of rest day working, which

helps to support operational resilience. We also

continue working with government and other

stakeholders on our plans to deliver long-term

improvements in customer experience and

resilience, and a new fleet of trains backed by

£350m of private sector investment entered

passenger service on 2 June 2024. We are also

continuing to undertake unprecedented levels

of driver recruitment and training to help sustain

good performance.

Continued outperformance

in open access

First Rail’s two open access operations,

where we bear all revenue and cost risk and

opportunity, have continued to outperform

expectations in FY 2024 due to strong leisure

demand and effective yield management.

Hull Trains and Lumo were also two of the

best-performing operators in England, with

operator-related cancellations below 1%.

Hull Trains was launched in September 2000

and, following three contract extensions,

has a track access agreement in place until

December 2032. Following a successful

targeted marketing campaign, Hull Trains saw

an increase in business travellers during the

year and increased capacity (by 14% since

December 2022) to match demand, running

a ten-car operation at peak demand times

(typically a five-car service). Seat capacity

utilisation has also continued to grow, from

59% in FY 2023, to 69% in FY 2024, and

Hull Trains reported a 40% increase in revenue

in FY 2024, to £45.1m (FY 2023: £32.1m).

By year end, Lumo has now carried more

than two and a half million passengers since its

launch in October 2021 and has a track access

agreement in place to May 2033. Lumo has

contributed to increased demand for all

operators on the East Coast Mainline and has

continued to see strong demand for its services

during FY 2024. Profit growth has been driven

predominantly by improving demand and

effective yield management, whilst still offering

competitive prices. Revenue increased by

42% to £54.7m in FY 2024 (FY 2023: £38.6m),

and seat capacity utilisation has risen to

75% from 71% in the prior year.

Our open access businesses are successfully

delivering good value, reliable, environmentally

friendly services for customers and contributing

to their local economies. Travelling by Hull Trains

has been shown to reduce carbon emissions

by 90% compared to travelling the same

distance by car, and a recent independent

study has forecast that Hull Trains will have

delivered £185-380m of economic benefits

since its launch. Independent research has

shown that a London to Edinburgh journey on

Lumo’s fully electric train fleet results in 95%

fewer carbon emissions than flying and emits

21 times fewer emissions than a petrol car.

Lumo has also been forecast to contribute

£470-740m to the UK economy between

2021 and 2033 including £21-43m from direct

employment, £130-365m from environmental

modal shift benefits and fare savings of c.£185m.

Expanding our open access operations

We are growing our open access business by

adding capacity, driving operational efficiencies,

enhancing timetables and applying for new and

complementary routes where there is proven

demand and capacity. As mentioned above,

since December 2022 we have added 14% more

capacity to our existing Hull Trains service, and

we launched an enhanced Sunday service with

the launch of the December 2023 timetable.

In January 2024, we submitted an application to

the ORR for a new Hull Trains London-Sheffield

daily return services. This would be a

competitively priced service which will

stimulate modal shift from road to rail, as

almost three quarters of trips between London

and Sheffield are currently made by car. If our

application is successful, we anticipate that

services could commence in calendar year

2026, subject to stakeholder agreement,

In May 2024 we submitted an application to

the ORR for six new Lumo daily return services

between Rochdale and London which would

restore a direct link from Rochdale to London,

via Manchester Victoria which last ran in 2000.

It is estimated that this new service would

provide 1.6m people in the North West with a

convenient and competitively priced direct rail

service to London from stations that are more

local to them. If the application is approved,

it is anticipated that services could begin in

calendar year 2027.

In addition, following successful discussions

with Network Rail Scotland and Transport

Scotland, we have also now submitted a formal

application to the ORR for the extension of a

number of Lumo’s daily services to and from

Glasgow. We have also submitted applications

for an additional, eighth return service on Hull

Trains between London King’s Cross and Hull

and for an additional, sixth return Lumo service

between London King’s Cross and Newcastle.

Scaling our Additional Services

businesses

During the year, we continued to make use of

our in-house expertise to develop, market and

deploy our affiliate services. These services

were initially developed to strengthen our

offering to passengers on our large passenger

rail operations, but they are now being

marketed to, and used by, third party operators.

Our analytics business Mistral Data was

launched in 2021 and now has 14 software

systems in operation built on native cloud

technology, allowing them to be quickly

deployed whilst also ensuring security and

scalability. Mistral’s product focus areas

include rail operations, staff communications,

customers (single view of customer

transactions with personalised marketing and

train running messages), revenue management,

remote asset management and business

intelligence. In FY 2024, product releases have

included an email alert service for customers

and a personalised messaging service for

front-line staff that sends operational messages

including the location of passengers who may

require assistance whilst the train is moving,

and any other relevant information.

Mistral also sold a first product to

a major train manufacturer.

Our First Customer Contact passenger service

centre was established in 2019 as a bespoke

contact centre providing efficient and effective

customer services for train operators. The

shared passenger service centre operates

at a lower cost than our previous outsourcing

arrangements and provides a single service for

customer queries across several rail operations,

and like Mistral, offers potential third-party

opportunities. During the year, the team

continued to support our TOCs, as well as

TransPennine Trains, processing delay repay

claims and passenger assistance bookings

with quick turnaround times.

Our First Rail Consultancy team has experience

built up over three decades. In FY 2024, the

team continued to support WCPD on HS2 and

other key projects in other TOCs. First Rail

Consultancy was also recently one of a small

number of consultants appointed by the DfT

to its £600m STARThree framework to advise

on the delivery of key rail, road and aviation

projects, and we were very pleased to have

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Business review

continued

been selected to support a high-quality

consortium bid for the design, build and

operation of a new high-frequency electrified

inter-city rail service, a major infrastructure

rail project between Quebec City and Toronto.

The installation of our evo-rail track-to-train

superfast rail 5G technology on a section of

the SWR network between Basingstoke and

Earlsfield is near completion. We undertook a

strategic review of evo-rail’s future earlier this

year, and while we are fully committed to

installing, commissioning and maintaining

evo-rail’s current projects, including the SWR

installation, we will not be actively developing

any further evo-rail projects.

Improving customer experience

Our train companies continue to work

collaboratively with industry partners and

stakeholders to enhance our service offering.

During FY 2024, Avanti teamed up with tech

innovator Signalbox to create a customised live

train app for travellers, and their innovative

low-cost, flexible Superfare has continued

to see strong demand and has recently been

extended to more destinations. Lumo has also

introduced a new, flexible ticket option,

LumoFlex, a digital-only ticket with benefits that

include reserved seating and a fee-free change

of journey. Both GWR and SWR have also

successfully introduced smartcards and

digital ticketing in parts of their networks.

Our DfT TOCs also delivered a number

of station improvement programmes in

partnership with the DfT, Network Rail and local

authority partners. GWR is helping to deliver

the MetroWest project in Bristol to generate

more than a million new rail journeys and give

80,000 more people access to train services

in the greater Bristol area, including the new

Portway Park & Ride station. GWR has also

worked with their partners to deliver new

stations in Reading and Exeter as well as

a number of accessibility improvements,

including a £1m package at Chippenham

station. SWR’s Island Line fully reopened

in 2023 following a £26m investment

programme to re-connect the service

with ferries.

Fleet upgrades

First Rail has an important role in meeting

the challenges of climate change, and we are

working with our partners to reduce carbon

emissions through initiatives including the

introduction of electric trains to replace

diesel where possible.

Avanti took delivery of the first of its new train

fleet following an investment of £350m in ten

electric-only trains and 13 bi-mode trains that

can run under both electric and diesel power.

These will replace Avanti’s diesel-only Voyager

trains, leading to a 61% reduction in carbon

emissions as well as providing a quieter and

roomier service, more reliable Wi-Fi, wireless

charging and a real-time customer information

system. The programme to refurbish Avanti’s

electric Pendolino fleet through a £117m

investment programme has also continued and

is delivering a step change in onboard

customer experience. In H1 2024, SWR started

its phased introduction of a new fleet of 90

Alstom Class 701 trains and will continue to

introduce the trains into service during FY 2025.

Finally, earlier this year GWR began a

successful trial of a battery-only train,

part of which included setting a UK distance

record for a battery train without recharging.

TfL contracts

As part of our drive to grow and diversify our

First Rail portfolio, we are identifying non-DfT

contract opportunities. Building on our existing

relationship with Transport for London (‘TfL’),

having operated trams in Croydon for a number

of years, in March 2024, we announced that we

had been awarded the contract to operate

the London Cable Car by TfL. The contract

commences on 28 June 2024 and we estimate

revenues of c.£60m over the eight-year contract

period. We look forward to supporting TfL in its

vision to promote the cable car as a leader in

London’s leisure market and to make use of the

opportunity to demonstrate our expertise. First

Rail has also been shortlisted with our bid

partner Keolis SA to bid for the Elizabeth Line

contract, and we look forward to submitting a

compelling bid that demonstrates our collective

experience and breadth of capabilities.

Rail policy

Both Conservative and Labour parties have

put forward proposals for the future of the

UK rail industry. Although there are significant

differences, both parties are promoting the

development of a ‘guiding mind’ industry body,

named as Great British Railways in the

Government’s Plan for Rail document. Labour

has said that if elected they will “fold existing

private passenger rail contracts into the new

body as they expire”. Looking at the industry

as a whole, the huge growth in passengers and

significant improvements to stations and rolling

stock that train companies delivered under

franchise agreements before the pandemic,

including those under our stewardship,

demonstrates that the UK rail industry works

best as a public-private partnership.

Furthermore, companies such as ours bring

private investment and focus on cost control

to an industry that needs it; our businesses

have saved more than £230m for the DfT in

the last two years alone.

We have been one of the largest UK rail

operators for more than 25 years, during which

we have worked successfully with a wide range

of partners under various forms of contract

types and delivered a number of significant rail

infrastructure projects. We know that growth

and innovation are key for the future of the

railway and are committed to working with our

government partners to provide competitive,

sustainable and improved services for all

passengers and communities.

Looking ahead

In First Rail, we expect the division’s financial

performance to be broadly in line with our

expectations in FY 2025, including growth in

open access and a normal level of variable fee

awards in the DfT TOCs (c.two thirds of the

maximum available).

Looking beyond FY 2025, despite political

uncertainty surrounding NRCs, we will maintain

our focus on delivery and will capitalise

on opportunities to make use of our extensive

experience and expertise to grow our UK open

access business, scale our Additional Services

businesses and participate in other UK

opportunities. We will also continue to monitor

opportunities for new open access entrants in

the European rail market where there are similar

regulatory frameworks and commercial models

to the UK.

If approved, the applications we have recently

submitted for new and extended open access

services could more than double our open

access capacity over the next three to five

years. If our application for the new Hull Trains

London-Sheffield service is successful,

we anticipate that services could commence

in calendar 2026, subject to stakeholder

agreement, and for the Lumo Rochdale-London

service, we currently anticipate a start date in

calendar year 2027.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Further progress in both

First Bus and First Rail

has resulted in a material

increase in our adjusted

earnings per share, from

11.6p in FY 2023 to 16.7p

in FY 2024.

Ryan Mangold

Chief Financial Officer

Financial review

Capital allocation guidance

Investment



Group: interest of £50-55m, includes DfT TOCs interest of c.£40m



First Bus: c.£120m net cash capex for FY 2025, mostly on electrification;

includes estimated capex saving of c.£15m from the Hitachi joint venture;

we continue to evaluate a pipeline of inorganic growth, franchising and

partnership opportunities



First Rail: continues to be cash capital-light, with any capital expenditure

required by the management fee-based operations fully funded under the

new contracts; business development and open access costs of £5-10m

are anticipated in FY 2025

Growth



Actively reviewing adjacent organic and inorganic opportunities where this

creates value for shareholders and exceeds the Group’s cost of capital

Returns for

shareholders



Progressive dividend policy c.3x cover of Group adjusted earnings; paid c.1/3

interim and 2/3 final dividend



Final dividend of 4.0p per share proposed, subject to shareholder approval



Subject to growth investment, balance sheet flexibility may allow for

additional shareholder returns

Balance

sheet



Less than 2.0x Adjusted Net Debt: rail management fee-adjusted EBITDA

target in the medium term



FY 2025 year end adjusted net cash of £40-50m before any inorganic growth

capital deployment

53 weeks to 30 March 2024

52 weeks to 25 March 2023

Revenue

£m

Adjusted

operating

profit

£m

Adjusted

operating

margin

Revenue

£m

Adjusted

operating

profit

£m

Adjusted

operating

margin

First Bus

1,012.2

83.6

8.3

902.5

58.4

6.5

First Rail

3,738.4

143.3

3.8

3,893.2

124.8

3.2

Group items/eliminations

(35.5)

(22.6)

(40.7)

(22.2)

Continuing operations

4,715.1

204.3

4.3

4,755.0

161.0

3.4

Discontinued operations

–

(1.9)

n/a

4.0

(6.6)

n/a

Total

4,715.1

202.4

4.3

4,759.0

154.4

3.2

1. ‘Adjusted’ figures throughout this document are before adjusting items as set out in note 4 to the financial statements.

The statutory operating profit including discontinued operations for the year was £41.2m (FY 2023: £185.2m) as set out in note 5.

2. Includes elimination of intra-group trading between Bus and Rail divisions, central management and other items.

3. Discontinued operations relates to the Group’s residual Greyhound US activities.

Revenue

Revenue from continuing operations decreased

marginally to £4,715.1m (FY 2023: £4,755.0m).

The Group saw strong performance in First Bus

and the open access Rail business, as well

as growth in the DfT TOCs although this

was offset by the impact of the non-renewal of

the TransPennine Express NRC at the end of

May 2023. The Group also benefited from an

extra week of trading in FY 2024 at First Bus.

Adjusted operating performance

Adjusted operating profit from continuing

operations was £204.3m (FY 2023: £161.0m).

First Bus benefited from increased passenger

volumes, improved driver availability and

data-led operational and commercial

improvements, which more than offset ongoing

inflationary pressures and lower funding levels.

In First Rail, open access operations performed

strongly underpinned by strong demand and

effective yield management more than

offsetting inflationary pressures. The DfT TOC

business was ahead of expectations owing to

higher than accrued final variable fee awards

for FY 2023.

Central costs were in line with the prior year

at £(22.6)m. The net impact to operating

profit of IFRS 16 in the year was £47.7m

(FY 2023: £41.9m), with the increase driven

mainly by the award of the GWR NRC and

the related rolling stock leases.

Adjusted earnings from continuing operations

were £110.7m (FY 2023: £85.6m), driven by

stronger adjusted operating profit performance

across the business, partly offset by a higher

taxation charge as a result of the increase in

the corporation tax rate.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

Strategic items

A final net credit of £1.4m was recognised,

being costs incurred in relation to the Group’s

central functions as part of its ongoing cost

efficiency initiatives following the exit from

North America, offset by the release of accruals

following the disposal of North America and the

execution of the strategy.

Greyhound Canada

Net restructuring and closure costs of £(1.5)m

relating to the continued winding down of

Greyhound Canada operations were incurred

during the prior year.

Adjusting items – discontinued operations were:

First Transit earnout

Following the announcement on 26 October

2022 of EQT Infrastructure’s agreement to sell

First Transit to Transdev North America, Inc.,

in the prior year the Group estimated its earnout

consideration to be around $88.5m (£72.3m)

based on the information received on the sale

by EQT. This gave rise to a non-cash, adjusting

charge of £33.8m relative to the carrying value

of the earnout of £106.1m as at 26 March 2022.

Gain on disposal of properties

A gain of £71.4m arose on the completion of the

sale of the majority of the remaining Greyhound

US properties in December 2022.

53 weeks to

30 March

2024

Adjusted

earnings

£m

52 weeks to

25 March

2023

Adjusted

earnings

£m

First Bus adjusted operating profit

83.6

58.4

First Rail adjusted operating profit

143.3

124.8

Group central costs (operating profit basis)

(22.6)

(22.2)

Group adjusted operating profit

204.3

161.0

Interest

(65.3)

(56.8)

Profit before tax

139.0

104.2

IFRS 16 DfT contracted TOCs adjustment

10.2

6.9

Taxation

(32.0)

(20.4)

Non-controlling interest

(6.5)

(5.1)

Group adjusted earnings

110.7

85.6

The Group has revised its definition of adjusted earnings, to also exclude the impact of IFRS 16 depreciation and interest

charges in relation to its First Rail – DfT contracted TOCs operations, given the Group takes no cost risk on these rolling stock

leases. The prior year comparatives have also been updated for the revised definition. There has been no other change to the

calculation, or to the Group’s policy regarding adjusting items.

The Group’s EBITDA adjusted for First Rail management fees performance measure also increased

materially year-on-year and is calculated as follows:

53 weeks to

30 March

2024

£m

52 weeks to

25 March

2023

£m

First Bus EBITDA¹

132.5

105.0

Attributable net income from First Rail DfT contracted TOCs

39.5

38.7

First Rail – Open Access and Additional Services EBITDA

37.6

32.5

Group central costs (EBITDA basis

)

(21.8)

(21.2)

Group EBITDA adjusted for First Rail DfT contracted TOCs’ management fees

187.8

155.0

1 IAS 17 basis.

A reconciliation to the segmental disclosures is set out in note 4.

Reconciliation to non‑GAAP measures and performance

Note 4 to the financial statements sets out the reconciliations of operating profit/(loss) and profit/

(loss) before tax to their adjusted equivalents.

The principal adjusting items in the year are as follows:

First Bus pension settlement charge and related items

In September 2023, First Bus concluded a period of consultation with regards to its two Local

Government Pension Schemes and subsequently terminated its participation in these funds on

31 October 2023, with affected employees enrolled into the First Bus Retirement Savings Plan.

Adjusting charges of £146.9m were recognised in the period for the settlement charge and related

termination costs. A gain of £161.0m was

recognised in Other comprehensive income in

relation to the restricted accounting surplus.

Legal claims in North America and the UK

The Group has recognised legal provisions

relating to claims in North America and the UK.

Adjusting items – discontinued operations were:

First Transit earnout

The final valuation of the First Transit earnout

contingent consideration receivable was agreed

and settled during the year, with the Group

receiving cash of $83.8m (£65.3m). The Group

incurred an adjusting charge of £2.3m,

reflecting the hedging of the cash receipt,

translation of the US dollar asset into pounds

sterling before settlement, partially offsetting

the write-off of the residual asset on settlement.

In the prior year, the principal adjusting items

in relation to the continuing business were

as follows:

First Bus restructuring

As part of the restructuring of the First Bus

division to exit loss-making markets and to

align networks with post-pandemic demand,

the Group completed the sale of its First

Scotland East business in September 2022,

realising a loss on disposal of £(3.7)m, and

closed the Southampton depot resulting in

closure costs and a release of prior impairment

for a net credit of £2.3m. In line with this

transition plan, the Group also incurred

costs of £(5.6)m relating to surplus vehicle

write-downs and other reorganisation charges

in the division.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

Tax

The tax charge, on adjusted profit before tax

on continuing operations for the year was

£32.0m (FY 2023: £20.4m), representing an

effective tax rate of 23.0% (FY 2023: 19.6%).

The rate has increased in the current year

because of an increase in the underlying

corporation tax rate in the UK. There was a

tax and remeasurement of tax losses. The

total tax credit, including tax on discontinued

operations, was £15.0m (FY 2023: charge of

£33.4m). The actual tax paid during the year

was £2.2m (FY 2023: £1.0m).

The ongoing Group’s effective tax rate

is expected to be broadly in line with

UK corporation tax levels being 25%.

Adjusted cash flow

The Group’s adjusted cash flow of £(167.7)m

(FY 2023: £28.0m) in the year reflects positive

cash flow from operations of £626.6m

(FY 2023: £644.8m) including the net receipt

from terminating participation in the Local

Government Pension Schemes in First Bus,

First Transit earnout proceeds and proceeds

from the disposal of property, plant and

equipment. This is offset by net capital invested

in the business, mainly in decarbonisation

in First Bus and acquisitions, as well as the

repayment of lease liabilities, dividends paid

and purchases of shares under the share

buyback programme. The adjusted cash flow

is set out below:

Group statutory operating profit

Statutory operating profit from continuing

operations was £46.5m (FY 2023: £153.9m) with

the positive underlying business performance

being offset by the £146.9m charge recognised

as a result of the termination of participation

of the Local Government Pension Schemes at

First Bus with an offsetting £161.0m gain in the

Condensed Consolidated Statement of

Comprehensive Income.

Finance costs and investment income

Net finance costs from continuing operations

were £65.3m (FY 2023: £56.8m) with the

increase principally due to IFRS 16 interest

costs which were £62.1m (FY 2023: £50.6m),

mainly arising in First Rail.

Profit before tax

Statutory loss before tax was £(18.8)m

(FY 2023: profit before tax of £97.1m), after the

Local Government Pension Scheme (LGPS)

pension settlement and related charges.

Adjusted profit before tax as set out in note 4

to the financial statements was £136.8m

(FY 2023: £97.9m) including

discontinued operations.

53 weeks to

30 March

2024

£m

52 weeks to

25 March

2023

£m

EBITDA

585.6

755.8

Other non-cash income statement charges

13.7

10.9

Working capital

(106.1)

(101.3)

Movement in other provisions

(27.9)

(33.0)

Increase in financial assets/contingent consideration receivable

23.7

–

Settlement of foreign exchange hedge

(1.1)

(1.2)

Pension inflow in excess of income statement charge/LGPS refund

138.7

13.6

Cash generated by operations

626.6

644.8

Capital expenditure and acquisitions

(236.0)

(208.5)

Proceeds from disposal of property, plant and equipment

42.8

147.8

Proceeds from capital grant funding

94.8

144.2

Proceeds from contingent consideration

65.3

–

Net proceeds from disposal of businesses

–

2.0

Interest and tax

(67.6)

(64.6)

Shares purchased for Employee Benefit Trust

(16.5)

(15.3)

Share repurchases from buyback programme including costs

(117.6)

(31.6)

External dividends paid

(29.5)

(14.7)

Dividends paid to non-controlling shareholders

(6.5)

(5.1)

Settlement of foreign exchange hedge

4.1

(12.5)

Fees for finance facilities

(1.4)

–

Lease payments now in debt

(526.2)

(557.5)

Adjusted cash flow

(167.7)

28.0

Foreign exchange movements

3.4

(4.0)

Net (inception)/termination of leases

(237.5)

(1,231.8)

Lease payments now in debt

526.2

557.5

Other non-cash movements

(0.1)

0.2

Movement in net debt in the period

124.3

(650.1)

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

During the year asset-backed financial liabilities

were entered into leases in First Bus of £22.1m

(FY 2023: £19.3m). Through the investment

in the strategic joint venture with Hitachi Zero

Carbon, £13.2m of battery leases have been

recognised through the sale and leaseback

arrangements for 257 batteries.

In addition, during the year the Group entered

into leases with a right of use value of £222.5m

comprising First Rail £192.6m, First Bus £27.2m

and Group items £2.7m (FY 2023: £1,219.0m,

comprising First Rail £1,213.8m, First Bus

£4.2m and Group items £1.0m)).

Gross capital investment (fixed asset and

software additions plus rights of use asset

additions) was £443.5m (FY 2023: £1,426.9m)

and comprised First Bus £208.2m, First Rail

£232.6m and Group items £2.7m (FY 2023: First

Bus £154.3m, First Rail £1,270.5m and Group

items £2.1m). The balance between cash capital

expenditure and gross capital investment

represents new leases, creditor movements

and the recognition of additional right of use

assets in the year.

Net cash/(debt)

The Group’s adjusted net cash as at

30 March 2024, which excludes IFRS 16 lease

liabilities and ring-fenced cash was £64.1m

(FY 2023: adjusted net cash of £109.9m).

Reported net debt was £(1,144.8)m (FY 2023:

reported net debt of £(1,269.1)m) after IFRS 16

and including ring-fenced cash of £249.6m

(FY 2023: £369.6m), as follows:

EPS

Total adjusted EPS from continuing operations

was 16.7p (FY 2023: 11.6p). Basic EPS was

(2.4)p (FY 2023: 11.8p).

Shares in issue

As at 30 March 2024, there were 625.4m shares

in issue (FY 2023: 707.8m), excluding treasury

shares and own shares held in trust for

employees of 125.3m (FY 2023: 42.8m).

The weighted average number of shares in

issue for the purpose of basic EPS calculations

(excluding treasury shares and own shares held

in trust for employees) in the year was 662.9m

(FY 2023: 739.5m).

Dividend

The Board is proposing that a final dividend

of 4.0p per share, resulting in a total

dividend payment of c.£24.3m, be paid on

23 August 2024 to shareholders on the register

at 19 July 2024, subject to approval of

shareholders at the 2024 AGM.

Capital expenditure

Non-First Rail capital expenditure was

£201.1m (FY 2023: £151.2m), comprising First

Bus £200.8m and Group items £0.3m (FY 2023:

First Bus £120.3m and Group items £1.0m).

In the year, the First Bus average fleet age

was 9.0 years (FY 2023: 9.1 years) reflecting

continued investment in the fleet, mainly on

electric vehicles and related infrastructure.

First Rail capital expenditure was £45.5m

(FY 2023: £56.7m) and is typically matched

by receipts from the DfT under current

contractual arrangements or other funding.

30 March

2024

25 March

2023

Analysis of net (cash)/debt

Total Group

£m

Total Group

£m

Sterling bond (2024)

96.2

184.2

Bank loans and overdrafts

27.8

82.9

Lease liabilities

1,458.5

1,748.6

Asset backed financial liabilities

45.6

44.2

NextGen (Hitachi JV) facility

13.2

–

Loan notes

–

0.6

Gross debt excluding accrued interest

1,641.3

2,060.5

Cash

(246.9)

(421.8)

First Rail ring-fenced cash and deposits

(245.6)

(364.2)

Other ring-fenced cash and deposits

(4.0)

(5.4)

Net debt excluding accrued interest

1,144.8

1,269.1

IFRS 16 lease liabilities – rail

1,408.9

1,711.2

IFRS 16 lease liabilities – non-rail

49.6

37.4

IFRS 16 lease liabilities – total

1,458.5

1,748.6

Net cash excluding accrued interest (pre-IFRS 16)

(313.7)

(479.5)

Adjusted net cash (pre-IFRS 16 and excluding ring-fenced cash)

(64.1)

(109.9)

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

Funding

As at the year end, the Group had £300.0m of

undrawn committed borrowing available under

its Revolving Credit Facility (‘RCF’). In addition,

there was £129.8m (FY 2023: £nil) of committed

headroom available under the Green Hire

Purchase Finance Facility and £54.9m available

under the NextGen Battery (Hitachi JV) facility.

Total undrawn bank borrowing facilities at year

end stood at £501.0m (FY 2023: £316.5m)

of which £484.7m (FY 2023: £300.0m) was

committed and £16.3m (FY 2023: £16.5m)

was uncommitted over and above the £246.9m

of cash balances.

Under the terms of the First Rail contractual

agreements with the DfT, cash can only be

distributed by the TOCs either up to the lower

amount of their retained profits or the amount

determined by prescribed liquidity ratios.

£38.2m has been paid in dividends from

the TOCs after finalisation of their FY 2023

statutory accounts to the Group during the

year. The ring-fenced cash represents that

which is not available for distribution, or the

amount required to satisfy the liquidity ratio

at the balance sheet date.

Interest rate risk

Exposure to floating interest rates is managed

to ensure that at least 50% (but at no time more

than 100%) of the Group’s pre-IFRS 16 gross

debt is fixed rate for the medium term.

Based on the current adjusted net debt profile,

the variable rate RCF is undrawn with only

finance leases and the 2024 6.875% £96.2m

fixed rate bond outstanding.

Fuel and electricity price risk

We use a progressive forward hedging

programme to manage commodity risk. As

at June 2024, 76% of our ‘at risk’ UK crude

requirement for FY 2025 (73.3m litres, which is

all in First Bus) was hedged at an average rate

of 51p per litre, and 41% of our requirements

for the year to the end of March 2026 at 50p

per litre. We also have an electricity hedge

programme in place, with 78% of our

consumption (based on current consumption

forecasts) hedged for FY 2025 at £129/MWh

and 55% for FY 2026 at £91/MWh.

Foreign currency risk

‘Certain’ and ‘highly probable’ foreign currency

transaction exposures (including fuel purchases

for the UK divisions) may be hedged at the time

the exposure arises for up to two years at

specified levels, or longer if there is a very

high degree of certainty. The Group does not

hedge the translation of earnings into the

Group reporting currency (pounds Sterling)

but accepts that reported Group earnings will

fluctuate as exchange rates against pounds

Sterling fluctuate for the currencies in which

the Group does business, although this

exposure is materially reduced following the

sales of the North American divisions. During

the year, the net cash generated in each

currency may be converted by Group Treasury

into pounds Sterling by way of spot

transactions in order to keep the currency

composition of net debt broadly constant.

Pensions

We have updated our pension assumptions

as at 30 March 2024 for the defined benefit

schemes in the UK and North America.

The net pension surplus of £27.8m at the

beginning of the year moved to a net deficit

of £25.3m at the end of the year.

At the beginning of the year, the balance sheet

included an asset of £21.7m relating to the

payment expected from the LGPS in Scotland.

That payment, which in practice amounted to

£23.1m, was duly received over the financial

year. The remaining movement arose from

asset performance that was insufficient to

offset an increase in the value of liabilities due

to a reduction in the discount rate. The main

factors that influence the balance sheet

liabilities for pensions and the principal

sensitivities to their movement (excluding

rail contracts and insurance liabilities)

at 30 March 2024 are set out below:

Movement

Impact

Discount rate

+1.0%

Decrease liabilities

by £150m

Inflation

+0.5%

Increase liabilities

by £59m

Life expectancy

+1 year

Increase liabilities

by £38m

On 31 October 2023, following a consultation

with affected employees, the Group terminated

the participation of the relevant First Bus

subsidiaries in the two Local Government Pension

Schemes in which they were admitted bodies.

An expense of £146.9m was recognised in the

year as an adjusting income statement item for

the settlement charges and other related costs,

with gains of £5.0m recognised in income for

curtailment gains and £161.0m recognised in

Other comprehensive income in relation to the

restricted accounting surplus. Terminating the

LGPS participation has resulted in an annualised

saving of c.£2m included within the First Bus

adjusted operating profit going forwards.

Foreign exchange

The most significant exchange rates to pounds Sterling for the Group are as follows:

30 March 2024

25 March 2023

Closing

rate

Effective

rate

Closing

rate

Effective

rate

US Dollar

1.26

1.22

1.11

Canadian Dollar

1.71

1.77

1.68

1.76

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

During the year, the Limited Partnership

created following the sale of the North

American divisions returned £23.7m to the Bus

Pension Scheme, linked to the £500m capital

return in December 2021. The amounts held by

the Limited Partnerships generated interest

income of £5.7m during the period which

partially offset the reduction in the value of the

related financial asset on the Group’s balance

sheet, to £99.6m (FY23: £117.6m).

At legacy Greyhound, the Group bought out

and settled c.$75m (c.£62m) of Greyhound US

pension liabilities, and in addition £153m

of pension liabilities in Canada have been

secured with an annuity buy-in.

The merger of the First Bus and FirstGroup

pension schemes was completed after year end

to drive further efficiencies. The Group Scheme

triennial funding valuation as at 5 April 2024

(now comprising legacy Group and Bus

pension obligations) has commenced and will

be finalised in FY 2026. The valuation outcome

will determine how the £77m currently held in

the Bus Scheme Limited Partnership will be

distributed, with the balance of £23m relating

to the Group scheme to be determined based

on the 2030 triennial valuation.

Balance sheet

Net assets have decreased by £109.1m since 25 March 2023. The principal reasons are the impact

of the profit for the year, which is more than offset by the reduction in the pension surplus, as well

as the share buyback programme.

Balance sheets – Net assets/(liabilities)

As at

30 March

2024

£m

As at

25 March

2023

£m

First Bus

580.2

511.9

First Rail

1,169.2

1,368.3

Greyhound

(24.7)

(21.8)

Divisional net assets

1,724.7

1,858.4

Group items

60.7

162.1

Net debt

(1,148.3)

(1,275.6)

Taxation

4.0

5.3

Greyhound – Held for sale

0.6

Total

641.7

750.8

Post‑balance sheet events

The merger of the First Bus and FirstGroup

pension schemes was completed on

31 May 2024.

Going concern

The Board carried out a review of the Group’s

financial projections for the 18 months to

30 September 2025 and evaluated whether it

was appropriate to prepare the full year results

on a going concern basis. In doing so the Board

considered whether any material uncertainties

exist that cast doubt on the Group’s and the

Company’s ability to continue as a going

concern over the going concern period.

Consistent with prior years, the Board’s going

concern assessment is based on a review of

future trading projections, including whether

banking covenants are likely to be met and

whether there is sufficient committed facility

headroom to accommodate future cash flows

for the going concern period.

Divisional management teams prepared detailed,

bottom-up projections for their businesses,

including assumptions on passenger volumes

and government support arrangements, and

having regard to the risks and uncertainties to

which the Group is exposed.

Following these reviews the Directors have

a reasonable expectation that the Group has

adequate resources to continue in operational

existence for at least the 12-month period from

the date on which the financial statements were

approved. Accordingly, they continue to adopt

a going concern basis of accounting in

preparing the consolidated financial statements

in this full year report.

Definitions

Unless otherwise stated, all financial figures for

the 53 weeks ending 30 March 2024 (the ‘year’

or ‘FY 2024’) include the results and financial

position of the First Rail business for the year

ended 31 March 2024 and the results of all

other businesses for the 53 weeks ending

30 March 2024. The figures for the 52 weeks

to 25 March 2023 (the ‘prior year’ or ‘FY 2023’)

include the results and financial position of the

First Rail business for the year ended 31 March

2023 and the results and financial position of all

other businesses for the 52 weeks to 25 March

2023. Results for the 52 weeks to 29 March

2025 (‘FY 2025’) will include the results and

financial position for First Rail for the year

ending 31 March 2025 and the results and

financial position of all the other businesses

for the 52 weeks ending 29 March 2025.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

‘Cont.’ or the ‘Continuing operations’ refer

to First Bus, First Rail and Group items.

‘Disc.’ or the ‘Discontinued operations’ refer to

First Student, First Transit and Greyhound US.

References to ‘adjusted operating profit’,

‘adjusted profit before tax’, ‘adjusted earnings’

and ‘adjusted EPS’ throughout this document

are before the adjusting items as set out in note

4 to the financial statements, and in the case of

‘adjusted earnings’ and ‘adjusted EPS’, exclude

the impact of IFRS 16 for the Group’s

management fee-based Rail operations.

‘EBITDA’ is adjusted operating profit less

capital grant amortisation plus depreciation.

The Group’s ‘EBITDA adjusted for First Rail

management fees’ is First Bus and First Rail

EBITDA from open access and additional

services on a pre-IFRS 16 basis, plus First Rail

attributable net income from management

fee-based operations, minus central costs.

‘Adjusted earnings’ is the Group’s statutory

profit for the year attributable to equity holders

of the parent, excluding adjusting items as

detailed in note 4, and also excluding the

impact of IFRS 16 for the Group’s management

fee-based Rail operations.

‘Net debt/(cash)’ is the value of Group

external borrowings, excluding accrued

interest, less cash balances.

‘Adjusted net debt/(cash)’ excludes

ring-fenced cash and IFRS 16 lease

liabilities from net debt/(cash).

Principal risks and uncertainties

The Board has conducted a thorough

assessment of the principal risks and

uncertainties facing the Group, including

those that would threaten the successful and

timely delivery of its strategic priorities, future

financial performance, solvency and liquidity.

In addition to the risk and uncertainties facing

the Group as detailed in the Business and

Financial Reviews, the underlying principal risks

and uncertainties in our operating businesses

will be set out in detail in the Group’s 2024

Annual Report and Accounts. A number of

these risks remain elevated given the wider

political uncertainty and related impact on

Government transport policies including

industrial action. The principal risks facing

the Group are:



Economic conditions



Geopolitical



Climate



Contracted business



Growth within the sector



Financial resources



Safety



Pension scheme funding



Legal & Regulatory compliance



Information security including cyber



Human resources

Whilst a number of risks facing the business

have reduced during the year including an

improved inflationary outlook and progress

in the First Rail business, industrial relations

challenges still persist. Furthermore, a change

of UK Government could lead to policy changes

resulting in the renationalisation of the National

Rail Contracts within the First Rail division

as the expiry dates of our various agreements

with the DfT are reached.

For a full summary of the Principal Risks

and Uncertainties facing the Group, please

refer to the Annual Report and Accounts 2024

which will be published on 26 June 2024 on

the Group’s website: www.firstgroupplc.com/

investors/reports-and-presentations.aspx.

Graham Sutherland

Ryan Mangold

Chief Executive Officer

Chief Financial Officer

11 June 2024

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Financial review

continued

Case study

Innovative financing to accelerate

our decarbonisation journey

As a major UK regional bus operator,

we have a key role to play in the

decarbonisation of public transport

in the UK. However, electrification of

bus fleets and infrastructure requires

capital investment and collaboration

between governments, local authorities

and operators.

Decarbonisation is a key part of our strategy

and we are pushing ahead and accelerating

our investment, underpinned by our strong

balance sheet. We have also worked

successfully with our local authority partners

to apply for government co-funding, while

it has remained available.

This year, alongside government co-funding,

we have also sought to find other methods

of financing to accelerate our electrification

journey and help bridge the total cost of

ownership gap between diesel and electric

buses. With this in mind, we have entered

a landmark, strategic decarbonisation joint

venture with Hitachi and secured innovative

financing with a £150m Green Hire Purchase

Finance Facility.

The

£100m joint venture with Hitachi

will

finance the purchase of up to 1,000 electric

bus batteries to be installed onto our buses.

The batteries will be leased from the joint

venture to First Bus over an initial eight-year

period, and the Group will retain 75% of the

residual value of the batteries when taken off

each bus at the end of its useful life, with an

estimated c.75% battery life remaining.

In addition, Hitachi Zero Carbon’s Battery

and Charging Management Services (BCMS)

will ensure we are using the batteries as

efficiently as possible and potentially extending

their lives, ultimately lowering costs by

improving energy utilisation.

This collaboration gives us greater visibility

of our financial commitment on the batteries,

extends the life of the battery life as well as

enhancing the residual life at the end of the

battery bus use, as well as potential benefits

from energy and electricity utilisation.

Looking ahead, FirstGroup will also have an

option, through a strategic partnership with

Hitachi ZeroCarbon to participate in future

opportunities, as Hitachi ZeroCarbon provides

new, market leading decarbonisation solutions

to transport operators worldwide, leveraging

our joint capability.

The

£150m Green Hire Purchase Finance

Facility

provides the funding for electric bus

bodies, net of any government co-funding

received, and is available for drawdown over

three years, on a competitive fixed margin

plus basis. Funding under the Facility will be

provided in tenors of either seven or ten

years depending on the specific requirement

at the time for each batch of vehicle bodies

to be financed.

The facility has been sized to support

the purchase of up to 1,000 electric bus

bodies and to broadly match the battery

arrangements within the Hitachi joint venture.

£100

joint venture with Hitachi

£150

Green Hire Purchase

Finance Facility

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

Our ambition is to be the partner of choice for innovative and sustainable

transport, accelerating the transition to a zero-carbon world.

2024 snapshot

£150

Green Hire Purchase

Finance Facility signed

by First Bus

1,000

electric bus batteries

to be funded by a

landmark joint venture

with Hitachi

£350

new fleet of 23 Avanti

electric or bi-mode

trains being introduced

Up to

carbon emissions

avoidance from

using Hull Trains

or Lumo services

6,000

solar panels

installed cumulatively

across First Bus

13%

of First Bus

fleet are zero

emission buses

First Bus depots

with electric

vehicle charging

792

apprentices in

training across

the Group

500

colleagues from

under-represented

groups completed

leadership development

programmes

650

Mental Health

First Aiders across

the Group

1,300

First Bus colleagues

immediately positively

affected by the introduction

of Real Living Wage

13%

of roles occupied

by minority

ethnic colleagues

where disclosed

Included in the 2023

S&P Sustainability

Yearbook once again

with a score of 62

Included in the Clean200,

the top publicly listed

companies by

clean revenue

Re-awarded the Green

Economy Mark on the

London Stock Exchange

‘Prime’ status on the ISS

ESG Index and ranked

in the top decile in

our sector

Maintained our

CDP rating of B

Ranked as the top

performing bus and rail

operator in our sector

in the FTSE4Good Index

‘AA’ ranking on MSCI

ESG index for sixth

year running

Proud member of

UN Global Compact

Network UK

Third party recognition

Included in the 2024

ESG Top-Rated

Companies List for

Sustainalytics with

a ‘Low Risk’ rating that

puts us in the top 6%

for transport and 11%

of the global universe

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Our approach

FirstGroup is committed to being a leader

in sustainable and innovative transportation

solutions. This commitment necessitates that

we view sustainability as a core aspect of our

operations, rather than a peripheral one. Over

the past year, our leadership has been deeply

involved in discussions on how to best serve

this goal for all our stakeholders, including

the communities we serve and the planet

that supports us.

Our business strategy has been updated

to reflect our progress and ambition.

Environmental and social sustainability is at

the heart of this new strategy, forming one of

four pillars. We take pride in the ambition with

which our team members across the Group

have adopted this purpose and have strived

to incorporate it into all our activities.

Environmental sustainability

As a leading transport operator, FirstGroup

recognises the risks but also the opportunities

that climate change presents for our business.

We continue to make progress towards our

Group-wide science-based emissions reduction

targets. This year we were pleased to announce

that Avanti and SWR successfully implemented

new targets, validated by the Science Based

Targets initiative (SBTi).

To meet our decarbonisation ambitions,

we are implementing innovative solutions that

will capitalise on opportunities to future-proof

our business and support the wider transition to

a low-carbon UK economy. First Bus continues

to make strong decarbonisation progress with

our aim to replace diesel buses with low and

zero emission alternatives. This year we

announced a landmark strategic joint venture

with Hitachi to finance the purchase of 1,000

electric bus batteries, and we signed a £150m

Green Hire Purchase Finance Facility with a

syndicate of three UK banks to support the

purchase of up to 1,000 electric bus bodies.

In a separate partnership with Hitachi,

Avanti announced the launch of a new fleet of

lower-carbon trains on behalf of the DfT. This

£350m project will deliver ten seven-carriage

electric trains and 13 five-carriage bi-mode

trains, capable of switching seamlessly between

electric and diesel fuel, allowing them to run on

electric where overhead power is available. The

project will provide customers with comfortable,

modern trains whilst reducing carbon emissions.

Equally important to our decarbonisation

strategy is our support for infrastructure

solutions that promote renewable and clean

energy. Given the recent volatility in energy

prices, we are acutely aware of the need for

energy security and the imperative to transition

to a low-carbon economy. A new electric

charging partnership with Openreach was

announced this year, which allows its electric

vehicles fleet to charge at First Bus depots.

This important milestone will help promote

greener journeys not only in the First Bus

fleet but also throughout the wider economy.

Our views on

sustainability

Environmental and social sustainability

forms a pillar of our new Group-wide strategy

ensuring that these principles and best practice

are embedded in every part of our business

and remain central to everything we do.

Graham Sutherland

Chief Executive Officer

Claire Hawkings

Chair, Responsible Business Committee

Graham Sutherland

Chief Executive Officer

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Climate change presents a significant and

growing risk to the public transport industry,

with extreme weather events and rising sea

levels threatening infrastructure and operations.

Our strategic approach not only focuses on

adapting our operations to be more resilient

in the face of climate change, but also on

reducing our own carbon footprint. We

were the first public transport operator in

the UK to officially support the Task Force

on Climate-related Financial Disclosures

(TCFD), and are now in our fourth year

of TCFD reporting.

Social sustainability

FirstGroup creates social value by enabling the

mobility that supports prosperity, growth, jobs

and education in the communities we serve.

We directly employ around 30,000 people from

across the UK, and we seek to represent the

customers and communities we serve so that

we can meet their diverse needs. This year the

Group was pleased to announce diversity

targets for our senior leadership population.

By 2028, we aim to have 40% of roles filled by

women, in line with the FTSE Women Leaders

recommendations. Equally, we are aiming to be

more reflective of the communities in which we

serve, so have set a target to have 11% of roles

filled by colleagues from a minority ethnic

background. Additionally, we launched ‘First

Connections’ in 2024, a Group-wide personal

development programme aimed at career

development amongst women and minority

ethnic colleagues to promote action towards

our new targets.

Being the partner of choice for our customers

requires us to invest in new ways to improve

accessibility and make journeys better.

Technological innovation and partnerships

have become a principal way for us to achieve

this aim. This year we introduced new customer

loyalty schemes, ticket discounts and live train

tracking at SWR and Avanti in partnership

with Go Jauntly and Signalbox. Lumo also

introduced several improvements including

superfast Wi-Fi, LumoGo, a ticketing and

entertainment centre, and LumoFlex,

a flexible ticketing system, providing

customers with better-connected and more

flexible ways to travel.

Providing comfortable and accessible journeys

to customers is also of high importance. This

year we maintained investment in new electric

buses at First Bus, launched a new fleet of

90 Arterio trains at SWR that will be rolled out

throughout 2024 and announced a fleet of

new electric and bi-mode trains at Avanti

that will all contribute towards more efficient

and comfortable journeys for customers.

Our business plays a crucial role in

communities throughout the UK, and we seek

to add social value by investing locally and

donating to charities. We support our TOCs

as they continue to build local community

relationships on their networks with the

continuation of Community Rail Partnerships

(CRPs) and the DfT’s Customer and Community

Investment Funding (CCIF). SWR were proud to

achieve the milestone of 100 station adopters

whereby local community groups can adopt

their local railway station and contribute to

its use and welfare. More broadly the Group

continues to support a variety of charitable

initiatives including Gift-in-Kind donations,

customer donations, employee matched

funding and payroll giving.

This year we were pleased to widen our

charitable activities by offering employees

in First Bus and Lumo a trial in corporate

volunteering opportunities with local

charity projects.

Conclusion

FirstGroup has been on a journey to understand

sustainability and to transition our business

so that we can leave a lasting, valuable impact

on the planet and society. The update of our

business strategy to incorporate sustainability

as a pillar is an important step in continuing

this journey. This remains a task that cannot

be achieved alone, requiring collaboration with

many stakeholders including our customers,

the public sector and suppliers. We continue

to contribute to various collaborative industry

initiatives, such as the new industry-wide

Sustainable Rail Blueprint, and align to broader

sustainability standards and initiatives including

the SBTi and the TCFD. This year, for the first

time, we are pleased to announce that we are

now signatories to the UN Global Compact and

are committed to their ten guiding principles

including human rights, labour, the environment

and anti-corruption.

We are pleased to note that our strides towards

sustainability have been acknowledged by

leading global sustainability ranking bodies.

These commendations are a testament to

the concerted efforts made throughout our

organisation over an extended period. This year

we are proud to have been named in S&P

Global’s Sustainability Yearbook; ranked as

the only UK transport operator to be included

in the 2024 Clean200 report of the world’s

cleanest 200 companies, one of only eight

UK companies to be included; and achieved

Industry Top-Rated from Sustainalytics.

However, in our pursuit of transparency, we

must also recognise the areas where we have

not met our expectations and where additional

focus is required. We are resolute in our

commitment to uphold standards that

significantly exceed regulatory and corporate

governance requirements.

Through innovative solutions and sustainable

practices, we are dedicated to contributing

to a greener future for the public transport

industry. This Annual Report outlines the key

achievements over the past year relating to

our sustainability efforts and describes

how we are integrating sustainability and

Environment Social Governance (ESG)

into our business strategy and activities.

Graham Sutherland

Claire Hawkings

Chief Executive Officer

Chair, Responsible

Business Committee

The Responsible Business

Committee welcomed the

new environmental and social

sustainability strategic pillar

which provides an important

focus and structure for

driving forward the Group’s

sustainability ambitions.

Claire Hawkings

Chair, Responsible Business Committee

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Our approach

Leading in environmental

and social sustainability is one

of our four business strategic

pillars, ensuring that sustainability

is embedded throughout

the Group.

‘Mobility Beyond Today’ is our Group-wide

strategic framework for sustainability. We are

committed to the transparent disclosure of

our full sustainability performance and report

progress each year. This section of the

report outlines our progress against our

‘Mobility Beyond Today’ priorities, including

decarbonisation, modal shift, supporting our

people, community investment, safety and

business ethics.

Alongside our Annual Report, the

Environmental Performance Report provides a

more detailed breakdown of how our business

is performing across key environmental metrics

covering carbon, energy, water and waste.

It also includes examples of biodiversity

initiatives taking place across FirstGroup.

Read our

Environmental Performance Report

Non-financial and sustainability

reporting regulations

In accordance with Sections 414CA and 414CB

of the Companies Act 2006, our non-financial

information and sustainability can be found on

the following pages of this Annual Report:

relating to environment matters, pages 54 to 59;

climate-related financial disclosures, pages 74

to 84; employees, pages 65 to 68; community,

pages 69 to 70; human rights, page 73; and

anti-corruption and anti-bribery, pages 73

and 102.

Strategic pillar

Sustainability framework

Lead in

environmental

and social

sustainability

Our sustainability framework ‘Mobility Beyond Today’ provides focus

on this strategic pillar with material issues identified by our stakeholders.

Mobility

Beyond

Today

Mobility

Beyond

Today

Innovating for our

customers and society

Being the partner of

choice for low and zero

emissions transport

Supporting

our people

Environmental

Management*

Health and

Safety

Ethics

Communities

* Environmental Management included in our Environmental Performance Report 2024

To be the partner of choice for innovative

and sustainable transport, accelerating

the transition to a zero-carbon world.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Our sustainability framework

Leading in environmental and social sustainability is one of our four strategic pillars, ensuring that

this is embedded throughout the Group. Our sustainability framework ‘Mobility Beyond Today’

provides focus on this strategic pillar with our material issues, identified by our stakeholders.

Strategic priority

Focus area

Goals

Progress in FY 2024

Being the partner

of choice for low

and zero emission

transport

Read more on pages 69-73

Communities

Form genuine, enduring

local relationships with the

communities we serve.



£2.4m delivered in 99 local community projects with the DfT’s Customer and Community

Investment Funding across our DfT contracted rail companies



100 station adopters at SWR



Trialled employee volunteering opportunities with Neighbourly in First Bus and Lumo

Ethics

Hold the highest ethical

standards.



Became a signatory of the UN Global Compact



Zero breaches of the Supplier Code of Conduct identified in FY 2024



217 suppliers registered onto a toolkit that provides assessments and assurance

into supply chain ESG

Safety

Foster continuous improvement

in safety towards our goal of

zero harm.



Defibrillators installed across all SWR’s staffed stations



Maintained certifications to ISO45001 at First Bus and our DfT contracted rail companies



First Bus created a bespoke health and safety qualification, accredited by the Institution

of Occupational Safety and Health (IOSH) for the transport sector

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Being the partner

of choice for

low and zero

emission transport

We are taking action to combat

climate change and improve

local air quality by delivering

low and zero emission mobility

solutions for our customers.

One of our goals is to eliminate

the carbon emissions associated

with our operations in line with

the latest climate science.

Zero carbon

Eliminating the carbon emissions

associated with our operations

£150

Green Hire Purchase Finance

Facility signed by FirstGroup

£350

new fleet of 23 Avanti trains

announced on behalf of

our government partners

1,000

electric bus batteries to

be financed through a new

joint venture with Hitachi

FirstGroup has set a near-term science-based

emissions reduction target, approved by the

SBTi, and aligned with the ambition of the Paris

Agreement to limit annual average temperature

increase to 1.5°C above pre-industrial levels.

Within our divisions, we have also set further

ambitious targets and are currently developing

a climate transition plan that outlines how we

will reach our goals. First Bus is at the forefront

of the industry in the operation of low and zero

emission vehicles and in 2020 announced a

commitment to achieving a fully zero emission

fleet by 2035. First Rail supports the UK

Government’s target to remove all diesel-only

trains from service by 2040 and deliver a

net-zero railway network by 2050.

Fleet decarbonisation

By carefully balancing operational needs,

customer expectations, budgetary constraints,

and sustainability objectives, we will maximise

the opportunities to reduce emissions through

rolling stock and vehicle changes.

First Bus has been steadily replacing the

existing diesel fleet with zero emission

alternatives. At the end of FY 2024, we now

have 574 zero emission buses in service,

making up 13% of our bus fleet, and direct

current (DC) fast electric charging infrastructure

at ten of our depots across the UK, including

three fully electric depots in York, Leicester

and Norwich. Our Hoeford depot in Portsmouth

will be partially electrified by June 2024. In

Leicester, First Bus invested £6.6m to bring this

project to fruition, alongside additional DfT

funding of £2.9m secured in partnership with

Leicester City Council. An additional 86 electric

buses arrived in Leicester this year.

During FY 2024, First Bus and our local

authority partners have also been successful

in securing government co-funding to

implement Zero Emission Bus Regional Area

(ZEBRA) projects in four new locations. The

latest investment will enable four depot sites

in Taunton, Weston-Super-Mare, Basildon and

Hengrove in Bristol to upgrade their power and

infrastructure, future-proofing them to operate

a fully electric fleet in the coming years. This

funding will also allow First Bus to order an

additional 178 electric buses across four

regions, taking the total number of electric

buses we run to more than 800 across our

14 electrified depots in the UK upon the

completion of projects.

In 2024, First Bus maintained its momentum

to decarbonise its bus fleet by 2035 with

an announcement of the signing of a new,

innovative £150m Green Hire Purchase

Financing Facility to support the purchase

of electric bus bodies. Furthermore, the Group

has agreed a strategic partnership with Hitachi

to create a newly formed joint venture to

support the purchase of up to 1,000 electric

bus batteries and provide battery and charging

management services for 1,500 buses powered

by the new batteries as part of First Bus’s fleet

decarbonisation. Please read the case study

on page 47 for more details on how we are

utilising innovative financing to accelerate

our decarbonisation journey.

Read more on page 47

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Meanwhile in First Rail, Avanti have begun

introducing a new £350m fleet of Hitachi Class

805 and 807 trains, which will replace the

current diesel-only Class 221 fleet in 2024.

This fleet upgrade is a critical step towards

Avanti reaching net zero by 2035. Please read

the case study on this page for more details.

At GWR, we have invested in low-carbon

transport innovation through the purchase

of intellectual property, rolling stock and

equipment from emissions-free and hybrid

trains manufacturer Vivarail, in partnership

with Network Rail. This has allowed us to trial

fast-charging battery electric technology on the

Greenford to West Ealing line with the aim of

replacing the use of diesel in running trains

on the line. The Class 230 battery trains to

be used in the trial are made from repurposed

ex-London Underground trains, with trial

operations that began in March 2024.

Zero carbon

continued

Driver performance and

energy efficiency initiatives

We aim to manage our timetabled

services to be as efficient as possible,

minimising bus and train idling as much as is

practical. For all buses, First Bus is measuring

key fleet performance indicators using

Greenroad telematics, a cloud-based system.

Operating companies and bus drivers have

specific CO

/miles per gallon targets that are

measured monthly and are directly linked to

reward through driver pay. These performance

systems allow for more accurate rerouting,

for shorter bus routes and maximised diesel

efficiencies and electric battery life depending

on the vehicle.

In First Rail, Driver Advisory Systems (DAS)

monitor driver performance on behaviours such

as idling and unnecessary acceleration and

braking, which improves the energy efficiency

of our operations. DAS will likely be

incorporated into our specifications for any

future rolling stock upgrades across our rail

division. SWR have successfully deployed

DAS across their electrified and diesel-powered

fleet which led to average energy savings of

between 5% and 10% across the fleet

compared to before it was implemented.

Case study

First Bus and Openreach

expand EV charging

partnership

First Bus announced a significant

collaboration with the UK’s largest

broadband network provider, Openreach,

granting them access to its rapid electric

vehicle (EV) charging infrastructure at bus

depots nationwide. Openreach joins the

ranks of DPD and Police Scotland,

plugging into this innovative shared

EV infrastructure initiative.

The initial phase of the partnership will

witness up to 30 Openreach EVs from

its fleet charging at First Bus depots in

Glasgow, Aberdeen and Leicester while

buses are in service. This enables

Openreach engineers to cover more ground,

reduce their environmental impact

and dedicate more time to the needs

of their customers.

As an industry leader in the decarbonisation

space, First Bus is keen to harness its

EV infrastructure to help support local

communities and businesses reach their

own environmental aspirations. This

commitment aligns with our own ambition

of reaching a zero emission bus fleet by

2035. Currently, Openreach has more

than 3,000 EVs in its fleet – but it is aiming

to convert all its diesel fleet to zero

emissions by 2031.

Avanti launches new

£350m fleet

A £350m project will deliver a fleet of

ten seven-carriage electric trains and

13 five-carriage bi-mode trains across the

Avanti Network, with the ability to switch

seamlessly between electric and diesel

power. The electric trains (Class 807) will

operate between London, the West Midlands

and Liverpool whilst the bi-mode version

(Class 805) will be focused on the London

to North Wales route. The new trains are

expected to enter service across Avanti

Network during 2024 to eventually replace

the Voyager trains, lowering the amount

of diesel used by only utilising the fuel

when there are no overhead wires

to supply electricity.

The fleet upgrade forms an integral part

of Avanti’s net-zero ambitions due to the

substantial carbon emissions savings

they will deliver. Phil Cameron, Commercial

Projects Director at First Rail, said:

“Our investment in the new fleet will help

raise the bar for rail travellers in North Wales

and is part of our wider commitment to

transform the customer experience and

deliver a more sustainable operation.”

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

We are looking to implement connected-DAS

(c-DAS) on our open access routes – Lumo

and Hull Trains. This more advanced system

is programmed with route knowledge, such as

the line speed and gradients, as well as train

capabilities in areas such as acceleration and

braking. c-DAS crucially has data on the

locations of other traffic on the network, which

we can then use to calculate an appropriate

speed for a train to travel at. This reduces the

number of conflicts at junctions and the need

for braking and acceleration. Therefore, our

trains coast more often allowing for more

efficient driving and consuming less energy

during operations. This, in turn, reduces our

carbon emissions. This year GWR have tested

c-DAS across our Class 387s and Class 802

fleet, with a view to then rolling it out more

widely in the medium to long term.

Electric vehicle charging

Our fleet decarbonisation plan includes

provisions to increase the availability of electric

vehicle charging points across our networks for

businesses, customers and communities. This

year GWR teamed up with ChargePoint Genie

to offer new electric car charging points at four

stations and join 60 customer charge points

available across SWR’s network.

In First Bus, we continue to work with

businesses including DPD, Openreach and

local public services to allow their fleets the

opportunity to charge commercial vehicles at

our electrified bus depots whilst they are not in

use. Please read the case study on page 55 for

more details.

Air quality

Improving local air quality in

our towns and cities through

our cleaner fleets.

of First Bus diesel fleet meet

the latest Euro VI low emission

standards for improved air quality

1,600+

First Bus vehicles cumulatively

retrofitted with exhaust

after‑treatment systems

Promoting healthier communities

through air quality improvement

We recognise that air quality profoundly

impacts the health and wellbeing of our

communities. We actively support the

development of convenient and cost-effective

public transport systems that prioritise modal

shift and low-emission vehicles. Furthermore,

we are looking to improve our own vehicle fleet.

Through contract renewals and planned fleet

replacements, we aim to minimise our harmful

air emissions.

Monitoring and data-driven decisions

We chair the Rail Safety and Standards Board’s

Air Quality Working Group and contribute

towards the first-ever air quality monitoring

network spanning 105 train stations across

England and Wales. Our initiatives include:



Diffusion tubes and monitoring equipment:

Our rail businesses have installed diffusion

tubes and other monitoring equipment at

various stations. These tools allow us to track

levels of nitrogen oxide, nitrogen dioxide,

and particulate matter accurately.



Informed decision making: By analysing

this data, we develop targeted air quality

improvement plans where necessary. Our

commitment extends beyond compliance

– we actively seek opportunities to enhance

air quality.

Reducing emissions and retrofitting

Our commitment to cleaner air involves several

strategic initiatives. As active participants in

the rail industry idling reduction project, we

work to overcome technical and operational

barriers by minimising engine idling. By doing

so, we contribute significantly to improving air

quality. In First Bus, 78% of our diesel fleet now

meets the Euro VI low emission standards or

equivalent. Additionally, we continue to retrofit

exhaust after-treatment systems (EATS) to older

diesel vehicles, with over 1,600 retrofitted

vehicles to date in our fleet.

Innovating for air quality

SWR has become the first rail company to trial

a Pluvo air-purifying totem at one of its stations.

To help combat the effects of air pollution,

the Pluvo Column, which is sited on a platform

at Salisbury station, will monitor and remove

harmful pollutants from the air using its

advanced air filtration technology to create

a cleaner and healthier environment for

customers. Additionally, SWR has begun

trialling new, more energy-efficient vending

machines with ‘living walls’ at Bournemouth

station. The living walls – which are small,

self-sufficient, vertical gardens – have been

developed to thrive in all locations, whether

sunlit, shady or covered, and if the trial is

successful, they will be deployed on machines

at other locations on the SWR network.

Zero carbon

continued

Introduction

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Climate resilience

Incorporating climate adaptation

measures to improve the resilience

of our services.

4th year

reporting to the Task Force

on Climate‑related

Financial Disclosures

27%

reduction in our Scope 1 and 2

emissions achieved this year

compared to our 2020 base year

Climate resilience

To ensure the success of our business for the

long term, we are equally focused on climate

resilience – understanding the physical and

transition impacts climate change can have on

our business over the short, medium and long

term, and taking action to mitigate the risks

and maximise the opportunities. In 2021,

we published our first TCFD report,

which has expanded over the years from a

qualitative review of climate-related risks and

opportunities to include a quantitative scenario

analysis, financial impact assessment and

engagement of internal functions and

stakeholders to ensure actions are being taken

to address risks and capture opportunities.

Later this year we will be publishing our first

Group-wide climate transition plan in line with

the Transition Plan Taskforce framework.

This plan will outline our strategy, governance,

targets, progress to date and risk management

approach. Climate change is managed and

reported as one of our principal risks, and these

considerations have been an integral part of our

risk management framework for many years.

In our TCFD section on pages 74-84, we go into

more detail about how we are exploring these

risks and opportunities.

Greenhouse gas emissions

The Group’s overall Scope 1 and Scope 2

location based carbon emissions increased

by less than 2% from FY 2023 to FY 2024

and were 27% lower than in FY 2020. Our

decrease in diesel consumption due to the

continued electrification of our bus fleet was

counterbalanced by an increase in traction

and depot electricity consumption, as well as a

higher electricity emission factor compared to

FY 2023. The increase in electricity consumption

is a result of more electric buses being in

service in our bus division and increased

mileage in our rail division, a high proportion

of which was driven by electric traction.

The table below reflects the carbon emissions

associated with our global operations and aligns

with the UK’s Streamlined Energy and Carbon

Reporting (SECR) requirements. Our UK

operations represent 99% of both our global

GHG emissions in the table below and our

global energy use in the table on page 59.

Our Aircoach operations based in Ireland are

responsible for only 1% of our total emissions.

The Scope 1 emissions for these operations

amounts to 6,844 tCO

e (7,274 tCO

e in

FY 2023), while Scope 2 emissions (location

based) total 25 tCO

e, bringing the combined

total for Scope 1 and Scope 2 emissions

to 6,869 tCO

e and resulting in an intensity

ratio of 304 tCO

per million revenue

(351 in FY 2023). The energy consumption

used to calculate these emissions is

27,805MWh (30,174MWh in FY 2023).

Tonnes of carbon dioxide equivalent (tCO

e) for operations:

2024

2023

2022

2021

2020

Scope 1

478,705

487,362

524,683

467,773

653,779

Scope 2 location based

216,508

197,271

214,967

236,592

303,628

Total Scope 1 and Scope 2

695,213

684,633

739,650

704,365

957,407

Total Scope 1 and Scope 2

per £m revenue (tCO

e/£m)

149

159

178

179

255

Scope 3:

Other indirect emissions inclusive

of business travel, water use and downstream

waste treatment and disposal

9,764

8,724

3,227

2,684

12,257

Scope 3:

FERA emissions related to the

production of fuels and energy purchased

196,753

186,421

216,738

228,549

217,066

Total all scopes (Location)

901,730

†

879,779

959,615

935,598 1,186,730

Total all scopes (Market)

685,513

†

682,758

744,673

699,162

884,782

Out of scope

34,895

32,513

28,496

23,819

22,636

Total all scopes exclusive of FERA emissions

per revenue (tCO

e/£m)

159

†

169

185

265

Scope 1 and Scope 2 emission % change

(2020 baseline)

-27%

-28%

-23%

-26%

†

All assured metrics are highlighted with a † symbol.

Total emission of FirstGroup’s Scope 1, Scope 2 location based, Scope 3 (limited to emission from business travel,

waste disposal, water supply and treatment and upstream transportation and distribution and Out of scope emissions).

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Climate resilience

continued

For a more detailed analysis and an

understanding of our Group carbon

performance, please see FirstGroup’s

Environmental Performance Report 2024.

www.firstgroupplc.com/responsibility/

responsibility-reports/2024.aspx

Methodologies and calculations

Our carbon and energy reporting approach

is prepared in accordance with the following

standards and guidelines:



Greenhouse Gas Protocol (GHG Protocol)

for Corporate Accounting and

Reporting Standard



UK Government Streamlined Energy and

Carbon Reporting (SECR) Guidelines

FirstGroup has an operational control boundary

covering 100% of its business activities with

a materiality reporting threshold of 5%.

The term ‘carbon emissions’ in this report

refers to GHG emissions as required for a

GHG inventory. This includes carbon dioxide

alongside six other GHGs calculated in mass

of carbon equivalent (CO

e).

Our GHG inventory is reported in four

categories or ‘scopes’, listing our direct

and indirect emissions in accordance with

the GHG Protocol:

Scope 1:

Direct emissions from road and rail

vehicle fuel, heating fuel and fugitive refrigerant

gas emissions

Scope 2:

Indirect emissions from the

generation of electricity purchased for buildings

and to power electric road or rail vehicles

(location-based)

Scope 3:

In the Annual Report and Accounts

is limited to categories (Waste, Water, Business

Travel, Fuel and Energy-related activities and

upstream transportation and distribution) for

which we are currently able to gather actual

source data from along our value chain and

apply relevant emissions factors.

We have also worked with ERM – a specialist

consultancy, to complete a full Scope 3

emissions assessment and identify all material

Scope 3 emissions. We are reporting on all our

material Scope 3 emissions for the first time in

our Environmental Performance Report 2024

www.firstgroupplc.com/responsibility/

responsibility-reports/2024.aspx. For some

Scope 3 categories in this assessment, we

have relied upon a spend based method to

calculate emissions and we will work towards

gathering actual emissions data from external

partners in our value chain over time.

Out of scope:

relating to the combustion

of biofuels.

Our carbon emissions and energy metrics

are adjusted to account for the contract ending

with TransPennine Express, which was

transferred to the DfT’s Operator of Last

Resort on 28th May 2023. This is calculated

in accordance with Appendix E of the

GHG Protocol.

Our UK carbon and energy emissions

are calculated using UK Government-issued

emission factors:



UK Government GHG reporting: Conversion

Factors 2023 from Department for Energy

Security and Net Zero

There are limited examples where emissions

factors have been developed as ‘bespoke’.

To calculate underlying energy use, liquid

and gaseous fuels have been converted from

a volume to kWh (Gross Calorific Value).

The following sources have been used to derive

fuel energy properties for these calculations:



UK Government GHG reporting: Conversion

Factors 2023 from Department for Energy

Security and Net Zero

A detailed understanding of our calculation

methodologies is available within FirstGroup’s

Environmental Performance Report 2024,

which can be found on our website at

www.firstgroupplc.com/responsibility/

responsibility-reports/2024.aspx.

Independent assurance

FirstGroup plc has engaged Grant Thornton UK

LPP to provide independent limited assurance

in accordance with International Standards on

Assurance Engagements 3000 (Revised),

“Assurance Engagements other than Audits or

Reviews of Historical Financial Information”

(“ISAE 3000 (Revised)”), and in respect of the

greenhouse gas emissions information included

within the Subject Matter Information, in

accordance with International Standard on

Assurance Engagements 3410 – “Assurance

Engagements on Greenhouse Gas Statements”

(“ISAE 3410”), issued by the International

Auditing and Assurance Standards Board

(IAASB).

All assured metrics are highlighted with a

†

symbol.

Grant Thornton UK LLP issued an unqualified

assurance report over the selected metrics

and their full report can be found here

www.firstgroupplc.com/responsibility.aspx.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Climate Resilience

continued

Energy initiatives

FirstGroup tracks and monitors energy-saving

initiatives to ensure we continue to focus on

energy efficiency alongside switching to low

and zero-carbon energy choices. The following

are examples of major initiatives in the

short to medium term which will be driving

continuous improvement in our energy

and carbon performance:



GWR is trialling fast-charging battery

technology to help bring regular battery-only

rail services a step closer. The battery is

currently being trialled from West Ealing

to Greenford in north-west London



Ten First Bus depots now offer electric vehicle

charging and three are fully electrified



First Bus has invested £2.5m in more than

6,000 solar panels to help supplement power

to 24 bus depots over the past two years

The underlying energy use which affects our

carbon footprint has decreased 1% since

last year.

This year the proportion of renewable energy

we used was 6.3%, impacted by the relative

use of electric versus diesel vehicles in

our fleet.

For a more detailed analysis and understanding

of our Group energy performance please

see FirstGroup’s Environmental Performance

Report 2024 www.firstgroupplc.com/

responsibility/responsibility-reports/2024.aspx.

FirstGroup’s Scope 1 and Scope 2 carbon

emissions per million £ of revenue were 6%

lower in FY 2024 than in FY 2023. The reduction

in carbon emissions was partly due to the

continued electrification of our bus fleet, the

roll-out of energy efficiency programmes while

we maintained strong revenue growth.

Science-based targets

We are aligned to the UK Government’s broader

climate change strategy and the reductions

needed to meet the global commitment under

the Paris Agreement to limit climate warming

to 1.5°C by 2050, thereby mitigating the worst

impacts of climate change. In the long term,

a shift to zero emission public transport and

active travel – moving people out of cars and

planes – is vital to achieving this global goal.

Our near-term target is to reduce Scope 1 and

2 GHG emissions by 63% by FY 2035 from a

FY 2020 base year. Importantly, we also commit

to reduce absolute Scope 3 GHG emissions

from fuel and energy-related activities by

20% by FY 2028 from a FY 2020 base year,

and that 75% of our suppliers by emissions

covering purchased goods and services and

capital goods will have science-based targets

by FY 2028.

Our performance against these targets

is as follows:



Scope 1 and 2 target: 27% reduction on the

base year



Scope 3 fuel- and energy-related activities

target: 9% reduction on the base year



Scope 3 supplier engagement target:

45% of suppliers in scope already

have a science-based target in place



As well as having Group-wide targets

two of our rail have also set their own

science-based targets:



This year Avanti committed to achieve net zero

by 2035 and successfully submitted three

near-term targets that we validated by the

SBTi. These were:



To reduce absolute Scope 1 and 2

GHG emissions 40% by FY 2026 from

a FY2020 base year



To reduce absolute Scope 3 GHG emissions

15% by FY 2026 from a FY 2021 base year



90% of its suppliers by spend covering

purchased goods and services, and capital

goods, will have science-based targets

by FY 2026



SWR were the first rail company to have a

long-term decarbonisation goal to be net zero

by 2040 that has been verified by the Science

Based Targets initiative. Their priority is to

mitigate their impact on climate change by

setting robust carbon targets to hit each year

in line with the science-based target of 4.2%

reduction per year.

Total energy use (kWh)

Kilowatt-hours of energy (kWh HHV): Total by energy source and renewable content

2024

2023

2022

2021

2020

Non-renewable sources

2,867,623,032

2,929,421,246

3,067,303,177

3,102,497,653

2,768,829,848

Renewable energy sources

193,152,955

†

163,898,921

293,028,797

294,454,269

622,940,538

Total all

3,060,775,988

†

3,093,320,167

3,360,331,974

3,063,284,116

3,764,489,175

% change (year-on-year)

-1%

-9%

10%

-19%

% change (2020 baseline)

-19%

-18%

-11%

-19%

Per £m revenue

(MWh/£m)

656

719

807

777

1,005

First Bus

2024

2023

2022

2021

2020

Zero emission buses

(electric or hydrogen powered)

13%

†

3.3%

1.1%

0.3%

Total bus fleet

4,425

4,441

4,926

5,030

5,619

Carbon emission per vehicle distance (gCO

e/vkm)

(Scope 1, 2 location based and Out of scope)

897

†

1,103

1,112

964

975

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Innovating for

our customers

and society

We are focused on providing

services that have innovation,

ease, convenience and

sustainability at their core,

in order to have more people

than ever joining us in travelling

on our bus and rail services

and taking cars off the road.

Providing alternative modes of travel

Our role in mitigating road congestion,

enhancing air quality and contributing to the

reduction of carbon emissions is pivotal. The

transport sector is a major contributor to the

UK’s carbon emissions, yet buses and coaches

are responsible for 2.2%, and railways for just

1.5% of the transport sector’s GHG emissions,

according to government data.

Our focus is on encouraging a greater number

of individuals to choose our bus and rail

services, thereby decreasing the frequency

of car travel. This shift is not only crucial for

achieving the UK’s net-zero objectives but

also plays an essential role in fostering social

inclusion. Public transport provides equitable

access to education, employment healthcare,

and facilitates social mobility.

First Rail’s open access operators, Hull Trains

and Lumo have seen an impressive growth in

the number of journeys, with an increasing

number of passengers choosing lower-carbon

travel. The latest report by the rail industry

regulator, the ORR, shows evidence of Hull

Trains’ stability and strength within the industry,

with the local open-access operator now

delivering more journeys than it was doing prior

to the pandemic. This is hoped to continue with

Hull Trains’ submission for a new route between

Sheffield and London to further expand the

reach of this long-distance operator. Lumo is

equally hoping to encourage more passengers

to use lower-carbon transport having

announced their plans for extra journeys

between Newcastle and London every day,

enabling it to carry even more passengers

between the cities each year.

First Bus introduced several new routes and

services across its network in response to

demand and feedback from local communities.

Examples include in Yorkshire, where new

school bus services were introduced, and

timetable changes allowed services to

coincide with school timetables, and in Dorset,

where new routes were added following

community campaigns.

In Leicester, our Enhanced Partnership (Plus)

with the Local Transport Authority delivered

an increase in patronage in the year from

June 2022 of 23% and has continued to

grow by a further 10% subsequently.

Enabling the shift

Helping more people to use

bus and rail services, leading to

fewer car journeys being made.

Up to 95%

carbon emissions avoidance from

using Hull Trains or Lumo services

£2

fare cap scheme being continued

at First Bus until December 2024

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Affordability

The cost of living crisis has highlighted the

importance of having affordable transport

services. Within our rail division, several

schemes sought to make journeys more

affordable this year. Lumo introduced LumoFlex

– a new ticket option which offers greater

flexibility on all services on the London to

Edinburgh route. The digital-only ticketing

scheme parallels the freedom and flexibility

often provided by airline tickets. It offers

customers more options for reserved seating

and to cancel or amend journeys, part

of Lumo’s aim to switch passengers from

flying to the train for journeys from London

to Edinburgh.

GWR introduced the UK’s first regional digital

railcard offering a one-third discount on

standard class rail fares to residents of Devon

and Cornwall as part of the Devon and Cornwall

Rail Partnership. Avanti has grown the recently

launched Club Avanti loyalty scheme that

rewards frequent travellers with discounted

travel, onboard food and drink, and free tickets.

Since its launch in 2022, Club Avanti has seen

over 250,000 customers sign up to the scheme.

First Bus have continued to support the DfT’s

£2 fare cap scheme, which came into effect in

England in January 2023. The aim was to help

the sector support customers at a time when

the cost of living has increased whilst also

seeking to encourage greater bus use. We

welcomed the extension of the scheme until the

end of December 2024. Additionally, First Bus

have worked in partnership with Aberdeenshire,

Surrey, Glasgow, Somerset and Hampshire

local councils on special initiatives to help make

public transport more accessible and reduce

costs. Examples of these schemes include

selected free bus travel days in Somerset,

free Hogmanay rides in Glasgow and

discounted fares for selected events.

Improving accessibility

We are committed to making our services

accessible and we make every effort to support

customers with disabilities or restricted mobility.

Throughout the railway network, we work with

our industry partners to make stations and

trains more accessible by leveraging inclusive

design to introduce new ticket gates, ramps,

open entrances, accessible waiting rooms,

accessible toilets, tactile warning surfaces

and more. We have introduced further

passenger-focused initiatives including

assistance apps, train maps, tailored audio

and visual announcements and conducted

specialised training with our frontline staff.

Our rail companies offer free ‘Try the Train’

days to community groups to increase

confidence of rail users with specific needs and

improve the accessibility of rail travel. Each day,

groups are shown around a station, walked

through the process of purchasing a ticket and

finding the right platform before taking a train

trip. These days aim to reassure and educate

those who have not travelled by train before,

or those who have limited experience on the

railway, to ensure it is an accessible mode

of transport that everyone feels

comfortable using.

We are also trialling new ways to promote

accessibility. Lumo, for example, have

embraced digitalisation to improve accessibility

through the publishing of an interactive 360°

virtual tour of its train carriages to support

customers who may require additional support

or wish to familiarise themselves with the

carriage environment ahead of their travels.

Equally, GWR have introduced autism-friendly

services including a train sound series, virtual

tours, provision of sensory packs and ear

defenders and providing training to over

700 front-line staff. These initiatives

led to GWR winning an award with the

National Autistic Society in January 2024.

In 2023, AI systems were introduced by SWR

to improve accessibility. The project at London

Waterloo Station provides accessible travel

information to deaf customers who use British

Sign Language, displaying information in their

first language, giving them more confidence

on their journeys. The cutting-edge technology

was evaluated across a six-month trial period

and will steadily be rolled out across the rest

of the SWR network.

Enabling the shift

continued

250,000

customers have joined the Club Avanti

loyalty scheme since its launch

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Promoting modal shift

To meet the UK Government’s net-zero

commitments, journeys made by car or plane

must reduce. A modal shift is required whereby

people choose to use buses, trains or other

public transport instead. Hull Trains and Lumo

both conducted avoided emissions studies this

year to understand how using their services

between two destinations can save carbon

emissions when compared to driving or flying

on the same route. The Hull Trains study,

in collaboration with Arup, analysed various

routes and found that travelling by rail from

Hull to London King’s Cross, for example,

produces 12 times less CO

than driving, with

5.42 kgCO

e by train compared to 67.2 kgCO

by car. Customers at all locations along Hull

Trains’ route to London King’s Cross can view

the CO

savings they can make using the newly

launched ‘travelling sustainably’ web page.

A similar study found that there are similar

benefits brought by Lumo across their routes,

with avoided emissions over eight times the

emissions associated with its own operations.

Across both networks, passengers can save

up to 95% of emissions by using this form

of transport over driving or flying.

This focus on avoided emissions forms part

of the wider rail industry’s Green Travel Pledge

– a commitment to engage and empower

passengers, businesses and business travellers

to make more informed choices by providing

detailed, accurate and reliable data on the

carbon emissions of rail journeys when

compared with other modes.

Enabling the shift

continued

Driving innovation

Embracing new technologies

and ways of working to

deliver easy, convenient,

and sustainable mobility

solutions for our customers.

Combining excellent customer service

with digital technologies

The growth and emergence of artificial

intelligence technology provides a significant

opportunity to optimise and improve services

for customers. First Bus partnered with

Prospective, an AI company, to optimise

timetables, scheduling and real-time fleet

instructions. Due to the success of initial

trials the technology will be rolled out across

the broader network. See the case study on

page 20 for more information.

New software systems in First Rail allow for

real-time train service information and live

train maps, technologies designed to improve

journeys by letting passengers access more

detailed information whilst travelling. An

example of this in 2024 is the partnership

between Avanti and Signalbox to create

customised live train maps. The interactive

technology provides real-time data and live

maps of the rail network to help customers

track their train in real-time during their journey.

Case study

Avoided emissions

with Lumo

An emissions avoidance study conducted

by Lumo found that travelling on their

100% electric network rather than flying,

saves up 95% of emissions on certain routes.

A one-way Lumo trip between Edinburgh and

London emits approximately 7 kgCO

e while

the equivalent journey flying emits 149

kgCO

e. A single passenger could therefore

take 22 one-way rail trips before creating

the same emissions as a single flight.

Saving

95% CO

saving

vs car

95% CO

saving

vs car

96% CO

saving

vs plane

Route

Stevenage

Edinburgh

London

King’s

Cross to

Edinburgh

London

King’s

Cross to

Newcastle

Avoided

emissions

Travelling

by rail

emits 20

times less

less

than by car.

Travelling

by rail

emits 21

times less

less

than by car.

Travelling

by rail

emits 27

times less

less

than flying.

By rail

(kgCO

6.29

6.77

4.63

By petrol

car

(kgCO

129.92

142.25

98.93

By plane

(with RF*)

(kgCO

155.76

149.16

126.21

RF: Radiative Forcing

Full results available at: www.lumo.co.uk/-/media/Arup

Lumo-Avoided-Emissions-Study.pdf

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Using our influence

Collaborating and partnering

with stakeholders to shape

the sustainable communities

of the future.

Transportation plays a prominent role in public

discourse and political discussions owing to

its public-facing nature. It involves extensive

interactions with government entities at local,

regional and national levels. Our aims are to

promote innovation and sustainable investment

in mobility, and to advocate for transport

infrastructure choices that alleviate congestion,

improve customer satisfaction and reduce

travel times. We achieve these goals by actively

engaging with a diverse set of stakeholders

and policymakers.

We recognise our prominence as one of the

largest UK transport operators and a FTSE 250

employer, and the need to uphold the highest

standards of governance and ethics. Whilst

we engage in industry collaboration and open

discussions with government at all levels,

we adhere rigorously to the Lobbying (Scotland)

Act 2016 regulations, and our key personnel

feature in the UK Lobbying Register. As

company policy, we do not make political

donations, and FirstGroup’s gifts and

hospitality policy is strictly adhered to

when engaging with stakeholders at all levels.

Our Governance report starts on page 103

and our stakeholder engagement strategies

on pages 98 to 100.

With government

We foster robust and enduring connections

with government officials and departments,

along with positive engagements with ministers.

We liaise closely with both government

and opposition policy teams, advisers,

parliamentary committee members, MPs

and local councillors who have direct ties

to our businesses. Our active involvement

in shaping policy occurs through direct

engagement and also via membership in sector

trade organisations within the UK. These

organisations, in turn, consult with government

bodies and regulators to create a favourable

policy environment for private sector transport.

We continue to engage in discussions to allow

further routes and services at open access

operators Hull Trains and Lumo. The First Bus

Network also saw continued expansion,

an example of which was the introduction

of AirCoach’s first ever English route with a

new Leicester to Birmingham Airport service.

With local authorities

Across the Group, we forge close ties with

our local authority partners, actively pursuing

both formal and informal collaborations.

These partnerships empower us to enhance

our services by implementing measures that

promote a shift to public transport, alleviate

road congestion and prioritise more sustainable

methods of transportation.

Within First Rail our Regional Development

Managers engage with local and regional

governments, businesses, user groups and

other stakeholders. Their experience and

commitment to effective local and regional

partnerships form the bedrock of our approach

to ensure that Rail is the cornerstone of

communities. We firmly believe that private

operators’ expertise remains pivotal in

delivering public transport services.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

In First Bus we work closely with our local authority

partners to grow bus use and support the delivery

of shared economic, social and environmental

goals. Our aim is to deliver great services to help

promote and cement the status of the bus as a

great-value, credible everyday choice.

This focus underpins our approach to being the

partner of choice for innovative and sustainable

transport solutions. Through engagement with

our partners and using our experience and

expertise, we support prosperity, growth and jobs

in the communities we serve. This year we were

delighted to successfully secure further funding

with our local authority partners which we

supplemented with our own investment for further

electric buses in Somerset; North Somerset,

West of England Combined Authority, and Essex.

Read more on page 11.

We have worked in strong collaboration with

a number of local transport and combined

authorities. For example, in Portsmouth, the

Enhanced Partnership has delivered strong

passenger recovery at 115% of pre-Covid levels

bucking the national trends. Enhanced evening

and weekend services have been delivered

across eight routes including some routes

moving to 24-hour operations, and a package

of fares initiatives (including young persons)

have contributed to this growth.

Using our influence

continued

In South Yorkshire, we have worked with

the Mayoral Combined Authority to review

connectivity on the bus network and agree a

series of new routes and timetable interventions

to help grow bus usage. Working together,

we have widely consulted on the plans and

followed this with a series of community

events to promote the changes in spring 2024.

With our industry

Nationally, we actively collaborate with

a diverse array of business advocacy

organisations, sustainability lobby groups

and public transport campaigns throughout

the UK. Our strategic alliances serve as

powerful conduits, amplifying our influence

on policy decisions.

Representatives from across the Group sit

on influential and critical forums. Our Group

Engineering Director chairs the Industry

Sustainable Rail Leadership Group, and First

Rail Head of Sustainability chairs the Air Quality

Working Group. We also sit on the Rail

Environment Forum and the Noise Working

Group. These forums are essential to ensure

that we can collaborate with fellow stakeholders

for an industry-wide approach to challenges

and opportunities. We continue our

engagement with Rail Delivery Group, Rail

Partners and the RSSB. This year we supported

the RSSB’s newly introduced Sustainable Rail

Blueprint in collaboration with other network

operators. This strategy creates a cohesive

national partnership for creating sustainable

Rail, a unified plan that provides a

whole-industry view as far ahead as 2050.

The Community Rail Network is dedicated

to supporting community-based groups and

partnerships that connect their community

with their railway and deliver social benefit.

We represent and advocate for community

rail, providing a link between our members

and national and devolved governments,

promoting understanding of their contribution

and how this can be nurtured. We also aim

to raise awareness about community rail,

explaining its importance.

First Bus is a proactive member of the

Confederation of Passenger Transport.

This year we have worked together to

successfully develop the case for a long-term

funding settlement for Bus, and have worked

collaboratively to address the common

issue on driver recruitment and retention.

We continue to work extensively with industry

partners Transport Focus, including as major

contributors to the ‘Your Bus Journey’ survey,

and with Bus Users UK.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Supporting

our people

We employ around 30,000

people in depots, stations and

offices, providing vital services

which connect people and

communities. Our people are

at the heart of our business,

and we are extremely proud

of the way they keep

customers moving.

To better understand and meet the needs of the

diverse customers and communities we serve,

we are committed to increasing the diversity of

our workforce. We recognise that attracting and

retaining people with different backgrounds and

experiences requires an inclusive culture where

everyone feels valued and respected. While we are

proud of the progress being made in many areas,

we acknowledge there is still more to do, therefore,

we are committed to making our workplaces

inclusive for all our colleagues, regardless of their

gender, ethnicity or any other characteristics.

Our Responsible Business Committee, which

was set up in 2022, plays a key part in reviewing

the practices and performance of the Group in

supporting our people, and in particular our

progress towards meeting the Group’s goals

and objectives with regard to diversity and

inclusion. As a result, we have set targets for

our senior leadership population, where by

2028 and in line with the FTSE Women Leaders

recommendations, we aim to have 40% of roles

filled by women, and to be more reflective of the

communities in which we serve, aiming to have

11.0% of roles filled by colleagues from a

minority ethnic background. This will double the

number of minority ethnic senior leaders. As part

of International Women’s Day in March, First Bus

pledged to double the proportion of women in

their workforce by 2028 to 20%. We have also

set a number of other additional internal targets

around specific roles to help us make positive

progress against our respective pay gaps.

The composition of our Company continues to

evolve. Through this, we are making progress

towards our targets, and as of 31 March 2024,

women occupied 20.8% of all roles across the

Group and 32.8% of senior leadership roles.*

Minority ethnic colleagues occupied 13.0% of

all roles and 5.8% of senior leadership roles.*

Over the last 12 months, 21.6% of all hires

were women and 25.2% were from a minority

ethnic group.

In collecting this sensitive data from our

colleagues, over 72% of our colleagues are

comfortable to share their ethnicity with us,

and over 44% their ability status and 43% their

sexual orientation. Whilst we still have a way to

go, we continue to be committed to increasing

disclosure of protected characteristics across

the Group to have a better understanding of

the composition of our workforce.

The above ‘senior leadership’ population is an expanded

population from the reported Hampton-Alexander

population which allows us to evaluate the success of

our development programmes and track our progress

against targets.

Ethnicity – FY 2024

White

59.3

Ethnic minority group

13.0

Unknown

27.7%

Disability status – FY 2024

Not disabled

40.7

Disabled

3.3

Unknown

56.0%

Diversity and inclusion

We value diversity and inclusion,

and our workforce represents

the communities we serve,

increasing effective participation

and equal opportunities.

25.2%

of all hires were from a minority

ethnic group

32.8%

of senior leadership roles held

by women

500

colleagues from under‑represented

groups completed leadership

development programmes

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Our gender breakdown

FY 2024

Women

Men

Total

Number

% Number

Total

population

6,442

20.8

24,553

79.2

30,995

Senior

management

32.8

67.2

Board

44.4

55.6

FY 2023

Women

Men

Total

Number

% Number

Total

population

6,540

20.8 24,937

79.2 31,477

Senior

management

23.5

76.5

Board

44.4

55.6

Excludes 28 colleagues who had not disclosed their gender.

2 Hampton-Alexander definition.

Development programmes

We run a number of personal leadership

development programmes, aimed at women

and ethnically diverse colleagues, which are

designed to build confidence, develop personal

insights, and foster readiness for their next

career step. Our Senior Women’s Leadership

programme was refreshed and relaunched in

2023, and our ‘Step’ and ‘Reach’ programmes

continue to successfully provide a pipeline of

talent for our senior and middle management

roles. 32% of attendees of these programmes

who have remained within FirstGroup have

either been promoted or secured a further

development job move.

To consolidate this, in January, we launched

our advocate network, ‘First Connections’.

This includes nearly 500 colleagues from

under-represented groups who completed

one of our personal leadership development

programmes, creating a self-supporting,

diverse community of talent to support each

other in their careers. The inaugural event was

attended by around 150 colleagues, including

former participants and senior leaders

from across the FirstGroup businesses,

and following its resounding success,

a second, follow-up event is planned.

Our First Rail Contact Centre launched its

‘First Steps’ programme which enables call

agents the opportunity to enhance their

leadership skills and gain exposure across

wider business functions. 20% of the first

cohort have been successful in achieving

secondments into junior leadership positions.

Attraction and recruitment

We have recently launched our new external

careers website which collates all live job

opportunities from across FirstGroup into one

place. The new site enables visitors to contact

our FirstGroup ‘Insiders’ – current colleagues

who have volunteered to share their career

experiences and answer questions about what

it’s like working for different parts of the Group.

Alongside the new external website, we have

launched an internal opportunities page, to

allow current colleagues to explore what job

opportunities exist across the Group. The

internal opportunities site will not only

advertise live roles but includes secondment

and project opportunities.

In March, First Bus partnered with Women in

Transport to host the first-ever Inclusive Cab

Summit at their Leicester depot, starting the

journey towards creating a gold standard for

inclusive bus cab design and ensuring a career

in bus driving provides a safe, comfortable

and inclusive space to work from. The event

welcomed 30 organisations from across the

sector including drivers, operational colleagues

and engineers, as well as representatives from

key bus manufacturers, suppliers, trade unions

and Bus Users UK.

Diversity and inclusion

continued

Case study

Step and Reach programmes

Since 2018, our ‘Step Up’ and ‘Reach Up’

development programmes have supported

women and ethnic minorities, respectively,

in non-management roles to prepare for and

attain their first management or supervisory

role. Our ‘Step Forward’ and ‘Reach

Forward’ development programmes have

supported women and ethnic minorities,

respectively, in managerial or professional

roles to prepare for ‘Head of’ or

equivalent role.

Mau Nteteka, Guards Manager, GWR, says

“The Reach programme was a turning point

in my life, greatly improving both my

personal and professional growth. It has

helped me learn more about myself and

boost my confidence and has also made

me more open-minded and integrated the

idea of inclusion into my everyday life. This

has been very important in helping make

the workplace more diverse. Participating

in this programme has taught me important

lessons about how to make a difference

at work, which has had a big impact on my

career path. It was a very important part of

giving me the skills and confidence I needed

to secure my current role. It also stressed

the importance of finding a balance between

personal growth and productivity at work

which has been very helpful in managing

complex and changing situations.”

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Recognition

Our progress has been achieving

wider recognition:



FirstGroup were finalists in the ED&I category

at the Personnel Today Awards 2023,

receiving recognition for our work delivering

change through our Step, Reach and Senior

Women’s development programmes



First Bus were shortlisted for

‘Best Diversity & Inclusion Strategy’

at the HR Excellence Awards



Hull Trains won ‘Top Employer of the Year’ at

the 2023 Women in Rail Awards, where they

were commended for having the highest

percentage of women drivers in the industry,

providing pathways to progression for women

who want to balance family life with a career

and with having 50-50 boardroom diversity



Avanti won the ‘Campaign of the Year’ award

for their ‘Pulling in the Right Direction’

campaign to help inspire the next generation

of women to become train drivers and SWR

were Highly Commended in the Diversity &

Inclusion category at the Rail Business

Awards 2023

Driving inclusion

SWR launched a major new campaign called

‘All Aboard’ to tackle discrimination and abuse

on the railway and affirm that everyone is

welcome on its network, and ensuring all SWR

colleagues are free from discrimination and

abuse at work. They are also running reverse

mentoring and ‘Inclusion Allies’ programmes,

empowering colleagues to act in allyship for

under-represented groups and for role model

inclusion. Meanwhile, GWR engaged over

60 people in their successful ‘Platform to

Boardroom’ reverse mentoring programme.

They have now launched an ‘Alliance Mentoring

Scheme’ which extends the reverse mentoring

across GWR and Network Rail.

Both of our divisions provide training to enable

our employees to deliver great service for our

customers and invest in the skills we need for

the future. The changing nature of transport

and mobility, particularly new vehicle

technologies and energy transition, requires

us to adapt the way we develop, operate and

maintain our services. To deliver that change,

we need a healthy, engaged, agile and diverse

workforce with the skills and expertise for a

zero-carbon economy, equipped to innovate

and deliver mobility for the future. Our

apprenticeship programmes are an important

way of growing the engineering and operational

skills which are vital to our business. We are

running industry-leading programmes that

are fully integrated into the fabric of our

organisation, working in key areas of the

business such as operations engineering,

human resources, customer service and

business administration.

We have 792 apprentices in training across

First Bus and First Rail, with 26% of

apprentices recruited over the last year

being women.

First Bus, in partnership with Reaseheath College,

Cheshire, currently have 75 apprentices learning

at the UK’s first engineering academy for the next

generation of zero emission coaches and buses,

specialising in mechanical and electrical

engineering, coachbuilding and stores. During

National Apprenticeship Week in February, they

announced the launch of a new apprenticeship

programme for bus drivers, partnering up with

leading training provider Realise to build a

sustainable pathway for new drivers.

In the same week, GWR ran a service between

London to Cardiff, crewed, driven, dispatched

and controlled solely by current and former

GWR apprentices, demonstrating the breadth

of opportunity and what is possible through

their apprenticeship programme.

Diversity and inclusion

continued

Skills for the future

Our people have the skills,

expertise and knowledge

to drive the transition

to a sustainable future.

792

apprentices in training

across the Group

apprentices learning at the UK’s

first engineering academy for

zero emission buses and coaches

26%

of new apprentices recruited

this year were women

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Wellbeing

Our culture means that

our employees are supported

towards good mental and

physical wellbeing.

650

Mental Health First Aiders

across the business

1,500

First Bus colleagues used health

kiosks in a wellbeing campaign

1,000

Individuals assisted with financial

wellbeing by the Avanti and

Railway Benefit Fund partnership

Responsible business

continued

Wellbeing

The wellbeing of our employees remains a key

priority for FirstGroup. Our employees have

various wellbeing resources available to them

through the wellbeing hub, accessed through

our intranet.

First Rail now has more than 400 Mental Health

First Aiders in place, with coverage across all

rail companies, and First Bus have a trained

network of more than 250 Mental Health First

Aiders. Within First Bus, all line managers have

also been formally trained as Mental Health

Champions this year. A new mental health

awareness course has been launched on the

First Bus University online learning platform.

Avanti and Railway Benefit Fund renewed their

partnership and commitment to support

colleagues’ wellbeing this year. The aim of the

partnership is to support as well as improve the

general and financial wellbeing of current or

former Avanti employees. The Crewe-based

charity offer bespoke care and advice to railway

families. In the past 12 months they have

helped over 1,000 individuals struggling with

hardship by delivering training sessions and

running events for colleagues to increase the

awareness of grants available to those who

may be struggling financially.

First Bus have launched ‘Wellbeing

Wednesdays’, a programme in which,

an all-colleague webinar on a specific health

topic is held live and recorded on the first

Wednesday of each month. With each webinar

typically attracting over 200 colleagues,

topics covered have included prostate

cancer awareness (including PSA testing) and

menopause, with menopause information zones

following in depots. In October 2023, health

kiosks were also placed into 16 sites around

the First Bus business, allowing colleagues to

understand their BMI, heart health and other

indicators. These were used by over 1,500

colleagues across the month, allowing them to

make informed decisions about their health and

the preventive action they can choose to take.

Real Living Wage

To attract and retain the skills we need, we offer

a competitive wage reflecting local market

demands and conditions. In First Rail, Avanti

and Tram Operations Ltd. are accredited Living

Wage Employers and pay the Real Living Wage

(RLW) to employees and to third party

contractors working directly for the Company

in accordance with the Living Wage Foundation

rates of pay. From 1 April 2024, First Bus also

became a RLW employer, immediately

impacting over 1,300 colleagues who have

received a pay increase in line with this new

commitment. Over the next 18 months there

is also a commitment (outside of accreditation

requirements) to include all First Bus

apprentices. GWR and SWR also pay

the RLW to directly employed colleagues.

Employee engagement

All our businesses carry out regular Your Voice

surveys giving employees the opportunity to

share their views on the way they are managed,

and how likely they are to recommend

FirstGroup as an employer. These surveys are

anonymous and managed by an external

specialist company to encourage candid

feedback. Surveys from across our businesses

conducted in 2024 have shown an improvement

in response rates and in engagement levels.

In February, First Bus conducted their latest

survey. This showed a year-on-year increase

of 16% in the response rate and a 5% increase

in engagement. Due to recent economic

conditions, within the DfT contracted rail

companies, engagement has fallen in GWR

and Avanti, with SWR due to publish updated

results later in the year. Within the open access

train operators, Hull Trains and Lumo both

have engagement levels at 80% or above and

within the corporate functions, engagement

was at 85%.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Foundations

Responsible business

continued

Communities

We are proud to support the

communities in which we operate.

We use our skills, reach and

influence to make a positive impact

and help those causes that can

make a difference, both locally

and nationally.

£2.4 million

community funding initiatives

across all our businesses this year

More than 60

charities supported through

the matched funding scheme

£1.4 million

donated to charity partners

across the Group this year

We take pride in supporting our local

communities. Using our skills and influence,

we make a positive impact by assisting local

causes that matter. Through volunteering,

corporate donations and in-kind gifts, we

have supported numerous community

causes and charitable organisations this year.

Our contributions include donating advertising

space, providing vehicle hires and offering

spaces at our stations.

Charitable giving

Transport operators, as integral members

of local communities, bear a responsibility

to contribute meaningfully. Our extensive

networks, from buses to trains, play a vital role

in people’s daily lives. As connectors, we can

amplify charitable efforts and so actively

engage in community initiatives, leveraging

our resources, expertise and reach.

FirstGroup matches donations made by

its staff up to £200 per employee per year.

This empowers employees to raise funds for

charities that matter to them and enables them

to go further with this fundraising. In the latest

financial year, 152 employees took part in the

matched funding scheme and raised funds for

over 60 charities. Furthermore, employees can

donate directly to a charity of their choice using

our payroll giving scheme which raised over

£150,000 in 2024. This year we also introduced

a new employee volunteering trial in our bus

division for employees. This new scheme offers

volunteering opportunities for employees using

a partner system Neighbourly that connects our

teams at sites to local good causes.

Alongside offering employees the flexibility

of donating to charities of their choice, we also

support key charity partners across the Group

selected by our employees and aligned to our

business Values. In FY 2024, our First Rail

partners are Samaritans and Railway Children,

and First Bus partner is Macmillan. To support

our partners, we run various schemes including

Gift-in-Kind donations for advertising space

that totalled over £1m in media value, customer

and employee donations from various

fundraising events and initiatives totalling over

£120,000, provision of spaces to run events and

awareness-raising throughout the business.

Overall our total charitable contributions across

the Group were over £1.4m across all initiatives.

Community Rail Partnerships

CRPs are not-for-profit organisations that help

to further connect the railway with the

communities they serve. All over the country,

CRPs work with communities to promote social

inclusion and sustainable travel, champion

economic development and bring stations back

to life. These partnerships are attuned to local

needs, and their work is varied but driven by

passionate volunteers. Each partnership has

a steering group made up of local stakeholders,

who agree on an activity plan of work.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Communities

continued

Across Britain, more than 70 CRPs, plus

hundreds of Station Friends, groups and social

enterprises, make up the growing community

rail movement. Members deliver a range of

activities that bring people together and help

communities get the most from their railways,

as well as helping our railways to thrive. These

activities range from community gardening and

arts projects on stations, to helping people with

disabilities use Rail and advise train operators

to meet local needs – all carrying significant

social and economic value. Each year, our rail

businesses under NRCs (Avanti, GWR, SWR)

provide DfT funding to the various CRPs

that exist along their networks and their

community projects.

In FY 2024, we supported more than 23 CRPs

around the UK and allocated over £670,000

in funding with plans to support a further

20 projects. Our rail businesses are actively

involved with each CRP, working in partnership

with them to deliver outcomes that benefit as

many people locally as possible.

We further benefit our communities with the

Customer and Community Investment Fund

(CCIF) a funding scheme for small and medium-

sized rail-related projects that can be

completed over a financial year. The scheme,

provided by the DfT, is available through our

DfT contracted rail businesses to work in

partnership with charities, their customers

and the communities located along our routes.

In 2024, we supported 99 projects across

our networks with £2.4m invested in

communities from the DfT funding. Beneficiary

projects included accessibility schemes,

educational projects, under-represented

groups, historical and heritage schemes,

research and more.

Station adopters

Across the network, station adopters have

played a vital role in supporting social, cultural

and economic development in their local areas,

creating a sense of community and inclusion,

and enhancing the customer experience.

Station adopters include community groups,

charities and businesses. Our DfT contracted

rail businesses fund their membership of the

Community Rail Network, the national body

of over 1,000 station adopters across different

train operators, which provides access to grant

opportunities from station adoption funds,

as well as additional training, advice and

resources. This year SWR achieved a

significant milestone when the 100th station

was adopted by local community volunteers at

Staines, cementing SWR’s industry leadership

in community engagement. These adopters

ensure volunteers can make the most out of

their local station spaces and environments

and take a lead on imagining new and creative

ways for their stations to better serve their

communities and strengthening their place

within their local area.

Additionally, as part of our commitment to

communities, we have made redundant space

in some of our station buildings available for

use by local community groups. These spaces

include offices, station houses, retail units and

waiting rooms. At SWR there are 19 spaces

available across the network and nine station

houses which are available for use.

Case study

SWR invests £1.5m in projects

by local communities

SWR invested £1.5m investment in 58 local

community projects across its network,

from Vauxhall in London to Exeter in Devon,

from SWR’s Customers and Communities

Improvement Funding (CCIF) round for

2023/24 from the DfT. The wide range of

projects were funded by various grants.

Included in the 58 projects – 15 of which

are run by local authorities in Berkshire,

Devon, Dorset, Hampshire, Surrey and

Wiltshire – were:



£76,759 awarded to the University of

Portsmouth for the UK’s first ‘skills garden’,

an interactive outdoor space that can be

used by the whole of the local community.



Active Vision, a 12-month project which

will allow Guide Dogs to support 30

vision-impaired people living across the

SWR Network, helping them to get out of

their homes and re-engage with the local

community. SWR is contributing £25,605

in funding.



Improving facilities at Smallbrook Junction

on the Isle of Wight, for passengers

connecting between the Island Line and

the Isle of Wight Steam Railway (pictured),

including Customer Information Screens

and power and lighting using solar power

and biodiesel.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Safety

Our commitment to the safety

of our customers, our employees

and all third parties interacting

with our businesses remains

unwavering and is articulated

through our ‘Dedicated to Safety’

value which applies in everything

we do.

9.88

Employee Lost Time Injury rate

(per 1,000 employees per year)

13.14

Passenger Injury rate

(per million miles)

4.57

Passenger injury rate

(per million journeys)

Responsible business

continued

Every day our trains, buses and trams carry

more than 1.8 million customers, and we are

responsible for around 30,000 employees.

By its nature, the transport industry requires

a large number of movements across our

networks and therefore we take seriously our

duty of care to ensure that our customers can

safely use our services and that our employees

are able to perform their duties in a safe place

to carry out their daily tasks. We continually

strive to seek innovative safety mitigations

to ensure the wellbeing of our people.

We maintain robust safety management

systems throughout the Group, with a clear

focus on ensuring compliance with legislation,

policies, processes and procedures.

Alongside this, we continue to invest in

technology solutions to assist our teams in

delivering first-class safety, reducing incidents,

and monitoring and managing performance.

We are proud of the safety culture we have

established over many years.

Strong leadership from the top is a key

feature of our safety culture. Our Responsible

Business Committee, involving the Chief

Executive Officer and members of the Group

Executive Committee, together with First Bus

and First Rail senior leadership teams,

oversee the Group’s safety strategy and the

performance, procedures and practices

across all operating companies.

First Bus

This year First Bus has achieved the

ISO 45001 and ISO 14001 accreditation and

merged the two standards across the division.

Consolidating these standards demonstrates

a comprehensive approach to ensuring both

safety and environmental controls are aligned

and subject to independent scrutiny by

specialists Alcumus ISOQAR.

We have maintained alignment with the

broader First Bus diversity and inclusion

programme with safety policies and procedures

written in a way that is simpler and more

easily applied by our people. We continue

to offer our safety information in a variety

of languages to aid understanding and

mirror the diverse nature of our workforce.

Our emphasis on competence, compliance

and engagement is crucial for maintaining

a strong safety culture. This year we also

introduced a bespoke health and safety

training programme, certified by the Institute

of Occupational Safety and Health (IOSH)

ensuring key colleagues are well equipped to

understand and adhere to safety management

protocols. This followed the introduction of a

bespoke qualification for our managers and

supervisors which is accredited by the

IOSH that is unique and relevant to the road

passenger transport sector and is designed

to ensure better applicability to road transport

incidents as well as more interactive learning

through bite-size content.

Lost Time Injury rate

(

per 1,000 employees)

12.00

0.00

4.00

2.00

6.00

8.00

10.00

FY 2020

FY 2021

FY 2022

Fiscal year

FY 2023

FY 2024

Passenger injury rate

(per million miles)

16.00

0.00

4.00

8.00

12.00

FY 2020

FY 2021

FY 2022

Fiscal year

FY 2023

FY 2024

Passenger injury rate

(per million Journeys)

8.00

0.00

2.00

4.00

6.00

FY 2020

FY 2021

FY 2022

Fiscal year

FY 2023

FY 2024

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible business

continued

Safety

continued

Our support programme called Thru-Care

continues to support new drivers through

their first year with us, which is typically the

most challenging. Special rosters to ensure

they are not overwhelmed, phasing their

learnings, and tracking their performance

through our driving standards database,

provides them with support until they gain the

relevant experience. This early period is crucial

in shaping their driving performance standards,

and the support we provide also reduces

potential attrition rates.

We have improved our safety management

with contractors through a new permit system

which helps to ensure that safety standards are

upheld across all aspects of operations and by

everyone working on our sites.

Approximately a quarter of our customer and

employee injuries happen each when they

are getting on or off our buses. Therefore,

we strengthened our existing campaign

called ‘Hold, Look, Land’ to encourage safer

behaviours to reduce slips, trips and falls,

sharing the message with customers through

onboard signage and our employees by

embedding the message in local campaigns

and messaging via the winter guidance

documents and employee app.

Overall, we are committed to maintaining

a high standard of health and safety

management, and we continually strive

to improve and innovate in these areas.

First Rail

Our approach across each of our rail

businesses is firmly dependent upon:



A comprehensive safety management system

focused on understanding the safety risk

profile of the company and ensuring suitable

risk mitigations are in place. Each company

reviews and updates their risk profile in light

of new/updated legislation, changes within the

business operation(s) such as new train

introductions, audits, recommendations from

accidents and incidents and horizon scanning



A dedication to employee health and safety

that is shared through induction, training,

communication, briefings, line management,

peer review and sharing of best practice



Through our health and safety policies we lay

out our commitment to continually improving

the health and safety of our employees,

contractors and customers, focusing

on getting the basics right and continually

learning from those both within and outside

our industry



An internal openness and accountability

in identifying health and safety issues,

which includes partnership working between

employees and trade unions to ensure a safe

workplace. In addition to this, we work closely

with other rail industry partners to ensure

we are aware of best practice and

lessons learned



Continuous improvement through both

maintaining and attaining certifications for

quality and efficiency process standards.

Whilst some of the functions within the

businesses already have ISOs such 9001,

18001 and 45001. The aim is to work towards

achieving more of these accreditations

Throughout the year we continually focus on

prioritising a reduction in customer injuries on

our trains and stations where we know slips,

trips and falls are the most common cause

of injury. Our frontline staff are focused on

identifying and assisting vulnerable customers

where possible, specifically those travelling for

leisure who may be less aware of the station

or train environment, the elderly or those

with reduced mobility. Innovative publicity

campaigns were developed that were

themed around known risks such as not using

handrails, minding gaps between trains and

platforms, not using lifts when travelling with

luggage or pushchairs, not rushing and

distraction due to use of electronic devices.

The risk of Signals Passed at Danger (SPAD)

continues to be at the forefront of our safety

activities, with monitoring arrangements

supporting both performance metrics and the

implementation of safety plans. We have many

ongoing workstreams focused on mitigating

SPADs such as localised risk reduction plans,

driver-focused communications, and

an engagement campaign called

‘Respect the Red’.

An example of successful implementation of

these initiatives can be seen with Hull Trains

who have taken significant steps to improving

safety for both staff and customers on board

resulting in them being shortlisted at the

National Rail Awards for safety achievements.

Various initiatives were rolled out across

the company in the past 12 months

to improve safety. In ORR’s recent safety

report, Hull Trains received a level 5 ‘excellent’

evaluation in recognition of the way its safety

team works with frontline teams to achieve

collaborative solutions to safety issues

through partnership working.

Case study

SWR marks the successful

installation of lifesaving

defibrillators at all its

staffed stations

SWR has marked the installation of publicly

accessible, automated, external defibrillators

at more than 150 staffed stations on its vast

network, available for local communities at

any time of the day. The defibrillators are

placed in protective cabinets, as close as

possible to the front entrance of the stations.

They can be used day or night in the event

of cardiac incidents, and they are remotely

monitored to ensure they are always in

working order.

The locations of the defibrillators have been

added to ‘The Circuit’ — the British Heart

Foundation’s database, visible to

NHS ambulance services who can direct

999 callers to its position, so the device can

be used to help save lives. Local ambulance

services are provided with the codes so

users can unlock the cabinets and access

the devices. Particularly in the more remote

areas SWR serves, where ambulance

response times may be slower, a publicly

accessible community defibrillator could

be the difference between life and death.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Ethics

In line with our Values and the

expectations of our customers

and partners, we are committed

to conducting our business in

an open and ethical manner,

including in all of our interactions

with our customers, employees

and other stakeholders.

Our Values and ethical

commitment shape not only

what we do, but also how we do it.

We invest time and effort to put in

place the right processes, policies,

governance structures and

Board oversight to ensure we

meet these high standards of

integrity and professionalism.

Our policy framework

Our Code of Ethics, which is available

at www.firstgroupplc.com/responsibility,

makes sure that all of our businesses are

performing to the highest ethical standards

and are accountable for their performance.

The Code of Ethics is supported by detailed

policies and procedures which apply across the

Group and, along with the Code of Ethics itself,

are implemented and managed by the senior

management team in each of our divisions.

Our Group policies cover topics including

anti-bribery and corruption, health and safety,

supplier conduct, environment, privacy and

data protection, meeting passenger needs,

competition laws, insider dealing, bullying and

harassment, political activity, diversity and

inclusion, conflicts of interest, drugs and

alcohol, fraud, whistleblowing, media relations,

and other areas of legal and ethical compliance.

Our divisions also have additional policies that

are specific to their businesses, for example,

Avanti has a Welsh Language Policy, and

these can be found on their respective

company websites.

Governance and implementation

We have mandated centrally a set of minimum

requirements for training, testing and policy

attestation across a range of ethical and

compliance topics. All non-frontline staff are

required to complete an annual attestation

confirming that they understand and comply

with each of the policies. In addition, senior

managers and higher-risk individuals are

required to complete training and pass tests

annually. Compliance with these policy and

training requirements is monitored regularly

by the senior management team and at Board

level. The minimum requirements are reviewed

and updated as appropriate to address new

or evolving risks.

Divisional management teams are responsible

for ensuring that these core requirements

are implemented and adhered to within

their respective businesses. They are also

responsible for assessing whether stricter

or additional requirements are appropriate

to the particular ethical and legal compliance

risks faced by their respective businesses,

and implementing such further measures as

are deemed necessary to mitigate those risks.

Human rights

We are firmly committed to upholding human

rights on a global scale. We recognise our

responsibility to ensure that FirstGroup

operates in a manner that respects, protects

and champions the human rights of all

individuals who interact with our operations.

Our annual Modern Slavery and Human

Trafficking Statement outlines our policies

and the steps we take to address modern

slavery risks in our business and supply chains.

You can find this statement on our website

at www.firstgroupplc.com. In alignment with

our commitment to continuous improvement,

we apply this statement to all our businesses,

regardless of size, location or turnover,

even those not legally required to make such

a statement under the Modern Slavery Act

or equivalent legislation.

Whistleblowing

Our whistleblowing policy covers all full-time

and part-time employees, officers, consultants,

contractors, casual workers and agency

workers in all FirstGroup companies. It also

covers whistleblowing allegations raised by

external agencies including suppliers. The

policy outlines the measures and protections

put in place to allow an individual to report

suspected wrongdoing or dangers at work

in a confidential and independent manner,

along with the process, protection and

support they will receive.

We have an externally managed whistleblowing

service for colleagues available across the

Group with a helpline (online and phone-based)

for the anonymous reporting of suspected

wrongdoing or dangers at work. The hotline

is actively communicated to colleagues via a

number of channels, as well as being available

via the Code of Ethics and other policy and

training materials. The Board also receives

reports on the operation of and any matters

reported to this whistleblowing hotline.

Responsible business

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate‑related financial disclosures

Our commitments, actions

and focus areas

Our ambition is to be the partner of choice

for innovative and sustainable transport,

accelerating the transition to a zero-carbon

world by eliminating carbon emissions from

our operations and supporting a modal shift

to public transport, whilst building climate

resilience across our business. Our business

strategy was updated in 2024 to reflect our

progress and ambition. Driving modal shift

and leading in environmental and social

sustainability were both placed at the heart

of this new strategy, forming two of the four

pillars. We take pride in the ambition with which

our team members across the organisation

have adopted these priorities and have strived

to incorporate them into all our activities.

We are working towards some ambitious goals.

First Bus has a target to operate a zero

emission fleet by 2035. To achieve this, we are

focused on replacing existing diesel buses with

electric or hydrogen powered vehicles. First

Rail is supporting the UK Government’s target

to remove all diesel-only trains from service

by 2040 and deliver a net-zero railway network

by 2050.

Following a qualitative review of climate-related

risks and opportunities in FY 2021, and a

quantitative scenario analysis and financial

impact assessment in FY 2022, for the past

two years we have worked with key internal

functions to build further understanding of

climate risks and opportunities, how they are

being addressed, and what further actions

can be put in place as part of a broader,

Group-wide transition plan. We aim to publish

this plan later in 2024.

This TCFD update therefore provides a

summary of the key, climate-related risks and

opportunities already reported for the first time

in our Annual Report 2022 (pages 62-64), and

an overview of what we are doing to continue

to reduce our carbon footprint and build climate

resilience. We report against the four pillars of

TCFD – Governance, Strategy, Risk

Management, Metrics & Targets – and the

individual requirements underneath (see table

on page 75 for the location of relevant

disclosures). In line with the UK Listing Rules,

we confirm that disclosures are consistent with

the TCFD Recommendations. Under the

metrics and targets section, we explain how

limited Scope 3 emissions calculated using

actual source data from our value chain are

included in the Annual Report and all material

Scope 3 emissions calculated using a

spend based method are included in our

Environmental Performance Report 2024

www.firstgroupplc.com/responsibility/

responsibility-reports/2024.aspx.

We were the first UK public transport operator

to support the Taskforce for Climate-related

Financial Disclosures (TCFD), and this will

be our fourth year of reporting against the

framework in our Annual Report. We have

also developed a near-term science-based

emissions reduction target aligned with a 1.5°C

ambition and approved by the SBTi. Our target

is to reduce Scope 1 and 2 GHG emissions by

63% by FY 2035 from a FY 2020 base year.

We also commit to reduce absolute Scope 3

GHG emissions from fuel and energy-related

activities by 20% by FY 2028, from a FY 2020

base year, and that 75% of our suppliers by

emissions, covering purchased goods and

services and capital goods, will have

science-based targets by FY 2028. We report

on our annual progress against these targets

for the first time on pages 57-59.

To ensure the success of our business for

the long term, we are equally focused on

climate change adaptation and resilience –

understanding the physical and transition

impacts climate change can have our business

over the short, medium and long term, and

taking action to mitigate the risks and capture

the opportunities. Climate change is managed

and reported as one of our principal risks

and has been an integral part of our risk

management framework for many years.

In preparing these disclosures, we considered

the 2021 TCFD Guidance ‘Implementing

the Recommendations of the Task Force

on Climate-related Financial Disclosures’,

including the supplementary guidance for the

Transportation group. However, we recognise

that climate-related risk assessments are

subject to data availability, trend projections

and underlying business assumptions. It is

therefore important to continue to monitor

climate-related risks and how they evolve over

time, and we will periodically assess the need

to update our 2022 impact assessment

to account for any significant changes in

key parameters.

Finally, we look at our TCFD work not just as

a vital mechanism to build long-term business

resilience, but also as an important step

towards increased transparency around

climate as well as broader sustainability-related

risks and opportunities, in line with

recommendations by the International

Sustainability Standards Board. To this end,

we have formed a working group comprised of

Corporate Responsibility and Finance teams

that work collaboratively to prepare for any

future disclosure requirements for our company

that could emerge based upon these newly

launched standards: (i) IFRS S1: General

Requirements for Disclosure of Sustainability-

related Financial Information; and (ii) IFRS S2:

Climate-related Disclosures.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate-related ﬁnancial disclosures

continued

TCFD recommendations

Subheading

Page

Governance

a) Describe the Board’s oversight of climate-related risks and opportunities.

Board oversight

Read more on page 84

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Management of climate-related risks is

aligned with the robust corporate governance

frameworks and processes in place throughout

the Group. The Board, Executive Committee

and our individual bus and rail divisions

regularly review climate-related risks in

accordance with the Group’s risk management

framework and consider broader sustainability

matters in line with duties included in the

Corporate Governance Code and Section 172

(see pages 101 and 102).

Board oversight

The Board is responsible for promoting the

Company’s long-term sustainable success for

the benefit of its shareholders. This aim extends

to the setting of our approach to climate-related

risks and opportunities and our decarbonisation

ambitions, which now form a key part of our

broader business strategy. Driving modal

shift and leading in environmental and social

sustainability were both placed at the heart

of this new strategy, forming two of the

four pillars.

In addition, the Audit Committee supports

the Board in the management of risk, including

climate-related risks, and is responsible for

reviewing the effectiveness of risk management

and internal control processes. The Audit

Committee reviews climate-related risks as

relevant in relation to going concern, viability

statement and the assessment of impairment.

See page 104 for more information on Board

Committees and how our Board operates and

pages 119 to 120 for more details on how risks

are reviewed and considered in strategic

business decisions.

Climate-related matters are also embedded

into FirstGroup’s remuneration approach, with

our long-term incentive plan including specific

targets driving the electrification of our bus fleet

and a reduction in our Scope 1 and 2 carbon

emissions (see pages 134 and 137).

Performance against these targets is reviewed

half-yearly by the Remuneration Committee of

the Board.

Management’s role

The Executive Committee provides leadership

and direction for the Group on sustainability

matters, including climate change, with material

issues presented by the Group Corporate

Responsibility and Finance teams for

discussion and decision making as they arise

throughout the year. Executive responsibility

for sustainability matters is held by the CEO.

Executive responsibility for climate-related

financial risks and opportunities is held by

the CFO, who represents these matters

at Board level.

Our Responsible Business Committee of the

Board meets four times a year to review the

practices and performance of FirstGroup, its

companies and joint ventures, with respect to

health and safety, our people and communities,

the environment and our decarbonisation

transition. The Committee comprises several

Board members with specific climate-related

and energy transition expertise, described in

more detail on pages 106 to 108. At each

meeting, the Committee receives a detailed

performance update from First Bus and First

Rail against specific commitments and targets

and discusses strategic priorities going

forward. Over the last year, the Committee

reviewed and guided, for example FirstGroup’s

plans for further embedding the TCFD

recommendations across the business,

our work undertaken to assess flooding

risk and our annual performance against

our science-based targets.

To further support Board-level oversight of

climate-related matters, during FY 2025 we will

run an in-depth briefing session for the Board

covering the development of our first-ever

Group-wide climate transition plan and how

it aligns with the reporting requirements of

the UK’s new Transition Plan Taskforce

(TPT) framework.

At divisional level, First Bus and First Rail have

executive management individuals responsible

for driving environmental sustainability across

the divisions, leading on the development and

implementation of decarbonisation strategies

and risk mitigation actions. First Bus appointed a

Chief Sustainability and Compliance Officer who

sits on their Executive Committee to oversee

this agenda and chairs a cross-functional

Decarbonisation Forum that meets monthly to

set policy, drive action and review progress.

Similarly, First Rail established a Sustainability

Leadership Group, including senior leaders from

Finance, Operations and Engineering, who meet

quarterly to discuss climate-related matters as

part of a broader sustainability strategy for Rail.

The Executive Committee receives regular

divisional updates from the MDs of Bus and Rail.

This year, we have worked with our Executive

Committee to drive alignment between selected

pillars of our new launched business strategy

and the work being undertaken to develop our

first-ever Group-wide climate transition plan,

so that the ambition, actions and accountability

in this plan replicate and build upon those

already set out in our business strategy.

We will publish this plan later in 2024.

To strengthen ownership and accountability,

climate-related KPIs are embedded into our

variable remuneration practices. For example,

our Long-Term Incentive Plan (LTIP) awards,

made to the CEO, CFO, and other senior

leaders, include two environmental measures

– one related to the number of zero emission

vehicles in our bus fleet, and one linked to a

reduction in our absolute Scope 1 and 2

emissions (see pages 134-137 for more details).

Climate-related ﬁnancial disclosures

continued

Governance

TCFD recommendation:

Disclose the organisation’s governance

around climate-related risks and opportunities

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate change is managed as one of our

principal risks and is a core consideration in

business strategy and decision making. Physical

risks include more intense precipitation and

extreme temperatures, whilst transition risks

include changes in policy, technology, customer

and investor expectations. Alongside potential

risks, we view a shift in customer preferences

towards lower-carbon alternatives and strong

governmental and regulatory support for

transport decarbonisation and modal shift as key

business, environmental and social opportunities.

Climate-related risks and

opportunities and scenario analysis

In FY 2022, we worked with a specialist

consultancy to model potential physical

and transition risks and opportunities to our

business over the short, medium and long term,

and to estimate cumulative Enterprise Value

at Risk over a five-year period (2022-2027).

With no significant change to key business

parameters and underlying assumptions since

our 2022 assessment, this TCFD update

provides a summary of impact areas already

reported in 2022, and an overview of what

we are doing to continue to reduce our

carbon footprint and build climate resilience

across our operations.

Transition risks and opportunities

Our analysis of transition risks considered

potential impacts on our business from

changes in policy (such as carbon pricing),

technology (additional capital expenditure

required to meet more stringent environmental

standards), brand reputation (customer

expectations and FirstGroup’s environmental

credentials and ability to meet carbon-

reduction goals), and capital markets

(investor expectations and impact on

funding access/costs).

Given our industry, we also expect growing

opportunities over the coming years to

counteract some of these risks, mainly linked

to a more rapid modal shift supported by

customers’ increasing climate consciousness

and more stringent climate policy and market

incentives. We are working with our Bus and

Rail divisions to understand how the pace at

which we electrify our fleet and progress

towards our net-zero goals could affect

our ability to capture these opportunities.

Using a digital twin of FirstGroup, we modelled

impacts across five different climate scenarios,

from a world where there is little to no climate

policy in place and global temperatures

increase by a catastrophic 4°C, to a world

where there is rapid transition to a low-carbon

economy and global temperature increase

is limited to 1.5°C above pre-industrial levels.

See Table 1 and refer to our ARA 2022

(at pages 61-63) for more details on

individual scenarios.

Whilst in some of our modelling we considered

five individual scenarios, this report focuses

on the two most extreme ones and the

‘Stated Policy’ scenario, to consolidate some

of the findings, but still illustrate the full range

of estimated impacts. Across these scenarios,

we looked at potential transition and physical

impacts to our business from 2022 until 2027

(short term), 2035 (medium term) and 2050

(long term). The medium- to long-term

scenarios align with First Bus’s target of

a zero

emissions fleet by 2035 and the

UK’s net-zero goal by 2050.

Our modelling work identified impacts from

policy, technology, investor and customer

behaviour as the most material to our business

over the next five years, as outlined in Table 2.

There is also a detailed description of the

impact of each risk or opportunity on our

business within the Risk Management section.

Risks or opportunities were considered material

if they had at least a ‘medium’ impact under at

least one scenario in Table 2. It is important to

note that these potential impacts focus on

direct risks to FirstGroup, recognising that

under the current NRCs some of the wider risks

and opportunities for our Rail operations would

be shared with or transferred to third parties.

Physical risks

When looking at physical risks, we considered

the potential impacts of acute climate events,

such as more frequent and more severe floods,

storms, rainfall, heatwaves and droughts,

as well as the impacts of more chronic and

long-term changes such as rising sea levels

and a global increase in temperatures.

Financial impacts from these events range

from operational disruptions and asset damage

to health and safety risks, insurance costs and

revenue loss.

Climate-related ﬁnancial disclosures

continued

Strategy

TCFD recommendation:

Disclose the actual and potential impacts of climate-related risks and opportunities

on the organisation’s businesses, strategy and financial planning where such information is material.

Table 1: Climate scenarios considered in risk modelling

Policy Pathway

Policy

Current

Policy

Stated

Policy

Paris

Agreement

Paris

Aspiration

Global temperature increase

>4°C

3°C

2.5°C

2°C

1.5°C

Global emissions reduction target

by 2100

-50%

by 2100

-75%

by 2100

Net zero

by 2070

Net zero

by 2050

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our analysis identified flooding as our most

immediate, and material risk and we therefore

carried out a separate, in-depth flood modelling

exercise covering riverine, surface water

and coastal flooding in FY 2022. The model

considered the top 240 most critical property

assets owned, leased or managed by

FirstGroup or our subsidiary companies and

assessed the maximum metres of flooding

expected at these locations over different

timeframes. The purpose of this exercise

was to identify assets at high risk of flooding,

assess potential financial impact and

strengthen mitigation measures going forward.

The model showed that the majority of

FirstGroup-owned assets have limited/low

exposure to flood risks in the short term and

estimated potential financial impacts,

cumulative over the next five years, to range

from £20m in a 4°C world to £4m in a 1.5°C

world. We have engaged with our Bus and Rail

divisions since this analysis was first carried

out in FY 2022 and we remain ready to

respond by drawing upon our pre-existing

flood response plans and procedures should

an incident occur.

Given the nature of our business,

climate-related risks and opportunities affect all

areas of our First Bus strategy, including vehicle

and infrastructure investment, operations and

service delivery, business development and

growth. Transitioning to a 100% zero emission

bus fleet involves significant capital expenditure

and potential impairment costs, which are both

factored into long-term business strategy and

financial planning cycles of the Group. Our

decisions on capital allocation for new zero

emission buses are driven by considering a

total cost of ownership (TCO) model. This

considers both the upfront purchasing costs

and the ongoing operational costs over the

typical lifecycle of a vehicle. In addition, our

TCFD work highlighted a potential increase

in future costs from, for example, new

environmental regulatory requirements (such as

carbon pricing) or technology and supply chain

challenges (such as an increase in the cost of

zero emission vehicles and green electricity

if demand outstrips supply). These factors are

considered in our going concern and viability

statement (see pages 96 to 97). We will

describe aspects of the financial planning that

underpins our decarbonisation actions in our

first Group-wide transition plan, which we are

aiming to publish later this year. We also

evaluate climate-related risks associated with

potential mergers and acquisitions and the

impacts of such activities on our progress

towards our decarbonisation goals.

Our assessment focused on potential impacts

to assets that we own, lease or manage, but our

exposure to climate risks critically also depends

on assets that are owned and managed by third

parties, such as rail tracks owned and managed

by Network Rail. In 2024, we have worked

ever more closely on this agenda with key

stakeholders across the rail industry, as part

of a new forum on climate change adaptation

convened by the DfT, to start sharing our

approach to climate risks and facilitate

closer collaboration on risk mitigation and

climate adaptation.

Impact on strategy and

financial planning

This year we launched a new business strategy.

We set out the four pillars on pages 17 to 29.

Our First Bus and First Rail divisions have

aligned around these strategic drivers with

clear priorities now in place.

First Bus’s business strategy focuses on:

i) operational excellence to improve customer

experience, reliability and cost efficiencies,

alongside pricing strategies to drive demand

and improve yield; ii) repositioning the customer

proposition to focus on attitudes to car usage

and increasing B2B markets ‘where car won’t

work in the future’; iii) pursuing near-term

franchise opportunities and undertaking

selective mergers and acquisitions (M&A)

to extend reach; and iv) continuing fleet

electrification and building out adjacent

B2B/B2C charging opportunities.

First Rail’s business strategy focuses on:

i) operational excellence to retain and extend

our NRCs and maximise our scoring on wider

DfT performance metrics; ii) adding capacity

to our current open access businesses and

pursuing new routes; iii) pursuing non-DfT

rail contracts and expanding affiliate First Rail

businesses. We also remain committed to

helping to achieve the UK Government’s target

to remove all diesel-only trains from service

by 2040 and deliver a net-zero railway network

by 2050.

With most rail service elements and

investments mandated as part of our

management fee-based contracts with DfT,

and rail tracks and infrastructure owned and

managed by Network Rail, any exposure to

climate-related risks is shared with these third

parties. Any approach to mitigation actions

therefore requires close industry collaboration

as well as funding approval in annual business

planning processes with DfT for those rail

businesses under NRCs.

Climate-related ﬁnancial disclosures

continued

Strategy

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate-related ﬁnancial disclosures

continued

Strategy resilience

Within our new business strategy, our pillar

on leading in environmental and social

sustainability includes clear decarbonisation

goals, from running a 100% zero emission bus

fleet by 2035 to reducing our overall Scope 1

and 2 emissions from bus and rail by 63%

by the same year (from a 2020 base year and

in line with a 1.5°C science-based carbon

reduction pathway). Our pillar on modal shift

includes clear goals to add capacity to our

First Rail Open Access business and to

reposition the First Bus customer proposition

to drive demand away from car usage and

increase Adjacent Services where car usage

is becoming less attractive.

Furthermore, considering our business model

and some of the critical interdependencies

between us as a public transport provider and

local authorities, DfT, Network Rail and our

supply chain partners, a strong approach to

partnership and advocacy is key in building

strategy resilience and future-proofing our

business. It enables us to inform policy

developments, accelerate decarbonisation

efforts, mitigate our exposure to climate-related

risks and capture business opportunities as

they arise. For example, see page 36 for details

on funding secured over the last year by First

Bus to accelerate its transitions to a zero-

carbon fleet. The plan, which we aim to publish

later in 2024, will outline the policy support we

feel is required and the engagement we are

undertaking with industry bodies and public

sector stakeholders to bring it about.

The work being undertaken to develop our

first-ever Group-wide climate transition plan will

set out in more detail the steps we are taking to

deliver on these ambitions and build resilience

into our overall business strategy. This will

include a description of the specific actions

being taken, accountability for these actions

and the dependencies we are addressing.

We will also describe how aspects of our

financial planning is supporting delivery

of these ambitions.

Our year-on-year progress and our roadmaps

for achieving these ambitions, coupled with

third party recognition of our decarbonisation

efforts (see page 58), all help to build strategy

resilience against potential transition risks from,

for example, carbon taxes and sustainability-

driven customers and investors. In terms of

physical risks, these are addressed within our

asset management strategy and business

continuity plans, with winter and summer

preparedness plans in place across the Group

and setting out actions and procedures in the

case of severe weather events.

Strategy

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate-related ﬁnancial disclosures

continued

Table 2: Transition risks – potential Enterprise Value at Risk, cumulative over five-year period, assessed against different emissions pathways scenarios

Transition risks/opportunities

No Policy

Stated Policy

Paris Aspiration

Policy

Action by central

government/regulators,

including carbon pricing

Low impact



Expected carbon price of ~£2 per tonne

by 2025 in some regions



Low emission zones leading to some

route constraints

Medium impact



Expected carbon price of ~£30 per tonne

by 2025 across the UK



Zero emission zones leading to further route

constraints and potential loss of licence

to operate

Medium impact



Expected carbon price of ~£65 per tonne

by 2025 across the UK



Zero emission zones leading to significant

route constraints and potential loss of licence

to operate

Technology

Cost and availability of new

technology to support a

lower-carbon economy

Low impact



Potential impairment of carbon-intensive vehicles



Ongoing investment in zero emission fleet

to meet current commitments

Medium impact



Increasing impairment of

carbon-intensive vehicles



Some investment in zero emission fleet ahead

of current schedule



Some increase in cost of zero-carbon vehicles

and green electricity

High impact



Significant investment in zero emission fleet

ahead of schedule



Substantial increase in cost of zero-carbon

vehicles and green electricity, due to demand

outstripping supply

Investors

Financing influenced by

environmental credentials

Low impact



Low focus from investors on

green credentials

Medium impact



Moderate focus by investors



More favourable interest rates for

green companies

High impact



Significant focus by investors



Expected green covenants in financing

Customers

Demand driven by

sustainability of products

and services, leading to

increased modal shift

towards public transport

Low opportunity



Small shift to public transport, due to

increasing environmental impacts

and customers’ climate awareness



No transport policy to encourage

modal shift to public transport

Medium opportunity



Increasing shift to public transport due to

customers’ growing climate consciousness



Some transport policy to encourage modal

shift to public transport

High opportunity



Substantial shift to public transport due to

customers’ high climate consciousness



Substantial transport policy to encourage

modal shift

Low impact

<£20m

Medium impact

£20m – £50m

High impact

>£50m

Limited opportunity

<£20m

Medium opportunity

£20m – £50m

High opportunity

>£50m

Strategy

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate-related ﬁnancial disclosures

continued

Risk management

TCFD recommendation:

Disclose how the organisation identifies,

assesses and manages climate-related risks.

Approach to risk management

We take a holistic approach to risk

management, first building a picture of

the principal risks at divisional level, then

consolidating these alongside Group-level

risks into a Group-wide view (see page 87). The

Board assesses the effectiveness of the

Group’s risk management system and receives

reports on principal risks, including climate

change. It also reviews the external risk

environment, scrutinises assessment of key

risks and determines strategic action points.

The Group’s Sustainability and Public Affairs

teams provide regular ESG updates and

insights on market developments to relevant

stakeholders and functions across the Group.

Climate change is managed as a principal risk,

with the aspects below identified as most

material. Further mitigation actions and

timelines are being defined as we develop

our Group-wide transition plan.

Policy risks

More stringent climate policy could

result in increased carbon taxes,

road pricing in low-emission zones,

policy-driven compliance costs

and enhanced emissions reporting

requirements. An increase in carbon

pricing is expected to drive increases

in energy, facility and material costs.

This would be exacerbated by

increasing mandates on the carbon

intensity of our fleet and a diminishing

secondary market for legacy diesel

vehicles. At the same time, transport

policies such as road pricing could

support an accelerated modal shift

from private cars to public transport

and create key opportunities for

our business.

Risk mitigation actions

We have set ambitious decarbonisation goals, including achieving a zero

emission bus fleet and a 1.5°C aligned science-based carbon reduction

target for FirstGroup as a whole, with clear progress reported year-on-year.

See pages 57 to 59 for more details.

We continue to work closely with governments, industry bodies and other

stakeholder groups to monitor regulatory developments, affect and foresee policy

changes, and proactively respond to evolving conditions. First Bus regularly liaises

with local authority partners to drive modal shift towards public transport and the

transition towards electric buses. We will be investing £89m in a further 178 zero

emission buses and infrastructure across four of our regions. In partnership with

local authorities, funding of £16m has been secured through the latest round of

the DfT’s Zero Emission Bus Regional Area (ZEBRA) scheme.

First Rail are strongly represented on the Sustainable Rail Executive, convened

by RSSB, and also chair their Sustainable Rail Leadership Group. We are active

members of the industry-wide Climate Change Adaptation Working Group which

leads and defines a collaborative industry approach to weather resilience and

climate change. This has enabled us to be heavily involved in the development of

the industry-wide Sustainable Rail Blueprint, the first industry-wide sustainability

plan, co-created and facilitated by RSSB with industry and overseen by DfT.

The Blueprint provides a framework for aligning strategies and commitments

across the industry to establish rail as the backbone of a cleaner future

transport system.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Climate-related ﬁnancial disclosures

continued

Risk management

continued

Technology

risks

As we move towards a ‘Paris Aspiration’ scenario (in which policies

are put in place to limit global temperature increase to 1.5°C above

pre-industrial levels), the transformation to net-zero operations would

have to be significantly accelerated, leading to potential write-offs,

asset impairments and/or early retirement of existing fossil fuel-related

infrastructure and vehicle assets. There could also be additional supply

chain challenges and costs if the transport sector starts competing for

the same technology and specialist resources and demand outstrips

supply. On the other hand, prices of green hydrogen and battery packs

are expected to fall due to continuous innovation and increasing

economies of scale. In addition, with an increasing number of businesses

looking to decarbonise their operations, our investments in electric

vehicles and charging infrastructure create significant B2B opportunities.

Risk mitigation actions

In First Bus, careful planning is taking place to ensure an efficient and effective conversion

of our existing infrastructure to one powered by electricity. While there is competition for

government funding, our wide-ranging experience as a transport operator in the UK has

enabled us to begin a cost-competitive electric vehicle (EV) transition. Our Project NextGen

strategic partnership with Hitachi ZeroCarbon (HZC) has been named the winning deal in

the IJGlobal 2023 Awards ‘Innovation of the Year – Europe’ category. This deal has seen the

creation of a new joint venture between FirstGroup Energy Limited and HZC, which has been

established to finance the acquisition of up to 1,000 batteries to be leased to FirstGroup for

use in electric bus fleets.

Our property plans, infrastructure investments and increased access to energy supplies for

EVs are all key to our fleet decarbonisation strategy. We are also focused on capturing new

opportunities from the EV transition, establishing partnerships to leverage our EV charging

infrastructure to support wider community electrification needs and exploring how this can

open up new revenue streams. First Bus announced a significant collaboration this year with

the UK’s largest broadband network provider, Openreach, granting them access to its rapid

EV charging infrastructure at bus depots nationwide.

Within First Rail, a key focus is upgrading our rolling stock to electric or bi-mode trains

wherever possible. The launch of a £350m fleet of 23 brand new electric or bi-mode Hitachi

trains for Avanti will take place in H2 2024.

We are supporting knowledge and skills development for our people to drive this transition,

and are working with vehicle manufacturers, energy partners, professional associations,

and others to create low and zero emission mobility solutions. First Bus welcomed 52 new

engineering apprentices this year to the bespoke academy at Reaseheath College. These

apprentices will receive training on next-generation zero emission vehicles, providing them

with the skills to progress their careers, whilst enabling First Bus to future-proof its business.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Customer

and investor

risks

Growing awareness of climate change amongst the public is expected to

drive demand for more sustainable travel options, whilst climate-related

risks and opportunities may increasingly affect investors’ priorities and

access to capital funds. For our industry, this creates key opportunities

to grow our customer base as well as the volume of transport services

delivered to our existing customers, subject to the pace of our fleet

electrification and the perception of the sustainability of our brand

and services in relation to other operators and transport alternatives.

Driving modal shift by encouraging a step change from car and air travel

to bus and train, is a key pillar in our new business strategy. First Rail

is focused on adding capacity to its open access businesses. Since its

launch, Lumo has carried more than two million passengers in its first two

years and Hull Trains has had a faster post-pandemic passenger recovery

than any other operator. We are currently in discussions to extend a

number of Lumo’s daily London to Edinburgh services to Glasgow and

our application for a new Hull Trains London-Sheffield open access

service was submitted to the ORR this year. First Bus is focused on

providing new routes where cars are becoming less attractive, and this

year our Aircoach business launched a new Leicester to Birmingham

airport service.

Risk mitigation actions

We anticipate that with the continuing decarbonisation of our bus and rail operations, and

the critical role we play in helping to reduce carbon emissions through modal shift to public

transport, our business will be considered an increasingly attractive option for ‘green’

investment and will be well positioned to access green financing. This year we undertook

an investor roadshow to our Leicester depot to showcase the new EV charging facilities

now in place. We also delivered a Rail teach-in for investors in which we highlighted the

importance of modal shift to the strong growth of our open access businesses this year.

We further consolidated the greening of our financing strategy with the signing of a new,

innovative £150m Green Hire Purchase Financing Facility to support the purchase of electric

bus bodies. The facility provides the funding for electric bus bodies, net of any government

co-funding received, and is available for drawdown over three years.

Physical

risks

Acute and chronic weather events can affect our infrastructure and

operations. More frequent extreme weather events could increase

disruption to our services, affecting customer satisfaction and potentially

longer-term customer inclination to use bus or rail services. Potential

costs include loss of revenue, compensation for disrupted services,

increased asset repair and maintenance costs as well as insurance costs

for infrastructure and vehicles. Severe weather events could also pose

risks to the health, safety and wellbeing of our employees and customers.

Risk mitigation actions

Robust business continuity plans are in place across the Group to manage the risks

from severe weather conditions, including frost and flooding. In addition to our winter

preparedness plans, during FY 2024 we have continued to develop summer preparedness

plans to set out actions and procedures in the case of heatwaves.

In First Bus, while physical risks to assets might be limited and buses can be rerouted to

avoid road blockages, extreme weather conditions can significantly increase driver absences

due to sickness or inability to reach depots. Our weather preparedness plans therefore

include both operational as well as behavioural guidance to help employees stay safe and

cope with extreme weather events.

In First Rail, severe weather events such as storms and heat waves can impact the tracks

and overhead lines and cause significant service disruption. We work closely with Network

Rail, who own and manage the tracks, to resolve disruptions as effectively as possible.

We have also started to carry out site-specific impact assessments at individual rail stations

to better understand the impacts physical risks and develop focused mitigation plans.

Climate-related ﬁnancial disclosures

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

When looking at the results of our 2022

financial impact assessment of climate-related

risks and opportunities, the key metric used

was Enterprise Value at Risk (EVR), as the

measure of the total estimated financial impact

of a given scenario over a five-year period,

discounted to 2022 values. This, in turn, was

affected by other metrics such as our GHG

emissions, used to assess our potential

exposure to carbon pricing.

We have been measuring and reporting our

energy and carbon performance for many

years. Please see details of these

metrics on pages 57 to 59, including:



our absolute carbon footprint and carbon

intensity (tCO

e per £m revenue).



our energy consumption and the proportion

of renewables in our energy mix.



our progress against our target of operating

a zero emission bus fleet by 2035.

The reporting on our annual performance

against all of these targets can be found,

for the first time, on pages 57 to 59.

Our Scope 1, Scope 2 and limited Scope 3

GHG emissions are reported in line with the

GHG Protocol methodology (see page 58).

These metrics have also been subject to

independent limited assurance by Grant

Thornton. Scope 3 reporting is limited to

categories (Waste, Water, Business Travel,

Fuel and Energy-related activities) for which

we are currently able to gather actual source

data from along our value chain and apply

relevant emissions factors.

The above KPIs give an indication of our

exposure to policy risks such as carbon taxes,

as well as technology risks related to electric

vehicles. They also strengthen our sustainability

credentials with customers and investors,

enabling us to capture opportunities from

modal shift and green financing.

To strengthen ownership and accountability,

climate-related KPIs are embedded into our

variable remuneration practices. For example,

our LTIP awards, made to the CEO, CFO, and

other senior leaders, include targets linked to

the number of zero emission vehicles in our

bus fleet and the reduction in our absolute

Scope 1 and 2 emissions. See more details

on pages 134 and 137.

We have set a near-term science-based

emissions reduction target aligned with a

1.50°C ambition and approved by the SBTi.

Our target is to reduce Scope 1 and 2 GHG

emissions by 63% by FY 2035 from a FY 2020

base year. We also commit to reduce absolute

Scope 3 GHG emissions from fuel and

energy-related activities by 20% by FY 2028,

from a FY 2020 base year, and that 75% of our

suppliers by emissions, covering purchased

goods and services and capital goods, will

have science-based targets by FY 2028.

We have also worked with ERM, a specialist

consultancy, to complete a full Scope 3

emissions assessment and identify all material

Scope 3 emissions. We are reporting on all our

material Scope 3 emissions for the first time in

our Environmental Performance Report 2024

www.firstgroupplc.com/responsibility/

responsibility-reports/2024.aspx. For some

Scope 3 categories in this assessment, we

have relied upon a spend-based method to

calculate emissions and we will work towards

gathering actual emissions data from external

partners in our value chain over time. Our

Sustainable Procurement Working Group is

currently working to develop a more targeted

approach to gathering emissions data and

promoting carbon reductions in our value chain.

Please see our Environmental Performance

Report 2024 www.firstgroupplc.com/

responsibility/responsibility-reports/2024.aspx

for a more detailed update on our key

environmental metrics, performance trends

and progress against targets.

Climate-related ﬁnancial disclosures

continued

Metrics and targets

TCFD recommendation:

Disclose the metrics and targets used to assess and manage

relevant climate-related risks and opportunities where such information is material.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Board and

Audit Committee

Divisions

Executive

Committee

Internal

Audit

Risk management

A crucial part to deliver on the Group’s four

strategic pillars is our ability to effectively

manage the risk and opportunities the business

faces. Our risk management framework

considers the impacts of both the changing

transportation market and the wider

environment to our operations. We keep ahead

of potential risks by horizon-scanning

for emerging risks, training our people and

investing in awareness campaigns and external

expert advice, implementing risk mitigations,

and reviewing opportunities that are identified

through the evolution of the public transport

models. Our principal risks and uncertainties

are detailed on pages 88 to 95.

Our risk management approach

We take a holistic approach to risk

management, first building a picture of the

principal risks at the divisional level, then

consolidating these with Group risks into

a Group view. The Executive Committee

continues to have regular meetings dedicated

to discussions around the Group’s principal

risks, as well as the identification and analysis

of emerging risks, all of which are considered

and approved before being presented to the

Audit Committee and Board for review and

approval. The objective of this process is to

ensure that all key risks to the Group are

identified and reviewed regularly, are actively

monitored, and mitigating controls are put

in place to ensure that the impact on the

organisation is managed within the risk

appetite levels set by the Board.

Responsibility

The Board has overall responsibility

for the Group’s systems of internal

control and their effectiveness.

The Audit Committee has a specific

responsibility to review and validate

the systems of risk management

and internal control.

Process

The Board reviews and confirms

Group and divisional risks and the

Audit Committee reviews the Group’s

risk management process.

Responsibility

The Executive Committee acts as

Executive Risk Committee and

reviews the Group’s risk management

processes. Internal Audit provides

assurance on the key risk mitigating

controls and ensures that the audit

plan is appropriately risk-based.

Process

The Executive Committee meet

quarterly to review and challenge

Group and divisional

risk submissions.

Responsibility

The divisions and corporate functions

management have responsibility for

the identification, assessment and

management of risks, developing

appropriate mitigating actions and

the maintenance of risk registers.

Process

Divisional and Group risk champions

maintain and update risk registers for

their function or division. Risks and

mitigating actions are monitored

through normal business

management processes.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Emerging risks

Our risk management approach and

methodology includes review and identification

of risks which may develop or already exist that

may be difficult to quantify, and may lead to a

significant impact on the Group. Emerging risks

are reported to the Executive Committee and

the Board to consider whether to establish

them as principal risks. To identify and assess

emerging risks, we conduct risk workshops

and run deep-dive sessions with divisional

and Group leadership teams, engage

specialists and perform scenario analysis.

Our risk management

framework and structure

Whilst some risks, such as the financial

resources risk, are managed at a Group level,

all our businesses are responsible for

identifying, assessing and managing the risks

they face with appropriate assistance, review

and challenge from the Group functions.

We seek to continue to improve the quality of

risk management processes and information

generated by our divisions. The Group has

developed a risk appetite framework which

informs the business of the Board’s appetite

for certain risks and informs their risk

assessment activities.

Our risk management framework is shown

in the adjacent diagram.

Board/Audit Committee

Executive Committee

Divisions

Our risk management framework

Top down

Strategic risk management

Bottom up

Operational risk management

Review external environment

Robust assessment of principal and emerging risks

Set risk appetite and parameters

Determine strategic action points

Regular meeting dedicated to risk management

to identify principal and emerging risks

Direct delivery of strategic actions in line

with risk appetite and tolerance levels

Monitor key risk indicators and provide direction

for risks mitigating activities

Execute strategic actions

Report on key risk indicators

Assess effectiveness of

risk management system

Report on principal and emerging

risks and uncertainties

Consider completeness of identiﬁed risks

and adequacy of mitigating actions

Consider aggregation of risk exposure

across the business

Report current and emerging risks

Identify, evaluate and mitigate operational

risks recorded in risk register

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risks associated with artificial

intelligence

Technological developments, including AI,

continue to be fast-paced and uncertain.

This will affect our external environment

(e.g. customers, political and other

stakeholders, competitors and cyber threat

actors), and the Group’s internal environment

(our processes and supply chains),

including new evolving regulatory

compliance requirements.

In order for FirstGroup to remain competitive

and responsive to the market, there is a need

to continually seek opportunities to both

deploy innovative technology solutions for our

customers and to drive internal process and

decision efficiency in a safe and trusted way.

In addition, we need to monitor the use of these

technologies externally by threat actors as well

as emerging competitive deployment of AI,

including generative AI.

AI is expected to have direct and indirect

impacts across the Group’s principal risks

(e.g. Safety, Legal and Regulatory, HR skills and

competencies & resourcing, and Cyber risks),

and unlock opportunities within Contracted

business and Growth within the sector.

However, whilst these impacts are expected

to be beneficial as well as adverse in some

instances, the nature, scale and timing

continue to be highly uncertain at this stage.

We continually monitor technological

developments, including Generative AI,

to ensure our risk mitigation is effective for

managing these risks from internal deployments

and to protect the business from external use

by third parties.

Principal risks and uncertainties

We outline our principal risks on page 88

onwards with an overview of the associated

mitigation activities, and corresponding

movement of the risk. The Board defines the

risk appetite for each of these principal risks.

The overall risk appetite for the Group is

balanced between risk averse for safety and

regulatory compliance risks to neutral or risk

accepting for areas that can drive future growth

for the Group.

Our risk management methodology continues

to aim at identifying the principal and emerging

risks that could:



adversely impact the safety or security of the

Group’s employees, customers and assets



have a material effect on the financial or

operational performance of the Group



impede achievement of the Group’s strategic

objectives and financial targets



adversely impact the Group’s reputation or

stakeholder expectations

Further information on our risk management

processes is contained in the Governance

report on pages 103 to 161.

How to use this scale:

During execution of the review and placement of the principal risks on the above table, the

Executive Committee and the Board considered financial impacts to the divisions and the

Group. Specifically, the ‘High’ end of the scale represents a combination of a catastrophic

annual financial impact at a level that is expected to be difficult to mitigate being repetitive

and the ‘Low’ end considers financial impacts that are not material.

Principal risks

The following table provides an overview of our principal risks, their risk direction and severity

at the year end compared to the prior year using individually assessed impact, likelihood and

velocity scores. Understanding these risk parameters aids effective risk management and

delivery of our strategy.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Severity:

(Impact x Likelihood x Velocity)

External risks

Economic conditions

Geopolitical

Climate change

Strategic risks

Contracted business

Growth within the sector

Operational risks

Financial resources

Safety

Pension scheme funding

Legal and regulatory compliance

Information security, including cyber

Human resources

Low

High

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

External risks

Economic conditions

The Group’s success depends on adapting to economic

ﬂuctuations or uncertainties which may negatively impact

performance by increasing costs, changing customer needs,

reducing demand and/or reducing opportunities for growth.

Globally, the economic outlook is less certain, and the Group

speciﬁcally has experienced continued industrial relations activity

as well as inﬂationary cost pressures due to the macroeconomic

environment, which eased in the second half of the year. All these

market changes have the potential to decrease the Group’s ﬁnancial

performance and available ﬁnancial resources to invest capital

in innovative solutions that drive demand.

Whilst passenger demand in our key markets has been stable,

potential changes in passenger behaviours and the applicable

economic conditions remain uncertain in the medium term.



We actively engage with government departments and sector bodies to ensure

an appropriate level of passenger services are delivered whilst at the same time

designing and running our operations based on current demand levels



We prioritise a customer-focused perspective and seek to provide innovative

transport solutions, by adapting to market uncertainties and driving demand



We continue to apply our fuel and energy hedging strategy to offset temporary

economic impacts driven by inflation and supply chain challenges



We continue to focus on developing new innovative service offerings to our

customers to diversify the business, such as the open access fares model, to

mitigate against the impacts of changing economic conditions

The macroeconomic landscape is showing signs

of recovery, with the inﬂation outlook improving and

the Group continuing to hedge exposure to foreign

exchange and fuel price ﬂuctuations to minimise

material impact on costs. This has allowed for a

certain level of visibility that can be built into the

business forecasting models.

Geopolitical

The Group operates in a political landscape that is constantly

changing, with a UK general election scheduled to take place in

July 2024. This has the potential to cause instability where the

Group’s operations have some reliance on government policy

and funding to support public transport operators, as well as

infrastructure initiatives. Signiﬁcant industry reform and changes in

government transport policies, an inability to maintain or participate

in bus and rail contracts and/or participate in public transportation

funding available may result in the reduction or elimination of bus

services and rail contracts. Further, given the current uncertainty

in the political landscape, failure to attract and retain resources

with the knowledge and skills necessary to maintain/develop

government partnerships for rail operations and local government

for bus contracts, may result in adverse ﬁnancial impact for

the Group.

Developments in international affairs, such as international

tensions, including conﬂicts in Ukraine and the Middle East,

as well as changes in regulations in Europe and the UK

following Brexit, may impact the Group’s commitments to

deliver key investments, or impact the Group’s supply chain,

resulting in ﬁnancial loss and potential reputational damage.



Whilst the Group collaborates with industry bodies to help anticipate government

policy and/or funding regime changes in order to adjust operations, the Group is

an apolitical organisation and does not have the ability to control or substantially

influence government policy



The Group has been able to mitigate resourcing challenges by partnering with

third party consultants to help further drive the change in this area and ensure

the business has the requisite skills and capabilities to leverage national funding



Outside of the NRC’s which earn fees, flexible operating models enable the

business to react quickly and mitigate the impacts from changes in government

funding and related customer demand



We deploy hedging techniques to counterbalance potential negative impact

on certain costs due to adverse developments in international affairs



We regularly review and assess our risk environment to ensure that we are able

to adapt to any geopolitical developments including focus on supply chain disruption



We continue to actively engage with both local and national stakeholders and

partners on transport policy that delivers best for our customers

The UK political environment remains uncertain,

with an ever-evolving regulatory backdrop and the

upcoming UK general election. The Labour Party

has formally stated that NRCs will be brought into

public ownership as they expire during their ﬁrst term

in ofﬁce and that the party will support wider bus

industry franchising should it win the next election.

The Conservative Party has also outlined proposals

for the rail industry. Both Parties advocate for a

“guiding mind” in the form of Great British Railways,

and support the continuing role of open access

services, with track access independently granted

and renewed by the ORR.

Wider aﬁeld the developments from the 2024 US

presidential election, as well as ongoing international

tensions including war in Ukraine and the Middle

East add further uncertainty and could impact the

Company’s operations via reduction in economic

growth and consumer conﬁdence and disruption in

supply chain or inﬂation.

Nonetheless, passenger demand for our services

has remained stable and both national and local

governments in the UK continue to support public

transport service providers.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

External risks

continued

Climate change

Businesses globally continue to experience increasing pressure

and scrutiny from all stakeholders, particularly policymakers and

investors, to demonstrate strong progress on their climate-related

commitments and performance. Inadequate attention to our

climate-related risks and opportunities, as well as emerging

technologies, could negatively impact the Group’s performance,

reputation and growth.

The UK Government has set a legally binding target for net-zero

GHG emissions by 2050, to which we were the ﬁrst public transport

operator to formally commit. Delays in implementing our strategic

plans to mitigate climate-related risks, including transitioning our

ﬂeets to zero emissions, could result in lost business, reduced

revenue, reputational impacts and reduced opportunities from

modal shift.

Climate change poses both physical and transition risks to our

business, from weather events impacting our assets, operations,

service delivery and customer demand, to changes in policy,

technology and market expectations impacting our capital

and operational costs, our reputation, and access to funding.



Climate change has been an integral part of our risk management framework

for many years and is included within our strategic framework for sustainability

‘Mobility Beyond Today’. Our business strategy was updated in 2024 to reflect

our progress and ambition on addressing climate change. Driving modal shift and

leading in environmental and social sustainability were both placed at the heart

of this new strategy, forming two of the four key pillars



FirstGroup was the first bus and rail operator in the UK to formally commit to

setting an ambitious science-based target aligned with limiting global warming

to 1.5°C and reaching net-zero emissions by 2050 or earlier. During FY 2023,

we completed our submission of a science-based target and had our target

formally approved by the SBTi. Avanti and SWR have also successfully

submitted science-based targets



We continue to embed the TCFD recommendations to assess and mitigate impacts

from climate change onto our business and build long-term climate resilience across

our operations



More details on our climate-related targets, commitments, mitigation and actions

can be found in the TCFD section of this report from page 74

The Group recognises the continued responsibility

and opportunity to create a more sustainable world

and maintains our commitment to invest in new

technologies and collaborate with partners to help

create a cleaner future. Our TCFD implementation

work, the climate-related commitments we have

made and the strategies we are developing to meet

them will ensure we are managing our climate

transition risks effectively and continuing to build

business resilience for the long term. We have also

started work on a Group-wide transition plan in line

with Transition Plan Taskforce recommendations,

and we intend to publish this plan later in 2024.

Whilst recognising the risks, as a public transport

provider we are also focused on the opportunities

from modal shift and the vital role we play in reducing

congestion on the roads, improving air quality and

facilitating the transition to a zero-carbon world.

Highlights on climate and related sustainability

initiatives during the year can be found in the

Responsible business section of this report from page

48, with further details set out on pages 54 to 59.

More details on our climate-related performance can

be found in our Environmental Performance Report

2024 at www.ﬁrstgroupplc.com

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Read more on page 74

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

Strategic risks

Contracted business

The Group’s contracted bus and rail businesses are dependent

on the ability to secure and renew contracts on proﬁtable terms,

manage afﬁliate contracts effectively, deliver in accordance with

contract terms and avoid termination. This is becoming increasingly

important for First Bus in the emerging franchising landscape,

and in First Rail with the Labour Party stating that they will bring

the NRCs into public ownership as they expire. Additionally, the

ability of the Group to achieve performance targets is dependent

on our ability to meet and exceed performance metrics laid out

in rail contracts.

Failure to secure proﬁtable contracts would result in reduced

revenue and proﬁtability and/or negative impact on delivering

the Group’s strategic objectives.



The NRC structure is concession-based with a fixed management fee plus

performance incentives, providing a balance of risk and reward



GWR’s NRC runs to June 2028, with a core term to June 2025. The SWR NRC was

extended in accordance with its terms and runs until May 2025. The TransPennine

Express NRC was not renewed at the end of the core term on 28 May 2023. The

West Coast Partnership Emergency Recovery Measures Agreement was

superseded by an NRC which commenced in October 2023. It runs until October

2032, with a core term to October 2026



First Rail’s Hull Trains and Lumo open access operations have track access

agreements in place to 2032 and 2033 respectively



We have the extensive operational expertise needed to meet requirements for

the contract performance incentives



In First Bus the contracted element of the business has historically been low,

although this is likely to rise materially over the coming years as franchising affects

more areas, commencing with the Rochdale franchise in the TfGM area in 2024. At

Leicester, First Bus delivered an all-electric depot under an Enhanced Partnership

model with the City Council



The Group maintains delegated authority control across all contracted

operation bids

The transition from the previous franchising regime

to NRCs in First Rail has provided a balance of

risk and reward via reduced revenue risk, minimal

cost and contingent capital risk, and will continue

to provide more consistent cash generation each

year subject to government policy changes. Going

forward, First Rail is actively leveraging its operational

structure and depth of experience and evaluating

opportunities to diversify its portfolio. This includes

expanding open access and participating in bids for

new contracts like the TfL Elizabeth Line where First

Rail has prequaliﬁed, and the contract to operate

the IFS Cloud London Cable Car, which First Rail

has been awarded. The contract commences in

June

2024 and runs to 2032.

First Bus in Manchester has been awarded franchise

contracts to operate local bus services in and around

Rochdale in the evolving Bee Network, with the

division continuing to operate both tendered local

bus services and B2B employee shuttle/airport

services across the UK and Ireland.

Growth within the sector

The Group’s operational success from both organic and inorganic

growth is dependent on effectively responding to customer

demand, delivering operational efﬁciencies, and identifying and

executing acquisitions and transactions. Recent consolidation

in the transport industry may also lead to future opportunities

for the Group.

Failure to identify and/or execute acquisitions and other

transactions in a timely manner, along with the failure to complete

transactions in accordance with agreed terms, could result in

negative impact on business operations (contracts, employee

retention, etc.), the inability to meet ﬁnancial goals and obligations,

and negative reputational impacts.



The Group actively seeks out and reviews M&A opportunities that would

be beneficial to our portfolio, ensuring existing funding facilities are flexible



We continue active dialogue with our shareholders and investors and gather

insights from our strategic advisers and contacts within the business to evaluate

potential transactions. In particular, we have strong relationships with banks

which enable us to move fast when opportunities are identified



When necessary, we continue to seek external advice and input (e.g., from brokers

or other experts)



We have evaluation frameworks that include a disciplined and researched

approach to acquisitions



Participation in the wider opportunities from the electrification and decarbonisation

of First Bus, including the strategic partnership with Hitachi ZeroCarbon, B2B and

B2C charging using the charging infrastructure

The Group completed the bolt-on acquisition of

York Pullman bus business during the year adding

new product lines in the coach and B2B market to

the portfolio, following the acquisition of Airporter

and Ensign completed the prior year.

Acquisition opportunities are expected to continue.

We continue to engage with shareholders on strategic

direction and growth opportunities. Any material

transactions are announced on a timely basis.

Applications for the expansion of open access rail

services delivered by Hull Trains and Lumo have been

submitted to the ORR.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

Operational risks

Financial resources

The ability of the Group to service its current debt or other ﬁnancial

obligations relies on its capability to reﬁnance debt as it becomes

due and the capital allocation policy being applied.

The Group is investment grade credit rated by Standard & Poor’s

and Fitch, as well as having achieved further upgrades during the

year. A downgrade in the Group’s credit ratings to below current

investment grade may lead to increased ﬁnancing costs and other

consequences and affect the Group’s ability to obtain ﬁnancing

if required to invest in its operations.

The Group’s banking arrangements contain ﬁnancial and other

covenants with ﬁnancial covenants tested semi-annually on

30 September and 31 March. In the event a covenant test level

is breached, the Group may not be able to negotiate sufﬁcient

debt capacity to allow it to continue to trade.



The Group monitors our leverage ratios and overall liquidity consistently to ensure

we remain within our target range and have adequate financial resources on a

two-to three-year period looking forward



As at year end, the Group has adjusted net cash of £64m and an undrawn

£300m committed revolving credit facility that matures in August 2026 together

with a further committed Green Hire Purchase Finance Facility of £150m that is

available to draw to January 2027 for 1,000 EV bus bodies, and through Hitachi

joint venture a £80m debt facility for the financing of up to 1,000 EV bus batteries



We conduct a bi-annual viability assessment of the headroom and ensure this

is sufficiently resilient, including cash and financing facilities

The Group maintains strong bank relationships, with

good awareness and understanding of debt market

trends and regular monitoring of banking covenants

and headroom. Our credit rating was upgraded

by Fitch on 23 May 2023 and Standard & Poor’s

on 12 September 2023 to being further up the

investment grade credit rating.

We have experience in raising material amounts

of credit facilities, ensuring we plan alternative

solutions to mitigate liquidity risk in the event of

wider reﬁnancing requirements.

Safety

The Group is strongly committed to fostering and maintaining

a culture of safety. However, public transport inherently includes

safety-related risks, many of which are out of our control. These

include geopolitical risks impacting security and supply chain,

the increase in adverse weather and its impacts and increased

congestion on public roads. A safety incident, or a threat of an

incident, could be caused by mechanical failures and/or human

error resulting in adverse ﬁnancial impact, reputational damage

through reduced public conﬁdence in public transport and

potentially reduce demand for our services.



All divisions have extensive safety plans and safety training for our employees



We work with industry peers to share lesson learned and collaborate on

shared risks



Incidents are thoroughly investigated to maintain a learning culture where we

continuously improve our safety standards



Mechanical safety controls (speed monitoring, cameras, etc.) are implemented

across our fleet of vehicles and trains



We follow the regulatory regime and comply with statutory inspections

and monitoring



Whilst the Group has implemented preventative safety measures and procedures,

we recognise that certain incidents are ultimately out of our control and do at times

result in legal claims. As a result, the Group has dedicated departments, utilising

third party experts when needed, to analyse and maintain effective insurance

structures and levels



The Responsible Business Committee oversees material safety matters and risks

across the Group, as well as reviewing and challenging targets in respect of safety

performance



Across all our divisions we implement targeted biannual assurance reviews of

our safety management systems, improvements and performance. We use data

analysis and insights to prioritise our efforts in improving safety through both

technology and behaviour

The Group continues to assess, update and

implement safety procedures across our businesses,

mitigating risks to reduce the likelihood of safety

incidents from occurring, taking into consideration

any technological advancements.

Speciﬁc initiatives include enhancing the low bridge

warning system in First Bus, and enhancements to

door operation systems in First Rail to improve the

safety of train door opening.

Collaboration within the rail and bus sectors

continues to enhance safety by fostering industry-

wide learning and sharing innovative solutions for

safety improvements.

First Bus have also introduced a Road Passenger

Transport Speciﬁc H&S training programme

approved by IOSH to take employee competence

to the next level. We have also gained ISO 45001

accreditation for our Safety Management System

(SMS) which is independently scrutinised against

the ISO45001: 2023 standards annually.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Read more on page 71

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

Operational risks

continued

Pension scheme funding

The Group sponsors several deﬁned beneﬁt pension schemes.

The Group’s future cash contributions and funding requirements

in respect of each of the schemes are dependent on investment

performance, movements in discount rates, expectations of future

inﬂation and life expectancy, and relevant regulatory requirements.

In order to maintain adequate funding for its pension liabilities

and prevent adverse ﬁnancial impacts or reputational damage,

the Group continues to monitor the performance of pension fund

investments and movements in the factors that affect the value of

the related pension liabilities.



The Group’s pension schemes are well funded and have active programmes to

either fully de-risk (North American legacy schemes) or meet the objective of low

dependency in the short to medium term (Bus and Group schemes in the UK)



The Group uses third party experts to advise on investment strategies and

liability management and monitor movements in discount rates, mortality

and inflation expectations



Interest rate and inflation risks are hedged to a high degree with the use of

liability-driven investment strategies



The Group TOCs which operate under the NRCs are not responsible for any

residual deficit at the end of a contract and First Rail bares no cost risk during

the contract



Apart from the TOCs operating under NRCs, pension provision for all new

employees is provided via defined contribution arrangements



We work closely with experienced trustee boards that are ensuring effective

systems of governance are in place to manage risk



Pension risks are carefully scrutinised before any new contract or acquisition

is approved

We have reduced the Group’s exposure to pension

risk by c.£1bn as a result of:



terminating our participation in Local

Government Pension Schemes in the UK;



settling pension obligations by payment of

cash lump sums to eligible participants in

North American pension plans;



buying out a portion of the US pension plan

with an insurer, and



fully annuitising the Canadian pension plan.

Plans for terminating the legacy North American

pension plans in the near term are progressing

well. The legacy pension schemes in the UK

continue to mature reducing risk as a result

of closure to accrual several years ago.

C.£100m continues to be retained in Limited

Partnerships for the Group and Bus schemes

in the UK following the sale of the North

American businesses in 2021. The cash in these

arrangements could be returned to the Group in

certain scenarios depending on achieving low

dependency funding levels. Key funding valuations

will be the April 2024 and April 2030 valuations for

Bus and Group Schemes Respectively.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk description

Mitigation

Developments in the risk proﬁle during the year

Operational risks

continued

Legal and regulatory compliance

The Group’s operations are subject to a wide range of legislation

and regulation. Failure to comply could lead to ﬁnancial penalties,

investigation expenses, legal costs and/or reputational damage.

The need to comply with new or amended laws and regulations may

increase the Group’s operating costs.

The main legal and regulatory compliance risks speciﬁc to

the Group that are not covered in other principal risks include

compliance with data protection legislation, employment law

and regulation compliance (employee wages and other terms

and conditions of employment, including expanded rights

for employees), health and safety compliance, responding

to the development of ESG regulations, and key corporate

compliance risks such as competition and anti-bribery and

corruption legislation.

The Group continues to see an increase in digital ticket sales

across all divisions. These sales channels necessitate the

processing of personal data which require safeguards to protect

our customer data and comply with applicable data protection

legislation, including the Data Protection Act 2018 and the UK

and EU General Data Protection Regulations (GDPR).



To help the Group comply with all applicable legislative and regulatory

requirements, we have an in-house legal function which includes dedicated

subject-matter experts, who help to ensure relevant national and international

laws and regulations are followed



Our in-house team is supported by other internal colleagues (including the

Information Security and divisional Health & Safety functions) and external legal

experts where necessary



We have a comprehensive suite of Group-wide policies and procedures, which are

implemented and managed locally. These include data protection, modern slavery,

anti-bribery and competition law policies



To protect our data and comply with our integrity and confidentiality obligations

under data protection legislation, the Group has implemented robust IT

infrastructure controls across the Company. Additional information about how

this risk is managed can be found on page 94



The Group administers a training programme to employees across key areas

of compliance risk, communicating their roles and responsibilities in preventing

and mitigating compliance breaches



We have a named compliance officer in each division with responsibility for

ensuring the delivery of the compliance programme



We monitor new legislation across the jurisdictions in which we operate and

adapt or introduce policies and processes as required to ensure compliance



We provide a confidential reporting hotline for employees and third parties

to report concerns – the hotline is operated by an independent third party

to ensure objectivity and anonymity

Although our legislative and regulatory environment

continues to change, the Group maintains its

commitment to adapt policies and procedures

to detect and prevent non-compliance.

Risk management

continued

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

Operational risks

continued

Information security, including cyber

The transport sector is increasingly reliant on technology and

data, which has led to an increase in cyber security risks. In

particular, we continue to monitor the cyber landscape internally

at Group level, across our divisions, as well as third party suppliers

and networks.

Businesses continue to be targeted by cyber threat actors which

can include criminal cartels, whose motivation is ﬁnancial gain. In

its 2023 annual review, the National Cyber Security Centre (NCSC)

warned that 2023 has seen the emergence of state-aligned actors

as a new cyber threat to critical national infrastructure.

The majority of ransomware attacks are delivered as the result

of a successful phishing attack. Such incidents could disrupt

our operations and/or compromise our conﬁdential business

information. This may lead to long-term ﬁnancial damage with

signiﬁcant costs to recover, including penalties, and an adverse

impact on reputation and consumer conﬁdence in the Group.

The safeguarding and integrity of data continues to remain

a central issue relating to the emerging AI technologies.



Business continuity plans continue to evolve and are updated as the transition

to greater dependency on technology continues in order to minimise the impact

of cyber attacks and the potential impact on the continuity of our operations



We have ransomware procedures and have tested our incident response across

Group businesses in then event of a ransomware attack



We have a suite of information security procedures in place



We run regular cyber risk awareness training and phishing prevention campaigns.



Robust due diligence is performed for new suppliers, with information security

obligations as a prerequisite to be included in third party contracts

The risk of a cyber attack for all UK companies

remains high. The ofﬁcial UK Government ‘Cyber

Security Breaches Survey 2023’ reported 69% of

UK large business were subject to a cyber attack

in 2023. 93% of these instances were phishing

attacks for large businesses, and around one in ﬁve

of the respondents identiﬁed a more sophisticated

attack type such as a malware attacks. Amongst

those that have identiﬁed any breaches or attacks,

33% of large businesses have had some sort of

negative outcome from these. Amongst these

large businesses, 8% report user accounts being

compromised and 4% say assets, trade secrets

or intellectual property were stolen.

We continue to be vigilant and diligent in evaluating

and implementing enhanced techniques to protect

our systems from threats, including investing in

further cyber resiliency tools.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Risk management

continued

Risk description

Mitigation

Developments in the risk proﬁle during the year

Operational risks

continued

Human resources

Employee costs represent the largest component of the Group’s

operating costs. These costs include expenses related to

recruitment, retention and talent development. These costs

are affected by changes in employment markets, regulatory

requirements and diversity and inclusion programmes.

A failure to effectively recruit and retain a diverse and talented

workforce could have adverse ﬁnancial, operational and

reputational impacts.

The employment market for drivers and engineering technicians

remains challenging under an increasing consumer travel demand

and tight labour market. Our employee turnover has also been

impacted by current wider economic circumstances, particularly

rising inﬂation and wider labour mobility.



We continue to focus on improving communication with employees, developing

our people strategies and investing in employee development through compelling

employee value, diversity and inclusion propositions linked with market

competitive wages and benefits



The wellbeing of our employees remains a key priority for FirstGroup. Our

employees have access to various wellbeing resources such as the Wellbeing Hub,

accessed through our intranet. First Rail have introduced webinars on

neurodiversity and stress awareness, and marked Stress Awareness Month. First

Bus hosts a weekly Wellbeing Wednesday and appointed a new Company-wide

occupational health provider in the past year and tripled the number of mental

health first aiders. We continue to offer training for colleagues who may wish

to take up these roles in the future



First Rail continues to develop its people strategy, including effective talent

management and succession planning, ongoing commitment to apprenticeship

and graduate schemes, and a focus on diversity



First Rail continues to support efforts to resolve continued industrial action at

a national level



The First Bus people strategy has a focus on workforce development and culture,

including improving communication and frontline capability management,

with emphasis on reducing attrition and effective absence management



We have an ongoing programme for monitoring KPIs, including leveraging exit

interview data in designing recruitment activity



Employee engagement survey results are reviewed to develop actions to address

low performing metrics to further help retain our top talent

We continue to focus on our bus and train

driver recruitment and retention programmes,

and on managing our multi-year pay deals with

local unions.

We have developed new programmes to have

effective and engaging communications with

employees to impact our recruitment, retention,

diversity and development strategies.

First Bus, Avanti and Tram Operations Ltd. are

accredited Living Wage Employers and pay the Real

Living Wage (RLW) to employees and, as contracts

renew, to third party contractors working directly for

the Company in accordance with the Living Wage

Foundation rates of pay. GWR also pay the RLW to

directly employed colleagues.

Key:

FY 2024 risk is stable

FY 2024 risk is decreasing

FY 2024 risk is increasing

Read more on page 65

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Viability

Time horizon

The Directors have assessed the viability

of the Group over a three-year period. This

period reflects the Group’s corporate planning

processes and is considered appropriate for

a fast-moving competitive environment such

as passenger transport. Beyond three years,

forecasts may be affected by changes in

government transport policy and/or major

contract wins and losses.

Scenario testing

In making their assessment, the Directors have

taken into account the potential financial and

operational impacts, in severe but plausible

scenarios, of the principal and emerging risks

which might threaten the Group’s viability during

the three-year period to 31 March 2027 and the

likely degree of effectiveness of current and

available mitigating actions that could be taken

to avoid or reduce the impact or occurrence

of such risks (details of the risks and mitigating

actions are set out on pages 87 to 95). The

assessment of the available mitigating actions

includes the Group’s ability to manage its cost

base and capital expenditure.

The broad details of the scenarios that were

considered in the assessment are:

a protracted period of weak passenger

volumes comprising reductions of up to 10%

in First Bus and 25% in non-contracted rail,

and performance fees on NRCs 50% lower

than budgeted;

heightened operational, policy and

environmental pressures, including

increased inflation up to 3% higher than

budgeted levels and risk from changes

to governmental transport policy (including

decarbonisation) of £10m per annum,

with operating profit impact increasing

to £39m per annum in FY 2027;

one-off safety, regulatory non-compliance,

climate or technology incidents leading

to short-term reduced revenue and/or

additional costs of up to £30m;

loss of NRCs at the end of their core

contractual periods, reducing operating

profit and cash inflows to the Group; and

inability to renew the £300m revolving credit

facility when it matures in August 2026.

While the Group’s remaining £99.7m bond

expires in September 2024, the Group has

already put into place additional financing

facilities, and considers that it will continue to

have access to debt markets to negotiate

additional new credit facilities if required. The

results of this scenario testing showed that the

Group would be able to remain viable and

maintain liquidity over the assessment period.

Climate change

The Board has also considered how climate

risks could impact the Group’s viability. More

detail on the Group’s assessment of risks and

opportunities from climate change is contained

in our TCFD disclosure on pages 74 to 84.

The key conclusions relating to the viability

assessment were that given the Group’s

geographic diversity across the UK, the

financial impact of extreme weather events

over the three-year viability period was not

judged to be material.

Transitional risks, related to changes to the

government’s decarbonisation policy, were

unlikely to cause any material adverse impact

over the viability period given that, whilst the

vast majority of the Group’s emissions are

from vehicles, the Group is already targeting

industry-leading timescales for transitioning

its vehicles to zero emissions.

Corporate planning processes

The Group’s corporate planning processes

include completion of a strategic review for

the rail and bus divisions, preparation of a

medium-term business plan and a quarterly

re-forecast of current year business

performance. The plans and projections

prepared as part of these corporate planning

processes consider the Group’s cash flows,

committed funding and liquidity positions,

forecast future funding requirements, banking

covenants and other key financial ratios,

including those relevant to maintaining the

Group’s existing investment grade status.

The planning processes also considers the

ability of the Group to deploy capital. A key

assumption underpinning these corporate

planning processes is that credit and

asset-backed financing markets will be

sufficiently available to the Group to put

additional new facilities in place, if required.

Viability statement

Based on the results of the analysis explained

above, including scenario testing, the Directors

confirm that they have a reasonable

expectation that the Group will be able to

continue in operation and meet its liabilities as

they fall due over the period to 31 March 2027

and that the likelihood of extreme scenarios

which would lead to a breach of covenant

is remote.

The Board confirms that in making this

statement it carried out a robust assessment

of the principal and emerging risks facing the

Group, including those that would threaten its

business model, future performance, solvency

and/or liquidity.

Viability and going concern

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Going concern

The Board carried out a review of the Group’s

financial projections for the 18 months to

30 September 2025 and evaluated whether

it was appropriate to prepare the full year

results on a going concern basis. In doing so

the Board considered whether any material

uncertainties exist that cast doubt on the

Group’s and the Company’s ability to

continue as a going concern over the

going concern period.

Consistent with prior years, the Board’s going

concern assessment is based on a review of

future trading projections, including whether

banking covenants are likely to be met and

whether there is sufficient committed facility

headroom to accommodate future cash flows

for the going concern period.

Divisional management teams prepared

detailed, bottom-up projections for their

businesses reflecting the impact of

macroeconomic considerations on the

operating environment, assumptions on

passenger volumes and government support,

as well as the impact of actions required to

address the Group’s climate-related targets

and ambitions, and having regard to the

risks and uncertainties to which the Group

is exposed.

Base case scenario

The Board considered the annual budget to

31 March 2025 and medium-term plan to be the

base case scenario for the purpose of the going

concern assessment for the FY 2024 year end.

These projections were the subject of a series

of executive management reviews and were

used to establish the base case scenario that

was used for the purposes of the going

concern assessment. The base case assumes

a continuing recovery in bus passenger

volumes and yields in FY 2025, with some

offset from a reduction in direct government

funding. The rail base case also reflects the

expiry in May 2025 of the SWR contract and the

uncertainty regarding its renewal. The macro

projections in the updated base case assume

that the UK operates in a low-growth,

cautiously recovering economy. The annual

budget and medium-term plan also capture the

expected financial impact of the actions

required to support the Group’s climate-related

targets and ambitions.

Downside scenario

In addition, a downside case was also

modelled which assumes a more adverse

macroeconomic recovery profile. In First Bus,

the downside case assumes a reduction in

passenger volumes driving a 25% reduction

in profitability, as well as the impact of other

unexpected cost inflation. In First Rail, the

downside case assumes TOC performance

fee awards at 50% of expected levels, potential

expiry of the GWR NRC at the end of its core

period, and volume and revenue reductions in

Hull Trains and Lumo driving a 25% reduction

in open access profitability. The downside

scenario also considers potential impacts of

significant climate-related event or unbudgeted

decarbonisation costs, as well as the risk

of one-off safety, regulatory non-compliance

or technology incidents.

Mitigating actions

If the performance of the Group were to be

more adversely impacted than assumed in

the base case or downside case scenarios,

the Group would reduce and defer planned

growth capital expenditure, and further reduce

costs in line with a lower volume operating

environment to the extent that the essential

services we operate in First Bus are not

required to be run for the governments

and communities we support.

Going concern statement

Based on the review of the financial forecasts

for the period to September 2025 and having

regard to the risks and uncertainties to which

the Group is exposed, the Directors have a

reasonable expectation that the Group has

adequate resources to continue in operational

existence for at least the 12-month period from

the date on which the financial statements

were approved. Accordingly, they continue

to adopt a going concern basis of accounting

in preparing the consolidated financial

statements in this full year report.

Viability and going concern

continued

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our stakeholders

Customers

Delivering for our customers is at the heart of what we do.

Their needs are unique to each journey and requirements constantly

evolve. Listening, identifying future needs and being able to respond

quickly is critical. Our teams use a variety of channels and approaches

to engage with customers and passengers, assessing satisfaction

and gathering feedback.

Why we engage with them

We engage them in order to respond to

feedback and improve customer experience

and satisfaction. Longer term, this enables

us to continuously be aware of, and adapt to,

changing customer needs and build long‑lasting

and trusted relationships.

How we engage with them



Regular customer and passenger satisfaction

surveys to identify what we do well and where

we can improve



Robust customer feedback processes

through online and traditional channels



Customer panels and events



Ongoing dialogue with customer

representative groups



Regular customer updates by the CEO

to the Board

Our response to matters raised

and key activities



Introduced new strategic pillar: Deliver day

in, day out. See page 18 for more information



Introduced new customer loyalty schemes,

discounts and live train tracking initiatives

at our rail operators



Introduction of new environmentally friendly

trains and refurbishment of mid‑life fleets at

our rail operators



Implemented various initiatives to increase

accessibility of bus and train travel on

our networks



Mental and physical wellbeing initiatives are

being introduced for customers, for example

defibrillators being installed at some of

our rail stations

Investors

We welcome open, meaningful discussion with shareholders on all matters.

Being fully aware of the range of views of our shareholders is a key aspect

of good corporate governance and supports our commitment to ensuring

that we promote the success of the Company for the long‑term beneﬁt of

our members as a whole. We proactively engage throughout the year with

institutional, private and employee shareholders on a range of matters.

Why we engage with them

We keep investors informed of key business

activities and decisions and we listen and

respond to concerns and questions in order

to build the long‑term success of the Group.

How we engage with them



Presentations from Executive Directors



Annual Report, Environmental Performance

Report, Group website and

regulatory statements



Ongoing dialogue and individual engagement

with shareholders by the Directors, including

the Chairman



Engagement via the Investor Relations

function with current and potential investors

and other market participants



Annual General Meeting

Our response to matters raised

and key activities



Declaration and payment of FY 2023

full year and FY 2024 half year dividends



Approved and launched additional share

buyback programme



First Bus special investor session on

electrification held at Leicester depot



First Rail investor teach‑in on the First Rail

operating model

We interact with a huge range of stakeholders every single day.

Building strong relationships with them involves listening and working in partnership.

Engaging with our stakeholders

See page 101 for our Section 172 statement

and decisions taken by the Board

during the year.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our stakeholders

continued

Government

Strong engagement with governments at all levels is essential to our

business model, advocating for policy solutions which ensure optimal

operation of public transport by private operators. At both Group and

operational level, we have long‑established relationships with local

and national government ofﬁcials.

Why we engage with them

We are focused on achieving policy solutions

that support sustainable economic growth,

social mobility, modal shift and

environmental performance.

Engaging with governments ensures clear

communication and understanding of the

consequences of policy decisions at different

levels, and aids effective delivery of public

transport at the operational level.

How we engage with them



Direct engagement with policymakers



Links with national, devolved, regional and

local governments



Regular surveys of political stakeholders



Membership of UK and international sector

trade bodies who, in turn, engage with

governments and regulators to promote a

positive policy environment for private sector

public transport

Our response to matters raised

and key activities



Engaged with business advocacy

organisations, lobby groups and public

transport campaigns, particularly to raise

awareness of sustainability issues



Contributed to various collaborative industry

initiatives including the RSSB’s new

Sustainable Rail Blueprint



Secured ZEBRA funding to electrify local bus

services in several areas including Norwich,

Leicester, York, Bramley in Leeds and

Hoeford in Hampshire



Continued progress on environmental

and GHG commitments

Employees

Many thousands of FirstGroup employees work in depots, stations

and ofﬁces. They are the face of FirstGroup, delivering great service

to our millions of passengers. We have a broad range of mechanisms

through which our employees have the opportunity to make their

voices heard and inform the direction and governance of our business.

Read more about our people on page 65

Why we engage with them

We will achieve success by maximising the

benefits of the expertise and experience of our

employees in delivering services and improving

customer experience and satisfaction.

We engage to ensure our people have the skills

and knowledge needed to deliver our services

now and in the future; to create a safe and

inclusive working environment for all of our

employees; and to increase participation

and equal opportunities.

How we engage with them



Regular ‘Your Voice’ employee

engagement surveys



Dialogue with employee representatives,

including Employee Directors and trade unions



Inductions, onboarding sessions and

employee handbooks



Multiple internal communications channels,

including our intranet, briefings, newsletters

and our employee mobile apps



Individual performance reviews and

development discussions



Board and Executive Committee visits

to operational sites, and opportunities

for direct discussions with employees

Our response to matters raised

and key activities



Introduced new strategic pillar: Lead in

environmental and social sustainability

See page 24 for more information



Began paying all First Bus directly employed staff

at or above the Real Living Wage, the largest bus

operator to do so



Launched ‘First Connections’, a Group‑wide

personal development programme aimed at

women and minority ethnic colleagues



Launched new careers website which collates

all live job opportunities across FirstGroup and

facilitates contact with current employees to

share career opportunities



Introduced new diversity and inclusion targets



Increased collection of diversity data from

colleagues: ethnicity and disability status



Launched SmartHealth, a confidential health

service for colleagues



Updated Group safety policy and launched

bespoke H&S training programme certified

by IOSH at First Bus

Read more on page 63

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Our stakeholders

continued

Communities

We are at the heart of our communities and we need to

understand community needs in order to improve our services.

We have well‑developed mechanisms in place to help us listen to

and understand the needs of our communities, and we incorporate

their feedback into our decision‑making processes.

Read more about our communities on page 69

Why we engage with them

We engage with our communities to support

social inclusion and respond to local needs

for the long‑term success of our business.

How we engage with them



We conduct regular surveys to help us

understand a range of views and enhance

our activities



We also commit our time, skills and resources

to help charitable causes that are important to

our communities, both locally and nationally

Our response to matters raised

and key activities



Introduction of new strategic pillar: Lead in

environmental and social sustainability

See page 24 for more information



FirstGroup and our employees donated £1.4m

during FY 2024 as measured by the London

Benchmarking Group model for community

impact. See page 32 for a more detailed

breakdown of our contribution



Invested £2.4m in 99 local community projects

with CCIF Funding



In FY 2024, our TOCs also supported over

60 CRPs around the UK and allocated over

£1.3m in DfT funding. Our TOCs are actively

involved with each CRP, working in partnership

with them to deliver outcomes that benefit as

many people locally as possible



Electric charging partnership with Openreach

enabling Openreach EVs to be charged at

First Bus depots



Launched corporate volunteering trial for

employees of First Bus and Lumo



FY 2024 First Rail charity partnership

with Samaritans and Railway Children

and First Bus with Macmillan

Strategic partners and suppliers

We work with more than 4,500 suppliers driving innovation, expertise

and value for money from our supply chain to provide the goods and

services required to meet and exceed the expectations of our customers

and shareholders. Our suppliers range from small, independent companies

to global corporations, and we have dedicated teams of procurement

specialists centrally, and within our divisions, who develop and maintain

strong relationships with our supply chain to drive value and reduce risk.

Why we engage with them

Engaging with suppliers and strategic partners

builds long‑term relationships and enables

us to identify, manage and mitigate risks and

ensure environmental and ethical standards

in our supply chain.

How we engage with them



Key suppliers are engaged through

collaborative relationship management

systems to provide us with clear, consistently

applied processes to track performance and

generate additional value



Regular supplier relationship meetings and

business reviews are held to strengthen

relationships and identify and manage risks



Our core principles are shared across the

entire supply chain via the FirstGroup

Supplier Code of Conduct

Our response to matters raised

and key activities



Zero breaches of the Supplier Code of Conduct

identified in FY 2024



Supply chain risk processes continue to be

strengthened and developed. Highest‑risk

suppliers registered onto supplementary risk

toolkit that provides deeper assessment and

assurance into supply chain risks. This

includes enhanced reporting and capturing,

monitoring and mitigating risk increasing

supply chain maturity



Drive sustainable procurement principles

100

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Section 172 statement

The Directors are obliged

under Section 172 to promote

the success of the Company

over the long term for the benefit

of shareholders as a whole and

having due regard to a range

of other key stakeholders.

The Directors take their duties under Section

172 of the Companies Act very seriously,

not only because it is a legal requirement to do

so but because the obligations make very good

business sense and are consistent with the

Group’s Values. If decisions do not adequately

take account of the views of our different

stakeholder groups, the Company is unlikely

to be sustainable in the medium to long term.

Details of engagement with key stakeholders

are set out on pages 98 to 100

The Board is mindful of the matters set out in

Section 172 of the Companies Act in all of its

discussions and decision‑making processes.

The table to the right and on page 102 sets out

how the Company complies with the Act and

provides some additional detail, together with

the Board’s oversight and monitoring of these

areas and where there would be intervention or

decisions taken if required. Additionally we

provide examples of some key decisions taken

where the Board was particularly mindful of one

element of Section 172, although in reality

many of the decisions are nuanced and

require the Board to balance outcomes

across a number of stakeholders.

Section 172 principles

General comments/oversight

and monitoring

Key decisions

a) The likely consequence of

any decision in the long term

The Board realises that strategic decisions will

impact the long‑term future, direction and success

of the Company and is mindful of the long‑term

implications of decisions.

The Board was mindful of the long‑term

impact when approving the four strategic

pillars (read more about Company strategy on

page 17). Moreover, the strategy was approved

in consideration of all stakeholders (covering

principles b and c), the environment (principles

d and e) and to deliver long‑term, sustainable

results for all shareholders (principle f).

b) Foster business relationships

with suppliers, customers

and others

At the Board meeting held in June 2023, the

Board received a presentation from the Public

Affairs teams throughout the Group summarising

engagement with government and customers

to help the Board understand their differing

views and to provide additional context for

all deliberations and decisions.

In January 2024 the Responsible Business

Committee received a presentation on the

engagement programmes with communities,

employees and suppliers.

At each meeting the Board reviews, at a high level,

operational performance throughout the Group

which is aligned to the ﬁrst strategic pillar and

the service provided to customers.

The Board’s consideration of the bids

in respect of Manchester franchising

opportunities were carefully balanced,

considering a number of stakeholders and

the desire to win the work at an acceptable

commercial fee.

c) Interest of the

Company’s employees

Janette Bell and Steve Montgomery have kept the

Board apprised of the various initiatives to support

employee engagement throughout the year,

together with employee engagement scores for

the bus division. Ant Green, the Group Employee

Director, helps the Board to understand views

from the front‑line of our workforce. Ant spends

much of his time visiting different parts of the

business to understand the views of the workforce

and presents a report on his activities at each

Board meeting.

The Board endorsed the recommendations

from the Bus Executive team around the

Real Living Wage and additional healthcare

provisions (read more on page 68). The

associated cost and the beneﬁts have

been well received by employees, which

increases staff availability and facilitates a

better service for customers and long‑term

beneﬁts to shareholders.

101

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Section 172 statement

continued

Section 172 principles

General comments/oversight

and monitoring

Key decisions

d) Impact of the Company’s

operations on the community

and the environment

The Company provides key services to its communities, providing public transport

and employment in the communities in which we operate.

The environmental impact of the Company’s operations is at the forefront of the

Board’s mind.

The Board considered and approved applications for ZEBRA

funding and the Group’s associated capital expenditure to increase

the number of zero emission buses operated by the Group.

e) The desirability of the Company

maintaining a reputation for high

standards of business conduct

The Board recognises the importance of maintaining high standards of conduct.

The Board has oversight of the Company’s Values, Code of Ethics, and the training

programmes led by the legal team covering business ethics, anti‑bribery policies,

gifts and entertainment.

At least twice a year, the Board reviews matters reported to the conﬁdential

whistleblowing hotline together with any investigation ﬁndings and actions taken.

In addition to the regular review of matters during the year, with

support from the Responsible Business Committee the Board

approved signiﬁcant updates to the Group Safety Policy.

f) The need to act fairly between

members of the Company

The Executive Directors lead the Company’s engagement with shareholders

with support from the Investor Relations team. These meetings give investors the

opportunity to share their views on the Company’s operations, capital allocation

policies and strategies. These views are reported to the Board so that they

understand the context for their decision‑making. Additionally, the Chairman has

met with a number of investors during the year. The AGM provides an opportunity

for some of the Company’s smaller shareholders to meet the Directors and put

questions to the Board.

The Board carefully reviewed the Group’s dividend policy and

concluded no changes were required. Early in the year the Board

decided to launch an additional share buyback programme of

£115m in addition to the £75m programme completed in August

2023. The Board was mindful of shareholder views as to whether

to pay a special dividend or buy back shares. Taking shareholders’

views into account and on advice from corporate advisors the Board

considered a buyback to be most appropriate in the circumstances

for all shareholders.

The Strategic report was approved on behalf of the Board on 11 June 2023.

Graham Sutherland

Chief Executive Officer

11 June 2023

395 King Street

Aberdeen

AB24 5RP

102

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Dear Shareholder,

I am delighted to introduce the Corporate

Governance Report for FY 2024.

In my Chairman’s statement starting on page 4

I have commented on the progress made

during the year. This report focuses on

governance and how your Board has acted

and made decisions during the year.

The financial results have been strong, and

we have made good strategic progress. The

Executive team have performed very well, and

the Board members have been busy providing

oversight for all stakeholders.

We conducted an external Board evaluation

during the year and report on that on page 113.

In September 2023, we held our Board meeting

in Birmingham and our January 2024 meeting

was held in Bristol to enable the Board to meet

team members and visit our operations in

those areas.

The report is set out on the pages that follow

and you will find an introductory letter from

the Chair of each of the Board Committees

followed by their report on that Committee.

I welcome your comments on this

Corporate Governance Report and on

the 2024 Annual Report more generally.

I’d like to thank my colleagues on the Board

and all the employees of FirstGroup for

their ongoing commitment and for their

achievements in the past year.

David Martin

Chairman

11 June 2024

Compliance with the

UK Corporate Governance Code

We have complied with the Provisions of the

UK Corporate Governance Code (the ‘Code’)

throughout the 53 weeks to 30 March 2024.

In this Annual Report we have included a

commentary running throughout the Governance

Report that summarises how we have complied

with the UK Corporate Governance Code and

guide shareholders to sections of the report to

help access information quickly. The Principles

are represented by letters and the Provisions by

numbers. Both the Principles and the Provisions

are paraphrased in the interests of space –

full details of each can be found on the Financial

Reporting Council’s website at www.frc.org.

Led by an effective Board

The Board’s effectiveness review (details of

which are set out on page 113) indicates that the

Board has operated effectively during the period

under review.

Purpose, values and strategy

This is covered throughout the Strategic report.

The Values are on the website and are set

out in the Culture section of this Corporate

Governance Report.

David Martin

Chairman

Corporate

Governance

report

We have complied with the provisions

of the UK Corporate Governance Code

throughout the period.

103

Introduction

Strategic report

Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Governance at a glance

Overview

The illustration below shows the Board-level governance structure and the primary standing

Committees that have been established to effectively run the business in compliance with the

UK Corporate Governance Code.

Corporate governance framework

The corporate governance framework, comprising clearly defined responsibilities and

accountabilities, is set out below:

The Board is responsible for promoting the long-term success of the Company for the benefit

of its shareholders and stakeholders.

The matters reserved to the Board are set out in writing and cover the most important decisions

that will be taken within the Group. These include strategy, capital structure/allocation, financial

reporting and controls, risk appetite and risk management, stakeholder engagement, Board

membership, remuneration, corporate governance and key policies. The Board Committees

assist by reviewing certain matters before recommendations are put to the Board for approval.

The Board of FirstGroup is led by its Chairman, David Martin who also chairs the Nomination

Committee. Jane Lodge chairs the Audit Committee, Claire Hawkings chairs the Responsible

Business Committee and Sally Cabrini chairs the Remuneration Committee. There is a separate

report covering the work of each of these Committees on the pages that follow. The terms of

reference of these four Committees are available on the Group’s website.

In addition to these four Committees the Board has a Disclosure Committee to identify inside

information and to oversee the timely and accurate disclosures when required.

The Board may delegate other matters to an ad hoc committee established for a specific purpose.

The matters not reserved to the Board are delegated to the Chief Executive Officer with the Board

retaining responsibility for oversight and holding management to account.

The split of responsibilities between the Chairman and Chief Executive Officer is set out in writing.

The Chief Executive Officer has formed an Executive Committee, which is not a Board Committee,

to assist him in the day-to-day running of the Company. The Executive Committee meets monthly

and, its main responsibilities include:



Developing, implementing and monitoring operational plans



Reviewing financial performance, forecasts and targets



Prioritising initiatives and allocating resources



Developing strategy for submission to the Board



Overseeing risk management including identifying risks and developing risk mitigation strategies



Developing and monitoring the internal control strategies



Leading the Group’s culture and safety programme.

Members of the Executive Committee are set out on page 108.

Board composition

As shareholders can see from the biographies on pages 106 to 108, we have diverse experiences

on the Board which gives rise to interesting debates on Board business.

Board and Committee attendance

Chairman

Non‑Executive Directors

Employee Director

Executive Directors

Director

David

Martin

Sally

Cabrini

Myrtle

Dawes

Claire

Hawkings

Jane

Lodge

Peter

Lynas

Ant

Green

Graham

Sutherland

Ryan

Mangold

Board

6/6

5/6

6/6

Short-notice Board

1/1

Audit

–

4/4

3/4

–

Remuneration

–

4/4

–

4/4

3/4

–

Nomination

3/3

2/3

3/3

–

Responsible Business

–

4/4

–

3/4

4/4

–

Overall

10/10

18/18

14/14

22/22

18/18

17/22

14/14

7/7

Peter Lynas was away for one set of meetings and missed five meetings held over two days. The original dates had to be changed and Mr Lynas had a prior engagement; he provided detailed comments to the relevant Chairpersons ahead of the meetings.

Board of FirstGroup

Audit

Committee

Nomination

Committee

Remuneration

Committee

Responsible

Business

Committee

104

Introduction

Strategic report

Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Governance at a glance

continued

Roles and responsibilities

The Board has agreed a clear division of responsibilities between the Chairman and the Chief Executive Officer, and these roles, as well as those of other Directors and the Company Secretary,

are clearly defined so that no single individual has unrestricted powers of decision.

Chairman

David Martin



Leads and manages the business

of the Board



Provides advice, support and

constructive challenge to the

Chief Executive Officer



Provides direction and focus and

ensures sufficient time is allocated

to promote effective debate and

sound decision making



Promotes the highest standards of

integrity and probity and ensures

effective governance



Manages Board composition,

performance and

succession planning



Maintains effective communication

with shareholders and ensures their

views are understood by the Board



Facilitates effective and constructive

relationships and communications

between Executive and

Non-Executive Directors

Chief Executive Officer

Graham Sutherland



Provides leadership to the

executive and senior management

team in the day-to-day running

of the Group’s businesses



Develops the Group’s objectives

and strategy for consideration

and approval by the Board,

taking into account the interests

of shareholders and stakeholders



Implements the agreed strategy



Promotes a safe working

environment and a safety-focused

culture across the Group



Maintains an active dialogue with

shareholders and other stakeholders



Responsible for implementing

effective internal controls and

ensuring risk management

systems are in place

Chief Financial Officer

Ryan Mangold



Responsible for the financial

stewardship of the Group’s

resources



Responsible for the Group’s

finance, tax, treasury, insurance,

Legal, risk management and

internal control functions



Supports the Chief Executive

Officer in providing executive

leadership and developing strategy



Supports the Chief Executive

Officer to implement the

agreed strategy



Reports to the Board on

operational and financial

performance of the businesses

Senior Independent Director

Peter Lynas



Acts as an additional point of

contact for shareholders to discuss

matters of concern



Provides a sounding board for the

Chairman and serves as an

intermediary for the other Directors



Leads the annual review of the

Chairman’s performance taking

into account the views of the

Non-Executive Directors and

Executive Directors

Non‑Executive Directors (NEDs)

Sally Cabrini

Myrtle Dawes

Claire Hawkings

Jane Lodge

Peter Lynas



Provide a strong independent

element to the Board and

collectively provide a broad range

of experience, knowledge and

individual expertise



Constructively support and

challenge management



Review management’s

performance in meeting agreed

objectives and deliverables



Review the integrity of financial

information and determine whether

internal controls and systems

of risk management are robust

Group Employee Director

Anthony Green



Brings insight into employee

engagement and perspectives from

the front line to Board deliberations



Chairs the Employee Director’s

Forum



Promotes employee involvement

and participation in the affairs

of the Group through share

ownership, employee surveys

and other means of

employee involvement



Promotes the Group’s policies and

procedures amongst employees,

in particular those related to safety,

diversity and inclusion,

and business ethics

Company Secretary

David Blizzard

(not a Board member)



Provides advice and support to

the Board, its Committees, the

Chairman and other Directors

individually as required, primarily

in relation to legal and corporate

governance matters



Responsible, with the Chairman,

for setting the agenda for Board

and Committee meetings and for

high-quality and timely information

and communication between the

Board and its Committees and

the Executive Directors and

senior management

105

Introduction

Strategic report

Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Board

Appointed:

15 August 2019

Key areas of expertise:

Surface Transportation, Business Turnaround, Performance

Improvement, International Transport Contract Businesses,

Strategic Transactions

Skills and experience:

David is the former Chief Executive of Arriva, which he joined in

1998 as Board member responsible for international development

before taking over the leadership of the company in 2006. During

his tenure, Arriva was transformed into a multi-national transport

services group through a number of key strategic mergers and

acquisitions. In September 2010, the company was purchased

by Deutsche Bahn, one of the world’s leading passenger transport

and logistics companies. David remained as Chief Executive

throughout this period, before stepping down in January 2016.

He remained on the Arriva Board advising on a range of issues

until May 2017. He was formerly a Non-Executive Director at

Biffa plc and at Ladbrokes plc and previously held roles at British

Bus plc, where he was responsible for development of strategy

and M&A, at shipping company Holyhead Group and at business

services group Initial Services PLC. David is a chartered

management accountant.

External appointments:

Member of the advisory board at Nottingham Business School;

member of the steering committee at Nottingham Trent University.

Nationality:

British

Appointed:

16 May 2022

Key areas of expertise:

Business Strategy, Performance Improvement, Government

Contracting, Engineering and Infrastructure, Digital Transformation,

Corporate Finance/M&A, Governance

Skills and experience:

Graham has a strong track record in the delivery of critical

services and in creating value for shareholders in rapidly evolving

regulatory and technological environments. Previously, he was

Chief Executive Ofﬁcer of KCOM Group plc, an LSE-listed

telecommunications company. Prior to this, Graham held a number

of senior executive roles within BT Group PLC over 12 years.

These included as Chief Executive Ofﬁcer of the BT Business

and Public Sector division, where he was responsible for proﬁtable

growth and led the integration of EE’s Business unit, creating a

division with £4.6bn in annual revenues and 13,000 employees.

Graham was also Chief Executive of BT Ireland where he was

responsible for all consumer, business and network activities.

Prior to that he was Chief Executive of NTL Ireland and has also

held senior ﬁnancial roles including at Bombardier. Graham has an

established record in strategic development, as well as delivering

enhanced ﬁnancial and operational performance and engaging a

diverse range of stakeholders including consumer, business and

public sector customers.

External appointments:

None.

Nationality:

British

Appointed:

31 May 2019

Key areas of expertise:

Corporate Finance/M&A, Turnaround, Pensions, Governance

Skills and experience:

Ryan was appointed as CFO in May 2019, having previously

been Group Finance Director of Taylor Wimpey Plc for eight years.

Ryan has a strong track record of building ﬁnancial discipline

in the organisations he has worked at. During his time at Taylor

Wimpey, Ryan played a leading and integral role in strengthening

the balance sheet, driving operational improvements, rebuilding

the business post the ﬁnancial crisis (to become a constituent

of the FTSE 100), the sale of the North American business and

the improvement of its pensions position. Ryan was previously

at the Anglo American group of companies, where he was Group

Financial Controller at Mondi and played a signiﬁcant role in its

demerger from Anglo American in 2007. Ryan is a chartered

accountant and has recent and relevant ﬁnancial experience.

External appointments:

None.

Nationality:

South African/British

Key

Audit Committee

Responsible Business Committee

Remuneration Committee

Executive Committee

Nomination Committee

Chair

Graham Sutherland

Chief Executive Officer

David Martin

Chairman

Ryan Mangold

Chief Financial Officer

106

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Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Board

continued

Appointed:

24 January 2020

Key areas of expertise:

Human Resources, Information Technology, Transformation

Skills and experience:

Sally brings valuable experience of a number of sectors including

UK regulated utilities, services and manufacturing. She has

expertise in delivering signiﬁcant business transformation

programmes often including internal restructuring or divestment,

pension changes and both cultural and signiﬁcant technological

changes. As Transformation, IT and People Director at Interserve

Group Limited, she had a strong focus on effective operational

delivery and led a major transformation programme which had

signiﬁcant ﬁnancial and strategic challenges, and prior to that she

was a senior executive at FTSE 100 constituent United Utilities

for nine years, including four years as Business Services Director

with responsibility for information technology, cyber security and

human resources in a regulated CNI environment. Sally was also

a Non-Executive Director and Chair of the Remuneration Committee

at Lookers plc from January 2016 to 2020 and at Appreciate Group

plc (2019 to 2023).

Sally is a fellow of the Chartered Institute of Personnel

and Development.

External appointments:

None.

Nationality:

British

Appointed:

1 April 2022

Key areas of expertise:

Engineering, Safety, Technology and Digital Transformation,

Project Management and Energy Transition

Skills and experience:

Myrtle is an established leader with extensive experience in

the Energy sector both in the UK and internationally. A chartered

Chemical Engineer, she has held a number of senior safety and

engineering project management roles in the offshore Oil and Gas

industry, including for BP and BHP Petroleum. Moving to Centrica

in 2009, Myrtle performed a number of senior executive roles

encompassing engineering, project management, technology and

digital transformation, including leading the team responsible for

safety-critical, customer-facing residential assignments. She holds

a Masters in Chemical Engineering and Chemical Technology from

Imperial College.

External appointments:

Solution Centre Director for the Net Zero Technology Centre,

leading the development of technology for net zero in the Energy

sector and Non-Executive Director for Aquilla European Renewals

plc. Fellow of the Institution of Chemical Engineers, the Energy

Institute, the Forward Institute and Honorary Fellow of the

Association for Project Management.

Nationality:

British

Appointed:

15 September 2020

Key areas of expertise:

Transportation, Employee Engagement, Safety, Learning

and Development

Skills and experience:

Ant is a bus driver and a trainer for First Bus. He has been

the Employee Director of First Essex Buses Ltd since 2014,

a company he joined in 2009. In 2015, he was seconded to roll out

Be Safe, the Group’s safety behavioural change programme. Since

then, Ant has trained more than 1,900 colleagues and coached

leaders on the implementation of successful safety techniques.

Prior to joining First Essex, he worked at retailer Homebase for

16 years including in several managerial positions, and also

volunteered at St John Ambulance.

External appointments:

None.

Nationality:

British

Sally Cabrini

Independent Non-Executive Director

Myrtle Dawes

Independent Non-Executive Director

Anthony Green

Group Employee Director

Key

Audit Committee

Responsible Business Committee

Remuneration Committee

Executive Committee

Nomination Committee

Chair

107

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Governance report

Board

continued

Appointed:

21 January 2022

Key areas of expertise:

Sustainability Strategy, Business Transformation, Governance,

Commercial Transactions, Performance Management and

Energy Transition

Skills and experience:

Claire has more than 30 years’ business experience, principally

in the Energy sector, and has held UK and international leadership

positions, most recently with Tullow Oil plc, and prior to that with

BG Group plc and British Gas plc. Claire is an environmental

scientist and an experienced ESG professional and holds a degree

in Environmental Studies awarded by Northumbria University and

an MBA from Imperial College Management School. She is also a

Fellow of the Energy Institute and a Fellow of Chapter Zero.

External appointments:

Non-Executive Director and Chair of the ESG Committee of

Ibstock plc, a Non-Executive Director and Senior Independent

Director of James Fisher and Sons plc and a Non-Executive

Director of Defence Equipment and Support, a bespoke trading

entity and arm’s length body of the Ministry of Defence.

Nationality:

British

Appointed:

30 June 2021

Key areas of expertise:

Transportation/Travel/Engineering and Infrastructure, Corporate

Finance/M&A, Governance

Skills and experience:

Jane spent her executive career with Deloitte, where she spent

more than 25 years advising multi-national companies including

businesses in transport, leisure, consumer and technology

sectors. Since 2012, she has served as a non-executive director

and audit committee chair at several UK public companies in a

range of sectors. Previous roles include Non-Executive Director of

Sirius Minerals plc (2015-2020, when the company was acquired

by Anglo American plc), Costain Group plc and of Devro plc

(2012-2020) and Non-Executive Director and Audit Committee

Chair of DCC plc (2012-2022). In addition to broad international

experience in a range of sectors, Jane brings substantial audit,

risk and audit committee expertise to the Board.

External appointments:

Non-Executive Director, Audit Committee Chair and member of the

ESG Committee of Bakkavor Group plc; Non-Executive Director

and Remuneration Committee chair of Glanbia plc; Non-Executive

Director and Audit Committee Chair of TI Fluid Systems plc.

Nationality:

British

Appointed:

30 June 2021

Key areas of expertise:

Defence and Aerospace, Government Contracting, Turnaround,

Corporate Finance/M&A, Pensions, Governance

Skills and experience:

Peter was Group Finance Director of BAE Systems plc (and a

Director of BAE Systems, Inc.) from 2011 until his retirement in

2020, having previously served in increasingly senior ﬁnancial

and M&A roles since joining the company in 1999. Peter’s early

career was spent at De La Rue Systems, which he joined as a

trainee accountant, and then, GEC Marconi, where he became

Finance Director of Marconi Electric Systems. In addition to

his strong strategic and ﬁnancial background, Peter brings to

the Board extensive experience in heavily regulated industries

with signiﬁcant contractual relationships with government.

External appointments:

Non-Executive Director of Cohort plc.

Nationality:

British

Claire Hawkings

Independent Non-Executive Director

Peter Lynas

Senior Independent

Non-Executive Director

Jane Lodge

Independent Non-Executive Director

Key

Audit Committee

Responsible Business Committee

Remuneration Committee

Executive Committee

Nomination Committee

Chair

Executive Committee members

Graham Sutherland

Chief Executive Officer

Janette Bell

Managing Director, First Bus

David Blizzard

Group Company Secretary

Ryan Mangold

Chief Financial Officer

Steve Montgomery

Managing Director, First Rail

108

Introduction

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FirstGroup Annual Report and Accounts 2024

Governance report

Board

continued

Directors

The Company has formal procedures to review

and if appropriate authorise conflicts of interest

and these have operated effectively throughout

the year.

The Board carries out an annual review of the

independence of its Non-Executive Directors.

All the Non-Executive Directors are considered

to have the appropriate skills, knowledge,

experience and character to bring independent

and objective judgment and valuable insights

to the Board’s deliberations. The Chairman was

considered to be independent on appointment

and is committed to ensuring that the Board

comprises a majority of independent

Non-Executive Directors.

Ant Green has served as an Employee Director

throughout the year and has continued to act

as an effective channel to put the voice and

sentiment of the workforce into the Boardroom.

Ant Green and the Executive Directors are not

considered to be independent.

The biographies of all the current Board

members are set out on pages 106 to 108.

Following a recommendation from the

Nomination Committee, the Board recommends

that all Directors are reappointed at the AGM

where they will offer themselves for re-election.

As noted above, the Board has documented a

split of responsibilities between the Chairman

and the Chief Executive Officer, and we have

agreed responsibilities for the Committee

Chairs, Senior Independent Director and

Non-Executive Directors. The Board

reviewed and reconfirmed these arrangements

in March 2024, and they are summarised on

page 105 and available in full on our website.

Commitment

All Directors are expected to attend each

Board meeting and each Committee meeting

for which they are members, unless there are

exceptional reasons preventing them from

attending. The attendance levels were excellent

in FY 2024.

The Nomination Committee adopted an

over-boarding policy in early 2022 to make

sure Directors had sufficient time to fulfil their

obligations and has applied this when reviewing

additional appointments for existing Board

members. All Directors are within the limits set

by the policy. Further detail is provided in the

report of the Nomination Committee.

Culture

FirstGroup is values-based and has five Values:



Committed to customers



Dedicated to safety



Supportive of each other



Accountable for performance



Setting the highest standards

These Values underpin decisions taken at

all levels of the organisation and are wholly

consistent with the duties of Directors. The

operating companies also have their own

values, consistent with the above but

expressed differently for their respective

workforces. The Board monitors culture in a

variety of ways, receiving information from

many sources to enable them to understand

and monitor the culture of the organisation.

The primary sources are:



Regular updates from the CEO and CFO

within their reports to the Board



The reports from the Group Employee Director



The results from engagement surveys



Review of calls to the confidential

whistleblowing hotline



People sections of reports to Responsible

Business Committee



Meeting people when the Board visits the

Group’s operating locations

Additionally, the Board receives updates on

adherence with the Ethics and Compliance

training programmes which require employees

to complete a regular programme of training

that is relevant to their role and includes

IT security training, anti-bribery, modern slavery

and competition law training.

The Responsible Business Committee has met

four times during the year and considered a

range of very important topics. The Committee

has covered employee welfare, environmental

matters and community engagement.

The Responsible Business Committee has

monitored performance against the

science-based emissions reduction target that

was approved by the SBTi in FY 2023. Read

more about this on page 84. The Committee

has had oversight of the matters set out in the

Responsible business section of the Strategic

report starting on page 48. The governance

of the Responsible Business Committee is

within this Annual Report on page 123.

Compliance with the

UK Corporate Governance Code

Basis on which the company

generates and preserves value

This is covered in the Strategic report on pages 4

to 102.

The Board should assess and

monitor culture

Throughout the year, the Board monitors culture

through a variety of sources, and an explanation

is given in the columns to the left.

Engagement with major shareholders

The regular engagement with shareholders is

led by Executive Directors, and regular roadshow

events are held with larger shareholders following

results announcements. In FY 2024, we held two

additional investor events, one for each division.

The Chairman, Committee Chairs and the

Senior Independent Director are available to

shareholders on request, and if there is a matter

requiring shareholder input the most appropriate

Director will engage with shareholders.

Action if 20% of shareholders vote

against a proposal

Not applicable in FY 2024 – shareholders

overwhelmingly supported all the resolutions at

the AGM. Had this is not the case this year the

Board would expect to comply with the Code.

Views of key stakeholders and

S172 Statement

A comprehensive Section 172 statement is

set out on pages 101 to 102 within the Strategic

report. The Company has appointed Ant Green,

a Director from the workforce, who updates

his fellow Directors on the views from the

workforce at each Board meeting.

109

Introduction

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Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Board

continued

Board meetings

Board meetings focus on strategy and financial and business performance. The key matters

considered by the Board during the scheduled meetings are set out below.

June

Board evaluation

Strategic review

Year-end matters, approval of Results and Annual Report including the risk disclosures

Review of whistleblowing incidents and procedures

Modern Slavery Statement and Actions

July

Strategic update

Deep dive into the Group’s Public Affairs strategy

Update on the electric vehicle ﬂeet and related opportunities

September

(In Birmingham)

Detailed Strategy Review

Report on various cyber security matters

A review of the terms of the joint venture with Hitachi

Business presentation from the Avanti team

November

Half year results

Update on Capital Allocation and ﬁnancing of the electric ﬂeet

Talent and succession planning

January

(in Bristol)

Budget Assumptions

Business presentation from the bus leadership team covering West of England and

Wales

March

Presentation from the GWR team

Budget review and approval

At each meeting the Board receives an update from any of the Board Committee meetings

that have been held since the last meeting together with a presentation from the CEO, the CFO,

the head of the rail division, the head of the bus division, the Group Employee Director and the

Company Secretary.

In September 2023, the Board met in Birmingham in the Avanti offices and received a presentation

from the Avanti team and toured the operations at Birmingham New Street. In January 2024,

the Board met in Bristol and had the opportunity to visit a bus depot and staff facilities to

observe the operations and meet colleagues working at these sites. The Board received a

presentation from the GWR team in March 2024.

C Necessary resources and

control framework

The Board has delegated the day-to-day running

of the Company to the Chief Executive Ofﬁcer

who, with the Executive Committee ensure that

their teams have the necessary resources to

meet their objectives. The Board reviewed the

talent and succession planning to help ensure

the Company has the right teams to deliver

on the Group’s objectives.

Workforce concerns

(known as whistleblowing)

The Board reviews all concerns raised by the

workforce twice each year. If a serious concern

were to be raised between the reviews, it

would be escalated to the Board immediately,

rather then waiting until the next report was due.

D Responsibilities and engagement

with shareholders and stakeholders

There is a comprehensive programme to

engage with shareholders and stakeholders.

The engagement with the different stakeholders

is set out in the Strategic report with the relevant

section starting on page 98.

Workforce policies and practices

The Group has a comprehensive framework

of policies and practices that are aligned

with the Values and the long-term success

of the Company. Examples of the practices

are set out within the ‘Supporting our people’

section of the Strategic report that starts on

page 65. The relevant policies are owned by

the Human Resources teams and cover the

full range of employment issues expected for

a diverse workforce.

Chairman leads the Board and is

responsible for its effectiveness

The Chairman is responsible for leading the

Board and its effectiveness. The duties are set

out in a document published on the Company’s

website. The effectiveness of the Chairman is

reviewed annually as an important part of the

Board evaluation process led by the Senior

Independent Director.

Appropriate combination of Executive

and Non‑Executive Directors

There is an appropriate division of responsibilities

between the Executives and Non-Executives.

The matters reserved to the Board are clearly

deﬁned and all signiﬁcant transactions would

come before the Board.

Conﬂicts of interest

The Board reviews all Directors’ external

appointments twice each year to conﬁrm that they

do not create a conﬂict of interest. If a Director

had a conﬂict in respect of a particular contract

or arrangement being considered by the Board,

there is a process for the Director to declare that

conﬂict and the Board would decide whether

or not it was appropriate for the Director to be

involved in discussions on that matter.

Compliance with the

Corporate Governance Code

110

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Governance report

Board

continued

Concerns held by a NED

on resignation

No such concerns have been raised during the

period under review.

Chairman independent

on appointment

David Martin was independent on appointment.

The Board recognises that Mr Martin served as

Executive Chairman from September 2021 until

30 June 2022.

10 Identiﬁcation of independent NEDs

The Board has concluded that Sally Cabrini,

Myrtle Dawes, Claire Hawkings, Jane Lodge

and Peter Lynas are independent in character

and judgment.

11 At least half the Board is independent

Five of the nine Directors are independent and are

considered by the Board to be independent.

12 Appointment of Senior Independent

Director and review of Chairman

Peter Lynas was appointed as the Senior

Independent Director on 30 June 2021.

Mr Lynas led the Non-Executive Directors’ review

of the Chairman’s performance, and he discussed

the feedback with the Chairman.

13 Non‑Executives’ role

The Non-Executives hold Executive Directors

to account and regularly meet, normally at the

conclusion of each Board meeting, without any

members of the Executive team.

14 Roles of Chairman, Chief Executive

and Senior Independent Director

and Committee terms of reference

The responsibilities for these roles are set out

in writing and, following the Board’s review in

March 2024, the document has been publicly

available on the Company’s website. Each

Committee reviewed their terms of reference in

March 2024, and recommended changes were

approved by the Board. The updated terms of

reference for the Committees are available on

the Company’s website.

15 See page 115

The Board supported by the Company

Secretary should ensure that it has

resources to function

16 Access to and appointment of the

Company Secretary

The appointment or removal of the Company

Secretary is reserved to the Board. Since

appointment on 1 April 2022, David Blizzard has

worked with the Chairman and Committee Chairs

to support them to discharge their responsibilities.

All Directors have direct access to the Company

Secretary, and governance matters are raised with

the Board as they arise.

Compliance with the

Corporate Governance Code

Induction

On appointment all new Directors receive

a comprehensive induction tailored to their

experience, background and areas of focus.

The programme is designed to help each new

Director become fully effective in their role as

quickly as possible and provide them with a

good understanding of the Group’s businesses,

key drivers of operational and financial

performance, the role of the Board and

its Committees, the approach to corporate

governance and the duties and responsibilities

of being a Director of a publicly listed company.

Continuing professional development

From time to time, training sessions are

organised for the Board, and in FY 2024

the sessions focused on industry trends

and forthcoming governance developments.

From time to time, the Directors attend

seminars and round table discussions aligned

to their areas of responsibility or interest.

Shareholder engagement

Primary responsibility for shareholder

engagement sits with the Executive Directors.

The Executive Directors meet with larger

shareholders twice each year, normally shortly

after publication of the annual or interim results

and at other times if required. During the

financial year, a number of other, more detailed

teach-in sessions on the operations of the two

divisions took place, with Janette Bell and

Steve Montgomery joining the Executive

Directors for the meetings. The Bus session

was held in Leicester, looking at electrification,

and the Rail session was held in London

and took investors through the operating

model in Rail.

The Chairman also took a number of meetings

with large shareholders during the year.

111

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Governance report

Board

continued

Reporting table on sex/gender representation

FirstGroup plc

Board of Directors

Specified

senior positions

Executive management

(defined as the Executive Committee)

Number of

Board members

Percentage of

the Board

Number of senior

positions on the Board

(CEO, CFO,

SID and Chair)

Number in executive

management

Percentage of the

executive management

Men

55.6%

80%

Women

44.4%

20%

Overall Not specified/prefer not to say

–

Reporting table on ethnicity representation

FirstGroup plc

Board of Directors

Specified

senior positions

Executive management

(defined as the Executive Committee)

Number of

Board members

Percentage of

the Board

Number of senior

positions on the Board

(CEO, CFO,

SID and Chair)

Number in executive

management

Percentage of the

executive management

White British or other white (including minority-white groups)

88.9%

100%

Mixed/Multiple ethnic groups

–

Asian/Asian British

–

Black/African/Caribbean/Black British

11.1%

–

Other ethnic group including Arab

–

Not specified/prefer not to say

–

Diversity and inclusion

We believe that a diverse workforce that

represents the communities in which we

operate is vital to the Group’s success. We

value the differences each colleague brings to

their role, making the Group stronger and better

able to meet the needs of our customers and

the communities in which we operate.

Board diversity

The Group has selected 30 March 2024 as the

reference date for the data provided below.

Throughout the period under review and on

the selected reference date the Company has

complied with the requirements that at least

40% of the Board are women and also at least

one member of the Board is from a minority

ethnic background.

The Company has not complied with the

external target that at least one of the senior

Board positions (Chair, Chief Executive Officer,

Senior Independent Director or Chief Financial

Officer) is a woman. The Audit Committee, the

Remuneration Committee and the Responsible

Business Committee are all chaired by women.

The Nomination Committee is committed to a

meritocratic appointment process, and as and

when one of these roles becomes available

it will ensure a diverse long-list of candidates.

There have been no changes to the

composition of the Board since 30 March 2024.

All Directors and members of the Executive

management team are based in the UK and

have been willing to freely disclose the

information required for the disclosures below.

Our approach to collecting the data has been

to ask the relevant people for the information.

The required tables reporting on sex/gender

and ethnic representation are set out below.

The diversity data for levels below the Board

is set out in the Supporting our people section

starting on page 65.

112

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Governance report

Board

continued

Board evaluation

As reported last year, we delayed the external

Board evaluation given that a number of

Board members, including the Chief

Executive, were relatively new. In FY 2023,

the Company Secretary supported an internal

Board evaluation process. The areas of focus

and the actions taken during FY 2024 in

respect of each area identified are set out

in this report.

The Board commissioned Clare Chalmers

to conduct the Board evaluation in respect

of FY 2024. Following interviews with each

of the Directors, the external audit partner,

the Head of Internal Audit, the Company

Secretary and other executives who regularly

present to the Board or its Committees.

The review included the observation

of the Board meeting in January 2024.

A detailed report on the findings was

prepared and Clare Chalmers presented

her report to the Board in March 2024.

The report identified a number of

strengths and suggested areas of focus.

Following that presentation, the Chairman

held discussions with each of the Directors

and the Company Secretary to finalise the

agreed areas of focus which were endorsed

by the Board at the meeting in June.

Strengths and areas of focus are set out

in the column to the right. An update on

the areas of focus will be provided in

the Annual Report for FY 2025.

FY 2023 Board evaluation

Areas of focus

Board composition and dynamics

Create opportunities for the Board to meet

a wider group of senior leaders both within

the Boardroom and other settings.

The senior leadership teams from GWR, Avanti

and the Bus business covering the West of

England and Wales have presented their

businesses to the Board during the year.

A number of people who had not previously

presented to the Board have attended to present

on their areas of responsibility, and two NEDs

attended the launch of the alumni programme for

the internal leadership and management courses.

Conduct of meetings/Board support

Quality of Board reporting to be enhanced with

more focused papers using executive

summaries, signposting and reduce repetition.

A number of improvements have been made to

the papers, and this is an ongoing area of focus

following the 2024 review.

Stakeholders

Continue to improve the Board’s understanding

of the views of customers, suppliers and

communities served.

The Board and Committees received a number

of targeted presentations during the year to

improve understanding in these areas including

a presentation from the Head of Procurement

on relationships with suppliers. The business

presentations from GWR, Avanti and the Bus

teams cover customers and communities

served by the business.

Talent and succession

Build on improvements made in FY 2022.

The first action above will also support the

Board’s work in this area of focus.

The Board received a detailed presentation

in November 2023 reviewing detailed talent

profiles and the succession plans for senior

roles. The work was more detailed than

in previous years and provided the Board

with a clear understanding of the landscape.

2024 Board evaluation

Strengths

Amongst other things, the report identified

the following strengths:



Good dynamic supported by an open

and proactive management team



Processes around decision making and

risk management



Upward trends in effectiveness of meetings

particularly Audit Committee and the

Responsible Business Committee



Frontline perspective provided by

the Employee Director

Areas of focus

The Board agreed the following areas

of focus for FY 2025:



Further steps to be taken to enhance Board

reporting in both the papers and the content

of the verbal presentations at the meeting.



Increase the opportunities for the

Non-Executive Directors to meet senior

leaders below the Executive Committee



In light of the potential re-nationalisation

of Rail, accelerate continuing discussions

on strategic options for the future



Following a complete refresh of the

Non-Executives in the period to July 2023,

review the succession planning for Board

and Executive Committee during the year

Compliance with the Corporate

Governance Code

Annual evaluation process

21 Formal and rigorous annual evaluation

An external evaluation was conducted in FY

2024 and the process is set out in the report.

22 Act on results of evaluation

The Board agreed actions following the 2023

evaluation and updates are provided on the

agreed actions. The areas of focus resulting from

the FY 2024 report are set out in this report and

the Board intends to report on progress in the

Annual Report next year.

113

Introduction

Strategic report

Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Nomination Committee report

David Martin

Chair, Nomination Committee

Main responsibilities

The primary role of the Nomination

Committee is to ensure that the Board

has the appropriate skills, knowledge,

experience and diversity to operate

effectively and deliver strategy. The

Committee is responsible for identifying

the skills required and leading the Director

appointment process and considering

succession planning for Directors

and other Senior Executives.

The terms of reference are available

on the Group’s website.

Committee members:

David Martin (Chair)

Sally Cabrini

Myrtle Dawes

Ant Green

Claire Hawkings

Jane Lodge

Peter Lynas

Dear Shareholder,

The Nomination Committee had a quieter year

given the number of changes completed in the

previous financial year and the progress that

had been made regarding the appointment

of a new Chief Executive Officer last year.

Following feedback from the Board

effectiveness review conducted around the

last year end, we increased the membership

of the Nomination Committee to include all the

Non-Executive Directors. This change meant

that we had broader range of views for

this year’s meetings which was particularly

beneficial as the focus of the work was

on talent and succession planning for the

Executive Directors, the Executive Committee,

and the levels below.

David Martin

Chairman

11 June 2024

Activities during the year

In June 2023, the Nomination Committee

considered the Board effectiveness review and

recommended to the Board that all Directors

standing for re-election had performed well,

those put forward as independent were

independent and all should be re-elected

to the Board.

In November 2023, the talent and succession

plans were considered by the Board rather than

the Nomination Committee but all members

of the Nomination Committee were present

at the Board meeting for the discussions.

The Nomination Committee dealt with the

formalities for the extension of Ant Green’s

term as the Group Employee Director.

In March 2024, the Committee reviewed the

Board composition in light of the Board

Evaluation and recommended to the Board

that no changes were required.

The Executive Directors and the Divisional

Managing Directors attend meetings by

invitation of the Chairman and during the year

attended to present the talent and succession

plans for their areas of responsibility. The

Committee is supported by the Company

Secretary who has attended all meetings

during the year.

Compliance with the Corporate

Governance Code

Establish a Nomination committee

The Board has established a Nomination

committee and its membership complies

with the Code requirements.

18 Annual re‑election of all Directors

Following the year end and having reviewed

the output from the Board effectiveness review,

it was agreed that all Directors would stand for

re-election at the Company’s AGM in July 2024.

19 Chairman’s tenure less than nine years

The Chairman was appointed to the Board

in August 2019, and his tenure is well within

the limit set out in the Code.

Open advertising/search consultancy

for NED roles

An external search consultancy was used

for the NED appointments made during 2022

and as reported last year used ISP to lead the

searches. The Nomination Committee anticipates

that this approach would be adopted for

future appointments.

L 21 and 22 see page 113

23 Work of the Nomination Committee

The work of the Nomination Committee is set out

in this report.

114

Introduction

Strategic report

Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Nomination Committee report

continued

Policy on appointments to the Board

The Committee recognises the value that

individuals from diverse backgrounds can

bring to Board deliberations. The Committee

considers diversity in its wider sense including

gender, length of tenure and nationalities.

In line with the Committee’s diversity policy,

when considering the appointment of a new

Director the Committee adopts a formal,

rigorous and transparent procedure and due

regard is given to ensuring fairness and diversity

through the consideration of skills, experience,

competencies, sector knowledge, independence

and individual characteristics. Prior to any

appointment, the Committee evaluates the

composition of the Board and, in light of that

evaluation, prepares a full description of the

role and capabilities required.

In identifying suitable candidates,

the Committee:



uses open advertising or the services of

external advisers to facilitate the search



considers candidates on merit and against

objective criteria ensuring appointees have

sufficient time to fulfil their Board and

Committee responsibilities (giving due

consideration to the Company’s

over-boarding policy described below)



considers candidates from a wide range

of backgrounds

Over‑boarding policy

The policy was adopted in 2022 and has

been applied when reviewing additional

external appointments and will be applied

to appointments to the Board. Under the

policy, Directors may hold five mandates on

publicly listed companies. For the purposes

of calculating this limit:



a non-executive directorship counts

as one mandate



a non-executive chair counts as two mandates



a position as executive director

(or a comparable role) is counted as

three mandates

The Company will consider the nature and

scope of the various appointments and the

companies concerned, and if any exceptional

circumstances exist.

Compliance with the

Corporate Governance Code

Non‑Executives have sufﬁcient time

to meet responsibilities

The Non-Executives have sufﬁcient time to meet

their responsibilities – this is supported by the

high attendance levels at the additional Board and

Committee meetings that have been arranged

during the year. The over-boarding policy

adopted by the Nomination Committee in 2022

helps ensure that Directors are not too busy

to effectively discharge their responsibilities.

Time demands considered

on new appointments

The over-boarding policy provides guidance

which means these issues can be considered

consistently and objectively. The table on this

page demonstrates that all Directors are in

compliance with the policy.

Appointments subject to a formal,

rigorous and transparent process.

An effective succession plan

should be maintained for the

Board and senior management

During the year as set out above, the Committee

undertook a review of succession plans for the

senior roles in the organisation.

K Board and Committees

have combination of skills,

experience and knowledge

The Board effectiveness reviews conﬁrmed that

the Board and Committees felt they had an

appropriate combination of skills, experience

and knowledge to discharge their functions. The

Directors’ key skills are set out in their biographies.

The table below shows tenure and total mandates held by the current Directors including their appointment to the FirstGroup Board.

Position

Members

Appointment date

End of current 3‑year term

Mandates held

Chairman

David Martin

15 August 2019

August 2025

Non-Executive Directors

Sally Cabrini

24 January 2020

January 2026

Myrtle Dawes

1 April 2022

April 2025

Claire Hawkings

1 January 2022

January 2025

Jane Lodge

30 June 2021

June 2024

Peter Lynas

30 June 2021

June 2024

Employee Director

Ant Green

15 September 2020

September 2026

Executive Directors

Graham Sutherland

16 May 2022

n/a

Ryan Mangold

31 May 2019

n/a

A non-executive directorship on a listed company counts as one mandate; a chairman of a listed company counts as two mandates and a position as an executive director counts as three mandates

Myrtle Dawes’ full-time executive role is not at a listed company but is included above as it is a full-time executive role.

115

Introduction

Strategic report

Financial statements

FirstGroup Annual Report and Accounts 2024

Governance report

Audit Committee report

Jane Lodge

Chair, Audit Committee

Main responsibilities

The primary role of the Audit Committee

is to review and monitor the integrity of

the ﬁnancial reporting by the Company,

to review the Group’s internal control

and risk management systems,

to oversee the Group’s Internal Audit

function, to oversee the relationship

with the external auditor and to report

to shareholders on its activities.

The terms of reference are available

on the Group’s website.

Committee members:

Jane Lodge (Chair)

Claire Hawkings

Peter Lynas

Dear Shareholder,

I am delighted to introduce the report from

the Audit Committee for the 53 weeks ended

30 March 2024.

The report provides an overview of the

activities undertaken by the Committee

during the year and explains the significant

issues and judgments that the Committee

considered during the year and, in particular,

when approving this Annual Report.

The Audit Committee has a key governance

role and, on behalf of the Board and

shareholders, reviews important matters

relating to financial reporting, internal controls,

risk management and compliance with

regulations and legislation.

This report provides an overview of the

Committee’s principal activities and areas

of focus during the year together with the

priorities for the year ahead. As part of the

half‑year reporting process the Committee

carefully considered, amongst other things,

an assessment that an impairment to the

investment in the bus operations was not

required, a review of the going concern

and viability assessments, a review of the

judgments associated with pensions, the

insurance and legal exposures, adjusting

items and taxation.

The primary issues considered at the year end

are set out in a table on page 118.

The work on internal controls across the

Group that was a priority for this year has

progressed well. The work is ongoing as

the new governance regulations come online

and we will continue to work on this in the

coming year.

Jane Lodge

Chair, Audit Committee

11 June 2024

Composition and

Committee attendance

The membership of the Committee is set out in

the column to the left and attendance is set out

on page 104. Jane Lodge and Peter Lynas have

recent and relevant financial experience and

the requisite competence in accounting. Claire

Hawkings, the other member of the Committee,

has the necessary skills and financial literacy

to discharge her responsibilities.

The Chairman of the Board, the Chief Executive

Officer, the Chief Financial Officer, the

Company Secretary, the Director of Finance,

the Head of Internal Audit, the Group Head

of Financial Reporting and the external

audit partner routinely attend meetings of the

Committee. In addition, others are invited to

attend all or parts of meetings as required to

provide the Committee with additional insight

on relevant matters. Other members of the

Board have an open invitation to attend

Committee meetings and they did so on a

number of occasions during the year. The

Committee holds private sessions without

management present and regularly meets with

the Internal and external auditors (again without

management present).

Summary of Committee activities

throughout the year

The Committee has an extensive agenda

of items of business focusing on financial

reporting, internal control, risk management,

internal and external audit, in addition to certain

standing matters that the Committee considers

at each meeting as well as any specific topical

items that arise during the course of the year.

Compliance with the

Corporate Governance Code

Establish an Audit Committee

The Board has established an Audit Committee.

Currently it has three members, all of whom

are independent Directors, two of whom

(Jane Lodge and Peter Lynas) have recent and

relevant ﬁnancial experience and the requisite

competence in accounting to meet the Code

requirements. The Committee believes it

has sufﬁcient sector‑relevant competence

to discharge its duties.

Committee’s role

The Committee’s role is summarised in the

report that follows. The terms of reference are

on the Company’s website. The Committee

is comfortable that its role meets the

Code requirements.

Annual Report to describe work

of Committee

This Report discharges this Code Provision.

116

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Audit Committee report

continued

During the year, the Committee fully discharged

its responsibilities under the terms of reference,

and these broadly fall under three areas:

Accounting, tax and ﬁnancial reporting



reviewed and approved the half‑year and

annual results considering the significant

accounting policies, principal estimates

and accounting judgments used in their

preparation, the transparency and clarity

of disclosures and compliance with financial

reporting standards



reviewed the basis for preparing the half‑year

and full‑year accounts on a going concern

basis with input from the external auditors



considered and approved management’s

assessment of the Group’s prospects and

longer‑term viability contained within the

Annual Report



received reports from management and

the external auditors on accounting,

financial reporting regulation and tax issues



reviewed and assessed whether the

Annual Report taken as a whole was fair,

balanced and understandable



reviewed the Non‑Audit Services Policy,

Tax Strategy, Treasury Policy and the

application of the Adjusted Items Policy



reviewed the assumptions such as future

growth rates, cash flows and discount rate

used in the impairment models and

the output from the impairment review



reviewed the non‑GAAP measures

in the Company’s reporting



reviewed the assumptions used

to calculate the pension liabilities

Internal control, risk management and

internal audit



reviewed the structure and effectiveness of

the Group’s system of risk management and

the related disclosures in the Annual Report

and financial statements



reviewed the Group’s risk management

activities undertaken by the divisions and at

Group level in order to identify, measure and

assess the Group’s principal and emerging

risks and reviewed the risk appetite statement,

developed by management, for

recommendation to the Board



approved the annual Internal Audit plan and

reviewed reports from the Internal Audit team

relating to control matters; monitored

progress against the plan and any deviations

were agreed



monitored the Group’s insurance

arrangements, insured and uninsured

claims and material litigation



reviewed plans and progress to enhance

the internal control environment ahead of

expected regulatory and legislative changes

External audit



considered and approved the scope,

audit plan, terms of engagement and fees

for the external audit work to be undertaken

in respect of FY 2024



received reports from the external auditor

on their findings during the half‑year review

and the full‑year audit



considered the objectivity and independence

of the external auditor and the effectiveness of

the external audit process, taking into account

their policies to maintain independence,

non‑audit work undertaken by the auditor

and compliance with the Company’s policy

on the provision of non‑audit services and

applicable regulations



considered and approved the letters of

representation to the external auditors



considered and recommended to the Board

the reappointment of the external auditor

at the AGM

Compliance with the

Corporate Governance Code

M Formal transparent policies to

ensure independence of audit

The auditors’ policies and the Company’s

Non‑Audit Services Policy that are regularly

reviewed by the Committee helps ensure

the independence of the auditor.

There is additional commentary on the

assessment of the internal auditor on page 121.

117

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Audit Committee report

continued

Key accounting judgments reviewed during the year/Signiﬁcant issues

The matters the Committee considers to be significant for the FY 2024 Annual Report and financial statements are as follows:

Signiﬁcant issues and judgments

How the Audit Committee addressed these issues

Pension assumptions and funding

The Group participates in a number of defined benefit pension schemes. Management exercises

significant judgement when determining the assumptions used to value the pension liabilities as

these are particularly sensitive to changes in the underlying assumptions. Scheme valuations were

conducted during the year and changes were made to the assumptions which were considered to

be in acceptable ranges.

Management engaged with external experts and the Committee considered and challenged

the assumptions used for estimating the liabilities. Sensitivity analysis was performed on the

key assumptions: inflation, discount rate and mortality. The overall liabilities were assessed

for reasonableness. Further detail on pensions is provided in note 37 in the consolidated

financial statements.

Recovery of investments in subsidiaries (parent company only)

Investments held by the parent company in subsidiary undertakings were tested for recoverability.

Management assessed discounted cash flows in the Bus division based on the final Three‑Year Plan

to March 2027 adjusted for debt and debt‑like items. The financial impact of climate change risks was

a key consideration. The investments were considered to be recoverable.

The Committee received reports from the management team and the external auditors on

the recoverability of the parent company’s investments in subsidiaries and concluded that

the assessments were reasonable.

Going concern and viability

The Group regularly prepares an assessment detailing available resources to support the going concern

assumption and the long‑term viability statements. Management concluded that the financial statements

should be prepared on a going concern basis and there were no material uncertainties which require

disclosure. We continue to provide essential services to our customers and the communities we serve

and anticipate doing so for the foreseeable future.

The Committee reviewed and challenged management’s funding forecasts and sensitivity analysis

and the impact of various possible downside scenarios, which took into account the pace of improving

operating margins in the Bus division, changes to the contract portfolio and the level of performance

fees in the Rail Division, and ESG‑related risks including climate change. Following the review, which

the Committee carried out at its meeting in June 2024, the Committee recommended to the Board the

adoption of both the going concern and viability assessment, and the related statements for inclusion

in this Annual Report.

118

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Audit Committee report

continued

Internal control framework/assurance

The Board is responsible for establishing a

framework of prudent and effective controls,

which enable risk to be assessed and

managed. Periodic review and ongoing

monitoring of risk management and internal

control frameworks are essential components

of any sound system of risk management and

internal control.

The Committee monitors the Company’s risk

management and internal control systems

and, in addition to periodic reviews by the

Committee the Board undertakes an annual

in‑depth review of the effectiveness of internal

controls including the operation of financial,

operational and compliance controls.

The Committee also guides the Board on the

nature and extent of the principal and emerging

risks the Company may be willing to take

in order to achieve its long‑term strategic

objectives. The output from this system

is the Company’s risk appetite policy,

which is subsequently reviewed by the Board.

The process the Committee applied in

reviewing the effectiveness of the system of

risk management and internal control is set out

below, together with a summary of the actions

that have been or are being taken to improve

the overall control environment.

Internal controls

The Committee receives regular updates on

the Group’s system of internal control including

progress made to the overall programme and

conclusions on the design and effectiveness

of key controls, mitigating financial, operational

and compliance risk. Management continues

to improve the standardisation, documentation

and testing of internal controls to give the

Committee greater comfort around the

effectiveness of the control environment.

During the course of the financial year, any

control weaknesses identified through the

operation of our risk management and internal

control processes were subject to monitoring

and resolution in line with our normal

business operations.

In 2024, no material control weaknesses were

identified. Overall, the Committee is satisfied

that the Group’s internal control framework

was operating effectively as at the year end.

The ongoing controls assurance programme

is progressing well to support the formal

attestation on controls effectiveness required

as part of regulatory reforms.

Enhancements to the control environment are

being implemented, and are expected to be

completed in the forthcoming financial year.

Where specific areas for improvement were

identified, mitigating alternative controls and

processes were in place. The attestation

methodology and recruitment plans are

progressing well, and an attestation system

has been developed.

The Committee will continue to oversee the

approach, scope of compliance work

undertaken and assess progress on a regular

basis. Regulatory developments will continue

to be monitored and the project plan adapted

accordingly as the landscape develops.

Risk management

The Board, through the Committee, is

responsible for determining the nature and

extent of any significant risks the Group is

willing to take in order to achieve its strategic

objectives, as well as nature and extent of the

external risk environment.

To fulfil this responsibility the Committee

oversees a Group‑wide system of risk

management and internal control that identifies

and enables management and the Board to

evaluate and manage the Group’s principal

and emerging risks. The system is tailored

to the particular needs and risks to which

the Company is exposed and is designed

to manage, rather than eliminate risk. Owing

to the limitations inherent in any system of

internal control, this system provides robust,

but not absolute, assurance against material

misstatement or loss.

The Committee assessed the Group’s risk

management methodology, which is used

to identify and manage the principal and

emerging risks, as well as the reporting and

categorisation of Group risks, and made

recommendations for improvement. Changes

were implemented with the Committee’s

oversight. See the Risk management section

of the Strategic report starting on page 85

for further information on the Group’s risk

management system.

The Committee also reviewed the process for

assessing the principal and emerging risks that

could threaten the Company’s business model,

future performance, solvency or liquidity to

make the long‑term viability statement on

page 96 and considered the appropriate period

for which the Company was viable.

The Company’s policies on financial risk

management, including the Company’s

exposure to liquidity risk, credit risk and certain

market‑based risks including foreign exchange

rates, interest rates and fuel and electricity

prices, can be found in note 25 to the

consolidated financial statements.

Compliance with the

Corporate Governance Code

Fair, balanced and understandable

assessment of prospects

The report is fair, balanced

and understandable

The Committee, on behalf of the Board, reviews

the Report to conﬁrm that they believe it to be fair,

balanced and understandable. In addition to their

own knowledge and assessment, the Committee

takes comfort from the reviews conducted by

the Executive Committee particularly in respect

of fairness and balance. The external reviews as

part of the preparation and sign‑off process give

comfort in respect of understandability.

The Board reviewed the Annual Report and

each Director conﬁrmed to the best of his or

her knowledge that the Annual Report and

Accounts, taken as a whole, is fair, balanced

and understandable and provides the information

necessary for shareholders to assess the

Company’s and the Group’s position and

performance, business model and strategy.

Procedures to oversee internal

control framework and identiﬁcation

of principal risks

The procedures are described in the columns

to the left.

28 Assessment of emerging and

principal risks

The emerging and principal risks are disclosed

in the Risk management section of the Strategic

report starting on page 85 and the assessment

process is also set out in detail in that part of

the Annual Report. The Audit Committee reviews

the detailed outputs from the work completed

by the Executive team.

Monitor risk management and

internal control

The monitoring of risks and a description of

the internal control is system is set out in the

Strategic report and also within the report from

the Audit Committee.

119

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Audit Committee report

continued

Key elements of the Group’s risk management

framework that operated throughout the

year are:



a centrally coordinated internal audit

programme to verify that policies and internal

control procedures are being correctly

implemented and to identify any risks at

an early stage



an agreed methodology for ranking the level

of risk in each of its business operations

and the principal and emerging risks



divisions identifying and reviewing their

principal and emerging risks and adequacy of

controls for monitoring and managing risks,

and reviewed by senior management



implementation of appropriate strategies to

mitigate principal and emerging risks,

including careful internal monitoring, and

ensuring external specialists are consulted

where necessary



updated divisional and Group risks, which are

reviewed by the Chief Executive Officer and

Chief Financial Officer, are presented to the

Executive Committee on a regular basis



reviewing and monitoring the confidential

reporting system to allow employees to raise

concerns about possible legal, regulatory,

financial reporting or any other improprieties



a remuneration policy for executives that

motivates them, without delivering excessive

benefits or encouraging excessive risk‑taking

Twice a year, the Board is presented with an

update for its assessment of the principal and

emerging risks facing the Group, together with

a risk map, highlighting any changes made

since the prior update and the rationale for any

changes. Each Committee that reports

regularly to the Board provides an update on

the status of risks considered within its remit.

Financial and business reporting

The Board recognises its responsibility to

present a fair, balanced and understandable

assessment of the Group’s position and

prospects in its reporting to shareholders.

This responsibility encompasses all published

information including, but not limited to, the

half‑yearly and full‑year financial statements,

regulatory news announcements and other

publicly disclosed information.

The quality of the Company’s reporting is

ensured by having procedures in place for the

review of information by management. There

are also strict procedures to determine who has

authority to release information. A statement of

the Directors’ responsibilities for preparing the

financial statements can be found on page 161.

The Group adopts a financial reporting and

information system that complies with generally

accepted accounting practice. The Group

Finance Manual details the Group’s accounting

policies and procedures with which subsidiaries

must comply. Budgets are prepared by

subsidiary company management which

are then consolidated into divisional budgets.

These are subject to review by both senior

management and the Executive Directors

followed by formal approval by the Board.

Regular forecast updates are completed

during the year and compared against actions

required. Each subsidiary unit prepares a

monthly report of operating performance with

a commentary on variances against budget

and the prior year, which is reviewed by senior

management. Similar reports are prepared

at a Group level. KPIs, both financial and

operational, are monitored on a weekly basis. In

addition, business units participate in strategic

reviews, which include consideration of

long‑term financial projections and the

evaluation of business alternatives.

Reviews of internal controls within operating

units by Internal Audit have sometimes

highlighted control weaknesses, which are

discussed with management and, where

appropriate, the Committee, and remedial

action plans are agreed. Action plans are

monitored by Internal Audit and, in some cases,

follow‑up visits to the operating entity are

conducted until such time as the controls that

have been put in place are working effectively.

No material losses, contingencies or

uncertainties that would require disclosure

in the Annual Report have been identified

during the year by this process.

The Committee, in conjunction with the

Executive team, regularly reviews and develops

the internal control environment to make

continual improvements. No significant internal

control failings were identified during the year.

Where any gaps were identified, processes

were put in place to address them and these

are monitored. In addition, as stated above,

management intends to continue to improve

the standardisation, documentation and testing

of internal controls to give the Committee

greater comfort around the effectiveness

of the control environment.

The process is designed to provide assurance

by way of cumulative assessment. It is a

risk‑based approach.

Compliance with the

Corporate Governance Code

Going concern basis of accounting

The Audit Committee considered the going

concern basis of accounting statement set out on

page 97 complies with the Code provision.

Assessment of the current position

and principal risks/Viability Statement

The principal risks are set out in the Strategic

report on pages 87 to 95, together with

a description of the processes in place.

The Viability Statement complies with the

Code Provision and is set out on page 96.

120

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Audit Committee report

continued

Internal Audit

The Internal Audit function advises

management on the extent to which systems of

internal control are adequate and effective to

manage business risk, safeguard the Group’s

resources, and ensure compliance with the

Group’s policies and legal and regulatory

requirements. It provides objective assurance

on risk and controls to senior management,

the Committee and the Board. Internal Audit’s

work is focused on the Group’s principal and

emerging risks. The mandate and programme

of work of the Internal Audit function is

considered and approved by the Committee

annually and includes a number of internal

audits and health checks across the Group’s

divisions. Findings are reported to relevant

operational management and to the Committee.

The Internal Audit function follows up on the

implementation of recommendations and

reports on progress to senior management

and to the Committee at each meeting.

The Internal Audit function is a combination of

outsourced and insourced resource. The Head

of Internal Audit reports functionally to the

Chair of the Committee and administratively to

the CFO.

The effectiveness of the Internal Audit

function’s work is continually monitored using

a variety of inputs including the ongoing audit

reports received, the Committee’s interaction

with the function’s head, an annual review of

the function’s internal quality assurance report,

a quarterly summary dashboard providing a

snapshot of the progress against the internal

audit plan tabled at each Committee meeting

as well as any other ad‑hoc quality

reporting requested.

Taking all these elements into account, the

Committee concluded that the Internal Audit

function was an effective provider of assurance

over the Company’s risks and controls

and appropriate resources were available

as required.

External audit

External auditor independence

and objectivity

PricewaterhouseCoopers LLP (PwC) were

appointed the Company’s external auditor

following a competitive tender process in 2020,

and they undertook the FY 2021 audit.

Matthew Mullins is the Senior Statutory Auditor.

The independence of the external auditor

is essential to the provision of an objective

opinion on the true and fair view presented in

the financial statements. PwC’s independence

and objectivity are safeguarded by a number

of control measures including:



limiting the nature of non‑audit services

performed by the external auditor



the external auditor’s own internal processes

to vet and approve any requests for any

non‑audit work to be performed by the

external auditor



monitoring changes in legislation related

to auditor independence and objectivity to

assist the Company to remain compliant



the rotation of the lead audit partner after

five years



independent reporting lines from the external

auditor to the Committee and ensuring the

external auditor is afforded the opportunity

for in‑camera sessions with the Committee



placing restrictions on the employment

by the Group of certain employees of

the external auditor



providing a confidential helpline that

employees can use to report any concerns,

including those relating to the relationship

between Group employees and the

external auditor



an annual review by the Committee of the

policy in place to ensure the objectivity

and independence of the external auditor

is maintained

Assessing the effectiveness

of the external audit process

The Committee, other Board members, senior

management in both the corporate functions

and within the operations and the internal audit

team evaluated PwC’s performance and the

effectiveness of the external audit process

during FY 2024. The Committee also

considered the independence and objectivity

of PwC. The following factors were considered:



the quality of the interactions between the

audit team and the Committee, other Board

members, management and those involved

in the preparation of the accounts



whether the scope of the audit and the

planning process were appropriate for the

delivery of an effective audit



the external auditor’s progress achieved

against the agreed audit plan and

communication of any changes to the plan,

including changes in perceived audit risks



the competence with which the external

auditor handled the key accounting and audit

judgments and communication of the same

with management and the Committee



the external auditor’s compliance with relevant

regulatory, ethical and professional guidance

on the rotation of partners



the expertise and resources of the external

audit team conducting the audit



whether the statutory audit contributed to

the integrity of the Group’s financial reporting

Taking into account the above factors and

feedback from management, members of

the Committee and the Board, the Committee

concluded that the external audit process and

services provided by PwC were satisfactory.

The feedback was shared with PwC and

any opportunities for improvement will

be considered and agreed.

FRC Review

The FRC conducted an Audit Quality Review

on the work of the external auditor completed

in respect of the audit work conducted on

the annual report for the 52 weeks ended

25 March 2023. There were no key findings

reported following the review. There were two

points classified as other findings and these

were addressed by PwC in respect of the

audit for the 53 weeks ended 30 March 2024.

The FRC also conducted a review of the interim

report for the period ended 30 September 2023

and made two recommendations where further

clarity could be provided. The comments have

been taken on board in respect of the Annual

Report for 2024.

121

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Audit Committee report

continued

Policy on the provision of non‑audit services

The Committee’s policy on the use of the

external auditor for non‑audit services includes

the identification of non‑audit services that may

be provided and those that are prohibited. The

policy requires that the external auditor will only

be used for non‑audit services where regulation

permits, the Group benefits in a cost‑effective

manner and the external auditor maintains

the necessary degree of independence and

objectivity. The policy provides for a cap on

fees for non‑audit work of 70% of the average

of fees paid to the audit firm over the previous

three years for audit services.

The Committee receives regular reports on all

non‑audit assignments awarded to the external

auditor and a breakdown of non‑audit fees

incurred. The Committee is satisfied that the

Company was compliant during the year with

both the Code and the FRC’s Ethical Standard

in respect of the scope and maximum

permitted level of fees incurred for non‑audit

services provided by PwC. Details of amounts

paid to the external auditor for audit and

non‑audit services for the 53 weeks ended

30 March 2024 are set out in note 6 to

the consolidated financial statements.

Tax strategy

We believe we have a responsibility to manage

our tax affairs in a way that sustainably benefits

the customers and communities we serve.

We also have a responsibility to shareholders

to ensure we pay the right amount of tax

and ensure compliance with the tax rules

in each country in which we operate. In the UK,

HMRC have categorised the Group as low risk

given our systems, processes and governance

structures. Further information on our tax

strategy, which was reviewed by the Committee

and subsequently approved by the Board in

September 2023, is available on our website.

The tax strategy is reviewed annually by

the Committee.

Compliance with the Competition

and Markets Authority Order

Pursuant to Article 7.1 of The Statutory

Audit Services for Large Companies Market

Investigation (Mandatory Use of Competitive

Tender Processes and Audit Committee

Responsibilities) Order 2014, the Company

confirms that it has complied with the

provisions during FY 2024, including Part 5

in relation to the role of the Committee.

122

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsible Business Committee report

Claire Hawkings

Chair, Responsible Business Committee

Main responsibilities

The Committee has oversight of safety,

the People strategy, environmental impact

of the Group’s activities, sustainability

and community engagement.

The terms of reference are available

on the Group’s website.

Committee members:

Claire Hawkings (Chair)

Sally Cabrini

Myrtle Dawes

Ant Green

Peter Lynas

Dear Shareholder,

Leading in environmental and social

sustainability is a key pillar within the Group’s

new business strategy, which is overseen and

led by our Responsible Business Committee.

The Committee’s remit is broad, but has key

focus areas of safety, climate and environment,

governance, disclosures and social value

covering our people, communities and broader

stakeholder groups.

The Committee ensures our responsible

business activities are supported by robust

plans and performance metrics. Performance

reports are shared with the Committee at each

meeting and provide an essential mechanism

for understanding progress and taking action.

This report focuses on the governance of the

Responsible Business Committee and the

key governance matters are set out in the

paragraphs below.

I look forward to working with the Executive

team in the coming year as we start to

implement the new four‑pillar strategy for

the Group.

Claire Hawkings

Chair, Responsible Business Committee

11 June 2024

Membership and attendance

The Committee membership is set out in

the column to the left and the attendance

records are shown on page 104.

The Company Secretary attended all meetings

during the year and, at the invitation of the

Committee Chair, the Chairman, the Chief

Executive Officer, the Group HR Director,

the Director of Corporate Responsibility,

the Divisional Managing Directors, the General

Counsel and the Head of Internal Audit

attended relevant sections of meetings to

support the work of the Committee with inputs

on their areas of responsibility or expertise.

Meetings during the year

The Responsible Business Committee met on

four occasions and in each meeting received

a report from the Chief Executive Officer on

safety matters. Senior representatives from

First Rail and First Bus attended and each

presented progress in four areas: safety,

people, environment and community.

The Committee oversees the focus on safety

performance across the Group with positive

trends in the key indicators. The Committee

received reports on significant safety matters

and reviewed the root cause investigations in

respect of significant incidents that occurred

during the year.

In addition, when the Committee met in

March and June they reviewed the Responsible

Business disclosures in the Annual Report

for 2023.

In June, the Committee received an update

on the Group safety policy and reviewed the

gender and ethnic minority diversity targets.

The Committee also received a report on

TCFD alignment and steps being taken to

develop a Group‑wide climate transition plan.

In September, the Committee received an

update on TCFD compliance and the new

Group strategy. The Committee also reviewed

the external recognition from external bodies

and areas in which to focus effort to improve

any such ratings.

In January 2024, the Committee met in

Bristol and had the opportunity to tour two

bus depots. The formal meeting covered

a follow‑up on the new Group strategy.

The Committee also reviewed the Group’s

ethnic and gender pay gap reporting.

In March 2024, the Committee reviewed and

approved safety targets for FY 2025 and

received an update on science‑based targets,

TCFD reporting and a report on our sustainable

procurement strategy.

Throughout the year, the Committee has

worked with the Remuneration Committee to

oversee the development and performance

against key performance measures that form

part of the variable remuneration of the

Executive team.

FY 2025

At the meeting in June 2024, the Committee

reviewed the Responsible Business disclosures

and the TCFD reporting. During FY 2025,

the Committee will continue to provide

oversight on safety, people strategy,

environmental impact of the Group’s

activities and our community engagement.

123

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration Committee report

Sally Cabrini

Chair, Remuneration Committee

Main responsibilities

The Remuneration Committee is primarily

responsible for determining the policy

for Executive Director remuneration

and setting the remuneration for the

Chairman, the Executive Directors

and senior management.

The Committee also reviews wider

workforce remuneration and related

policies and the alignment of incentives

and rewards with culture, taking these

into account when setting the policy

for Executive Director remuneration.

The terms of reference are available

on the Group’s website.

Membership

Sally Cabrini (Chair)

Claire Hawkings

Jane Lodge

Peter Lynas

Dear Shareholder,

I am pleased to present the Directors’

Remuneration report for the 53 weeks

ended 30 March 2024.

The Remuneration Report covers the required

regulatory information and provides further

context and insight into our pay arrangements

for Directors and other Group employees.

We set out our key decisions since last year,

the assessment of FY 2024 performance

and determination of pay, and our approach

to ensuring executive pay outcomes are

fair in the context of wider employee pay.

FY 2024 was another year of strong financial

performance for the Group, driven by continued

growth in First Bus and our First Rail open

access operations. Group adjusted operating

profit increased to £204.3m (FY 2023: £161.0m).

Passenger volumes in First Bus increased

by 7% compared to last year’s levels which

resulted in total passenger revenue of £769.1m

(FY 2023: £660.0m). Our strong cash position

has allowed us to further progress our

investment in the electrification of our First Bus

fleet and grow our portfolio of businesses.

In First Rail, open access operations

performance was ahead of expectations

underpinned by strong demand. Lumo has

now carried more than 2.5m passengers since

its launch in October 2021. WCP have been

awarded a National Rail contract with a

minimum three-year term to October 2026.

We have had another very successful year

where we have made considerable financial

progress as we continue to transform our

leading First Bus and First Rail businesses.

Our strong balance sheet puts us in a good

position to grow and create further value for

all our stakeholders and to continue to invest

to build our portfolio to ensure our business

remains profitable and resilient in the long term.

Principles

The principles that underpin the Committee’s

approach to executive remuneration are set out

in the Directors’ Remuneration Policy (see

pages 144-155) that will be put to shareholders

for approval at the 2024 AGM. As described on

page 144, after a review of the existing policy it

was determined that no material changes were

needed to support our current business

and future growth strategy. The Committee

considered the UK corporate governance

landscape, including the relevant provisions

of the UK Corporate Governance Code and the

views of our investor base in deciding FY 2024

pay outcomes and developing the 2024 Policy.

Overview of financial performance,

operating achievements

and strategic progress

FY 2024 has been a year of strong financial

performance:



Group adjusted operating profit increased

significantly to £204.3m (FY 2023: £161.0m)



FY 2024 final dividend of 4.0p recommended

in line with the progressive dividend policy



We have returned c.£118m in share buyback

programmes in FY 2024



Our strong balance sheet puts us in a

good position to grow and create value

for our shareholders



Revenue and profits from open access

rail businesses exceeded expectations

The Group has delivered strong financial

performance in FY 2024, with operating profit

and cash flow exceeding the outlook for the

year. For the 53 weeks ended 30 March 2024,

FirstGroup outperformed the FTSE 250 with

83.5% return to shareholders compared to

11.3% return from the FTSE 250 index.

As a Committee we believe it is imperative to

strike the right balance between incentivising

the management team, rewarding strong

performance and being equitable in the broader

context, taking into account the experience

of our wider stakeholders, including our

employees and shareholders.

FY 2024 Executive Annual Bonus Plan

(EABP):

The FY 2024 EABP was based 70%

on financial metrics (60% adjusted Group

operating profit, 10% adjusted Group cash

flow) and 30% on non-financial metrics

(personal objectives).

The Committee carefully considered

performance against each of the financial

and non-financial targets and then a broader

consideration of overall performance.

Achievement of operating profit and cash flow

both exceeded maximum. In respect of

personal objectives, the Committee awarded

both Graham Sutherland and Ryan Mangold

80% of maximum.

The formulaic EABP award for the Executive

Directors resulted in awards of 94%

of maximum for both Graham Sutherland and

Ryan Mangold. The Committee reviewed the

overall outcome in the context of the Group’s

underlying performance and were satisfied

with this level of payout.

Full details of targets and performance

achieved are set out on pages 131-133.

124

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration Committee report

continued

2021 LTIP:

The vesting of the LTIP granted

in 2021 was subject to the following

performance measures:



50% EPS



40% relative total shareholder return

(TSR) vs FTSE 250



7.5% zero emission (ZE) fleet transformation



2.5% carbon intensity

Performance against the 2021 measures is

as follows:



the Company delivered strong earnings

growth, with EPS of 16.7p, resulting in 100%

vesting under this element (50% of the

overall award)



relative TSR vs FTSE 250 performance was

at the 97th percentile versus the peer group,

resulting in 100% vesting under this element

(40% of the overall award)



the Company outperformed against our ZE

fleet transformation target with a total of 574

new ZE buses by 30 March 2024, resulting in

100% vesting under this element (7.5% of the

overall award)



carbon intensity outturn was lower than

expected at 157 tCO

e per £1m, resulting

in 100% vesting under this element (2.5%

of the overall award)

Therefore, the formulaic vesting of the 2021

LTIP award was 100%. The Committee carefully

reviewed the overall formulaic vesting outcome

in the context of the Group’s underlying

financial performance and were satisfied that

there was no need to exercise discretion. The

shares will be held for an additional two years

to provide alignment with our shareholders.

Full details of the 2021 LTIP are set out on

page 133-134.

2023 LTIP:

The Committee determined that

the 2023 LTIP award made to the CEO, CFO

and other senior leaders would be measured

against EPS, relative TSR and a Sustainability

Scorecard (comprising two environmental

measures), over a three-year period.

Full details of targets are set out on

pages 134-135.

Review of our Directors’

Remuneration Policy

The Committee has undertaken a thorough

review of the existing Directors’ Remuneration

Policy, which was approved at our 2021 AGM

with c.96% shareholder support. As part of our

review we engaged c.70% of our shareholders

requesting feedback on both our proposed

policy and proposed implementation for

FY 2025. The conclusion of the review

was that our existing policy fully supports our

current position as a UK-based transportation

provider and our future growth strategy.

The Committee also concluded that the policy

retains the flexibility to ensure remuneration

remains aligned to our strategy and operations.

Therefore, no material changes to our

existing policy are proposed.

The policy will be put to shareholders for

consideration at the 2024 AGM.

The full policy can be found on pages 144-155.

Remuneration for FY 2025

The Committee carefully considered base salary

increases for the Executive Directors holistically,

taking into account FY 2025 base salary

increases applied to the wider workforce and

investor guidance that base salary increases

for Executive Directors should be aligned with

those provided to the wider workforce.

Therefore, the Committee approved an increase

of 4% for Graham Sutherland and Ryan

Mangold, effective 1 April 2024. See page 137

for more information.

The Executive Directors have an opportunity

to receive a maximum of 150% (half of which

is deferred into shares for three years) of base

salary under the FY 2025 EABP. Changes from

FY 2024 include a reduction in the weighting

of the personal element from 30% to 10% and

the inclusion of a new operational scorecard

weighted at 20%.

The FY 2025 EABP is based on the

following metrics:



60% adjusted Group operating profit



10% adjusted Group cash flow



20% operational scorecard



10% personal objectives

Details on the metrics are set out on page 137.

The Committee considers the forward-looking

annual bonus targets to be commercially

sensitive, but full disclosure of targets and

performance outcome will be set out in next

year’s Annual Report on Remuneration.

It is the Committee’s intention to make awards

under the LTIP this year, and it is anticipated

that the approach regarding metrics will be

similar to the 2023 LTIP with the only change

being the addition of diversity and inclusion

metrics, aligned with our equality, diversity

and inclusion (ED&I) strategy. The 2024 LTIP

consists of 50% EPS, 30% relative TSR and

20% on an ESG Scorecard. The targets for

these awards are set out on page 137.

Remuneration fairness

As a Remuneration Committee we take our

responsibility to consider senior team pay in

the context of wider workforce pay, policies

and practices, and a number of items are

tabled at Committee meetings every year to

ensure the approach throughout the Group

is fair, particularly during the cost of

living crisis.

The ‘Remuneration in context’ section of the

report on pages 128-129 provides a summary

of the items and the factors that the Committee

considers when making executive reward

decisions as well as support we have provided

to our employees during the cost of living crisis.

What the Remuneration Committee

has looked at in the last 12 months

The Committee has:



conducted a thorough review of the

Remuneration Policy, that is being put

to shareholders for approval at the 2024

AGM, including engaging in a shareholder

consultation process with c.70% of

our shareholders



approved FY 2024 EABP payout for Executive

Directors and other senior employees



determined the vesting of the 2021 LTIP



reviewed and approved the FY 2023 Directors’

Remuneration report



approved the 2023 LTIP awards



agreed FY 2025 EABP approach



reviewed the 2023 gender and ethnic pay gap

reporting ahead of publication



reviewed wider workforce remuneration

and related policies



approved the launch of the 2023 SAYE



reviewed its terms of reference

125

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Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration Committee report

continued

Governance

The Committee actively monitors developments

in corporate governance and the guidelines

produced by shareholders and their

representative bodies.

Our Group Employee Director is encouraged

to attend all Committee meetings, and regularly

does so. I also periodically attend meetings

of the Employee Directors’ Forum to hear

directly from our network of Employee

Directors. In these meetings I explain how

executive remuneration aligns with wider

workforce pay and Employee Directors have

the opportunity to ask questions about last

year’s Directors’ Remuneration Report.

We have provided further details on our

approach to pay throughout the Group

on pages 128-129.

In conclusion

We will continue to monitor governance

developments and are committed to

maintaining an open and transparent

dialogue with our shareholders on executive

remuneration. We consider ongoing

engagement to be vital in ensuring that our

approach to remuneration continues to be

aligned with the long-term interests of the

Group’s shareholders and wider stakeholders.

We welcome the feedback received during

the year and hope to receive your support

at our upcoming AGM.

Sally Cabrini

Chair, Remuneration Committee

126

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration at a glance

This section summarises the pay our Executive Directors received in FY 2024.

FY 2024 single figure total

remuneration (£’000s)

Read more on pages 130-134

CEO

CFO

* Graham Sutherland, the CEO, joined on

16 May 2022, therefore does not have an

LTIP vesting in 2024.

Shareholding requirement –

progress in FY 2024

Requirement:

200

of base salary

At 30 March 2024

CEO

116%

CFO

589%

Key remuneration outcomes

for FY 2024

FY 2024 Executive Annual Bonus Plan (EABP)

2021 Long-Term Incentive Plan (LTIP) vesting outcome

Weighting Measure

Threshold

(0% payment)

Target

(50% payment)

Maximum

(100% payment)

Outcome

as % of

maximum

award

Link to

strategy

60%

Adjusted Group operating proﬁt

60%

Target

105.8

117.5

135.1

Performance

10%

Adjusted Group cash ﬂow

10%

Target

(3.5)

12.8

38.2

Performance

30%

Personal objectives

Target

50%

100%

CEO

24%

CFO

24%

Total bonus achieved (as % of maximum)

CEO

94.0% (141.0% of base salary)

CFO

94.0% (141.0% of base salary)

Weighting Measure

Threshold

(0% payment)

Maximum

(100% payment)

Outcome

as % of

maximum

award

Link to

strategy

50%

EPS

50%

Target

5.8

9.9

Performance

40%

Relative TSR

40%

Target

Median

Upper Quartile

Performance

7.5%

ZE Fleet

7.5%

Target

260

400

Performance

2.5%

Carbon intensity

2.5%

Target

221 tCO

/£1m

212 tCO

/£1m

Performance

Total (as % of maximum)

100%

£156.6m

£67.7m

80%

97th percentile

574

157

16.7p

Spend on pay

Expenditure on pay vs

distributions to shareholders

Key to our strategic pillars

Deliver day

in, day out

Diversify

our portfolio

Lead in environmental

and social sustainability

Drive

modal shift

£1,398

£2,857

Base salary

41%

Pensions

and beneﬁts

EABP

57%

LTIP

n/a*

Executive

Directors’ pay

0.3%

Total employee

pay

91.3%

Distributions to

shareholders

8.4%

Base salary

17%

Pensions

and beneﬁts

EABP

23%

LTIP

57%

127

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration in context

In setting the remuneration for Executive

Directors, the Committee takes account of the

overall approach to rewarding other employees

in the Group. Due to the varied nature of the

operations of our divisions and their respective

employment markets, we have a range of

remuneration practices across the organisation.

These are designed to be relevant to each

individual market. Almost 85% of our

employees are covered by collective

bargaining arrangements.

A number of items are tabled at Committee

meetings each year to ensure the approach

throughout the organisation is consistent

and fair:



report summarising wider workforce pay

policies and practices with updates provided

on a regular basis



Gender and ethnicity pay gap reports

including statistics from each

UK reporting entity



actions management are taking to improve

diversity in the workforce and close pay gaps

where they exist



CEO pay ratio and underlying statistics

The table on page 129 (Wider workforce

remuneration) summarises the FirstGroup

approach to pay. The main difference between

the structure of our most senior employees’

remuneration and that of the wider workforce

is that senior employee remuneration is more

heavily weighted to variable pay, that is linked

to business performance.

Treating our people fairly

Effective 1 April 2024, First Bus became a

Real Living Wage employer. This commitment

impacted c.1,300 colleagues who received

a pay increase in line with this commitment.

First Bus have also committed to go beyond the

accreditation requirements and pay all

apprentices the Real Living Wage within

18 months of 1 April 2024.

The approach to pay rises for non-collectively

bargained employees in First Bus has been

to skew the salary increase budget to have a

greater impact on lower earners in recent years.

For FY 2023, First Bus applied a flat increase

to base salary in order to have a greater impact

on lower earners for FY 2023. For FY 2024,

non-collectively bargained colleagues in

First Bus received an increase of 3% + £800,

for an average base salary increase of c.5.2%.

For FY 2025, non-collectively bargained

colleagues in First Bus received an increase

of 4%. Depending on participation in our annual

bonus schemes, colleagues also received a

flat increase of up to £800 in addition to the

4% increase. For the collectively bargained

population, average increases in FY 2023

were over 7% and in FY 2024 were c.8%.

In First Rail, offers have been made for pay

increases for FY 2023 and FY 2024 of 9%

(i.e. 5% for FY 2023 (minimum of £1,750

increase) and 4% for FY 2024). These increases

have been implemented for our non-collectively

bargained population and collectively

bargained populations where an agreement has

been reached. At the time of publication Aslef,

who represent train drivers, have not put

their pay offers for FY 2023 or FY 2024 to their

members, but we remain open and willing to

engage in national level talks to resolve the

dispute. FY 2023 pay increases were made for

members of RMT, TSSA and Unite; FY 2024 pay

increases are currently in progress.

We also offer other benefits to our employees

to support them through the cost of living crisis,

including extensive retail discounts through our

shopping portal, discounts of 4-5% at several

large supermarkets. In 2023, colleagues saved

over £590,000 on their shopping bills.

For FY 2024, we relaunched the Save as You

Earn (SAYE) scheme, which allows colleagues

to purchase discounted shares at the end of

a three-year savings contract. We had a high

acceptance rate for the SAYE scheme with

applications for about 15.6 million options

from over 3,450 applicants and will be

launching the scheme again for FY 2025.

TOCs provide free travel for employees

and their families across their own network.

First Bus provides employees and their families

with free travel on the First Bus network. All

employees, regardless of employer, receive

discounted rail travel across our network.

All employees have access to our Employee

Assistance Programme, which among other

things, provides free, individual and

confidential financial advice.

In FY 2024, First Bus ran a series of Financial

Wellbeing webinars to offer support around the

cost of living crisis. We have also introduced

two new healthcare benefit schemes that are

available to all of our First Bus colleagues.

The SimplyHealth scheme allows First Bus

colleagues to claim back healthcare costs,

including optical, dental and muscular health

as well as contributions for health diagnostics.

The SmartHealth scheme is a free app that

provides access to a number of services,

including GP appointments, mental health

support, second medical opinion, nutrition

advice, fitness plans and health checks.

Employee engagement

While the Committee does not formally

consult with employees on Executive Director

remuneration, a number of different

mechanisms are in place to gather feedback

and insights from employees across a range

of issues.

Information on how we engage our employees

is set out on page 99.

The Group also engages with its workforce

through our Employee Directors and the Group

Employee Director is invited to attend all of the

Committee’s meetings, and regularly does so.

Our Committee Chair, Sally Cabrini, will also

periodically attend the Employee Director

Forum meetings to explain how executive

remuneration aligns with wider workforce pay

and answer questions on last years’ Directors’

Remuneration report. More information on the

role of our Group Employee Director is set out

on page 105.

The Committee believes that it is important

for our employees to understand how the

remuneration of our Executive Directors

is determined and utilises the different

communication channels operating across

the Group to ensure our employees are aware

of the information available in the Directors’

Remuneration report.

128

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration in context

continued

Wider workforce remuneration

Eligibility

Element

Definition

All employees

(c.31,000)

Base salary



Base salaries are reviewed annually



When considering salary for Executive Directors and Executive Committee members, the Committee considers increases available

to the wider workforce

Pension



We are committed to helping our colleagues save for retirement through a variety of Company pension arrangements, designed in

line with market practice. We operate a number of different pension plans that reflect the history and requirements of our various

businesses. See page 130 for more information on the average pension contribution

All employee share scheme



All UK employees with at least six months of service are eligible to participate in our HMRC approved all employee share plans.

Under SAYE eligible employees can make monthly savings over a period of three years with the option to purchase FirstGroup

shares at a discount of up to 20% of the market value of shares on grant. Under Buy as You Earn, our Share Incentive Plan (SIP),

eligible employees can purchase shares from their pre-tax salary and become shareholders in the Company

Beneﬁts



Our Employee Assistance Programme offers all employees access to free, 24/7 confidential telephone, online and face-to-face

advice for problems they may be experiencing at home or work. Other benefits include discounted travel on our rail and bus

services, discounts on shopping, entertainment and eating out



Our larger businesses have dedicated in-house Occupational Health teams and our other businesses use external specialist

advisers to support employees with health problems that may affect performance



All divisions run workplace health and wellbeing programmes to support employees in staying fit and healthy

Senior executives

and management

(c. 1,100)

Annual bonus



Senior executives and management population – incentivises successful execution of our business strategy and operational goals

with participants including both corporate centre and divisional roles



Our TOC businesses also offer commission schemes for Customer Hosts, Guards and Revenue Protection staff to drive revenue

Senior executives

(c. 150)

LTIP



Senior executives with sufficient line of sight to drive long-term sustained value creation for our shareholders

Executive Committee

and Executive Directors

(5)

Shareholding guidelines



Senior executives ensuring alignment with the shareholder experience

Strategic alignment of remuneration

The table below sets out how each of the performance metrics used in our incentive plans for FY

2025 are aligned to the Company’s strategy. See pages 17-29 for more information on our strategy.

Measure

Deliver

day in, day out

Diversify

our portfolio

Lead in

environmental

and social

sustainability

Drive

modal shift

EABP

Adjusted Group operating proﬁt

Adjusted Group cash ﬂow

Operational performance

Personal objectives

LTIP

EPS

Relative TSR

ESG Scorecard

The Remuneration Committee makes a holistic safety assessment at year end which can reduce the formulaic outturn to reflect

safety performance.

129

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Annual report on remuneration

The annual report on remuneration sets out



Directors’ remuneration for FY 2024, pages 130-136



the statement of the planned implementation of policy in FY 2025, page 137

This part of the Directors’ Remuneration report has been prepared in accordance with Part 3 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

(as amended) and Rule 9.8.6 of the Listing Rules. The annual report on remuneration and Chair’s statement will be put to an advisory shareholder vote at the 2024 AGM.

Single total figure of remuneration for Executive Directors (audited)

Salaries

Taxable

Benefits

Pension

Total fixed

remuneration

Annual Bonus

cash

Annual Bonus

value of

deferred

LTIP

2,3

Other

Total

variable

remuneration

Total

remuneration

Graham Sutherland – CEO

FY 2024 £’000s

567

596

399

–

802

1,398

FY 2023 £’000s

484

509

341

–

682

1,191

Ryan Mangold – CFO

FY 2024 £’000s

475

560

335

1,623

2,297

2,857

FY 2023 £’000s

461

544

325

2,312

–

2,962

3,506

Graham Sutherland was appointed to the Board as Chief Executive Officer on 16 May 2022 with an annual base salary of £550,000. Graham Sutherland did not receive any payments in relation to recruitment remuneration, including any buyout awards.

Graham Sutherland’s FY 2023 bonus has been pro-rated based on the date he was appointed to the Board.

The value of the 2021 LTIP, which has a three-year performance period ending 30 March 2024, was calculated using the average share price for the period of 1 January to 30 March 2024 (167.28p). In line with reporting requirements, the LTIP values include

dividend equivalent amounts of £59,794 for the Chief Financial Officer, and £775,354 of the value for the Chief Financial Officer at vesting is attributed to share price growth as the share price at award was 84.29p in 2021.

The value for FY 2023 relates to the 2020 LTIP which had a three-year performance period ending 25 March 2023. As a result of the downwards adjustment of 10%, 88.4% of the award vested in June 2023. The value of the 2020 LTIP reported in the 2023 report

(£1,877,592) was an estimate based on the average share price over the last three months of FY 2023 (106.3p). The actual value of the 2020 LTIP on the 8 June 2023 vesting date was £2,312,450 (based on adjusted closing share price of 131.31p); this includes

dividend equivalents of £34,681.

Graham Sutherland and Ryan Mangold both participate in the 2023 SAYE scheme, more detail on the scheme can be found on page 129. The value of their options under the 2023 scheme has been valued as the number of options subscribed for, multiplied by

the difference between the closing share price on the date before grant (£137.6p) and the option price (£111.0p) which is a 20% discount.

More detail can be found on pages 130-134.

Benefits (audited)

Benefits for Executive Directors include the provision of a company car allowance and private medical cover. Graham Sutherland’s benefits for the year comprised £604 for UK private medical

insurance. Ryan Mangold’s benefits for the year comprised a £12,000 car allowance and £1,509 for UK private medical insurance.

Pension (audited)

Graham Sutherland received a pension allowance of 5% of his base salary, £28,325. Ryan Mangold received a pension allowance of 15% of his base salary, £71,280. The average pension benefit

for the wider workforce is in excess of 15% of base salary.

No Director has a prospective benefit under a defined benefit pension.

We operate a number of different pension arrangements across the Group including defined benefit pension schemes. Over 60% of our UK workforce are in a defined benefit pension with the remainder in defined contribution schemes on varying rates.

130

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

FY 2024 performance and reward decisions

As a Committee, we believe it is imperative to strike the right balance between incentivising the management team, rewarding strong performance, and being equitable in the broader context.

When assessing the performance of the Executive Directors, the Remuneration Committee takes a broad view of financial performance delivered, the shareholder experience and the outcome for

the Company’s stakeholders, including customers, employees and the communities in which we operate. When considering remuneration outcomes, the Committee takes into account performance

against specific metrics on safety, including workplace fatalities and injuries, and customer satisfaction, as well as environmental, social and governance matters such as significant environmental

incidents, large or serial fines or sanctions from regulatory bodies, and significant adverse legal judgments or settlements. The Committee has broad discretion to ensure incentive outcomes

are appropriate.

FY 2024 Executive Directors’ annual bonus

For FY 2024, the annual bonus maximum opportunity was 150% of salary for both Executive Directors. As in previous years, the EABP aimed to incentivise improved performance against a range of

financial and non-financial metrics. The structure of the bonus was weighted so that 70% was based on financial metrics and 30% on non-financial metrics. The Committee retains overriding discretion

to adjust the overall bonus outturn (including to £nil) if a serious safety failing or deterioration is identified.

The chart below sets out the targets, performance achieved and corresponding bonus outturns on a formulaic basis against the financial and qualitative targets.

FY 2024 annual bonus outcome (audited)

Measure

Weighting

Threshold

Maximum

Actual Result

Bonus Achievement

Payout %

Adjusted Group operating profit (Pre-IFRS 16 basis)

60%

£105.8m

£135.1m

£156.6m

100%

60%

Adjusted Group cash flow

10%

£(3.5)m

£38.2m

£67.7m

100%

10%

Personal objectives

30%

N/A

See below

80%

24%

Adjusted Group operating profit is assessed on a pre-IFRS 16 basis as this more appropriately reflects the underlying risk given that the majority of IFRS 16 impacts are not for our account. Pre-IFRS 16 basis is readily understood by management teams and is

used in banking covenants. Group operating profit post-IFRS 16 is £204.3m. See note 4 for the reconciliation.

Group adjusted cash flow is assessed from continuing operations on a pre-IFRS 16 basis. It excludes growth investments (-£20.7m), Employee Benefit Trust share purchases (-£16.8m), interest & tax (-£5.1m), transit earnout from North America (+£67.6m),

Hitachi joint venture (+£15.1m), dividends to shareholders and non-controlling interests (-£36m) and share buyback (-£117.6m).

Graham Sutherland

Objectives

Performance Assessment

Reﬁne Group strategy/equity story including a capital markets day (or equivalent) and take steps

to reshape the ﬁnancial footprint of the Group through M&A, organic growth, decarbonisation,

and shareholder capital returns.

Refreshed Group strategy presented and endorsed by the Board. Four strategic pillars introduced to guide

decision-making and investment prioritisation across the Group. Introduced two events in the investor

relations calendar covering First Bus and First Rail strategies. Acquisition of York Pullman and integration

of acquisitions completed in FY 2023. Shareholder capital returns progressed returning c. £115m to

shareholders in FY 2024. Signiﬁcant work completed to enhance Bus and Rail development pipeline.

Monitor and ﬁnalise completion of US residual separation issues including First Transit earnout.

First Transit earnout completed. Now largely de-risked in North America.

Enhance the Group’s business continuity plans and execution capability in light of the increasing

threat levels from geo-political change and cyber attacks.

Signiﬁcant progress in cyber security defences through incremental protection investments.

Further review of Group talent and succession plans to be presented to the Board.

Full review of Group talent and succession plans including a robust view of the top leaders in the

organisation and respective development needs.

Demonstrate personal leadership of action to protect customers and employees from health and safety

risks and continue to improve our health and safety culture.

Regular private meetings with safety leads in both divisions to review safety KPIs and discuss individual

incidents and key learnings.

Deliver NRCs for WCP on a long-term contract, in line with current Government policy.

The WCP NRC was delivered with a 3+6 contract achieved to October 2032, with the ﬁrst potential risk

in October 2026.

Annual report on remuneration

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Graham Sutherland continued

Objectives

Performance Assessment

Demonstrate progress against all ESG targets and commitments to ensure the Group moves towards

a leadership position in the Transport sector.

Scope 1 & 2 emissions reduced by c.27%. Signiﬁcant improvement on ZE buses (13% of ﬂeet) and depot

electriﬁcation. On track for net zero 2035 commitment.

Demonstrate leadership and progress on D&I commitments that have been agreed by the Board.

Set D&I targets at the Board. In FY 2024 women in senior leadership roles increased from 33% to 35%.

Bonus Achievement for Graham Sutherland

80%

Payout % for Graham Sutherland

24%

Ryan Mangold

Objectives

Performance Assessment

Progress the equity story for the Group, including a capital markets day (or equivalent), and take steps to

reshape the ﬁnancial footprint of the Group through M&A, organic growth, or shareholder capital returns.

Introduced two events in the investor relations calendar covering First Bus and First Rail strategies.

Acquisition of York Pullman and integration of acquisitions completed in FY 2023. Shareholder capital

returns progressed returning c. £115m to shareholders in FY 2024. Signiﬁcant work completed to enhance

Bus and Rail development pipeline.

Implement the Hitachi Zero Carbon JV and explore opportunities from the strategic partnership.

Completed the £100m and 1000 EV bus battery JV with Hitachi that included an innovative ﬁnancing

structure allowing for future beneﬁt from battery residual value and the opportunity to beneﬁt from the

strategic partnership through the 5% warrants held in Hitachi Zero Carbon.

Progress the Group and Bus pension scheme merger to facilitate operating efﬁciencies and reduce costs.

Merger completed. Exit from LGPS and removed liability.

Exit strategy of remaining two Greyhound USA real estate assets and ensure the collection of CARES

and ARP attributable to the Group as covered under the SPA with Flix.

Successful collection of the outstanding CARES and ARP above expectations.

Finalise the First Transit earnout.

Completed the negotiation and settlement of First Transit.

Demonstrate personal leadership of action to protect customers and employees from health and safety

risks and continue to improve our health and safety culture.

Key focus on health and safety in Business Review Meetings and other forums in reviewing Health, Safety

and Environment to reinforce the importance in this area.

Deliver NRCs for WCP on a long-term contract, in line with current Government policy and support further

growth and sustainability in Afﬁliate Contracts.

The WCP NRC was delivered with a 3+6 contract achieved to October 2032, with the ﬁrst potential risk in

October 2026.

Ensure strong ﬁnancial and legal management on the exit of TPE contract.

TPE exited with smooth transition to the OLR, retaining all afﬁliate business.

Demonstrate leadership and progress on D&I commitments that have been agreed by the Board.

Diversity in the ﬁnance team is higher than before. Mentoring a participant from our Reach Forward programme.

Bonus Achievement for Ryan Mangold

80%

Payout % for Ryan Mangold

24%

As noted in the Chief Executive Officer’s review, performance on the financial measures was strong for the Group as a whole. There was also strong performance in respect of the non-financial measures

(as detailed above). The Committee determined that Graham and Ryan had delivered their personal objectives to a high standard. The Committee accordingly awarded both Graham Sutherland and

Ryan Mangold 24% out of a possible 30% for their personal objectives.

Taking into account the above outcomes, the formulaic EABP award for both Graham Sutherland and Ryan Mangold resulted in a potential award of 141% of the maximum. The Committee considered

this formulaic performance in the context of the Group’s wider performance and decided that it did not need to exercise any discretion to reduce this outcome. Under the approved policy, 50% of the

award is normally paid in cash with 50% deferred into shares (deferred share awards vest after three years, subject to continued employment, and are not subject to any further

performance conditions).

Annual report on remuneration

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Financial statements

FirstGroup Annual Report and Accounts 2024

The overall bonus payout for FY 2024 was therefore as follows:

Graham Sutherland

Ryan Mangold

Maximum EABP opportunity (% of salary)

150%

EABP Achieved (as % of maximum)

94%

EABP (% of salary)

141%

Total EABP

£798,765

£670,032

EABP – Cash

£399,382

£335,016

EABP – Deferred Shares

£399,383

£335,016

Long-Term Incentive Plan

The vesting of 2021 LTIP awards was subject to achieving the following performance conditions over a three-year performance period ending 30 March 2024.

Vesting of 2021 Long-Term Incentive Awards (audited)

Metrics

Weighting

Outturn

Threshold:

20%

Maximum:

100%

% of award

which vested

EPS

50%

16.7p

<5.8p

5.8p

9.9p

100%

Relative TSR vs FTSE 250

40%

97th percentile

<Median

Median

Upper quartile

100%

Sustainability Scorecard

ZE Fleet (# vehicles)

7.5%

574

<260

260

400

100%

Carbon intensity (tCO

e per £1m)

2.5%

157

>221

221

212

100%

Total

100%

As disclosed in the 2021 report, the Committee decided to delay 2021 LTIP target setting to allow adequate time to better understand uncertainties around the impact of Covid-19 on the wider

economy and our business and the impact and timing of the sales of our North American businesses.

The 2021 LTIP absolute EPS target was set reflecting the current portfolio (comprising only First Bus and First Rail), therefore, no adjustment was required in respect of the disposals. However,

the tender offer that took place in December 2021 reduced the number of shares in issue compared to when the EPS target was set in November 2021. Therefore, in line with market practice,

the EPS targets were restated in order to ensure the EPS targets retain the same level of stretch as before the tender offer. The adjusted targets are shown in the table above and were also disclosed

in the 2022 report.

Beginning with the 2021 LTIP, ESG measures have been introduced as part of a Sustainability Scorecard, with the Committee selecting a measure relating to progress in transforming our First Bus

fleets through the deployment of zero emissions technology, which will have the most significant impact on reducing our carbon air pollution emissions, and an emissions measure (Carbon Intensity

as tonnes of CO

equivalent per £1m of revenue) which measures performance across our whole business in a way that allows a single measure to be used for both First Bus and First Rail operations

and allows for like-for-like comparisons across peer companies and industries. In selecting the measures for use in the Sustainability Scorecard, the Committee considered it important to choose those

which most closely aligned with our strategy and investment case, and selected metrics that are quantifiable and capable of being independently verified. Both of these measures meet these tests and

are tracked, measured and reported to our banking partners as part of the Company’s sustainability-linked revolving credit facility.

Annual report on remuneration

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Financial statements

FirstGroup Annual Report and Accounts 2024

As a result of this outcome, awards vested as follows:

Executive Director

Total number of

shares granted

Proportion of

award vesting

(% max)

Face value of

shares vesting

(£’000)

Value attributable

to share price

movement

(£’000)

Value of

dividend

equivalents due

(£’000)

Value of

resultant

award

(£’000)

Chief Financial Officer

934,274

100%

£1,563

£775

£60

£1,623

The face value of the 2021 LTIP at vesting has been calculated based on the average share price over the last three months of FY 2024 (167.28p).

£775,354 of the value for the Chief Financial Officer at vesting is attributed to share price growth. The share price at award was 84.29p in 2021.

Long-Term Incentive Awards made during the year

The Committee determined that the 2023 awards would be measured against EPS, relative TSR and a Sustainability Scorecard (comprising two environmental measures), over a three-year period.

The measures of the 2023 LTIP are consistent with the 2022 and 2021 LTIP. The only difference is the emissions reduction measure in the 2023 and 2022 LTIP is aligned with the Science Based Target

(SBT), set during FY 2022, for a reduction in our Scope 1 and 2 emissions.

Emissions reduction aligned to our SBT will become the main emissions metric that we report on and a key performance indicator for the Group. In addition, we consider that using an absolute carbon

reduction metric is ultimately more appropriate than a carbon intensity measure, on the basis that the latter is affected by changes in revenue as well as carbon performance. As was the case with the

previous measure, the Scope 1 and 2 emissions reduction targets are quantifiable, capable of being independently verified and are closely aligned with our strategy and investment case.

Both of our sustainability measures will be tracked, measured and reported to our banking partners as part of the Company’s sustainability-linked revolving credit facility.

Awards were made in June 2023 and are subject to an additional two-year holding period as well as malus and clawback. Before an award vests, the Committee must be satisfied that the underlying

performance of the Group is satisfactory and has the ability to amend the formulaic vesting outcome if they believe this is appropriate. The Committee believes that having a performance override is an

important feature of the plan, as it mitigates the risk of unwarranted vesting outcomes.

Details of the performance metrics, targets and comparator group for the 2023 LTIP awards are set out below.

2023 Long-Term Incentive Plan performance metrics (audited)

Sustainability Scorecard

Adjusted EPS

Relative TSR vs

FTSE 250

Additional ZE

buses

in service/on order

by 31 March 2026

Scope 1&2 emissions

(tCO

reduction

Weighting

50%

35%

7.5%

Threshold (20% vesting)

12.1p

Median

600

12%

Maximum (100% vesting)

15.7p

Upper quartile

850

15%

Vesting will be on a straight-line basis between threshold and maximum.

EPS will be assessed on a pre-IFRS 16 basis as this aligns with how performance is measured internally and is most readily understood by management teams (adjusted Group operating profit in the EABP is measured on a pre-IFRS 16 basis for the same

reason). A reconciliation from IAS17 to post-IFRS 16 EPS will be included in the FY 2026 Directors’ Remuneration report so to provide clarity between the LTIP targets and achievement relative to the reported EPS on a statutory basis.

Relative TSR will be assessed against the FTSE 250 Index, excluding investment trusts.

4 Zero emission.

Tonnes of carbon dioxide equivalent (tCO

e) per £1m of revenue.

From SBT base year 2020.

An LTIP award of 200% and 175% of salary were granted to Graham Sutherland and Ryan Mangold, respectively, on 9 June 2023.

Annual report on remuneration

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Financial statements

FirstGroup Annual Report and Accounts 2024

2023 Long-Term Incentive Plan grants (audited)

Details of Graham Sutherland’s and Ryan Mangold’s awards (granted in the form of conditional share awards) are set out below:

Executive Director

Share price

at date of grant

Face value

(% of base salary)

Number

of shares

awarded

Face value

of award

% of award

which vests

at threshold

Performance

period

Graham Sutherland

135.2p

200%

838,017

£1,133,000

20%

1.4.23 – 31.3.26

Ryan Mangold

135.2p

175%

615,088

£ 831,600

20% 1.4.23 – 31.3.26

The share price at grant for the LTIP awards is closing mid-market share price for the day preceding the grant date.

As is normal practice, the Committee will ensure that any vesting is appropriate in the context of underlying financial performance and the experience of our wider stakeholders. The Committee retains

the ability to apply discretion in the event that the value at vesting is considered to be an unjustified windfall gain taking into account the performance of the Group.

Directorate changes

No directorate changes were made during FY 2024.

Payments for loss of office (audited)

No payments for loss of office were made during FY 2024.

Payments to past Directors (audited)

No payments to past Directors were made during FY 2024.

Performance graphs

The graph below shows the TSR performance of £100 invested in FirstGroup plc shares over the past ten years compared to an equivalent investment in the FTSE 250. The FTSE 250 Index has been

selected as it provides an established and broad-based index, of which the Company is a constituent.

31/03/14

31/03/15

31/03/16

31/03/17

31/03/18

31/03/19

31/03/20

31/03/21

31/03/22

31/03/23

31/03/24

100

150

FirstGroup plc

Total shareholder return

FTSE 250 Index

TSR is measured according to a return index calculated by Thomson Reuters Datastream on the basis that all the Company’s dividends are reinvested in the Company’s shares. The return is the

percentage increase in the Company’s index over the ten-year period.

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration of the Chief Executive Officer

The table below shows the total remuneration figure for the Chief Executive Officer, during each of the past ten years. The total remuneration figure includes the annual bonus and LTIP awards that

vested based on performance in those years. The annual bonus percentages show the payout for each year as a percentage of the maximum.

2015

2016

2017

2018

2019

(Tim

O’Toole)

2019

(Wolfhart

Hauser)

2019

(Matthew

Gregory)

2020

2021

2022

(Matthew

Gregory)

2022

(David

Martin)

2023

(David

Martin)

2023

(Graham

Sutherland)

2024

Total remuneration (£’000s)

1,647

1,243

1,267

1,100

175

266

422

788

840

2,246

320

134

1,191

1,398

EABP (% of maximum potential)

15.9

–

N/A

33.4

–

N/A

LTIP vesting (% of maximum potential)

–

16.3

–

N/A

12.5

14.6

88.5

N/A

–

No EABP was paid to Tim O’Toole in 2017, he received a conditional deferred share award instead.

No EABP was paid to Tim O’Toole in 2018.

Remuneration for Tim O’Toole until he stepped down as CEO on 31 May 2018. Tim O’Toole was not eligible for an annual bonus or LTIP awards.

Remuneration for Wolfhart Hauser for his period as Executive Chairman, 1 June to 12 November 2018. Wolfhart Hauser was not eligible for EABP or LTIP awards.

Remuneration for Matthew Gregory as Chief Executive from 13 November 2018 to 31 March 2019.

Remuneration for Matthew Gregory as Chief Executive from 1 April 2021 to 13 September 2021.

Remuneration for David Martin for his period as Interim Executive Chairman from 13 September 2021. David Martin was not eligible for EABP or LTIP awards.

Remuneration for David Martin for his period as Interim Executive Chairman until 30 June 2022. David Martin was not eligible for EABP or LTIP awards.

Remuneration of Graham Sutherland from his appointment as Chief Executive Officer on 16 May 2022. Salary and EABP have been pro-rated for time served.

Non-Executive Directors’ (NEDs’) and Chairman’s fees (audited)

Having not increased NEDs’ or Chairman’s fees since 2019, we conducted a market review of both NEDs’ and Chairman’s fees in FY 2024. As a result, for FY 2024 NEDs’ fees were increased by 3%.

That is, for FY 2024 NEDs’ fees were £59,740 p.a. with additional fees of £12,360 p.a. payable to the Senior Independent Director and the Chairs of the Audit, Responsible Business, and

Remuneration Committees. No changes to the Chairman’s fees were made in FY 2024.

FY 2024

FY 2023

£’000

Basic Fee

Committee

Chair

SID

Taxable

Benefits

Total

Basic Fee

Committee

Chair

SID

Taxable

Benefits

Total

David Martin

310

–

340

366

–

418

Sally Cabrini

–

Myrtle Dawes

–

Claire Hawkings

–

Jane Lodge

–

Peter Lynas

–

Anthony Green

–

The Company meets all reasonable travel, subsistence, accommodation and other expenses, including any tax where such expenses are deemed taxable, incurred by the Chairman and NEDs in the course of performing their duties.

David Martin’s basic fee in FY 2023 includes the additional fee of £225,000 p.a. he was paid for his role as Executive Chairman in FY 2023 (from 1 April 2022 to 30 June 2022). When he returned to the role of Non-Executive Chairman his fee returned to £310,000p.a.

Anthony Green was appointed as Group Employee Director on 15 September 2020. In addition to his fee as Group Employee Director, Anthony Green received earnings from the Group as an employee amounting to £24,898 in FY 2023 and £29,810 in FY 2024.

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Financial statements

FirstGroup Annual Report and Accounts 2024

Implementation of Remuneration Policy for FY 2025

Annual base salary

The Committee carefully considered base salary increases for the Executive Directors holistically,

taking into account FY 2025 base salary increases applied to the wider workforce (see page 128 for

more information), investor guidance, the Group’s strong performance in FY 2024 as well as the

macroeconomic environment, including relatively high rates of inflation experienced during FY 2024.

The Committee decided it would be appropriate to award a base salary increase of 4% for

Graham Sutherland and Ryan Mangold, increasing their base salary to £589,200 and £494,300,

respectively, from 1 April 2024.

FY 2025 Executive Directors’ annual bonus

For FY 2025, the EABP will continue to incentivise improved performance against a range of

financial and non-financial metrics. The financial targets are set by the Committee based on a

number of factors such as the Group’s business plan, individual business unit level performance,

consensus and expectations for FY 2025. Changes from FY 2024 include a reduction in the

weighting of the personal element from 30% to 10% and the inclusion of an operational scorecard

weighted at 20%. The precise measures under the operational scorecard may change each year

depending on annual business priorities. The performance measures for FY 2025 are:

Measure

Weighting

Adjusted Group operating profit (pre-IFRS 16)

60%

Adjusted Group cash flow

10%

Operational scorecard:

First Bus Net Promoter score

3.5%

First Bus Employee engagement score

3.5%

First Bus Overall Fleet MPG

3.0%

First Rail average TOC Scorecard score

10%

Personal objectives

10%

The targets for FY 2025 will be disclosed in next year’s report when they are no longer

commercially sensitive.

The FY 2025 annual bonus maximum and threshold levels of bonus as a percentage of base salary

will be as follows:

Executive Director

Maximum

Threshold

Graham Sutherland

150%

Ryan Mangold

150%

All payouts will be subject to the Committee’s discretion as well as malus and clawback

provisions. 50% of any bonus earned will be deferred into the Company’s shares for three years,

conditional upon continued employment. The Committee has demonstrated in assessing bonus

outcomes, including in respect of FY 2021 and FY 2020, that it is prepared to set aside the

formulaic outcome and reduce awards or introduce a further condition, to ensure that business

performance or the impact of a significant event is properly reflected.

2024 Long-Term Incentive Awards

It is the Committee’s intention to make awards under the LTIP this year. Awards of 200% and

175% of salary will be made to the Chief Executive Officer and Chief Financial Officer, respectively.

The measures of the 2024 LTIP will be consistent with the 2023 LTIP with the only difference

being the inclusion of a diversity and inclusion metric aligned with our strategy.

The Committee is mindful of potential changes in transport policy in the short to medium term and

the targets are based on the information known at the time they were set. The Committee will

consider if any adjustments to the 2024 LTIP targets are necessary (either positive or negative)

during the course of the performance period due to factors outside of management’s control to

ensure an appropriate level of stretch is maintained and payouts under the LTIP are aligned to the

wider stakeholder experience. Full disclosure on any adjustments will be provided in the relevant

remuneration report.

Details of the performance metrics, targets and comparator group for the 2024 LTIP awards are

set out below.

ESG Scorecard

Adjusted

EPS

Relative

TSR vs

FTSE250

Additional

buses

in service/

on order by

31 March

2027

Scope 1&2

emissions

(tCO

reduction

Gender

diversity

in senior

leadership

Ethnic

diversity

in senior

leadership

Weighting

50%

30%

7.5%

2.5%

Threshold (20% vesting)

16.7p

Median

700

24%

reduction

37.4%

8.2%

Maximum (100% vesting)

21.4p

Upper

quartile

990

26%

reduction

38.7%

9.6%

Vesting will be on a straight-line basis between threshold and maximum.

Relative TSR will be assessed against the FTSE 250 Index (excluding Investment Trusts).

4 Zero emission.

Tonnes of carbon dioxide equivalent (tCO

e).

From SBT base year 2020.

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Financial statements

FirstGroup Annual Report and Accounts 2024

Directors’ interests in share awards (audited)

The outstanding LTIP, deferred share bonus awards of Directors are set out in the table below. There have been no changes to the terms of any share awards granted to Directors.

During year

Director

Plan

Date

of grant

Number of shares

under award

as at

26.03.23

Awards

granted

Awards

exercised

Awards

lapsed

Number of shares

under award

as at

30.03.24

Exercise

price

(£)

Face value

of awards

(£)

Date on which

awards vest/

become

exercisable

Expiry date

Graham Sutherland

LTIP

18.08.22

972,590

–

972,590

nil

1,100,000

18.08.25

N/A

09.06.23

–

838,017

–

838,017

nil

1,133,000

09.06.26

N/A

Deferred

bonus shares

09.06.23

–

252,191

–

252,191

nil

340,963

09.06.26

N/A

SAYE

13.07.23

–

13,621

–

13,621

1.11

18,743

01.09.26

01.03.27

Ryan Mangold

LTIP

24.09.20

1,962,274

–

1,734,057

228,217

–

nil

762,736

08.06.23

08.06.24

02.08.21

934,274

–

934,274

nil

787,500

02.08.24

02.08.25

18.08.22

713,770

–

713,770

nil

807,275

18.08.25

N/A

09.06.23

–

615,088

–

615,088

nil

831,600

09.06.26

N/A

Deferred

bonus shares

18.08.22

289,456

–

289,456

nil

327,375

18.08.25

18.08.32

09.06.23

–

240,545

–

240,545

nil

325,217

09.06.26

09.06.33

SAYE

13.07.23

–

13,621

–

13,621

1.11

18,743

01.09.26

01.03.27

Anthony Green

SAYE

13.07.23

–

1,945

–

1,945

1.11

2,676

01.09.26

01.03.27

LTIP – granted in the from of nil cost options or conditional share awards granted under the Long-Term Incentive Plan. Awards prior to FY 2023 were typically made in the form of nil cost options. From FY 2023 awards were made as conditional share awards.

Awards are subject to clawback and malus and subject to an additional two-year holding period.

Deferred bonus shares – 50% of the bonus awarded. Awards made after FY 2023 are made as conditional share awards under the EABP. Awards are subject to clawback and malus.

SAYE – options granted under the all-employee share scheme.

Participants are entitled to receive accrued dividends and dividend equivalents under the LTIP and EABP pro-rated in proportion to the amount of the award that vests.

The table above shows the maximum number of shares that could be released if awards were to vest in full. In respect of LTIP and deferred bonus awards, participants are entitled to receive dividends or dividend equivalent amounts, once the share awards

have vested.

The face value of LTIP and deferred bonus awards made has been calculated by multiplying the maximum number of shares that could vest by the average closing mid-market share price for the five days preceding the grant date for awards made

prior to FY 2023. For LTIP and deferred bonus awards made from FY 2023, the face value of LTIP and deferred bonus awards has been calculated by multiplying the maximum number of shares that could vest by or become exercisable by the average closing

mid-market share price on the day preceding the grant date. For deferred bonus and LTIP awards made on 09.06.23 this is £1.352. For SAYE awards the face value of options under the 2023 scheme is determined by multiplying the number of options subscribed

for by the closing mid-market share price on the date before grant (£137.6p).

LTIP awards will not vest until the date the Committee determines whether performance conditions have been met, or if later, the date specified above. If dealing restrictions apply on the date of vesting then vesting will occur on the first date after dealing

restrictions cease to apply.

The market share price on the date of exercise, 15 June 2023, was £1.39 for a total market value of £2,413,807.

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Directors’ shareholding, shareholding guidelines and summary of outstanding share interests (audited)

Under the terms of the Policy approved by shareholders at the 2021 AGM, Executive Directors are expected to hold shares, or rights to shares in the Company, equivalent to a minimum of 200%

of base salary within a five-year period from their date of appointment to create greater alignment of the Executive Directors’ interests with those of shareholders. This represents an increase for

the Chief Financial Officer from 150%. The Policy approved at the 2021 AGM also introduced post-cessation shareholding guidelines where Executive Directors are normally expected to hold the

in-employment guideline (or full actual holding if lower) in the first year following cessation of employment and 50% (or full actual holding if lower) in the second year following cessation of employment.

The Committee reserves the right to relax or waive the application of such guidelines in certain circumstances, including the impending retirement of an Executive Director.

The table below sets out the shareholdings of the Executive Directors and their connected persons’ shareholdings (including beneficial interests) and a summary of outstanding and unvested share

awards as at 30 March 2024. It shows that Graham Sutherland’s current shareholding is 115.8% of his base salary and Ryan Mangold’s current shareholding is 589.3% of his base salary.

The Committee believes that it is an essential part of the Policy that Executive Directors build significant shareholdings. The retention and build-up of equity is important in a long-term business

such as FirstGroup, as it encourages decisions to be made on a long-term, sustainable basis for the benefit of customers and shareholders.

There has been no change in the Directors’ interests in the ordinary share capital of the Company between those set out below and the date of approval of this report. The beneficial interests

of Directors who served during the year ending 30 March 2024 and their connected persons in the shares of the Company as at that date and 26 March 2023 are shown below.

Ordinary shares beneficially owned

Directors

Date of

appointment

at 26.03.23 or

appointment

date if later

30.03.24

Unvested

EABP/SAYE/

SIP Shares

2,3

Unvested

LTIP

Vested but not

exercised

EABP/

LTIP awards

Shareholding

requirement

as % of salary

Current

shareholding

as % of

salary

5,6,7,8

shareholding

requirement

achieved

Executive Directors

Graham Sutherland

16 May 22

211,181

230,005

265,812

1,810,607

N/A

200%

115.8%

57.9%

Ryan Mangold

31 May 19

632,113

1,270,689

544,393

2,263,132

N/A

200%

589.3%

294.7%

Non-Executive Directors

David Martin

15 Aug 19

–

Sally Cabrini

24 Jan 20

10,000

–

Myrtle Dawes

1 Apr 22

–

3,497

Anthony Green

15 Sep 20

1,570

1,615

1,945

–

Claire Hawkings

21 Jan 22

10,000

–

Jane Lodge

30 June 21

15,000

–

Peter Lynas

30 June 21

80,000

–

Ryan Mangold participates in the all-employee Share Incentive Plan (SIP). His Partnership Shares are held in trust and are not at risk of forfeiture. Ryan Mangold acquired an additional 172 Partnership Shares between 30 March 2024 and the date of approval

of this Report.

EABP shares are deferred shares that are subject to continued employment, but not subject to further performance conditions.

SIP Matching Shares awarded to Ryan Mangold are held in trust and are at risk of forfeiture if the corresponding Partnership Shares are withdrawn from trust within three-years. No Matching Shares were awarded between 30 March 2024 and the date of approval

of this Report.

LTIP awards are conditional share awards and nil cost options subject to ongoing performance conditions.

Based on the closing mid-market share price on 30 March 2024 (£1.804).

Graham Sutherland has until 16 May 2027 to meet his current shareholding guideline.

Ryan Mangold has until 31 May 2024 to meet his current shareholding guideline.

The % shown includes the after-tax value of vested but unexercised awards and the after-tax value of unvested EABP awards that are subject to continued employment.

Shares for Non-Executive Directors are held outright with no attaching performance conditions.

10 A person closely associated with David Martin beneficially owns 200,000 shares.

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Financial statements

FirstGroup Annual Report and Accounts 2024

Dilution

The Company ensures that the level of shares granted under the Company’s share plans and the means of satisfying such awards remains within best practice guidelines, so that dilution from

employee share awards does not exceed 10% of the Company’s issued share capital for all share plans and 5% in respect of executive share plans in any ten-year rolling period. The Committee

monitors dilution levels at least once a year. At 30 March 2024, 3.43% of the Company’s issued share capital had been issued for the purpose of the SAYE, BAYE and LTIP over a ten-year period.

Employee Benefit Trust (EBT)

The FirstGroup EBT has been established to acquire ordinary shares in the Company, by subscription or purchase, from funds provided by the Group to satisfy rights to shares arising on the exercise

or vesting of awards under the Group’s share-based incentive plans. As at 30 March 2024, 14,379,907 shares were held by the EBT to hedge outstanding awards of 37,735,458. This means that the

EBT holds sufficient shares to satisfy approximately 38.1% of outstanding awards.

External board appointments

Where Board approval is given for an Executive Director to accept an outside non-executive directorship, the Director is entitled to retain any fees received, unless the appointment is in connection

with the business of the Group. None of the Executive Directors currently sit on any other external company boards.

Percentage change in remuneration levels

The table below shows the movement in the salary, benefits and annual bonus for all Directors between the current and previous financial year compared to that for the average UK employee

(First Bus and First Rail, but excluding the Corporate centre). For the benefits and bonus per employee, the figures are based on those employees eligible to participate in such schemes.

Executive Directors

Non-Executive Directors

Average UK employees

4,5

7,8

change

FY 2024

Salary/Fees

6.0%

3.0%

0.0%

3.0%

Benefits

(15.6%)

(46.2%)

(2.6%)

(41.5%)

102%

(4.8%)

(30.9%)

48.8%

(47.5%)

0.0%

Annual Bonus

9.1%

3.0%

–

change

FY 2023

Salary/Fees

5.9%

N/A

2.4%

0.0%

N/A

0.0%

(14.6%)

0.0%

Benefits

(7.3%)

N/A

0.0%

56.5%

(41.8%)

N/A

24.0%

116.2%

0.0%

Annual Bonus

(32.3%)

N/A

(0.7%)

–

change

FY 2022

Salary/Fees

11.1%

N/A

7.1%

6.1%

N/A

0.0%

Benefits

4.2%

N/A

0.0%

N/A

0.0%

Annual Bonus

576.6%

N/A

–

change

FY 2021

Salary/Fees

(2.4%)

N/A

(6.7%)

(5.7%)

N/A

Benefits

9.4%

N/A

0.0%

(100.0%)

0.0%

N/A

0.0%

Annual Bonus

(66.2%)

N/A

–

We use all UK employees as a reference, rather than just those employed by the listed parent company which only employs c. 50 individuals, as we believe this provides a more accurate reference point. Pay increases for the majority of UK employees in First Bus

and First Rail are collectively bargained with trade unions in individual operating companies in First Bus and First Rail. Some of these agreements are multi-year deals. The increase in benefits in FY 2021 reflects the inclusion of Avanti employees for a full year.

The decrease in annual bonus in FY 2021 reflects no management bonuses paid in the Rail business in FY 2021.

Graham Sutherland was appointed to the Board as Chief Executive Officer on 16 May 2022; as such, no comparison to FY 2022 is available and his FY 2023 pay has been annualised for comparison purposes.

Ryan Mangold was appointed to the Board as Chief Financial Officer on 31 May 2019, therefore, his FY 2020 pay has been annualised for comparison purposes. Bonuses were not paid in FY 2020 or FY 2021, therefore, the percentage change in annual bonus

to FY 2022 is ‘N/A’, meaning that the year-on-year change cannot be calculated.

David Martin, Sally Cabrini and Anthony Green were appointed to the Board in FY 2020. FY 2020 fees have been annualised for comparison purposes.

David Martin was appointed Interim Executive Chairman on 13 September 2021; as such he received a temporary fee increase to £535,000 per annum. David Martin resumed the role of Non-Executive Chairman from 1 July 2022 and his fees returned

to £310,000 per annum. For comparison purposes FY 2022 and FY 2023 fees relate to the fees he receives as Non-Executive Chairman. David Martin did not have any taxable benefits relating to FY 2021, therefore, the percentage change in benefits

to FY 2022 is ‘N/A’, meaning that the year-on-year change cannot be calculated.

Myrtle Dawes was appointed to the Board on 1 April 2022; as such, no comparison to FY 2022 is available.

Claire Hawkings, Jane Lodge and Peter Lynas were appointed to the Board in FY 2022. FY 2022 fees have been annualised for comparison purposes.

Peter Lynas served as Chair of Board Safety Committee from September 2021 to March 2022; for comparison purposes the fee he received as Chair has been annualised. Peter Lynas’ fees decreased in FY 2023 compared to FY 2022 as he no longer served

as Chair of a Committee.

Private medical insurance premium rates for all employees, including the Executive Directors, were lower in FY 2024 compared to previous years due to a Covid rebate.

10 Directors’ salary/fee figures for FY 2021 reflect the voluntary 20% reduction between April to July 2020. There were no changes to NED fees between FY 2020 and FY 2023, but an increase of 3.0% in FY 2024.

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Financial statements

FirstGroup Annual Report and Accounts 2024

CEO pay ratio

In line with reporting requirements, the table

below sets out the ratio at the median,

25th and 75th percentiles of the total

remuneration received by the Chief Executive

Officer, compared to the total remuneration

received by our UK employees. The Company

has calculated the ratios in accordance with the

methodology of Option B as it was deemed the

most reasonable and practical approach given

the collation of data exercise required for

gender pay gap reporting. There has been

no departure from this methodology and no

element of pay has been omitted. It should be

noted that the pay ratio may vary year-on-year

and the incentive outcomes for the Chief

Executive Officer can impact the results

significantly. We will provide an explanation

in each year’s report around the change in

the ratio as well as any additional context,

where helpful, to understand variance. The

UK employees at the lower quartile, median

and upper quartiles were identified as at

5 April 2023 and their salary and total

remuneration were calculated in respect

of actual pay data from 1 April 2023 to

31 March 2024.

The Committee is satisfied that these pay

ratios are consistent with our pay, reward and

progression policies and that these colleagues

are representative of the relevant percentiles

across the organisation, as they represent

frontline workers in our First Bus and

First Rail divisions, i.e., the large majority

of our UK workforce receiving basic pay,

overtime, holiday pay and employer pension

contributions. The figures also include

sick pay (where relevant).

There has been an increase in the CEO

pay ratio between FY 2024 and FY 2023.

This is largely due to the appointment of a

new Chief Executive Officer in May 2022,

therefore, FY 2023 salary and EABP awards

were pro-rated with FY 2024 being the first full

year. The significant decrease in CEO pay ratio

between FY 2023 and FY 2022 is largely due

to the former Chief Executive Officer’s 2019

LTIP award that vested at 88.5% of maximum

(177% of base salary). FY 2025 will be the first

year the current Chief Executive Officer will

have an LTIP award due to vest.

The Committee is satisfied that the data included

in the CEO Pay Ratio table reflect the goals

of the Group’s Remuneration Policy to support

colleagues in the performance of their roles in

collectively delivering the Group’s strategy. In

particular, the performance-based framework

that rewards employees for their individual

efforts and the performance of the Company,

and to structure pay in a simple and transparent

manner, have been applied consistently.

Pay ratio

Remuneration values

Year

Method

25th

percentile

50th

percentile

75th

percentile

Population

CEO

25th

percentile

Median

75th

percentile

FY 2024

Option B

42:1

40:1

26:1

Total remuneration

£1,397,817

£33,279

£35,182

£53,996

Salary only

£556,500

£28,715

£30,311

£49,240

FY 2023

Option B

34:1

30:1

22:1

Total remuneration

£1,190,865

£35,189

£40,145

£54,283

Salary only

£483,635

£23,018

£27,592

£46,518

FY 2022

Option B

68:1

62:1

41:1

Total remuneration

£2,246,181

£33,073

£36,395

£55,051

Salary only

£288,795

£22,179

£29,254

£45,703

FY 2021

Option B

30:1

25:1

16:1

Total remuneration

£839,822

£27,560

£34,002

£53,437

Salary only

£592,667

£22,274

£17,210

£38,480

FY 2020

Option B

32:1

25:1

17:1

Total remuneration

£788,400

£24,600

£32,000

£45,400

Salary only

£635,000

£19,100

£24,100

£37,200

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Relative importance of spend on pay

The table below illustrates the Company’s expenditure on pay in comparison to adjusted operating profit and distributions to shareholders by way of dividend payments and share buyback.

FY 2024

£m

FY 2023

£m

change

Adjusted operating profit

202.4

154.4

31%

Distributions to shareholders

103.7

45.9

126%

Total employee pay

1,572.0

1,520.3

3.4%

Group adjusted operating profit, as reported in note 5 in the notes to the consolidated financial statements, has been used as a comparison as it is a key financial metric that the Board considers when assessing Company performance.

Distributions to shareholders, as reported in the consolidated statement of changes in equity, of £103.7m in FY 2024 consists of £29.5m in dividends (£36m including non-controlling interests) and £74.2m share buyback (£74.7m including related costs). There is

an additional £41.1m in liability related to the share buyback for FY 2024, for a total share buyback of £115.3m (£115.8m including related costs). Distributions to shareholders in FY 2023 of £45.9m consists of £14.7m in dividends and £31.1m share buyback

(£31.6m including related costs). In FY 2023 there was an additional £43.9m in liability related to the share buyback, for a total share buyback of £75m, this was completed in August 2023.

Total employee pay is the total pay for all Group employees, including pension and social security costs. The average monthly number of employees in FY 2024 was 29,339 (FY 2023: 29,983).

Committee membership and attendance

The membership of the Committee is shown on page 124 and attendance is set out on page 104. After each meeting, the Chair of the Committee presents a report on its activities to the Board.

The Chairman, Chief Executive Officer, Group HR Director and Company Secretary will normally attend meetings by invitation, to provide advice and respond to specific questions. Other attendees

may include the Chief Financial Officer, the Group Head of Reward, the Employee Director and the Committee’s external remuneration adviser. Attendees are not involved in any decisions and are

specifically excluded from any matter concerning their own remuneration. The Company Secretary acts as secretary to the Committee.

Who supports the Committee?

The Committee continues to receive advice from independent external remuneration advisers, Willis Towers Watson (WTW). The Committee appointed WTW in FY 2020, following a competitive tender

process led by the Chair of the Committee. The Committee is solely responsible for their appointment, retention and termination and for approval of the basis of their fees and other terms. The Chair

of the Committee agrees the protocols under which WTW provides advice.

WTW is a member of the Remuneration Consultants Group Code of Conduct and adheres to this Code in its dealings with the Committee. The Committee reviews the appointment of its advisers

annually and is satisfied that the advice it receives is objective and independent.

During the course of the year, WTW provided independent advice and commentary on a range of topics including Directors’ remuneration reporting, new remuneration policy, discretionary share plans,

corporate governance and executive remuneration trends and shareholder consultation. WTW fees for advice provided to the Committee were £136,670 (FY 2023: £77,954), charged on a time-spent

basis. WTW provides remuneration advice, including the provision of benchmark data, to the Company.

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Financial statements

FirstGroup Annual Report and Accounts 2024

Shareholder voting on remuneration

Throughout FY 2024, we engaged with shareholders on the Directors’ Remuneration Policy,

and implementation for FY 2025, that is being put to shareholders to vote on at the 2024 AGM.

We have set out the results of votes on the Directors’ Remuneration report at the 2023 AGM and

the Directors’ Remuneration Policy at the 2021 AGM as well as the result of previous shareholder

votes on remuneration resolutions since 2016.

To approve the Directors’ Remuneration

report at the 2023 AGM

To approve the Directors’ Remuneration

Policy at the 2021 AGM

2023 AGM Voting

2021 AGM Voting

Votes for

511,579,618

Votes against

22,157,576

Votes withheld

175,084

Votes for

943,536,83

Votes against

40,940,117

Votes withheld

3,531,863

* Note: A ‘Vote withheld’ is not a vote in law and is not counted in the calculation of the votes ‘for’ and ‘against’ a resolution.

To approve the relevant Directors’ Remuneration report

Votes for

Votes against

2023 AGM

95.85%

4.15%

2022 AGM

84.16%

15.84%

2021 AGM

98.43%

1.57%

2020 AGM

99.99%

0.01%

2019 AGM

76.32%

23.68%

2018 AGM

96.37%

3.63%

2017 AGM

91.32%

8.68%

2016 AGM

96.53%

3.47%

Note: A ‘Vote withheld’ is not a vote in law and is not counted in the calculation of the votes ‘for’ and ‘against’ a resolution.

To approve the Directors’ Remuneration Policy

Votes for

Votes against

2021 AGM

95.84%

4.16%

2018 AGM

84.52%

15.48%

2015 AGM

92.82%

7.18%

Further engagement

The Committee values its continued dialogue with shareholders and engages directly with them

and their representative bodies at the earliest opportunity. Shareholder feedback received in

relation to the AGM, as well as any additional feedback and guidance received during the year,

is considered by the Committee as it develops the Company’s remuneration framework

and practices.

In line with Provision 3 of the Code, the Committee Chair welcomes questions from shareholders

on the Committee’s activities.

Annual report on remuneration

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Financial statements

FirstGroup Annual Report and Accounts 2024

Remuneration Policy

The 2024 AGM marks the third anniversary

of the approval of our Remuneration Policy.

As such, we are required to put a new

Directors’ Remuneration Policy to binding

shareholder vote, and we look forward to

continuing high levels of shareholder support.

The policy is the framework for setting the

pay of the Executive Directors, Non-Executive

Directors, and the Group’s Executive Team.

While the shareholder-approved policy applies

to the most senior executives in the business,

the Committee has also reviewed remuneration

and incentives more widely, taking these into

account when setting this policy. The focus

of the Committee is to ensure that the policy

fully supports the Group’s strategic aims

focused on operational delivery, driving modal

shift, targeted investment in adjacent growth

opportunities to diversify the Group’s portfolio

and playing a leading role in environmental

and societal sustainability.

The Committee met several times during

FY 2024 to discuss the 2024 policy to ensure

it is fit for purpose, aligned to the business

strategy and complies with the Companies Act,

relevant regulatory requirements (including

the Principles set out in Provision 40 of the

UK Corporate Governance Code) and the latest

investor guidelines. The Committee considered

the Company’s position as a UK-based

transport provider, our future growth strategy

and key stakeholders, including the wider

workforce, passengers and national, devolved

and local governments.

The key principles underpinning the

Committee’s approach to executive

remuneration are:



Alignment with business strategy

and objectives



Rewarding for performance



Competitive remuneration



Simplicity and transparency

The Committee sought the views of our

independent advisors, Willis Towers Watson,

as well as our top shareholders. The Committee

consulted c.70% of our top shareholders,

seeking their view on the proposed 2024 policy.

While the Committee did not formally consult

employees when determining the 2024 policy,

we do have several channels in which we gather

feedback from employees, including inviting

the Group Employee Director to all of the

Committee meetings, which he regularly

attends. The Committee Chair also attends

Employee Director forum meetings.

Following a thorough review of the policy, the

Committee concluded that our existing policy,

which was approved at our 2021 AGM with

c.96% shareholder support, fully supports

our current and future strategy, therefore,

no material changes to our existing policy

are proposed. This includes no change to the

structure or quantum of the annual bonus or

LTIP. Where appropriate we have made minor

clarifications to our existing policy.

The following table sets out how the proposed Remuneration Policy addresses the factors set out in Provision 40 of the UK Corporate Governance Code:

Clarity

The Committee considers that FirstGroup’s remuneration structures are transparent and welcomes open and frequent dialogue with shareholders on its approach to remuneration.

Major shareholders have been consulted on the Committee’s approach to remuneration.

Simplicity

The overall Remuneration Policy is designed to be comprehensive without becoming overcomplicated and to encourage the Executive Directors to concentrate on providing easy and convenient

mobility, improving quality of life by connecting people and communities, and delivering ongoing shareholder value through an attractive annual dividend.

Risk

One of the Committee’s principles is that the majority of the reward opportunity for Executive Directors should be provided through performance-related incentives linked to the Group’s

strategic goals and taking account of the Group’s attitude to risk. Reward under these incentives is linked to both individual and Group performance. The Committee is satisﬁed that the

structures of the incentive arrangements do not encourage inappropriate risk taking.

In addition, the following, best-practice, measures are in place to minimise risks:



EABP deferral, the LTIP holding period and shareholding requirement, including post-cessation provisions, provide a clear link to the Group’s ongoing performance and

shareholder experience



the Committee has discretion to adjust the formulaic incentive outcomes if it considers that they are not reflective of the underlying performance of the Company or any individual,

and has demonstrated in recent years that it is prepared to use its discretion to reduce a formula-driven outcome where this does not reflect broader Company performance or the

shareholder experience



malus and clawback provisions apply to EABP and LTIP awards

Predictability

The table on page 151 sets out four illustrations of the application of the Remuneration Policy including potential opportunity levels resulting from threshold, target and maximum performance

under the EABP and LTIP.

Proportionality

Performance measures and target ranges under the EABP and LTIP are designed to be sufﬁciently stretching in order to ensure outturns are fully aligned with Group performance. As above,

the Committee has discretion, and has demonstrated in recent years that it is prepared to use its discretion, to override formulaic outcomes in order to ensure performance is reﬂective of

FirstGroup’s underlying performance.

Alignment

to culture

The Committee believes in an approach to executive pay that is commensurate with value creation for shareholders. The Remuneration Policy and the Company’s incentive schemes have been

designed to drive appropriate behaviours consistent with FirstGroup’s purpose, Values and strategy and are aligned to wider workforce policies and practice.

The Company’s Policy remains to attract, retain and motivate its leaders and to ensure they are focused on delivering business priorities within a framework designed to promote the long-term success

of FirstGroup and align with shareholder interests. In order to prevent any conflicts of interest, the Committee is composed entirely of independent Non-Executive Directors. No individual is involved in

deciding their own remuneration.

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Remuneration Policy

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The diagram below illustrates the balance of pay and time period of each element of the Policy for Executive Directors.

Total pay over five years

Year 1

Year 2

Year 3

Year 4

Year 5

Fixed Pay

Salary

Fixed Pay

Benefits, Pension

EABP

(Malus and clawback

provisions apply)

Up to 150% of salary

50% in cash

50% in shares. Three-year deferral period

No further performance conditions

LTIP

(Malus and clawback

provisions apply)

Up to 200% of salary

Three-year performance period

Two-year holding period

No further performance conditions

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Remuneration Policy

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As outlined on page 144, the 2024 Directors’ Remuneration Policy, the ‘Remuneration Policy’, will be subject to a vote at the 2024 AGM on 26 July 2024. The Remuneration Policy for the Company

has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), and taking account of the

Principles of the UK Corporate Governance Code, the ‘Code’. The Remuneration Committee, ‘the Committee’, has also taken account of the guidelines issued by the Investment Association,

ISS and other shareholder bodies when setting the remuneration framework and has sought to maintain an active and constructive dialogue with investors on developments in the remuneration

aspects of corporate governance. The Remuneration Policy will take effect from the date it is approved.

Remuneration Policy for Executive Directors

Purpose and link to strategy

Operation

Maximum opportunity

Performance metrics

Salary

To attract and maintain high calibre

executives with the attributes,

skills and experience required

to deliver the Group’s strategy.

Typically reviewed annually, effective from 1 April.

Any increases take account of:



Company and individual performance

and experience



role and responsibilities



market positioning



external indicators, such as inflation and market

conditions, and



pay increases made to the wider workforce

No recovery or withholding applies.

Salary increases (in percentage terms) for Executive

Directors will normally be with reference to increases

made to the wider workforce, however, there is no

formal maximum. Where the Committee considers

it necessary or appropriate, larger increases may be

awarded in individual circumstances, including, but

not limited to, factors such as an increase in the size

or scope of the role, or the individual’s development

and performance in the role.

The Committee has the ﬂexibility to set the salary

of a new hire at a discount to the market level and to

realign it in subsequent years as the individual gains

experience in the role. In exceptional circumstances,

the Committee may agree to pay above market levels

to secure or retain an individual who is considered

by the Committee to possess signiﬁcant and relevant

experience that is critical to the delivery of the

Company’s strategy.

Not applicable

Beneﬁts

Provide market competitive beneﬁts

to assist in attracting and retaining

executives and to support them

in the performance of their roles.

A range of beneﬁts may be provided including,

but not limited to, private medical insurance,

life assurance, long-term disability insurance,

company car allowance, general employee beneﬁts,

including participation in our all-employee share

plans and travel and related expenses.

The Committee retains the discretion to offer

additional beneﬁts as appropriate, such as

assistance with relocation, tax equalisation

and overseas tax advisory fees.

No recovery or withholding applies.

The cost of beneﬁts is not pre-determined,

reﬂecting the need to allow for increases

associated with the provision of beneﬁts.

As such, there is no formal maximum.

Not applicable

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Remuneration Policy

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Remuneration Policy for Executive Directors

continued

Purpose and link to strategy

Operation

Maximum opportunity

Performance metrics

Pension beneﬁts

Allows executives to build long-term

savings for their retirement and

ensures the total remuneration

package is competitive.

Payment may be made into a pension scheme

or delivered as a cash allowance.

No recovery or withholding applies.

Executive Directors receive a pension contribution,

or cash allowance, of up to the average pension

beneﬁt for the wider UK workforce, up to a

maximum of 15% of base salary.

Not applicable

Annual bonus

To focus on the delivery of

annual goals, to strive for superior

performance and to achieve speciﬁc

targets which support the strategy.

The deferred share element provides

alignment with shareholders and

supports retention.

Bonuses are awarded annually under the

Executive Annual Bonus Plan (EABP).

At least half the bonus awarded in any year will

be deferred into shares, normally for a period

of three years.

The EABP is reviewed annually to ensure performance

measures and targets are appropriate and support

the strategy.

Up to 25% of the maximum may be payable for

threshold performance with maximum vesting

being equal to 100% of any award made.

The Committee has discretion to permit a dividend

equivalent amount to accrue on shares which vest

under the EABP.

The rules of the EABP contain malus and clawback

provisions to take account of exceptional and

adverse circumstances.

Cash bonus payments can be clawed back up

to the third anniversary of payment and deferred

share awards may be subject to malus prior to the

vesting date.

The maximum annual bonus opportunity for

the Executive Directors is 150% of salary.

The bonus may be based on a combination

of ﬁnancial, operational, and individual metrics,

which the Committee will review on an annual

basis. The precise allocation between ﬁnancial and

non-ﬁnancial metrics (as well as weightings within

these metrics), will depend on the strategic focus

of the Company from year-to-year. At least half

of any award will be subject to ﬁnancial measures.

Vesting of deferred shares is dependent on

continued employment or good leaver status.

The Committee retains the discretion, acting fairly

and reasonably, to alter the bonus outcome in light

of the underlying performance of the Company,

taking account of any factors it considers relevant.

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Remuneration Policy

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Remuneration Policy for Executive Directors

continued

Purpose and link to strategy

Operation

Maximum opportunity

Performance metrics

Long-Term

Incentive Plan (LTIP)

Incentivises the execution of strategy,

and drives long-term value creation

and alignment with shareholders.

Awards under the LTIP are conditional rights

to receive shares or nil-cost options over

shares, subject to continued employment

or good leaver status and the achievement

of performance conditions.

Up to 20% of the maximum may be payable for

threshold performance, with maximum vesting

being equal to 100% of any award made.

Shares which vest under the LTIP are typically

subject to an additional holding period of two years.

Shares may be sold in order to satisfy tax or other

relevant liabilities as a result of an award vesting.

The Committee has discretion to permit a dividend

equivalent amount to accrue on shares which vest

under the LTIP.

The rules of the LTIP contain malus and clawback

provisions to take account of exceptional and

adverse circumstances. Malus applies to awards

before vesting. Where awards have vested they

may be clawed back up to the ﬁfth anniversary

of grant.

Normal award policy is for a maximum annual award

opportunity of 200% of base salary for the Chief

Executive and 175% for other Executive Directors.

In exceptional circumstances, awards of up to

300% of base salary may be made, such as to

aid recruitment.

The Committee determines the precise metrics

and weightings of LTIP awards on an annual basis

to ensure the targets are stretching and supportive

of the Group’s strategy and business objectives,

usually over a three-year performance period.

In recent years measures have included ﬁnancial

measures, such as EPS, relative TSR vs the

FTSE 250 and ESG measures that support

our strategy.

The Committee retains the discretion, acting fairly

and reasonably, to alter the LTIP vesting outcome

in light of the underlying performance of the

Company during the performance period, taking

account of any factors it considers relevant.

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Remuneration Policy

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Remuneration Policy for Executive Directors

continued

Purpose and link to strategy

Operation

Maximum opportunity

Performance metrics

Shareholding Guidelines

To ensure that Executive Directors’

interests are aligned with those

of shareholders.

During employment

The Executive Directors are expected to hold

shares, or rights to shares, equivalent in value to a

minimum of 200% of base salary within a ﬁve-year

period from the later of their date of appointment

or the 2021 AGM.

For these purposes, rights to shares includes

the estimated after-tax value of EABP awards

and vested LTIP awards, including those subject

to a holding period, but does not include any

unvested LTIP awards.

Post-employment

Following cessation Executive Directors are

normally expected to hold:



the in-employment guideline (or full actual

holding if lower) for the first year following

cessation of employment, and



50% of the in-employment guideline (or full

actual holding if lower) for the second year

following cessation of employment

The post-employment guideline will apply to share

awards granted under incentive plans from the

2021 AGM onwards and will not include shares

purchased outright by an Executive Director.

Not applicable

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Remuneration Policy

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Remuneration Committee judgment

and discretion

The Committee operates within the bounds of

the shareholder approved Remuneration Policy

at all times. It will also operate the EABP and

LTIP according to the rules of each respective

plan, the Listing Rules and any relevant

legislation. The Committee considers the use

of judgment and discretion to be pivotal to

operating the Remuneration Policy successfully.

Remuneration Committee judgment and

discretion includes, but is not limited to:



when to make awards and payments; how to

determine the size of an award or payment, or

when and how much of an award should vest;



who receives an award or payment;



how to deal with a change of control,

restructuring or any other corporate event

of the Group;



whether an Executive Director or senior

manager is a good or bad leaver for incentive

plan purposes and what proportion of awards

vest, if any, at the time of leaving or at the

original vesting date(s);



how and whether an award or its

performance condition(s) may be adjusted

in certain circumstances, e.g. change of

accounting policy;



the choice of (and adjustment of) performance

measure(s), weighting(s) and target(s) for each

incentive plan from year-to-year in accordance

with the Remuneration Policy set out above

and the rules of each plan; and



amending plan rules in accordance with

their terms.

The Committee also has the ability to

exercise judgment when assessing qualitative

performance, including, but not limited to,

performance against any strategic objectives

in the EABP and the assessment of the

personal performance of an Executive Director.

Where the formulaic vesting outcomes for the

EABP or LTIP are not reflective of the

underlying performance of the Company during

the performance period, the Committee retains

the discretion, acting fairly and reasonably,

to alter the vesting outcomes of the EABP

or LTIP, taking account of any factors it

considers relevant.

Any use of discretion will, where relevant,

be disclosed in the Annual Report on

Remuneration and may, as appropriate,

be the subject of consultation with the

Company’s major shareholders.

Malus and clawback

Malus and clawback provisions apply to the

EABP (including deferred share awards) and

LTIP awards. Events that may trigger the

Remuneration Committee to apply malus and/

or clawback include, but are not limited to:



a material misstatement (including any

omission) in the Company’s financial results;



where the award, or the vesting outcome

of the award, was based on a material error,

or on inaccurate or misleading information;



any form of misconduct;



insolvency or corporate failure; and



regulatory censure or significant

reputational damage.

Corporate events

In the event of a change of control or

winding-up of the Company, unvested share

awards granted under the EABP and the LTIP

will normally vest early. The number of shares

which may vest under LTIP awards in these

circumstances will be subject to any relevant

performance conditions and, unless the

Committee determines otherwise, time

pro-rating. The Committee will determine the

number of shares in respect of which an EABP

award vests at its discretion. In the event of a

demerger, distribution (other than an ordinary

dividend) or other transaction which, in the

opinion of the Committee, would affect the

share price, the Committee may allow

EABP and LTIP awards to vest subject,

in the case of LTIP awards, to any relevant

performance conditions and, if the

Committee so decides, time pro-rating.

Setting performance measures and targets

In determining the levels of executive reward,

the Committee places considerable emphasis

on ensuring a strong and demonstrable link

between actual remuneration received and the

delivery of FirstGroup’s strategy. The measures

and weightings used under the EABP are

selected annually to reflect the Group’s key

strategic initiatives for the year and may reflect

both financial and non-financial objectives.

The targets for the EABP are set by reference

to the Company’s strategy and internal budgets

as well as the external context, such as market

forecasts. This approach seeks to ensure

that the targets are appropriately stretching,

yet achievable.

The LTIP provides a focus on delivering

superior returns to shareholders by providing

rewards for long-term sustainable value

creation. The Committee reviews annually

whether the performance measures, weightings

and calibration of targets remain appropriate

and sufficiently challenging taking into

account the Company’s strategic objectives

and shareholder interests.

All-employee share plans awards are not

subject to performance conditions in line

with the treatment of such awards for all

employees and in accordance with the

applicable tax legislation.

Group employee considerations

In setting the remuneration of the Executive

Directors, the Committee takes into account

the overall approach to rewarding employees

in the Group. All employees, including

Directors, are paid by reference to the market

rate and base salary levels are reviewed

regularly. When considering salary increases

for Executive Directors, the Committee pays

close attention to pay and employment

conditions across the wider workforce.

The key difference between Executive Director

remuneration and the wider workforce is that,

overall, the remuneration of Executive Directors

is more heavily weighted towards variable pay

linked to business performance. As a result,

Executive Director remuneration will be more

variable, increasing or decreasing in line with

overarching business performance. Long-term

incentives are provided only to the most senior

executives as they are reserved for those

considered to have the greatest ability to

drive Group performance.

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Remuneration Policy

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All UK-based employees are able to become

shareholders in the Company through

participation in the Company’s all-employee

share schemes. The Company provides a

number of forums for employees to provide

feedback as well as receiving employee

views from the Group Employee Director.

Legacy arrangements

The Company may make any remuneration

payments and payments for loss of office

to satisfy commitments agreed prior to

the approval of this Remuneration Policy

notwithstanding that they are not in line with the

Remuneration Policy set out above, provided

that such payments were consistent with the

Directors’ Remuneration Policy in force at the

time they were agreed. This includes previous

incentive awards that are currently outstanding,

and which have been disclosed to shareholders

in previous remuneration reports.

The Company may also make any remuneration

payments and payments for loss of office

outside of this Remuneration Policy in order

to satisfy legacy arrangements made to an

employee prior to (and not in contemplation of)

joining the Board of Directors. All historic

awards that were granted, but remain

outstanding, remain eligible to vest based

on their original award terms.

Minor amendments

The Committee may make minor amendments

to the Remuneration Policy (for example,

for tax, regulatory, exchange control or

administrative purposes) without obtaining

shareholder approval.

Reward scenarios

The graphs below provide an indication

of the

reward opportunity for each of the

current Executive Directors based on their

roles as at 01 April 2024.

The basis of calculation and key assumptions

used to complete the charts are as follows:

Minimum

– Only fixed pay is payable, i.e. base

salary, benefits and pension or cash in lieu of

pension. No bonus is payable, and no vesting

achieved under the LTIP. The Executive

Directors’ pension benefit is included at 5%

of salary for the CEO and 15% of salary for

the CFO.

On-target

– Fixed pay plus 50% of maximum

annual bonus payout (i.e. 75% of salary) and

20% vesting under the LTIP (i.e. 40% of salary

for the CEO and 35% of salary for the CFO).

Maximum

– Fixed pay plus 100% of maximum

annual bonus payout (i.e. 150% of salary) and

100% vesting under the LTIP (i.e. 200% of

salary for the CEO and 175% of salary for

the CFO).

Maximum + 50% share price growth

–

A maximum scenario showing maximum plus

50% share price growth has been included.

Graham Sutherland, Chief Executive

Total remuneration (£’000)

Ryan Mangold, Chief Financial Officer

Total remuneration (£’000)

Fixed

EAPB

LTIP

4,00

£1,297

£2,682

£3,271

£620

3,000

2,000

1,000

XXX

Minimum

On-target

Maximum

Maximum with share price appreciation

XXX

100%

48%

34%

23%

19%

33%

18%

27%

54%

44%

Fixed

EAPB

LTIP

3,00

2,000

1,000

XXX

Minimum

On-target

Maximum

Maximum with share price appreciation

XXX

100%

52%

33%

27%

22%

34%

15%

28%

49%

40%

£583

£1,126

£2,189

£2,622

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Approach to recruitment remuneration

The Committee believes it is vital to be able to attract and recruit high-calibre executives who are focused on delivering the Group’s strategy, while relating reward to performance in the context

of appropriate risk management and aligning the interests of Executive Directors and senior managers with those of shareholders to build a sustainable performance culture.

The Committee’s approach when considering the overall remuneration arrangements in the recruitment of a new Executive Director is to take account of his or her remuneration package in their

prior role, the market positioning of the remuneration package and not to pay more than is necessary to facilitate their recruitment.

The remuneration package for a new Executive Director will be set in accordance with the terms of the Company’s normal Remuneration Policy as set out above, modified as follows:

Salary

The salary level shall take into account Executive Director salaries paid by companies in the comparator group, which comprises companies that are broadly in line with FirstGroup’s

size, structure and complexity and have features that are comparable to FirstGroup.

The Committee has the ﬂexibility to set the salary of a new Executive Director at a discount to the market level initially, with a series of higher than usual increases implemented over

the following few years to bring the salary to the desired positioning, subject to individual and business performance.

Beneﬁts

The Company may award certain additional beneﬁts and other allowances including, but not limited to, those to assist with relocation support, temporary living and transportation

expenses, educational costs for children and tax equalisation to allow ﬂexibility in employing an overseas national.

Pension beneﬁts

Any new Executive Director will be eligible to participate in pension or pension allowance, insurance and other beneﬁt programmes in line with local practice.

Annual bonus

The maximum bonus opportunity shall be 150% of base salary.

Long-Term Incentive Plan

The maximum opportunity shall be 200% of base salary for a newly recruited CEO and 175% of base salary for other newly recruited Executive Directors. However, a maximum

opportunity of 300% of base salary may be used in exceptional circumstances, in addition to any buyout of forfeited awards.

Buyout awards

The Committee may grant such cash or replacement share-based awards, if any, as it considers are reasonably necessary to facilitate the recruitment of a new Executive Director

in the circumstances. This includes an assessment of the awards and any other compensation or beneﬁts item that would be forfeited on leaving their current employer.

The value of these payments would not exceed what is considered by the Committee to be a fair estimate of remuneration lost when leaving the former employer and would reﬂect,

as far as possible, the nature and time horizons attached to that remuneration and the impact of any performance conditions.

If the Executive Director’s former employer pays a portion of the remuneration that was deemed forgone, the replacement payments will be reduced by an equivalent amount.

Notice periods

The Committee shall utilise notice periods of up to 12 months.

For the appointment of a new Chairman or Non-Executive Director, the fee arrangement shall be set in accordance with the normal Remuneration Policy as set out below.

In the case of an internal executive appointment, any variable pay element awarded in respect of the prior role will be allowed to pay out according to its existing terms, adjusted as relevant to take into

account the appointment. In addition, any other ongoing remuneration obligations existing prior to appointment will continue.

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Executive Directors’ service agreements

The Executive Directors’ service agreements, including arrangements for early termination, are carefully considered by the Committee, and are designed to recruit, retain and motivate Executive Directors

of the calibre required to manage the Company. The Committee’s policy is for Executive Directors’ service contracts to be terminable on no more than one-year’s notice. The details of existing

Executive Directors’ service contracts are summarised in the table below:

Executive Director

Date of service contract

Notice period

Graham Sutherland

16 May 2022

12 months

Ryan Mangold

31 May 2019

12 months

Policy on payment for loss of office

Executive Directors’ service agreements contain provisions for payment in lieu of notice. The Company is unequivocally against rewards for failure; the circumstances of any departure, including

the individual’s performance, would be taken into account in every case. Executive Directors’ service agreements are kept available for inspection by shareholders at the Company’s registered office.

Service agreements may be terminated without notice and without payment in lieu of notice in certain circumstances, such as gross misconduct. The Company may require the Executive Director to

work during their notice period or may choose to place the individual on ‘garden leave’, for example to ensure the protection of the Company’s and shareholders’ interests where the Executive Director

has access to commercially sensitive information.

The Committee reserves the right to make any other payments in connection with an Executive Director’s cessation of office or employment where the payments are made in good faith, in discharge

of an existing legal obligation (or by way of damages for breach of such an obligation), by way of a compromise or settlement of any claim arising in connection with the cessation of the Executive

Director’s office or employment or to strengthen the Group’s rights post-termination. Any such payment may include, but is not limited to, paying reasonable relocation costs, including possible tax

exposure costs, any reasonable level of fees for outplacement assistance and/or the Executive Director’s legal or professional advice fees in connection with his cessation of office or employment.

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In the event of an Executive Director’s departure, any outstanding share awards will be treated in accordance with the plan rules as follows:

Plan

Treatment on Cessation

Salary, Beneﬁts and Pension

These will be paid over the notice period and are subject to mitigation. The Company has discretion to make a lump sum payment in lieu.

EABP

Good leaver reason*

Where an individual is considered a good leaver* a performance-related bonus may be paid. This will usually be based on the proportion of the bonus year for which the

individual has been actively employed and bonus (if any) will be paid at the normal time, although the Committee retains discretion to pay it earlier in appropriate circumstances.

Other reason

The EABP provides no entitlement to a bonus following cessation of employment, unless the leaver is considered a good leaver.

Deferred Share Awards

Good leaver reason*

Where an individual is considered a good leaver*, unvested EABP deferred share awards will typically vest at the end of the vesting period, although the Committee

may accelerate vesting. Where an award vests early, time pro-rating will apply unless the Committee determines otherwise.

In the case of death, all outstanding awards will vest in full immediately.

Other reason

Unvested EABP deferred share awards will normally lapse on cessation of employment or, at the Committee’s discretion, on service of notice of termination of employment.

Long-Term Incentive Plan

Good leaver reason*

Where an individual is considered a good leaver*, unvested LTIP share awards will typically vest at the end of the vesting period, subject to time pro-rating and to the extent

that any performance conditions have been satisﬁed, as determined by the Committee. The Committee may determine that vesting is accelerated with performance tested at

this time. Unless the Committee decides otherwise, the holding period will continue to apply.

In the case of death, awards will vest immediately subject to time pro-rating and no holding period will apply.

Other reason

Unvested LTIP awards will normally lapse on cessation of employment.

All-employee share plans

Awards will vest in accordance with the rules of the relevant plan, which do not permit the exercise of any discretion by the Committee.

A good leaver is defined as a share plan participant who ceases to be employed in the following circumstances: ill-health; injury or disability; statutory redundancy; agreed retirement; employing company ceasing to be a Group company; transfer of employment

to a company which is not a Group company; and at the Committee’s discretion. Cessation of employment in circumstances other than death or those set out above is cessation for other reasons.

Policy on external appointments

The Committee believes that the Company can benefit from Executive Directors holding one approved non-executive directorship of another company, offering Executive Directors the opportunity

to broaden their experience and knowledge. Company policy is to allow Executive Directors to retain the fees earned from such appointments.

Chairman and other Non-Executive Directors’ letters of appointment

The Chairman and other Non-Executive Directors do not have service contracts, but each has a letter of appointment with the Company. Each letter of appointment generally provides for a three-month

notice period. Non-Executive Directors are normally appointed for two consecutive three-year terms, with any third term of three years being subject to rigorous review, taking into account the need

progressively to refresh the Board.

In line with the requirement of the Code, all Non-Executive Directors including the Chairman are subject to annual re-election by shareholders at each AGM. The appointment of each of the

Non-Executive Directors is subject to early termination without compensation if they are not reappointed at a meeting of shareholders.

Remuneration Policy for the Chairman and Non-Executive Directors

The Chairman and Non-Executive Directors may on occasion receive reimbursement of costs incurred in relation to professional advice.

These payments, if made, are taxable benefits to the Non-Executive Director and the tax arising is paid by the Company on the Director’s behalf.

Fees for the Non-Executive Directors are determined by the Board as a whole, on the recommendation of the Executive Directors and the Chairman. Fees for the Chairman are determined

by the Committee.

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The policy on fees for the Chairman and Non-Executive Directors is:

Purpose and link to strategy

To be sufﬁcient to attract, motivate and retain Non-Executive Directors necessary to contribute to a high-performing Board.

Chairman

The fee for the Chairman is determined by the Committee and reﬂects the commitment, demands and responsibility of the role. The fee is paid monthly and can either be

taken in cash or shares or a combination of both. The fee is inclusive of all Committee roles and is not performance-related or pensionable. Limited beneﬁts relating to travel,

accommodation and meals may also be payable in certain circumstances, with the tax arising being paid by the Company on the Chairman’s behalf.

The fee payable to the Chairman may be varied (either up or down) from this level during the three-year period that this Remuneration Policy operates to ensure it continues

to appropriately recognise the requirements of the role.

Non-Executive Directors

Fees are determined by the Board, within the limits set out in the Company’s Articles of Association, with Non-Executive Directors abstaining from any discussion or decision

on their fees.

The Board takes account of recognised best practice standards for such positions when determining the fee level and structure.

The Non-Executive Directors receive a base fee. Additional fees may be payable for additional responsibilities, including chairmanship of the Company’s key Committees and

for performing the Senior Independent Director role. Fees are paid monthly and can either be taken in cash or shares or a combination of both.

Non-Executive Directors’ letters of appointment contain provisions for payment in lieu of notice.

Other than the Group Employee Director, Non-Executive Directors do not participate in any of the Company’s incentive arrangements or receive any pension provision.

Non-Executive Directors are reimbursed for expenses and any tax arising on those expenses is settled directly by the Company. To the extent that these are deemed taxable

beneﬁts, they will be included in the Annual Report on Remuneration, as required.

Reasonable costs of travel and accommodation for business purposes are reimbursed to Non-Executive Directors. On the limited occasions when it is appropriate for a

Non-Executive Director’s spouse or partner to attend, such as to a business event, the Company will meet these costs. The Company will meet any tax liabilities that may

arise on such expenses.

Fee levels may be varied (either up or down) during the three-year period that the Remuneration Policy operates to ensure they continue to appropriately recognise the time

commitment and responsibilities of the role, increases or decreases to fee levels for Non-Executive Directors in general and fee levels in companies of a similar size and complexity.

Group Employee Director

The Group Employee Director’s fee is in line with the basic fee of the Non-Executive Directors and is payable in addition to the remuneration received as an employee of the

respective Group operating company, which includes participation in any beneﬁt and incentive arrangements and pension scheme.

Consideration of shareholder views

As part of the Remuneration Policy review, the Committee consulted with our top shareholders (who collectively held c.70% of our outstanding share capital at the time of consultation) inviting

them to provide feedback on our proposed Remuneration Policy. The consultation process allowed us to ensure shareholders views were considered in shaping the Company’s Remuneration Policy.

The Committee values its continued dialogue with shareholders and engages directly with them and their representative bodies at the earliest opportunity. Shareholder feedback received in relation

to the AGM, as well as any additional feedback and guidance received during the year, is also considered by the Committee when developing the Company’s remuneration framework and practices.

Sally Cabrini

Chair, Remuneration Committee

11 June 2024

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Compliance with the Corporate Governance Code

Remuneration policies and practices designed to support strategy

The Directors’ Remuneration Policy, which if approved will apply from the 2024 AGM, was designed with consideration of the UK Corporate Governance Code. The majority of the Executive Directors’ remuneration

is through performance-related incentives linked to the Group’s strategic goals. Half of any Executive Director’s annual bonus that vests under the EABP is deferred into shares that vest after three years. Any awards

that vest under the LTIP are subject to a further two-year holding period. Additionally, the Executive Directors have shareholding guidelines and post-cessation shareholding guidelines provide a clear link to the

Group’s ongoing performance and shareholder experience. See pages 144-155 for the 2024 policy.

Formal and transparent procedure for developing policy on executive remuneration

FirstGroup welcomes open and frequent dialogue with shareholders on its approach to remuneration. Major shareholders have been consulted on the Committee’s approach to remuneration.

Directors to exercise independent judgment and discretion when authorising remuneration outcomes

The Remuneration Policy allows for the use of discretion to adjust the formulaic incentive outcomes if they are not reﬂective of underlying performance of the Group. As noted under Provision 37, discretion has been

applied to reduce formulaic outcomes under the EABP in FY 2020 and FY 2021, resulting in no bonus being awarded in either year. The Committee also used its discretion to apply a downward adjustment resulting

in an overall reduction of 10% of the 2020 LTIP award that vested in June 2023.

32 Establish a remuneration committee

The Company has a Remuneration Committee in accordance with the requirements of the Code.

33 Delegation of responsibilities and review of workforce remuneration and related policies

When determining senior team pay the Committee considers it in the context of wider workforce pay, policies and practices. Each year, a number of items are tabled at Committee meetings to ensure the approach

throughout the Group is fair. See pages 128-129 for further information.

34 Non-executive director remuneration

The Company’s NEDs each receive an annual fee reﬂecting the time commitment for their roles. An additional fee is paid to the Senior Independent Director and Chairs of the Audit, Remuneration and Responsible

Business Committees to reﬂect the additional time commitment associated with these roles. The NEDs do not receive any performance-related pay or equity awards. NEDs are permitted to buy shares in the

Company, subject to the Company’s share dealing code. See page 136 for fees paid to NEDs and the Chairman.

35 Consultants appointed by the committee

Willis Towers Watson was appointed by the Committee in FY 2020.

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Compliance with the Corporate Governance Code

36 Remuneration schemes should promote long-term holdings by executive directors

Executive Directors are required to hold shares to the value of 200% of base salary within ﬁve-years of appointment. Post-cessation, Executive Directors must maintain 100% of their in-employment shareholding

guideline in the ﬁrst year following employment, dropping to 50% in the second year (or the full actual holding if lower).

37 Use of discretion

As noted in Principle R, the Committee has the ability to use discretion to override formulaic outcomes.

The Committee used their discretion to reduce formulaic outcomes under the FY 2020 and FY 2021 EABP, resulting in no payout in both years, to ensure performance is reﬂective of the Company’s underlying

performance and aligned with the shareholder experience. The Committee also used its discretion to apply a downward adjustment resulting in an overall reduction of 10% of the 2020 LTIP award that vested in June

2023. Additionally, malus and clawback provisions apply to both the EABP and LTIP.

38 Only basic salary to be pensionable

The Company complies with this provision and pension contributions are aligned with the wider workforce. See page 130 for further information.

39 Notice and contractual periods

The notice and contractual periods for the Executive Directors are for one year.

40 Matters to be addressed by the committee when determining remuneration

The current remuneration structures address the principles of clarity, simplicity, risk, predictability, proportionality and alignment to culture. See page 144 for further detail on how the agreed Remuneration Policy

addresses these factors.

41 Report on the work of the committee and reporting requirements

The strategic rationale for our Executive Director remuneration policies and structures is set out in the Remuneration Committee Chair’s letter on pages 124-126 and in the Annual Report on Remuneration

on pages 130-143. The Committee is satisﬁed that the remuneration outcomes are appropriate, considering internal and external measures and the wider workforce pay.

We encourage an open dialogue with shareholders on executive remuneration matters.

In developing the Remuneration Policy we consider alignment with the wider workforce pay policies. The Remuneration Committee Chair regularly attends Employee Director Forums and answers questions

about executive remuneration.

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Directors’ report and additional disclosures

The Directors present their report on the affairs

of the Group, together with the audited financial

statements and the report of the auditor for the

53 weeks ended 30 March 2024. Information

required to be disclosed in the Directors’ report

may be found below and is incorporated into

the Directors’ report by cross reference to the

following sections of the Annual Report and

financial statements in accordance with the

Companies Act 2006 (the 2006 Act) and Listing

Rule 9.8.4R of the Financial Conduct Authority.

Information

Page

Sustainability governance

Greenhouse gas emissions

Likely future developments in

the business

Risk factors and principal risks;

going concern and viability statements

85 to 97

Governance arrangements;

human rights and anti‑corruption

and bribery matters

Long‑term incentive schemes

148

Financial instruments and related

market transactions

182 to 183

216 to 222

Directors

The Directors of the Company who served

during the year, and those appointed after the

end of the financial year, are shown on pages

106 to 108.

Details of the Directors’ interests in shares can

be found in the Directors’ Remuneration report

on page 139.

During the year, no Director had any interest

in any shares or debentures in the Company’s

subsidiaries, or any material interest in any

contract with the Company or a subsidiary

being a contract of significance in relation

to the Company’s business.

Powers of the Directors

The Directors are responsible for the

management of the business of the Company

and may exercise all powers of the Company

subject to applicable legislation and regulation

and the Company’s Articles.

Conflicts of interest

The Directors have a statutory duty under

the Companies Act 2006 to avoid situations

in which they have, or can have, a direct or

indirect interest that conflicts, or may conflict,

with the interests of the Company. This duty is

in addition to the existing duty that a Director

owes to the Company to disclose to the Board

any transaction or arrangement under

consideration by the Company. The Company’s

conflict of interest procedures are reflected in

the Articles. In line with the Companies Act

2006, the Articles allow the Directors to

authorise conflicts and potential conflicts

of interest where appropriate. The decision

to authorise a conflict can only be made by

non‑conflicted Directors. Directors do not

participate in decisions concerning their

own remuneration or interests.

The Company Secretary minutes the

consideration of any conflict or potential

conflict of interest and authorisations granted

by the Board. On an ongoing basis, the

Directors inform the Company Secretary of

any new, actual or potential conflict of interest

that may arise or if there are any changes in

circumstances that may affect an authorisation

previously given. Even when authorisation

is given, a Director is not absolved from their

duty to promote the success of the Company.

Furthermore, the Articles include provisions

relating to confidential information, attendance

at Board meetings and availability of Board

papers to protect a Director from breaching

their duty if a conflict of interest arises.

These provisions will only apply where the

circumstance giving rise to the potential conflict

of interest has previously been authorised by

the Directors. The Board considers that the

formal procedures for managing conflicts of

interest currently in place have operated

effectively during the year under review.

Election and re‑election of Directors

Directors are required under the Articles to

submit themselves for election by shareholders

at the AGM following their appointment by

the Board. Also, in accordance with best

practice and the Code, all of our Directors

put themselves forward for re‑election by

shareholders annually and will do so at

the AGM on 26 July this year.

Directors’ indemnities and

liability insurance

FirstGroup maintains liability insurance for its

Directors and Officers. The Company has also

granted indemnities to the extent permitted

by law to each of the Directors, the Company

Secretary and a number of other executives

and senior managers. These indemnities are

uncapped in amount in relation to certain

losses and liabilities which they may incur

to third parties in the course of acting as a

Director or Officer of the Company or any of its

associated companies. Neither the indemnity,

nor insurance cover provides cover in the event

a Director or Officer is proved to have acted

fraudulently or dishonestly. The indemnity

is categorised as a ‘qualifying third‑party

indemnity’ for the purposes of the Companies

Act 2006 and will continue in force for

the benefit of Directors and Officers on

an ongoing basis.

Disclosure of information

to the external auditor

Each of the Directors who held office at the

date of approval of this report confirm that, so

far as they are aware, there is no relevant audit

information (being information needed by the

auditor in connection with preparing their audit

report), of which the Company’s auditor is

unaware, and each of the Directors has taken

all the steps that they ought reasonably to have

taken as a Director in order to make themselves

aware of any relevant audit information and to

establish that the Company’s auditor is aware

of that information.

This confirmation is given and should be

interpreted in accordance with the provisions

of Section 418 of the Companies Act 2006.

Share capital

As at 30 March 2024, the Company’s issued

share capital was 750,695,015 ordinary shares

of 5 pence, each credited as fully paid and the

Company held 110,880,572 of these shares in

treasury, and the issued share capital of the

Company which carries voting rights of one

vote per share comprised 639,814,443 ordinary

shares. Given the ongoing buyback

programme, these figures continue to change

– announcements are made to the market

each day that shares are repurchased.

Further details of the Company’s issued share

capital are shown in note 28 to the Company’s

financial statements.

The Company’s shares are listed on the

London Stock Exchange.

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Directors’ report and additional disclosures

continued

Substantial shareholdings

As at 30 March 2024, the Company had been notified under the FCA’s Disclosure, Guidance

and Transparency Rule of the following interests in its total voting rights of 3% or more:

Name of shareholder

Number of

ordinary shares

% of total

voting rights

Date of

notification

Ameriprise Financial, Inc.

80,699,728

12.59

19 March 2024

Schroders Plc

70,053,170

10.93

20 March 2024

Majedie Asset Management Limited

60,915,714

4.99

3 February 2021

Aberforth Partners LLP

33,717,348

4.97

6 September 2023

Lombard Odier Asset Management Limited

55,461,667

4.54

16 December 2020

Coast Capital Management LP

25,169,383

3.35

20 May 2022

Between 30 March 2024 and the date of this report:

Name of shareholder

Number of

ordinary shares

% of total

voting rights

Date of

notification

BlackRock, Inc

32,025,072

5.01

23 April 2024

Schroders Plc

63,587,135

9.99

29 April 2024

BlackRock, Inc

n/a

below 5%

14 May 2024

BlackRock, Inc

31,599,564

5.00

27 May 2024

Articles of Association

The description in this section summarises

certain provisions of the Company’s Articles

and applicable Scottish law concerning

companies. This summary is qualified in its

entirety by reference to this Company’s Articles

and the Companies Act 2006. The Company’s

Articles may be amended by a special

resolution of the Company’s shareholders.

The rights attached to the ordinary shares of

the Company are defined in the Company’s

Articles. No person has any special rights

of control over the Company’s share capital

and all issued shares are fully paid.

Transfer of shares

There are no specific restrictions on the size

of a holding, nor on the transfer of shares which

are both governed by the general provisions

of the Company’s Articles and prevailing

legislation. The Directors are not aware of any

agreements between holders of the Company’s

shares that may result in restrictions on the

transfer of securities or on voting rights at

any meeting of the Company.

Going concern and viability

Directors are required to consider if it is

appropriate to adopt the going concern basis

of accounting. Disclosure of the Directors’

deliberations to determine whether it is

appropriate to adopt the going concern basis

of accounting in addition to consideration of

whether there are any material uncertainties

which may affect the Group’s ability to continue

to adopt this basis can be found in the Going

concern statement on page 97, the Audit

Committee report on starting on page 116 and

in note 2 to the financial statements. In

summary, the Directors have concluded that it

is appropriate to prepare the financial

statements on a going concern basis.

Directors are also required to provide a broader

assessment of viability over a longer period,

which can be found on page 96.

Employee share plans

The Company operates a number of employee

share plans, details of which are set out in note

36 and in the Directors’ Remuneration Report

that starts on page 124.

All of the Company’s employee share plans

contain provisions relating to change of control.

On a change of control, options and awards

granted to employees may vest and become

exercisable, subject to the satisfaction of any

applicable performance conditions at the time.

Voting rights

Shareholders are entitled to attend and vote

at any general meeting of the Company. It is

the Company’s practice to hold a poll on every

resolution at general meetings. This means that

each member present in person or by proxy

has one vote for every share held. In the case of

joint holders the vote of the senior shareholder

who tenders a vote, whether in person or by

proxy, shall be accepted to the exclusion of

the votes of the other joint holders and, for this

purpose, seniority shall be determined by the

order in which the names stand in the Register

of Members in respect of the joint holding.

Dividend rights

Shareholders may by ordinary resolution

declare dividends but the amount

of the dividend may not exceed the

amount recommended by the Board.

Employment of disabled persons

Applicants with disabilities are given full

and fair consideration during recruitment

processes. We are committed to supporting

employees with disabilities with regard to

training, career development and promotion.

Our policies on employee consultation and

on equal opportunities for all employees

can be found on pages 65 to 68.

Employee engagement

We remain committed to employee involvement

throughout the Group. Employees are kept

well informed of the performance and strategy

of the Group and other matters of concern

through a variety of means including personal

briefings, regular meetings, email and

broadcasts by the Group Chief Executive

and other senior managers. Refer to page 68

for further information.

Stakeholder engagement

The Board has determined that the Group’s

stakeholders are customers, investors,

government, employees, communities and our

strategic partners and suppliers. The Board is

aware that its actions and decisions impact

our stakeholders. Effective engagement with

stakeholders is important to the Board as it

strengthens the business and helps to deliver

a positive result for all our stakeholder groups.

In order to comply with Section 172 of the

Companies Act, the Board is required to take

into consideration the interests of stakeholders

and include a statement setting out the way

in which Directors have discharged this duty

during the year. The Group’s stakeholders are

identified on pages 98 to 100 of the Strategic

report and the statement of compliance

with Section 172 is set out on pages 101 and

102. Further information on workforce

engagement can also be found on page 68.

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Directors’ report and additional disclosures

continued

Purchase of own shares

At the AGM of the Company in 2023 authority

was granted for the Company to purchase up

to 14.99% of its ordinary shares. The Company

announced a £115m buyback programme on

8 June 2023 under the authority granted at

the 2023 AGM and restricted this to 14.99%

of the issued share capital on the day before

the programme commenced. The Company

anticipates seeking authority to purchase

up to 14.99% of its ordinary shares at the

AGM in 2024.

Political donations

At the 2023 AGM, shareholders passed

a resolution to authorise the Company and

its subsidiaries to make political donations

to political parties or independent election

candidates, to other political organisations, or

to incur political expenditure (as such terms are

defined in Sections 362 to 379 of the 2006 Act),

in each case in amounts not exceeding

£100,000 in aggregate. As the authority

granted at the 2023 AGM will expire, renewal

of this authority will be sought at this year’s

AGM. Further details are available in the

Notice of AGM.

As a result of the broad definition used in

the 2006 Act of matters constituting political

donations, it is possible that normal business

activities, which might not be thought to be

political expenditure in the usual sense, could

be covered. Accordingly, authority is being

sought as a precaution to ensure that the

Company’s normal business activities do not

infringe the 2006 Act, but it is not the policy

of the Company to make donations to UK or

EU political organisations, nor to incur other

political expenditure in the UK or EU.

No political donation nor expenditure was

incurred by the Company and its subsidiaries

during FY 2024.

First Rail

The Group’s contracted passenger rail

operators, First Greater Western Limited,

First MTR South Western Trains Limited

(jointly owned with MTR Corporation) and

First Trenitalia West Coast Rail Limited

(jointly owned with Trenitalia) are each

party to a contractual agreement with the

Secretary of State for Transport. These

agreements are subject to termination clauses

which may apply on a change of control.

First MTR South Western Trains Limited,

First Greater Western Limited, First Trenitalia

West Coast Rail Limited and the Group’s

non‑contracted rail operators, Hull Trains

Company Limited and East Coast Trains

Limited, each hold railway licences as required

by the Railways Act 1993 (as amended); these

licences may be revoked on three months’

notice if a change of control occurs without

the approval of the ORR. All of these operators

also require and hold track access agreements

with Network Rail Infrastructure Limited

under which they are permitted to access

railway infrastructure.

Failure by any of the operators to maintain

its railway licence is a potential termination

event under the terms of the track access

agreements. The Group’s railway operators also

lease rolling stock from specialist rolling stock

leasing companies such as Eversholt Rail

Group, Rock Rail Limited, Beacon Rail Limited,

Porterbrook Leasing Company Limited and

Angel Trains Limited. A material number of the

individual leasing agreements include change

of control provisions. The Group is also

involved from time to time in bidding processes

for transport contracts in the UK and further

afield which customarily include change in

circumstance provisions which would be

triggered on a change of control and could

result in termination or rejection from further

participation in the relevant competitions.

Change of control –

significant agreements

Financing agreements

As at 30 March 2024, the Group had a £300m

multi‑currency revolving credit and guarantee

facility between, amongst others, the Company

and The Royal Bank of Scotland plc dated

27 August 2021, maturing in August 2026.

Following any change of control of the

Company, individual lenders may negotiate

with the Company with a view to resolving any

concerns arising from such change of control.

If the matter has not been resolved within

30 days, an individual bank may cancel its

commitment and the Company must repay

the relevant proportion of any drawdown.

The Group also had a £150m Green Hire

Purchase Finance Facility between, amongst

others, the Company and Lloyds Bank plc

dated 21 December 2023, maturing in

December 2026. Following any change of

control of the Company, individual lenders

may negotiate with the Company with a view

to resolving any concerns arising from such

change of control. If the matter has not been

resolved within 30 days, an individual bank

may cancel its remaining available commitment

under the facility and immediately terminate

any Hire Agreements already in place.

The outstanding £96.2m 6.875% bonds due

18 September 2024 issued by the Company

may also be affected by a change of control

of the Company. Upon a change of control

of the Company, provided that certain further

thresholds in relation to the credit rating

of the bonds are met, the bondholders

have the option to require the Company

to redeem the bonds.

Significant shareholders’ agreements

The Group, through First Rail Holdings Limited,

has shareholders’ agreements governing its

relationship with MTR Corporation in relation

to the SWR rail operator and with Trenitalia

in relation to the West Coast Partnership rail

operator. As is customary, these agreements

include provisions addressing change of control.

FirstGroup plc entered into a strategic

partnership with Hitachi ZeroCarbon (HZC),

via a 50:50 joint venture, to purchase up to

1,000 bus batteries as part of its fleet

decarbonisation journey.

Post balance sheet events

Information on material events that occurred

from 30 March 2024 to the date of this report

can be found on page 248 and in note 39.

Branch disclosure

The Group has a branch in France

(First Travel Solutions Ltd), which was

established on 28 March 2019.

Streamlined Energy and Carbon

Reporting (SECR) compliance

In compliance with the SECR requirements,

our GHG emissions and our energy

consumption and energy and emissions

reduction initiatives are reported on page 57.

Management report

The Strategic and Directors’ reports together

are the management report for the purposes

of the FCA’s DGTR 4.1.5R.

The Directors’ report was approved on behalf

of the Board on 11 June 2024.

David Blizzard

Company Secretary

11 June 2024

395 King Street, Aberdeen AB24 5RP

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Statement of Directors’ responsibilities

Statement of Directors’

responsibilities in respect

of the financial statements

The Directors are responsible for preparing

the Annual Report and Accounts 2024 and

the financial statements in accordance with

applicable law and regulation.

Company law requires the Directors to prepare

financial statements for each financial year.

Under that law the Directors have prepared the

Group financial statements in accordance with

UK‑adopted international accounting standards

and the Company financial statements in

accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom

Accounting Standards, comprising FRS 101

‘Reduced Disclosure Framework’, and

applicable law).

Under company law, Directors must not

approve the financial statements unless

they are satisfied that they give a true and fair

view of the state of affairs of the Group and

Company and of the profit or loss of the Group

for that period. In preparing the financial

statements, the Directors are required to



select suitable accounting policies and then

apply them consistently



state whether applicable UK‑adopted

international accounting standards have been

followed for the Group financial statements,

and United Kingdom Accounting Standards,

comprising FRS 101, have been followed for

the Company financial statements, subject

to any material departures disclosed and

explained in the financial statements; make

judgements and accounting estimates that

are reasonable and prudent



prepare the financial statements on the going

concern basis unless it is inappropriate to

presume that the Group and Company will

continue in business

The Directors are responsible for safeguarding

the assets of the Group and Company and

hence for taking reasonable steps for the

prevention and detection of fraud and

other irregularities.

The Directors are also responsible for keeping

adequate accounting records that are sufficient

to show and explain the Group’s and

Company’s transactions and disclose with

reasonable accuracy at any time the financial

position of the Group and Company and enable

them to ensure that the financial statements

and the Directors’ Remuneration report, comply

with the Companies Act 2006.

The Directors are responsible for the

maintenance and integrity of the Company’s

website. Legislation in the United Kingdom

governing the preparation and dissemination

of financial statements may differ from

legislation in other jurisdictions.

Directors’ confirmations

Each of the Directors, whose names and

functions are listed in the Governance report,

confirm that, to the best of their knowledge:



the Group financial statements, which have

been prepared in accordance with UK‑

adopted international accounting standards,

give a true and fair view of the assets,

liabilities, financial position and profit of the

Group



the Company financial statements, which have

been prepared in accordance with United

Kingdom Accounting Standards, comprising

FRS 101, give a true and fair view of the

assets, liabilities and financial position of

the Company



the Strategic report includes a fair review of

the development and performance of the

business and the position of the Group and

Company, together with a description of the

principal risks and uncertainties that it faces

In the case of each Director in office at the date

the Directors’ report is approved:



so far as the Director is aware, there is no

relevant audit information of which the Group’s

and Company’s auditors are unaware; and



they have taken all the steps that they ought

to have taken as a Director in order to make

themselves aware of any relevant audit

information and to establish that the Group’s

and Company’s auditors are aware of

that information.

Ryan Mangold

Chief Financial Officer

11 June 2024

395 King Street,

Aberdeen AB24 5RP

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Independent auditors’ report to the members of FirstGroup plc

Report on the audit of the ﬁnancial statements

Opinion

In our opinion:



FirstGroup plc’s group financial statements and company financial statements (the “financial

statements”) give a true and fair view of the state of the group’s and of the company’s affairs as

at 30 March 2024 and of the group’s loss and the group’s cash flows for the 53 week period

then ended;



the group financial statements have been properly prepared in accordance with UK‑adopted

international accounting standards as applied in accordance with the provisions of the Companies

Act 2006;



the company financial statements have been properly prepared in accordance with United

Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,

including FRS 101 “Reduced Disclosure Framework”, and applicable law); and



the financial statements have been prepared in accordance with the requirements of the

Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts 2024

(the “Annual Report”), which comprise: the Consolidated balance sheet and the Company balance

sheet as at 30 March 2024; the Consolidated income statement, the Consolidated statement of

comprehensive income, the Consolidated statements of changes in equity, the Company

statement of changes in equity, and the Consolidated cash flow statement for the period then

ended; and the notes to the financial statements, comprising material accounting policy

information and other explanatory information.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”)

and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’

responsibilities for the audit of the financial statements section of our report. We believe that the

audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are

relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical

Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non‑audit services prohibited by the

FRC’s Ethical Standard were not provided.

Other than those disclosed in Note 6, we have provided no non‑audit services to the company or

its controlled undertakings in the period under audit.

Our audit approach

Context

The group consists of two main divisions, Rail and Bus. In the Rail division, all train operating

companies have continued to be operating under contracts with the Department for Transport (“DfT”)

with Great Western Railway (GWR) and South Western Railway (SWR) on National Rail Contracts for

the full year and Avanti West Coast (AWC) under an Emergency Recovery Measures Agreement

(ERMA) until October 2023 before moving onto a National Rail Contract. Under both types of contract

this has meant a fixed management fee was received to operate at agreed service levels, as well as a

performance‑based fee element. The structure of the contracts within the Rail division has reduced

the revenue and cost risk compared to the previous franchise arrangements. Outside of the TOCs the

Rail Division also includes Hull Trains and Lumo which have experienced growth year on year. First

Bus continued to receive government support in the way of Business Recovery Grants (BRG) in

England, Bus Emergency Scheme (BES) in Wales and Bus Service Operators Grant (BSOG) in

Scotland for the first three months of the year and has continued to receive funding in respect of the

£2 bus fare cap in England which provided further government revenue support in the Bus division

with this now extended to December 2024. The group has continued to realise value from retained

assets from the sale of US businesses with the Transit Earn Out being settled in the year and a partial

buy‑in performed in relation to legacy Greyhound pension schemes. In addition the group has exited

two Local Government Pension Schemes in the year, significantly reducing the assets and liabilities in

relation to their pensions assets and liabilities, incurring an exit cost of £146.9m as well as a gain of

£161.0m within Other Comprehensive Income from the restricted accounting surplus.

Overview

Audit scope



The scope of our audit determines where we go and what we do, the best types of audit evidence

to obtain, the right areas of operations to focus on and the resources needed to deliver this. As

group auditors we are required to obtain sufficient audit evidence from the components of the

group. We have determined there are four components for group reporting purposes.



Each Rail Train Operating Company (TOC) is a separate component, with all TOCs operating

throughout the whole year in scope for group reporting, being Great Western Railway (GWR),

South Western Railway (SWR), and Avanti West Coast (AWC).



First Bus

Key audit matters



Valuation of pension liabilities driven by salary increase, mortality, discount rate and inflation level

assumptions (group)



Valuation of complex investments within the pension assets (group)



Recoverability of the company’s investments in subsidiary undertakings (parent)

Materiality



Overall group materiality: £20,000,000 (2023: £20,000,000) based on 0.42% of revenue.



Overall company materiality: £13,600,000 (2023: £16,200,000) based on 1% of total assets.



Performance materiality: £15,000,000 (2023: £15,000,000) (group) and £10,200,000m

(2023: £12,150,000) (company).

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Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Independent auditors’ report to the members of FirstGroup plc

continued

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material

misstatement in the financial statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most

significance in the audit of the financial statements of the current period and include the most

significant assessed risks of material misstatement (whether or not due to fraud) identified by the

auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of

resources in the audit; and directing the efforts of the engagement team. These matters, and any

comments we make on the results of our procedures thereon, were addressed in the context of our

audit of the financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

The key audit matters below are consistent with last year.

Key audit matter

How our audit addressed the key audit matter

Valuation of pension liabilities driven by salary increase, mortality, discount rate and inflation

level assumptions (group)

The group has gross defined benefit obligations in

the UK and North America totalling £5,026.6m at

30 March 2024 (2023: £6,156.5m). The total

liabilities has been reduced significantly largely due

to the exit of two local government pension

schemes in the period. The valuation of pension

plan liabilities requires estimation in determining

appropriate assumptions such as salary increases,

mortality rates, discount rates and inflation levels.

Movement in these assumptions can have a

material impact on the determination of the liability.

Management uses external actuaries to assist in

determining these assumptions, and this is

considered to be the significant audit risk.

Management’s actuaries carry out the valuation of

the pension liabilities based on these assumptions.

In addition, there are restrictions under IAS19 and

IFRIC 14 as to when a net pension surplus should

be recognised, as well as balance sheet

adjustments in respect of First Rail due to the Rail

contracts. Refer to note 37 and the Critical

accounting judgements and key sources of

estimation uncertainty section in note 2. Refer to

the Audit Committee report for a description of its

assessment of this significant judgement.

We used our actuarial experts to assess whether

the assumptions used in calculating the defined

benefit liabilities for the UK, US and Canadian

Schemes were reasonable and in line with

accounting standards. We assessed whether

mortality rate assumptions were appropriate for

each plan and, where applicable, incorporated

considerations of relevant national actuarial data.

We also assessed whether the discount rate and

inflation rates were consistent with our internally

developed benchmarks and in line with market

information. We examined the salary increase

assumptions to consider whether they represent

management’s best estimate. In addition to our

significant risk areas, we reviewed the trust deeds

and statutory legislation relevant to each plan

where applicable. We tested the IFRIC 14

adjustments in respect of these plans, agreed the

value of the restrictions and found them to be

reasonable, based on the specifics of each plan.

We also assessed management’s judgement with

regard to the rail ‘contract adjustment’ and found no

exceptions. We evaluated the calculations prepared

by the external actuaries to assess whether the

disclosed pension liabilities are consistent with the

assumptions used. Where there has been updated

Funding Valuations, we have performed

completeness checks and reviewed movements in

the census data for each scheme by reference to

the latest Funding Valuation performed.

We have performed procedures on the exit of two

Local Government Pension Schemes and obtained

support for the final liability position and settlement

cost and release of the restricted surplus.

Based on procedures performed we consider that

the assumptions used to value the pension

obligation are within an acceptable range other

than a trivial difference.

We assessed the appropriateness of the related

disclosures in note 37 of the group financial

statements and consider them to be

materially appropriate.

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Financial statements

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Key audit matter

How our audit addressed the key audit matter

Valuation of complex investments within the pension assets (group)

As set out in note 37, the group has gross defined

benefit plan assets in the UK and North America

totalling £5,135.0m at 30 March 2024 (2023:

£6,220.0m) excluding agent arrangements. The

pension schemes in which the group participates

hold unquoted pooled investment vehicles which

invest in private equity, infrastructure, and property

funds. There is significant estimation uncertainty in

determining the valuation of these investments

which are based on inputs that are not directly

observable. The funds where the valuation requires

significant judgement across the group total £475m

(2023: £467m). The funds are present in the

FirstGroup UK Bus Pension Scheme. There is a

potential range of reasonable outcomes to the

valuations of these assets greater than our

materiality for the financial statements as a whole.

We obtained pricing confirmations directly from

investment managers as primary sources of

evidence. We also performed additional

procedures on investments that are more complex

in nature to evaluate whether there is any

contradictory evidence suggesting that the pricing

confirmations do not reflect an appropriate

valuation as at the balance sheet date. For

investments considered more complex these

procedures included one or more of the following:



Obtained the most recent third party controls

assurance reports and bridging letters on the

valuation procedures and investment

managers’ operations;



Reviewed the pricing of transactions taking place

close to the balance sheet date;



Performed look back testing of previous

valuations provided by investment managers to

their audited financial statements;



Performed independent internet based searches

for information suggesting any doubts in the

investment managers’ capability of pricing; and/or



Reviewed investment contributions and

distributions between the valuation date and the

balance sheet date and obtained affirmations

from investment managers that the price taken is

the latest price available where the valuation date

is different to the balance sheet date.

Based on the procedures performed we have no

findings to report.

Key audit matter

How our audit addressed the key audit matter

Recoverability of the company’s investments in subsidiary undertakings (parent)

As set out in note 5 to the Company financial

statements, investments in subsidiaries are

£738.2m (2023: £740.7m). Of this balance, £659.3m

relates to the direct and indirect ownership of the

Bus division. The investments are accounted for at

cost less provision for impairment in the Company

balance sheet at 30 March 2024. The carrying

value of the investment in Bus is supported by the

recoverable amount which has been calculated on

a value in use basis. Investments are tested for

impairment if impairment indicators exist. If such

indicators exist, the recoverable amounts of the

investments in subsidiaries are estimated in order

to determine the extent of any impairment loss.

Consideration is also given to whether there are

indications that impairments previously booked

should be reversed. Management have prepared a

value in use model which shows headroom

compared to the carrying value of the investment.

This is considered a significant audit risk.

Judgement is required in this area, particularly in

assessing whether the carrying value of an asset

can be supported by the recoverable value, being

the higher of fair value less cost of disposal or the

net present value of future cash flows which are

estimated based on the continued use of the asset

in the business. Refer to note 5 in the Plc company

accounts and the Critical accounting judgements

and key sources of estimation uncertainty section

in note 1.

The recoverable value of the investment in First

Bus subsidiaries was determined from the

discounted future cash flows of the Bus division.

We obtained management’s value in use

impairment assessment and ensured the

calculations were mathematically accurate. We

evaluated the inputs in the value in use calculation

and challenged the key assumptions including:



The operating margins forecast to be

achieved, noting that the margins in the

terminal year are consistent with those

achieved in the industry pre‑covid;



Using our internal valuation experts to

calculate an independent WACC rate range,

with reference to comparable businesses, and

to assess whether management’s rate is

within a reasonable range;



With the support of internal valuation experts

assessing the long‑term growth rate applied.

We evaluated the extent to which the

considerations of climate change, such as

capital expenditure on battery, electric and

hydrogen fuel cell vehicle fleets had been

reflected in the underlying cash flows. We

verified adjustments made to the value in use

in respect of external and intercompany debt

within the subsidiaries.

Based on our procedures we did not identify

any matters indicating that management’s model

was inappropriate.

We have assessed the disclosures provided and

consider them to be appropriate. For non‑Bus

investments we have assessed the value of the US

investment to the net assets which provides

sufficient support.

Independent auditors’ report to the members of FirstGroup plc

continued

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an

opinion on the financial statements as a whole, taking into account the structure of the group and

the company, the accounting processes and controls, and the industry in which they operate.

The group is organised into two operating divisions, First Bus and First Rail. There are 134

reporting units within the consolidation, the majority of which are inactive although there is some

trading activity in nine reporting units in addition to those included in group reporting scope. We

have defined a component as a business unit where legal entities have been grouped together

based on the fact they have the same management, the same control environment and also

considering the way the component reports to the group. We have determined there are four

components required for group reporting as follows: SWR, GWR, AWC and First Bus. We have

performed audit procedures over significant or large balances outside of the in scope entities and

performed analytics over all out of scope entities.

The impact of climate risk on our audit

As part of our audit we made enquiries of management to understand the process management

on climate change adopted to assess the extent of the potential impact of climate risk on the

group’s financial statements and support the disclosures made within the Note 2 and Note 11.

In addition to enquiries with management, we also:



Read the governance processes in place to assess climate risk



Read additional reporting made by the entity on climate including its Environmental Performance

Report 2024

We challenged the completeness of management’s climate risk assessment by:



Reading external reporting made by management including the Carbon Disclosure

Project submissions



Reading the entity’s website /communications for details of climate related impacts

Management has made commitments to operate a fully zero emission Bus fleet by 2035.

Management considers the impact of climate risk does give rise to a potential material financial

statement impact.

The key areas of the financial statements where management evaluated that climate risk has a

potential significant impact are disclosures relating to impairment assessment of goodwill and

carrying value of investments in subsidiaries.

Using our knowledge of the business we evaluated management’s risk assessment, its estimates

as set out in note 2 of the financial statements and resulting disclosures where significant. We

considered the following areas that could potentially be materially impacted by climate risk and

consequently we focused our audit work in these areas:



Valuation of goodwill



Carrying value of investment is subsidiaries

To respond to the audit risks identified in these areas we tailored our audit approach to address

these, in particular, we:



Challenged management on how the impact of climate commitments made by the group would

impact the assumptions within the discounted cash flows prepared by management that are used

in the group’s impairment analysis.



Evaluated whether the impact of both physical and transition risks arising due to climate risk had

been appropriately included in the recoverable value of the group’s assets.



Challenged whether the impact of climate risk in the Directors’ assessments and disclosures of

going concern and viability were consistent with management’s climate impact assessment

We also considered the consistency of the disclosures in relation to climate change (including the

disclosures in the Task Force on Climate‑related Financial Disclosures (TCFD) section) within the

Annual Report with the financial statements and our knowledge obtained from our audit

Our procedures did not identify any material impact in the context of our audit of the financial

statements as a whole, or our key audit matters for the period ended 30 March 2024.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative

thresholds for materiality. These, together with qualitative considerations, helped us to determine

the scope of our audit and the nature, timing and extent of our audit procedures on the individual

financial statement line items and disclosures and in evaluating the effect of misstatements, both

individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a

whole as follows:

Financial statements – group

Financial statements – company

Overall materiality

£20,000,000 (2023: £20,000,000).

£13,600,000 (2023: £16,200,000).

How we determined it

Based on 0.42% of revenue

Based on 1% of total assets

Rationale for benchmark applied

Revenue is considered to be the

most appropriate benchmark for

the financial year. In the

engagement leader’s judgement

£20 million is an appropriate

materiality for a group of the scale

and size of FirstGroup plc.

The entity is a holding company

of the rest of the group and is

not a trading entity. Therefore

an asset based measure is

considered appropriate.

Independent auditors’ report to the members of FirstGroup plc

continued

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Financial statements

FirstGroup Annual Report and Accounts 2024

For each component in the scope of our group audit, we allocated a materiality that is less than

our overall group materiality. The range of materiality allocated across components was between

£13,500,000 and £19,000,000.

We use performance materiality to reduce to an appropriately low level the probability that the

aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically,

we use performance materiality in determining the scope of our audit and the nature and extent of

our testing of account balances, classes of transactions and disclosures, for example in

determining sample sizes. Our performance materiality was 75% (2023: 75%) of overall materiality,

amounting to £15,000,000 (2023: £15,000,000) for the group financial statements and

£10,200,000m (2023: £12,150,000) for the company financial statements.

In determining the performance materiality, we considered a number of factors – the history of

misstatements, risk assessment and aggregation risk and the effectiveness of controls – and

concluded that an amount at the upper end of our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during

our audit above £1,000,000 (group audit) (2023: £1,000,000) and £680,000 (company audit)

(2023: £810,000) as well as misstatements below those amounts that, in our view, warranted

reporting for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the Directors’ assessment of the group’s and the company’s ability to continue to

adopt the going concern basis of accounting included:



obtaining and agreeing management’s going concern assessment to the business’s Board‑

approved plan and ensuring that the base case scenario indicates that the business generates

sufficient cash flows to meets its obligations within the going concern assessment period while

complying with covenant arrangements;



considering the extent to which the group’s and company’s future cash flows might be adversely

affected by discontinuation of Government support and the impact of contingent liabilities,

pending litigation, or cost of living;



reviewing management’s cash flow forecasts, assessing the existing sources of finance and

considering the overall impact on liquidity;



ensuring the mathematical accuracy of management’s models;



evaluating management’s severe but plausible scenario and ensuring this is appropriately

modelled through the cash flows;



considering the risk of breach of the covenant arrangements in place for external borrowings

under the severe but plausible scenario;



evaluating whether the cash flows in the going concern period include the costs associated with

achieving the group’s climate change goals such as capital expenditure on battery, electric and

hydrogen fuel cell vehicle fleet;



performing further sensitivity analysis on the severe but plausible scenario;



considering the adequacy of the disclosures in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to

events or conditions that, individually or collectively, may cast significant doubt on the group’s and

the company’s ability to continue as a going concern for a period of at least twelve months from

when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the Directors’ use of the going

concern basis of accounting in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a

guarantee as to the group’s and the company’s ability to continue as a going concern.

In relation to the Directors’ reporting on how they have applied the UK Corporate Governance

Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in

the financial statements about whether the Directors considered it appropriate to adopt the going

concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are

described in the relevant sections of this report.

Independent auditors’ report to the members of FirstGroup plc

continued

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Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial

statements and our auditors’ report thereon. The Directors are responsible for the other

information. Our opinion on the financial statements does not cover the other information and,

accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated

in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or our knowledge obtained in the audit, or otherwise appears to be

materially misstated. If we identify an apparent material inconsistency or material misstatement,

we are required to perform procedures to conclude whether there is a material misstatement of the

financial statements or a material misstatement of the other information. If, based on the work we

have performed, we conclude that there is a material misstatement of this other information, we

are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors’ report and additional disclosures, we also

considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also

to report certain opinions and matters as described below.

Strategic report and Directors’ report and additional disclosures

In our opinion, based on the work undertaken in the course of the audit, the information given in

the Strategic report and Directors’ report and additional disclosures for the period ended

30 March 2024 is consistent with the financial statements and has been prepared in accordance

with applicable legal requirements.

In light of the knowledge and understanding of the group and company and their environment

obtained in the course of the audit, we did not identify any material misstatements in the Strategic

report and Directors’ report and additional disclosures.

Directors’ remuneration

In our opinion, the part of the Remuneration Committee report to be audited has been properly

prepared in accordance with the Companies Act 2006.

Corporate governance statement

The Listing Rules require us to review the Directors’ statements in relation to going concern,

longer‑term viability and that part of the corporate governance statement relating to the company’s

compliance with the provisions of the UK Corporate Governance Code specified for our review.

Our additional responsibilities with respect to the corporate governance statement as other

information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following

elements of the corporate governance statement is materially consistent with the financial

statements and our knowledge obtained during the audit, and we have nothing material to add or

draw attention to in relation to:



The Directors’ confirmation that they have carried out a robust assessment of the emerging and

principal risks;



The disclosures in the Annual Report that describe those principal risks, what procedures are in

place to identify emerging risks and an explanation of how these are being managed or mitigated;



The Directors’ statement in the financial statements about whether they considered it appropriate

to adopt the going concern basis of accounting in preparing them, and their identification of any

material uncertainties to the group’s and company’s ability to continue to do so over a period of at

least twelve months from the date of approval of the financial statements;



The Directors’ explanation as to their assessment of the group’s and company’s prospects, the

period this assessment covers and why the period is appropriate; and



The Directors’ statement as to whether they have a reasonable expectation that the company will be

able to continue in operation and meet its liabilities as they fall due over the period of its assessment,

including any related disclosures drawing attention to any necessary qualifications or assumptions.

Our review of the Directors’ statement regarding the longer‑term viability of the group and company

was substantially less in scope than an audit and only consisted of making inquiries and considering

the Directors’ process supporting their statement; checking that the statement is in alignment with

the relevant provisions of the UK Corporate Governance Code; and considering whether the

statement is consistent with the financial statements and our knowledge and understanding of the

group and company and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the

following elements of the corporate governance statement is materially consistent with the

financial statements and our knowledge obtained during the audit:



The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced

and understandable, and provides the information necessary for the members to assess the

group’s and company’s position, performance, business model and strategy;



The section of the Annual Report that describes the review of effectiveness of risk management

and internal control systems; and



The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the Directors’ statement

relating to the company’s compliance with the Code does not properly disclose a departure from a

relevant provision of the Code specified under the Listing Rules for review by the auditors.

Independent auditors’ report to the members of FirstGroup plc

continued

167

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Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Responsibilities for the financial statements and the audit

Responsibilities of the Directors for the financial statements

As explained more fully in the Statement of Directors’ responsibilities, the Directors are

responsible for the preparation of the financial statements in accordance with the applicable

framework and for being satisfied that they give a true and fair view. The Directors are also

responsible for such internal control as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the group’s

and the company’s ability to continue as a going concern, disclosing, as applicable, matters

related to going concern and using the going concern basis of accounting unless the Directors

either intend to liquidate the group or the company or to cease operations, or have no realistic

alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non‑compliance with laws and regulations.

We design procedures in line with our responsibilities, outlined above, to detect material

misstatements in respect of irregularities, including fraud. The extent to which our procedures

are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the group and industry, we identified that the principal risks of

non‑compliance with laws and regulations related to employment laws and regulations and health

and safety legislation, and we considered the extent to which non‑compliance might have a

material effect on the financial statements. We also considered those laws and regulations that

have a direct impact on the financial statements such as Companies Act 2006 and UK tax

legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation

of the financial statements (including the risk of override of controls), and determined that the

principal risks were related to posting inappropriate journal entries including those to increase

revenue and management bias within accounting estimates. The group engagement team shared

this risk assessment with the component auditors so that they could include appropriate audit

procedures in response to such risks in their work. Audit procedures performed by the group

engagement team and/or component auditors included:



Enquiries of management at the group and divisional levels;



Enquiries of the group’s legal teams;



Enquiries with component auditors;



Review of internal audit reports in so far as they related to the financial statements;



Identifying and testing journal entries, in particular certain journal entries posted with unusual

account combinations which result in an impact to revenue; and



Challenging estimates and judgements made by management in determining significant accounting

estimates, in particular in relation to valuation of pensions liabilities, valuation of complex

investments within the pension assets and recoverability of investments held by the parent.

There are inherent limitations in the audit procedures described above. We are less likely to

become aware of instances of non‑compliance with laws and regulations that are not closely

related to events and transactions reflected in the financial statements. Also, the risk of not

detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting

from error, as fraud may involve deliberate concealment by, for example, forgery or intentional

misrepresentations, or through collusion.

Our audit testing might include testing complete populations of certain transactions and balances,

possibly using data auditing techniques. However, it typically involves selecting a limited number of

items for testing, rather than testing complete populations. We will often seek to target particular

items for testing based on their size or risk characteristics. In other cases, we will use audit sampling

to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on

the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our

auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as

a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other

purpose. We do not, in giving these opinions, accept or assume responsibility for any other

purpose or to any other person to whom this report is shown or into whose hands it may come

save where expressly agreed by our prior consent in writing.

Independent auditors’ report to the members of FirstGroup plc

continued

168

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

Independent auditors’ report to the members of FirstGroup plc

continued

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:



we have not obtained all the information and explanations we require for our audit; or



adequate accounting records have not been kept by the company, or returns adequate for our

audit have not been received from branches not visited by us; or



certain disclosures of Directors’ remuneration specified by law are not made; or



the company financial statements and the part of the Remuneration Committee report to be

audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit Committee, we were appointed by the members on

5 November 2020 to audit the financial statements for the year ended 27 March 2021 and

subsequent financial periods. The period of total uninterrupted engagement is four years, covering

the years ended 27 March 2021 to 30 March 2024.

Other matter

The company is required by the Financial Conduct Authority Disclosure Guidance and

Transparency Rules to include these financial statements in an annual financial report prepared

under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on the National

Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no

assurance over whether the structured digital format annual financial report has been prepared in

accordance with those requirements.

Matthew Mullins (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

Watford

11 June 2024

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Strategic report

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Financial statements

FirstGroup Annual Report and Accounts 2024

171

Consolidated income statement

172

Consolidated statement of comprehensive income

173

Consolidated balance sheet

174

Consolidated statement

of changes in equity

175

Consolidated cash flow statement

176

Note to the consolidated

cash flow statement

177

Notes to the consolidated

financial statements

252

Group financial summary

254

Company balance sheet

255

Company statement of changes in equity

256

Notes to the Company

financial statements

260

Shareholder information

262

Glossary

Financial

statements

170

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Financial statements

FirstGroup Annual Report and Accounts 2024

Continuing Operations

Notes

2024

£m

2023

£m

Revenue

3,5

4,715.1

4,755.0

Operating costs before LGPS pension settlement and related charges

(4,521.7)

(4,601.1)

LGPS pension settlement and related charges

(146.9)

–

Total operating costs

(4,668.6)

(4,601.1)

Operating profit

5,6

46.5

153.9

Investment income

16.7

12.3

Finance costs

(82.0)

(69.1)

(Loss)/profit before tax

(18.8)

97.1

Tax

15.1

(10.4)

(Loss)/profit from continuing operations

(3.7)

86.7

(Loss)/profit from discontinued operations

(5.7)

8.6

(Loss)/profit for the year

(9.4)

95.3

Attributable to:

Equity holders of the parent

(15.9)

87.1

Non‑controlling interests

6.5

8.2

(9.4)

95.3

Earnings per share

Earnings per share for (loss)/profit from continuing operations attributable to the ordinary equity holders of the Company

Basic earnings per share

(1.5)p

10.6p

Diluted earnings per share

(1.5)p

10.3p

Earnings per share for (loss)/profit attributable to the ordinary equity holders of the Company

Basic earnings per share

(2.4)p

11.8p

Diluted earnings per share

(2.4)p

11.4p

Adjusted results (from continuing operations)

Adjusted operating profit

204.3

161.0

Adjusted profit before tax

139.0

104.2

Adjusted EPS

16.7p

11.6p

Adjusted diluted EPS

16.1p

11.2p

Adjusted for certain items as set out in note 4. The Group has revised its definition of adjusted earnings/EPS during the year, to exclude also the impact of IFRS 16 depreciation and interest charges in relation to its rail management fee-based operations,

given the Group takes no cost risk on these rolling stock leases. The prior year comparatives have also been updated for the revised definition. There has been no other change to the calculation, or to the Group’s policy regarding adjusting items.

The accompanying notes form an integral part of this consolidated income statement.

Consolidated income statement

For the 53 weeks ended 30 March 2024/52 weeks ended 25 March 2023

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Financial statements

FirstGroup Annual Report and Accounts 2024

Notes

2024

£m

2023

£m

(Loss)/profit for the year

(9.4)

95.3

Items that will not be reclassified subsequently to profit or loss

Actuarial losses on defined benefit pension schemes

(77.7)

(150.9)

Gain on termination of LGPS participation from restricted accounting surplus

161.0

–

Deferred tax on actuarial losses/(gains) on defined benefit pension schemes

(20.2)

37.2

63.1

(113.7)

Items that may be reclassified subsequently to profit or loss

Hedging instrument movements

5.1

(6.3)

Deferred tax on hedging instrument movements

(0.5)

(1.3)

Cumulative (loss)/gain on hedging instruments reclassified to the income statement

(2.7)

10.9

Exchange differences on translation of foreign operations – continuing operations

–

0.9

Exchange differences on translation of foreign operations – discontinued operations

(6.6)

6.8

(4.7)

11.0

Other comprehensive income/(loss) for the year

58.4

(102.7)

Total comprehensive income/(loss) for the year

49.0

(7.4)

Attributable to:

Equity holders of the parent

42.5

(15.6)

Non-controlling interests

6.5

8.2

49.0

(7.4)

Total comprehensive income/(loss) for the year attributable to owners of FirstGroup plc arises from:

Attributable to:

Continuing operations

62.1

(22.6)

Discontinued operations

(13.1)

15.2

49.0

(7.4)

The accompanying notes form an integral part of this consolidated statement of comprehensive income.

Consolidated statement of comprehensive income

For the 53 weeks ended 30 March 2024/52 weeks ended 25 March 2023

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Financial statements

FirstGroup Annual Report and Accounts 2024

Notes

2024

£m

2023

£m

Non‑current assets

Goodwill

111.0

99.6

Other intangible assets

10.4

10.8

Property, plant and equipment

2,155.4

2,329.7

Deferred tax assets

39.6

47.0

Retirement benefit assets

6.4

44.6

Derivative financial instruments

0.4

0.1

Financial asset

99.6

117.6

Investments

2.6

2.5

2,425.4

2,651.9

Current assets

Inventories

25.9

26.0

Trade and other receivables

852.6

848.3

Contingent consideration receivable

–

72.3

Current tax assets

4.4

–

Cash and cash equivalents

496.5

791.4

Derivative financial instruments

2.0

7.4

1,381.4

1,745.4

Assets held for sale

0.6

8.9

Total assets

3,807.4

4,406.2

Current liabilities

Trade and other payables

1,258.6

1,314.4

Tax liabilities – Current tax liabilities

0.4

0.3

– Other tax and social security

39.6

41.4

Borrowings

626.5

554.7

Derivative financial instruments

3.4

2.6

Provisions

74.6

85.9

Current liabilities

2,003.1

1,999.3

Net current liabilities

(621.7)

(253.9)

Notes

2024

£m

2023

£m

Non‑current liabilities

Borrowings

1,018.3

1,512.3

Derivative financial instruments

1.3

1.9

Retirement benefit liabilities

31.7

16.7

Provisions

111.3

125.2

1,162.6

1,656.1

Total liabilities

3,165.7

3,655.4

Net assets

641.7

750.8

Equity

Share capital

37.5

Share premium

693.3

693.2

Hedging reserve

(1.8)

(0.7)

Other reserves

22.4

Own shares

(20.4)

(15.4)

Translation reserve

(22.9)

(16.3)

Retained earnings

(74.8)

19.5

Equity attributable to equity holders of the parent

633.3

740.2

Non‑controlling interests

8.4

10.6

Total equity

641.7

750.8

The accompanying notes form an integral part of this consolidated balance sheet.

Ryan Mangold

11 June 2024

Consolidated balance sheet

As at 30 March 2024/25 March 2023

173

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Financial statements

FirstGroup Annual Report and Accounts 2024

Consolidated statement of changes in equity

For the 53 weeks ended 30 March 2024/52 weeks ended 25 March 2023

capital

(note 28)

£m

premium

£m

Hedging

reserve

(note 29)

£m

Other

reserves

(note 29)

£m

Own

(note 29)

£m

Translation

reserve

(note 30)

£m

Retained

earnings

£m

Total

£m

Non-

controlling

interests

£m

Total

equity

£m

Balance at 27 March 2022

37.5

692.8

19.3

22.4

(9.0)

(24.0)

137.6

876.6

8.5

885.1

Profit for the period

–

87.1

8.2

95.3

Other comprehensive income/(loss) for the period

–

3.3

–

7.7

(113.7)

(102.7)

Total comprehensive income/(loss) for the period

–

3.3

–

7.7

(26.6)

(15.6)

8.2

(7.4)

Hedging instrument movements transferred to balance sheet (net of tax)

–

(23.3)

–

(23.3)

–

(23.3)

Transactions with owners in their capacity as owners

Shares issued

0.0

0.4

–

0.4

–

0.4

Shares bought back but not yet cancelled

–

(31.6)

–

(31.6)

Liability for shares not yet bought back

–

(43.9)

–

(43.9)

Dividends paid

–

(14.7)

(6.1)

(20.8)

Movement in EBT and treasury shares

–

(6.4)

–

(8.6)

(15.0)

–

(15.0)

Share-based payments

–

6.4

–

6.4

Deferred tax on share-based payments

–

0.9

–

0.9

Balance at 25 March 2023

37.5

693.2

(0.7)

22.4

(15.4)

(16.3)

19.5

740.2

10.6

750.8

Balance at 26 March 2023

37.5

693.2

(0.7)

22.4

(15.4)

(16.3)

19.5

740.2

10.6

750.8

(Loss)/profit for the period

–

(15.9)

6.5

(9.4)

Other comprehensive income/(loss) for the period

–

1.9

–

(6.6)

63.1

58.4

–

58.4

Total comprehensive income/(loss) for the period

–

1.9

–

(6.6)

47.2

42.5

6.5

49.0

Hedging instrument movements transferred to balance sheet (net of tax)

–

(3.0)

–

(3.0)

–

(3.0)

Transactions with owners in their capacity as owners

Shares issued

–

0.1

–

0.1

–

0.1

Shares bought back but not yet cancelled

–

(74.7)

–

(74.7)

Liability for shares not yet bought back

–

(41.1)

–

(41.1)

Non-controlling interest buy-out

–

(2.2)

Dividends paid

–

(29.5)

(6.5)

(36.0)

Movement in EBT and treasury shares

–

(5.0)

–

(11.5)

(16.5)

–

(16.5)

Share-based payments

–

15.6

–

15.6

Deferred tax on share-based payments

–

(0.3)

–

(0.3)

Balance at 30 March 2024

37.5

693.3

(1.8)

22.4

(20.4)

(22.9)

(74.8)

633.3

8.4

641.7

The accompanying notes form an integral part of this consolidated statement of changes in equity.

174

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Financial statements

FirstGroup Annual Report and Accounts 2024

Notes

2024

£m

2023

£m

Cash generated by operations

626.6

644.8

Tax paid

(2.2)

(1.0)

Interest paid

(81.1)

(70.0)

Net cash from operating activities

543.3

573.8

Investing activities

Interest received

15.7

6.4

Proceeds from disposal of property, plant and equipment

42.8

147.8

Purchases of property, plant and equipment

(216.9)

(173.7)

Purchases of software

(2.4)

(4.2)

Proceeds from capital grant funding

94.8

144.2

Proceeds from contingent consideration

65.3

–

Net proceeds from disposal of subsidiaries (net of cash disposed)

–

2.0

Settlement of foreign exchange hedge

4.1

(12.5)

Acquisition of businesses (net of cash acquired)

(13.6)

(30.6)

Net cash (used in)/generated from investing activities

(10.2)

79.4

Financing activities

Shares purchased by Employee Benefit Trust

(16.5)

(15.3)

Treasury shares purchased via share buyback scheme and directly associated costs

(117.6)

(31.6)

External dividends paid

(29.5)

(14.7)

Dividends paid to non-controlling shareholders

(6.5)

(6.1)

Non-controlling interest buy-out

(3.1)

–

Shares issued

–

Repayment of bond issues

(88.0)

(15.7)

Repayment of lease liabilities

(506.9)

(546.9)

Repayment of asset backed financial liabilities

(19.3)

(10.6)

Repayment of loan notes

(0.6)

–

NextGen facility drawdown

13.1

–

Fees for finance facilities

(1.4)

–

Net cash flow used in financing activities

(776.3)

(640.9)

Net (decrease)/increase in cash and cash equivalents before foreign exchange movements

(243.2)

12.3

Cash and cash equivalents at beginning of year

708.5

700.2

Foreign exchange movements

3.4

(4.0)

Cash and cash equivalents at end of year

468.7

708.5

Cash flows of discontinued operations are shown in note 21.

Notes

2024

£m

2023

£m

Reconciliation to cash flow statement

Cash and cash equivalents – balance sheet

496.5

791.4

Bank overdraft

(27.8)

(82.9)

Cash and cash equivalents at end of year per consolidated balance sheet

468.7

708.5

Consolidated cash ﬂow statement

For the 53 weeks ended 30 March 2024/52 weeks ended 25 March 2023

175

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Financial statements

FirstGroup Annual Report and Accounts 2024

Notes

2024

£m

2023

£m

Net (decrease)/increase in cash and cash equivalents in year

(243.2)

12.3

Decrease in debt excluding leases

75.5

15.7

Adjusted cash flow

(167.7)

28.0

Repayment of lease liabilities and asset backed financial liabilities

526.2

557.5

(Inception)/termination of leases and asset backed financial liabilities

(237.5)

(1,231.8)

Foreign exchange movements

3.4

(4.0)

Other non-cash movements

(0.1)

0.2

Movement in net debt in year

124.3

(650.1)

Net debt at beginning of year

(1,269.1)

(619.0)

Net debt at end of year

(1,144.8)

(1,269.1)

Management considers that adjusted cash flow is an appropriate measure for assessing the Group cash flow as it is the measure that is used to assess both Group and divisional cash performance against

budgets and forecasts. Adjusted cash flow is stated prior to cash flows in relation to debt excluding leases.

The accompanying notes form an integral part of this consolidated cash flow statement.

Note to the consolidated cash ﬂow statement – reconciliation of net cash ﬂow to movement in net debt

176

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FirstGroup Annual Report and Accounts 2024

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Financial statements

FirstGroup Annual Report and Accounts 2024

177

General information

FirstGroup plc is a company incorporated in the United Kingdom under the Companies Act 2006.

The address of the registered office is 395 King Street, Aberdeen, Scotland, United Kingdom

AB24 5RP. The nature of the Group’s operations and its principal activities are set out in the

Strategic report on pages 4 to 102.

These financial statements are presented in pounds sterling. Foreign operations are included

in accordance with the accounting policies set out in note 2.

Significant accounting policies

Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) in conformity with the requirements of the Companies Act 2006 (IFRS) and the

applicable legal requirements of the Companies Act 2006, in addition to complying with

international accounting standards in conformity with requirements of the Companies Act 2006.

The consolidated financial statements of FirstGroup plc comply with UK‑adopted international

accounting standards and with the requirements of the Companies Act 2006. These financial

statements are also prepared in accordance with IFRSs as issued by the IASB, including

interpretations issued by the IFRS Interpretations Committee, as there are no applicable

differences from IFRSs as issued by the IASB for the periods presented. There were no unendorsed

standards effective for the period ended 30 March 2024 affecting these consolidated and separate

financial statements.

The financial statements have been prepared on the historical cost basis, except for the revaluation

of certain financial instruments, and on a going concern basis as described in the going concern

statement within the Strategic report on page 96.

As set out on page 85, the Group has undertaken detailed reviews of a range of severe but plausible

financial and operational scenarios using financial outlook modelling. Based on their review of the

financial forecasts and having regard to the risks and uncertainties to which the Group is exposed,

the Directors believe that the Company and the Group have adequate resources to continue in

operational existence for at least a 12‑month period from the date on which the financial statements

were approved. Accordingly, the financial statements have been prepared on a going concern basis.

The financial statements for the 53 weeks ended 30 March 2024 include the results and financial

position of the First Rail businesses for the year ended 31 March 2024 and the results and financial

position of all the other businesses for the 53 weeks ended 30 March 2024. The financial statements

for the 52 weeks ended 25 March 2023 include the results and financial position of the First Rail

businesses for the year ended 31 March 2023 and the results and financial position of all the other

businesses for the 52 weeks ended 25 March 2023.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and

entities controlled by the Company (its subsidiaries). Control exists when the Company has power

over an investee entity, exposure to variable returns from its involvement with the entity and the

ability to use its power over the entity to affect its returns.

Non‑controlling interests in subsidiaries are identified separately from the Group’s equity interest

therein. The present ownership interests of non‑controlling shareholders entitle their holders to

a proportionate share of net assets upon liquidation, and may initially be measured at fair value,

or at the non‑controlling interests’ proportionate share of their fair value of the acquiree’s identifiable

net assets. The choice of measurement is made on an acquisition by acquisition basis. Other

non‑controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying

amount of non‑controlling interests is the amount of those interests at initial recognition plus the

non‑controlling interests’ share of subsequent changes in equity. Total comprehensive income

is attributed to non‑controlling interests even if this results in the non‑controlling interests having

a deficit balance.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated

income statement from the effective date of acquisition or up to the effective date of disposal,

as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the

accounting policies used into line with those used by the Group.

All intra‑group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

The acquisition of subsidiaries is accounted for using the acquisitions method. The consideration

for each acquisition is measured at the aggregate of the fair values, at the date of exchange,

of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in

exchange for control of the acquiree. Acquisition‑related costs are recognised in the income

statement as incurred.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions

for recognition under IFRS 3 Business Combinations are recognised at their fair value at the

acquisition date.

Notes to the consolidated ﬁnancial statements

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Financial statements

FirstGroup Annual Report and Accounts 2024

178

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Assets and disposal groups held for sale and discontinued operations

Non‑current assets, or disposal groups comprising assets and liabilities, are classified as held for

sale if it is highly probable that they will be recovered primarily through sale rather than through

continuing use. This condition is regarded as met only when the sale is highly probable and the asset

is available for immediate sale in its present condition. Management must be committed to the sale

which should be expected to qualify for recognition as a completed sale within one year of the date

of classification.

Such assets, or disposal groups, are measured at the lower of their carrying amount and fair value

less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains

and losses on remeasurement are recognised in profit or loss.

A disposal group qualifies as a discontinued operation if it is a component of an entity that either

has been disposed of, or is classified as held for sale, and:



represents a separate major line of business or geographical area of operations; or



is part of a single coordinated plan to dispose of a separate major line of business or geographical

area of operations; or



is a subsidiary acquired exclusively with a view to resale.

Discontinued operations are excluded from the results of continuing operations and are presented

as a single amount as profit or loss after tax from discontinued operations in the income statement.

Goodwill and intangible assets

Goodwill arising on consolidation is recognised as an asset at the date that control is acquired.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of

any non‑controlling interest in the acquiree and the fair value of the acquirer’s previously held equity

interest (if any) in the entity over the net of the acquisition date amounts of the identifiable assets

acquired and liabilities assumed.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash generating

units (CGUs) which are tested for impairment annually, or more frequently where there is an

indication that the CGU may be impaired. If the recoverable amount of the CGU is less than the

carrying amount of the CGU, the impairment loss is allocated to the goodwill of the CGU and then

to the other assets of the CGU pro rata on the basis of the carrying amount of each asset in the

CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period. On

disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill

is included in the determination of the profit or loss on disposal.

Computer software is recognised separately as an intangible asset and is carried at cost less

accumulated amortisation and accumulated impairment losses. Costs include software licences,

website development, costs attributable to the development, design and implementation of the

computer software and internal costs directly attributable to the software. Software is amortised

on a straight‑line basis over its useful economic life (three to five years).

Revenue recognition

Under IFRS 15 revenue is recognised when control of a good or service transfers to the customer.

The point at which goods and services are transferred to the customer is based on the fulfilment

of performance obligations.

As the Group has the right to consideration corresponding directly with the value of performance

completed to date, customer contract revenue is recognised consistent with the amount that

the Group has a right to invoice. The Group is therefore exercising the practical expedient not

to explain transaction prices allocated to unsatisfied performance obligations at the end of the

reporting period.

Revenue principally comprises revenue from train passenger services, road passenger transport,

and certain management and maintenance services in the UK. Where appropriate, amounts are

shown net of rebates and sales taxes. An explanation of the types of revenue is set out below.

Note that revenues include contractual and direct fiscal support including post‑pandemic recovery

funding. This is covered in more detail further on in this note.

Passenger revenues

Passenger revenues primarily relate to ticket sales through First Bus and the First Rail businesses.

Passenger revenue is recognised at both a point in time and over time. Ticket sales for journeys

of less than one week’s duration are recognised on the first date of travel. Ticket sales for season

tickets, travel cards and open‑return tickets are initially deferred then recognised over the period

covered by the relevant ticket. Concessionary amounts are recognised in the period in which the

service is provided.

Contract revenues

Contract revenues mainly relate to tenders in First Bus. Revenues are recognised as the services

are provided over the length of the contract and based on a transaction price which is defined in

the terms of the contract.

Rail contract subsidy receipts

Revenue in the First Rail businesses includes subsidy receipts from the Department for Transport

(DfT) for National Rail Contracts (NRCs), Emergency Recovery Measures Agreements (ERMAs),

and for FY 2023 Emergency Measures Agreements (EMAs), with amounts receivable under these

arrangements including certain funded operational projects. Revenue also includes amounts

attributable to the Train Operating Companies (TOCs), predominantly based on models of route

usage, by the Railway Settlement Plan in respect of passenger receipts. Revenue is recognised over

time as the performance obligations are met as agreed between the individual TOCs and the DfT.

Other revenues

Other revenues mainly relate to non‑rail subsidies, revenue arising from ancillary services to other rail

and road passenger service providers for maintenance, refuelling and other associated services and

to sundry third parties for the use of space at terminals and on‑board vehicles for other business

activities, e.g. retail outlets, taxi ranks, catering and advertising. Other revenues are recognised at

both a point in time and over time.

Introduction

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Financial statements

FirstGroup Annual Report and Accounts 2024

179

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Contractual and direct fiscal support

The principal direct fiscal support recognised during the year comprised £383.5m (2023: £848.8m)

of EMA/ERMA/NRC funding in the First Rail businesses, and £25.0m (2023: £76.3m) of funding and

concessions (including the £2 fare cap in England) in First Bus. These are recognised within revenue

in accordance with IFRS 15 when control of the good or service is transferred to the customer

and the Group is entitled to the consideration.

In the legacy North America business (discontinued operations), there were £nil (2022: £10.7m) of

CARES Act employee retention credits accounted for through operating costs. These amounts were

recognised as an offset to the related costs when conditions were met and expenses were incurred.

The main direct fiscal support recognised in revenue over time for each division has been as follows:

First Bus

The English, Scottish and Welsh Governments have each supported bus operators, through a variety

of funding schemes since March 2020. In England, the BRG scheme, which provided funding from

September 2021 to June 2023, has been replaced by a new scheme, BSOG+ from July 2023, under

which funding is provided through enhanced BSOG rates per litre and an additional payment per km

operated for eligible miles. In addition to this the DfT implemented a £2 cap on all single fares across

the country in January 2023 and are currently reimbursing operators for any revenue foregone as

a result of the reduced ticket prices, with the scheme now running until at least December 2024.

In Scotland, the NSG+ scheme which ran throughout FY23 has ended with the only remaining

funding being provided by the NSG scheme which essentially replaces BSOG. In Wales the BES

scheme which funded operators to a pre‑agreed margin in order to allow them to maintain the

network ended in July 2023 and has been replaced by the Bus Transition Fund (BTF) which operated

in an almost identical manner and ended in March 2024 with the Welsh Government now providing

funding through tendering non‑commercially viable routes.

The extent to which certain costs are eligible for inclusion in claiming bus support grant income

and how certain costs should be determined for the purposes of the schemes remains subject

to reconciliation processes. Income is recognised in the income statement in the same period

in which the related shortfall of revenue over costs is incurred to the extent there is reasonable

certainty that: (a) the Group will comply with the conditions attaching to the grant and (b) the

grant will be received and retained by the Group, taking account of the potential adjustments

to grant payments as a result of any reconciliation process.

First Rail

The Emergency Measures Agreements (EMAs), the Emergency Recovery Measures Agreement

(ERMAs) and the National Rail Contracts (NRCs) transferred substantially all revenue and

substantially all cost risk to the government and for the current and prior periods our First Rail

contracts were operated under the terms of these arrangements:



EMA in respect of GWR up to 26 June 2022, whereupon GWR transitioned to a new, three‑year

NRC with an option for the DfT to extend by a further three years to June 2028.



ERMA in respect of WCP/Avanti up to 16 October 2022, whereupon the existing arrangement

was extended by a further six months by the DfT to March 2023. That arrangement was again

extended to 15 October 2023, and in September, a new NRC was awarded for a nine‑year period,

with a minimum core three‑year term to 18 October 2026.



NRCs for SWR throughout both periods.



On 11 May 2023, the DfT confirmed that it would not exercise its option to extend FirstGroup’s

TransPennine Express (TPE) NRC and the contract expired on 28 May 2023. On that date the

DfT appointed its Operator of Last Resort to take over delivery of passenger services on the

TPE network.

Under the arrangements, our franchised TOCs are paid a fixed management fee to continue to

operate the rail network at a service level agreed with the government. Performance based fees are

earned through a combination of scorecards and quantified target methodologies benchmarked

off this agreed service level. Net DfT funding including the management and performance fee is

recognised as revenue in Rail contracts subsidy receipts, in line with the revenue recognition policy

for contract subsidy receipts from the DfT.

Disaggregated revenue by operating segment is set out in note 4.

Leasing

Lease identification

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract

is, or contains, a lease if the contract conveys the right to control the use of an identified asset for

a period of time in exchange for consideration.

Right of use asset

At the commencement date, the right of use asset is initially measured at cost, which comprises

the initial amount of the lease liability adjusted for any lease payments made at or before the

commencement date, less any incentives received, plus any initial direct costs incurred and an

estimate of costs to be incurred by the Group to dismantle and remove the underlying asset or

restore the underlying asset or the site on which it is located.

The right of use asset is depreciated on a straight‑line basis over the shorter of the estimated useful

life of the asset, the lease term or current contract terms for rail TOCs. In addition, the right of use

asset is periodically reduced by impairment losses, if applicable, and adjusted for certain

remeasurements of the lease liability.

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FirstGroup Annual Report and Accounts 2024

180

Notes to the consolidated ﬁnancial statements

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Significant accounting policies

continued

Lease liability

At the commencement date of the lease, the lease liability is initially measured at the present value

of lease payments to be made over the lease term. The lease payments include fixed payments

(including in‑substance fixed payments) less any lease incentives receivable, variable lease

payments that depend on an index or a rate, and amounts expected to be paid by the Group under

residual value guarantees. The lease payments also include the exercise price of a purchase option

if the Group is reasonably certain to exercise that option. Payments of penalties for terminating

a lease, if the lease term reflects the Group exercising the option to terminate the lease, are also

included. The payments are discounted at the incremental borrowing rate since the rates implicit

in the leases are not readily available.

The lease liability is measured by increasing the carrying amount to reflect the interest on the lease

liability and reducing the carrying amount to reflect the lease payments made. The carrying value

is remeasured when there is a change in future lease payments arising from a change in an index

or rate, if there is a change in the Group’s estimate of the amount expected to be payable under

a residual value guarantee, or if the Group changes its assessment of whether it will exercise

a purchase, extension or termination option.

Lease incentives

The Group assesses reimbursements from lessors, to establish whether these represent lease

incentives. Where a lease incentive is identified, the income is spread over the term of the related lease.

Short‑term leases and leases of low‑value assets

The Group applies the short‑term lease recognition exemption to selected leases that have a lease

term of 12 months or less from the commencement date and do not contain a purchase option and

where it is not reasonably certain that the lease term will be extended. It also applies the low‑value

assets recognition exemption to leases of assets of low value based on the value of the asset when

it is new, regardless of the age of the asset being leased. Lease payments on short‑term leases and

leases of low‑value assets are recognised as an expense on a straight‑line basis over the lease term.

On the balance sheet, right of use assets have been included in property, plant and equipment and

lease liabilities have been included in borrowings.

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the

primary economic environment in which it operates (its functional currency). For the purpose of the

consolidated financial statements, the results and financial position of each Group company are

expressed in pounds sterling, which is the functional currency of the Company, and the presentation

currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other

than the functional currency are recorded at the rates of exchange prevailing on the dates of the

transactions. At each balance sheet date, monetary assets and liabilities that are denominated in

foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non‑monetary

assets and liabilities carried at fair value that are denominated in foreign currencies are translated

at the rates prevailing at the date when the fair value was determined. Non‑monetary items that

are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of

monetary items, are included in profit or loss for the period. Exchange differences arising on the

retranslation of non‑monetary items carried at fair value are included in profit or loss for the period,

except for differences arising on the retranslation of non‑monetary items in respect of which gains

and losses are recognised within other comprehensive income. For such non‑monetary items, any

exchange component of that gain or loss is also recognised within other comprehensive income.

In order to hedge its exposure to certain foreign exchange risks, the Group holds currency swaps

and borrowings in foreign currencies (see note 25 for details of the Group’s policies in respect of

foreign exchange risks).

On consolidation, the assets and liabilities of the Group’s overseas operations are translated at the

closing exchange rates on the balance sheet date. Income and expense items are translated at the

average exchange rates for the period. Exchange differences arising from the average exchange

rates used and the period end rate, if any, are classified as equity and transferred to the Group’s

translation reserve. Such translation differences are recognised as income or as expenses in the

period in which the operation is disposed of.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying

assets, which are assets that necessarily take a substantial period of time to get ready for their

intended use or sale, are added to the cost of those assets, until such time as the assets are

substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Non‑GAAP measures and performance

In measuring the Group and divisional adjusted operating performance, additional financial

measures derived from the reported results have been used by management in order to eliminate

factors which distort year‑on‑year comparisons. The Group’s adjusted performance is used to

explain year‑on‑year changes when the effect of certain items is significant, including strategic items

(including material M&A and group restructuring projects), costs of acquisitions including aborted

acquisitions, and impairment of assets. Other items below £5.0m would not normally be considered

as adjusting items unless part of a larger strategic project, but items which distort year‑on‑year

comparisons that exceed this amount could potentially be classified as an adjusting item and are

assessed on a case‑by‑case basis. Such potential adjusting other items may include: restructuring

and reorganisation costs; property gains or losses; aged legal and self‑insurance claims; movements

on insurance discount rates; onerous contract provisions; pension settlement gains or losses; and

other items which management has determined as not being relevant to an understanding of the

Group’s underlying business performance. Subsequent remeasurements of adjusting items are

also recognised as an adjusting item in the future period in which the remeasurement occurs.

Management considers that this overall basis supports year‑on‑year business performance

comparisons, to underpin planning and decision making on resource allocation. The Group does

not consider the non‑GAAP measures to be more important than, or superior to, IFRS measures.

See note 4 for the reconciliation to non‑GAAP measures and performance.

Introduction

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Financial statements

FirstGroup Annual Report and Accounts 2024

181

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Retirement benefit costs

The Group operates or participates in a number of pension schemes, which include both defined

benefit schemes and defined contribution schemes.

Payments to defined contribution plans are charged as an expense as they fall due. There is no

further obligation to pay contributions into a defined contribution plan once the contributions

specified in the plan rules have been paid.

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit

Credit Method, with actuarial updates being carried out at each balance sheet date. Actuarial gains

and losses are recognised in full in the period in which they occur. They are recognised outside the

income statement and presented in the consolidated statement of other comprehensive income.

All past service costs are recognised immediately in the consolidated income statement.

Where changes to the benefits in payment on defined benefit pension schemes require a change

in scheme rules or ratification by the Trustees, the change is recognised as a past service charge

or credit in the income statement. Where changes in assumptions can be made without

changing the Trustee agreement, these are recognised as a change in assumptions in other

comprehensive income.

The retirement benefit position recognised in the balance sheet represents the present value of the

defined benefit obligation as reduced by the fair value of scheme assets. Any residual asset resulting

from this calculation is limited to refunds economically available to the Company, in the form of either

a public sector payment or the present value of future service costs recognised via suspension of

cash contributions.

Various TOCs in the First Rail business participate in the Railways Pension Scheme (RPS), which is

an industry‑wide defined benefit scheme. The Group is obligated to fund the relevant section of the

scheme over the period for which the contract is held. The full liability is recognised on the balance

sheet, which is then reduced by a ‘contract adjustment’ so that the net liability reflects the Group’s

obligations to fund the scheme over the contract term, subject to any changes in the schedule of

contributions following a statutory valuation.

Retirement benefits are also covered in the Key sources of estimation uncertainty section

of note 2 below.

Tax

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net

profit as reported in the income statement because it excludes items of income or expense that

are taxable or deductible in other years and it further excludes items that are never taxable or

deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted

or substantively enacted by the balance sheet date and includes an estimate of the tax which could

be payable as a result of differing interpretation of tax laws.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying

amounts of assets and liabilities in the financial statements and the corresponding tax bases used

in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred

tax assets are recognised to the extent that it is probable that taxable profits will be available

against which deductible temporary differences can be utilised. Such assets and liabilities are

not recognised if the temporary difference arises from the initial recognition of goodwill, or from the

initial recognition (other than in a business combination) of other assets and liabilities in a transaction

that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in

subsidiaries and associates, and interests in joint ventures, except where the Group is able to control

the reversal of the temporary difference and it is probable that the temporary difference will not

reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced

to the extent that it is no longer probable that sufficient taxable profits will be available to allow all

or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability

is settled or the asset is realised and is based on the estimated tax consequences of items that are

subject to differing interpretations of tax laws. Deferred tax is charged or credited in the income

statement, except when it relates to items charged or credited in other comprehensive income

or directly to equity, in which case the deferred tax is also dealt with within other comprehensive

income or directly in equity respectively.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current

tax assets against current tax liabilities and when they relate to income taxes levied by the same

tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.

The Group follows IFRIC 23 Uncertainty over Income Tax Treatments. IFRIC 23 sets out how

to determine the accounting tax position when there is uncertainty over income tax treatments.

The interpretation requires the Group to determine whether uncertain tax positions are assessed

separately or as a Group, and



Assess whether it is probable that a tax authority will accept an uncertain tax treatment used,

or proposed to be used, by an entity in its income tax filings:



If yes, the Group should determine its accounting tax position consistently with the tax

treatment used or planned to be used in its income tax filings.



If no, the Group should reflect the effect of uncertainty in determining its accounting tax position

using either the most likely amount or the expected value method.

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FirstGroup Annual Report and Accounts 2024

182

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Property, plant and equipment

Properties for provision of services or administrative purposes are carried at cost, less any

recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing

costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets,

on the same basis as other property assets, commences when the assets are ready for their

intended use.

Passenger carrying vehicles and other plant and equipment are stated at cost less accumulated

depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost of assets, other than freehold land, the land

element of long leasehold properties or on assets in the course of construction, over their

estimated useful lives, using the straight‑line method, on the following bases:

Freehold buildings	50 years straight‑line
Passenger carrying vehicles	seven to 17 years straight‑line
Other plant and equipment	three to 25 years straight‑line

Assets specific to Train Operating Companies are depreciated over the lesser of their estimated

useful lives or the rail contract term.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference

between the sales proceeds and the carrying amount of the asset and is recognised in income.

Capital grants

Capital grants relating to property, plant and equipment are held in other payables and released

to the income statement over the expected useful lives of the assets concerned. Capital grants are

not recognised until there is a reasonable assurance that the Group will comply with the conditions

attaching to them and that the grants will be received.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible

assets to determine whether there is any indication that those assets have suffered an impairment

loss. If any such indication exists, the recoverable amount of the asset is estimated in order to

determine the extent of the impairment loss (if any). Where the asset does not generate cash flows

that are independent from other assets, the Group estimates the recoverable amount of the CGU

to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value

in use, the estimated future cash flows are discounted to their present value using a pre‑tax discount

rate that reflects current market assessments of the time value of money and the risks specific to

the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount,

the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss

is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is

increased to the revised estimate of its recoverable amount, but so that the increased carrying

amount does not exceed the carrying amount that would have been determined had no impairment

loss been recognised for the asset or CGU in prior years. A reversal of an impairment loss is

recognised as income immediately.

Inventories

Inventories of spare parts and consumables are stated at the lower of cost and net realisable value,

after making appropriate allowances for obsolete and slow‑moving items. Cost comprises direct

materials and, where applicable, those overheads that have been incurred in bringing the inventories

to their present location and condition. Cost is calculated using the weighted average cost method.

Where the purchase of inventory was the hedged item in a cash flow hedge relationship, the initial

carrying amount of the recognised inventory is adjusted by the associated hedging gain or loss

transferred from the hedging reserve (a basis adjustment). There are no material inventory allowances.

Financial instruments

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the

Group becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets can be measured at amortised cost, fair value through profit or loss or fair value

through other comprehensive income. The measurement basis is determined by reference to both

the business model for managing the financial asset and the contractual cash flow characteristics

of the financial asset.

Financial assets are classified into one of three primary categories:

Financial assets at amortised cost

Financial assets at amortised cost are non‑derivative financial assets held for collection of

contractual cash flows where those cash flows represent solely payments of principal and interest.

Financial assets at amortised cost are subsequently measured using the effective interest method

and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is

derecognised, modified or impaired.

Fair value through profit and loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial

assets designated upon initial recognition at fair value through profit or loss, or financial assets

mandatorily required to be measured at fair value. Financial assets are classified as held for trading

if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives are

also classified as held for trading unless they are designated as effective hedging instruments.

Financial assets at fair value through profit or loss are carried in the statement of financial position

at fair value with net changes in fair value recognised in the income statement within finance costs.

Transaction costs arising on initial recognition are expensed in the income statement.

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FirstGroup Annual Report and Accounts 2024

183

Notes to the consolidated ﬁnancial statements

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Significant accounting policies

continued

Fair value through other comprehensive income

The Group does not have any financial assets held at fair value through other comprehensive income.

Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the

contractual arrangements entered into. An equity instrument is any contract that evidences a

residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments

issued by the Company are recorded at the proceeds received net of direct issue costs.

Financial liabilities

Bank borrowings

Interest‑bearing bank loans and overdrafts are measured on an amortised cost basis.

Bonds and loan notes

These are measured either on an amortised cost basis or at fair value, if designated.

Trade payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised

cost, using the effective interest rate method.

Derivative financial instruments and hedge accounting

The Group uses derivative financial instruments to hedge its exposure to foreign exchange, interest

rate and commodity risks. Use of such financial instruments is governed by policies and delegated

authorities approved by the Board. The Group does not hold or issue derivative financial instruments

for trading purposes. The main derivative financial instruments used by the Group are interest rate

swaps, fuel swaps, and cross currency interest rate swaps. Such instruments are initially recognised

at fair value and subsequently remeasured to fair value at the reported balance sheet date. The fair

values are calculated by reference to market exchange rates, interest rates and fuel prices at the

period end, and supported by counterparty confirmations. Where derivatives do not qualify for

hedge accounting, any gains or losses on remeasurement are immediately recognised in the Group

income statement. Where derivatives qualify for hedge accounting, recognition of any resultant gain

or loss depends on the nature of the hedge relationship and the item being hedged. At inception of

designated hedging relationships, the Group documents the risk management objective and strategy

for undertaking the hedge, the nature of the risks being hedged and the economic relationship

between the item being hedged and the hedging instrument.

Fair value hedging: The fair value change on qualifying hedging instruments is recognised in profit

or loss. The carrying amount of a hedged item not already measured at fair value is adjusted for

the fair value change attributable to the hedged risk with a corresponding entry in profit or loss.

Cash flow hedging: The effective portion of changes in the fair value of derivatives and other

qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised

in other comprehensive income and accumulated under the heading of hedging reserve, limited to

the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss

relating to the ineffective portion is recognised immediately in profit or loss. Amounts previously

recognised in other comprehensive income and accumulated in equity are reclassified to profit or

loss in the periods when the hedged item affects profit or loss, in the same line as the recognised

hedged item. However, when the hedged forecast transaction results in the recognition of

a non‑financial item such as inventory, the gains and losses previously recognised in other

comprehensive income and accumulated in equity are removed from equity and included as a basis

adjustment in the initial measurement of the cost of that item. This transfer does not affect other

comprehensive income, however the hedging gains and losses that will subsequently be transferred

as basis adjustments are categorised as amounts that may be reclassified subsequently to profit

or loss, as such a reclassification may occur in the event that the hedged transaction is no longer

expected to occur. Furthermore, if the Group expects that some or all of the loss accumulated in the

cash flow hedging reserve will not be recovered in the future, that amount is immediately reclassified

to profit or loss.

Net investment hedging: Derivative financial instruments are classified as net investment hedges

when they hedge the Group’s net investment in an overseas operation. The effective element of

any foreign exchange gain or loss from remeasuring the derivative instrument is recognised directly

in other comprehensive income and accumulated in the foreign currency translation reserve.

Any ineffective element is recognised immediately in the Group income statement. Gains and losses

accumulated in the foreign currency translation reserve are included in the Group income statement

on the disposal or partial disposal of the foreign operation.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and

it is probable that the Group will be required to settle that obligation. Provisions are measured at the

Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date

and are discounted to present value where the effect is material.

Self‑insurance

The Group’s policy is to self‑insure high‑frequency, low‑value claims within the businesses. In

addition there are typically a smaller number of major claims during a financial year for which cover is

obtained through third party insurance policies subject to an insurance deductible. Where the Group

holds legacy self‑insurance exposures related to disposed businesses, insurance and re‑insurance

policies have been purchased to de‑risk this exposure. Provision is made under IAS 37 Provisions,

Contingent Liabilities and Contingent Assets for the estimated cost of settling uninsured claims for

incidents occurring prior to the balance sheet date. The provision is discounted to appropriately

reflect the timing of future cash claims settlements. Self‑insurance is also covered in the Key sources

of estimation uncertainty section of note 2 below.

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Financial statements

FirstGroup Annual Report and Accounts 2024

184

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Share‑based payments

The Group issues equity‑settled share‑based payments to certain employees. Equity‑settled

share‑based payments are measured at fair value at the date of grant. The fair value is expensed

over the vesting period, based on the Group’s estimate of shares that will eventually vest and is

adjusted for the effects of non‑market‑based vesting conditions.

Fair value is measured by use of a Black‑Scholes or other appropriate valuation models.

The expected life used in the model has been adjusted, based on management’s best estimate,

for the effects of non‑transferability, exercise restrictions and behavioural considerations.

Joint operations

Where the Group assesses a joint arrangement to be a joint operation, it recognises its direct right to

the assets, liabilities, revenue and expenses of the joint operation, and its share of any jointly held or

incurred assets, liabilities, revenue and expenses. These have been incorporated in the financial

statements under the appropriate headings.

Dividend distributions

Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’s

financial statements in the period in which the dividends are approved by the Company’s shareholders.

Adoption of new and revised standards

The accounting policies adopted are consistent with those of the previous financial year except for

the changes arising from new standards and amendments to existing standards which have been

adopted in the current year.

The following amended standards and interpretations were adopted by the Group during the year:



IFRS 17 Insurance contracts



Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8



Amendment to IAS 12 – deferred tax relating to assets and liabilities arising from a single transaction



Amendment to IAS 12 – international tax reform, which grants a temporary exemption from

applying IAS 12 to the International Tax Reform: Pillar Two Model Rules

There has been no material change as a result of applying these amendments and no significant

impact is expected from any of the future standards and amendments that are visible.

Key sources of estimation uncertainty and significant judgements

The preparation of financial statements in conformity with generally accepted accounting principles

requires the use of estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the reported amounts of revenues and expenses

during the reporting period. Although these estimates are based on management’s best knowledge,

actual results may ultimately differ from those estimates. The estimates and underlying assumptions

are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period

in which the estimate is revised if the revision affects only that period, or in the period of revision

and future periods if the revision affects both current and future periods.

The following are the critical estimates and judgements that the Directors have made in the process

of applying the Group’s accounting policies and that have the most significant effect on the amounts

recognised in the financial statements.

Impairment of assets in CGUs

The key sources of estimation uncertainty in relation to the potential risk of impairment of assets

in CGUs relate to the cash flow forecasts including significant judgements in deciding what

assumptions to make regarding the future financial performance of the CGU in a post‑pandemic

environment, the ongoing macroeconomic uncertainty, and the Group’s future climate‑related

targets and ambitions. This is covered in more detail in note 11.

Defined benefit pension arrangements

Railway Pension Scheme

As at the balance sheet date, the Group sponsors five sections of the Railway Pension Scheme

(RPS), relating to its obligations for its contracted TOCs, and a further section for Hull Trains, its

Open Access operator. The RPS is a defined benefit pension scheme which covers the whole of the

UK rail industry. The RPS is partitioned into sections and, for the sections that relate to contracts,

the Group is responsible for the funding of these sections only while it operates the relevant contract.

In contrast to the pension schemes operated by most businesses, the RPS is a shared cost scheme

which means that costs are formally shared 60% employer and 40% employee. The Group only

recognises amounts in relation to its share of costs in the income statement, and for the contracted

TOCs, those amounts are then reimbursed to the TOCs as part of the overall allowable contracted

operating expenses. Management of the RPS is not the responsibility of the Group, nor is it able

to benefit from any future surplus, or liable for any deficit, of those funds.

At the end of the contract term, responsibility for funding the relevant section of the scheme, and

consequentially any deficit or surplus existing at that date, is passed to the next contractor. At each

balance sheet date a contract adjustment is recognised against the IAS 19 net pension asset or

liability to reflect that portion expected to pass to the next contractor.

The Directors view this arrangement as analogous to the circumstances described in paragraphs

92‑94 of IAS 19 (Revised) with a third party taking on the obligation for future contributions. As there

is no requirement to make contributions to fund the current deficit, it is assumed that all of the

current deficit will be funded by another party and hence none of that deficit is attributable to the

current contractor. In respect of the future service costs, there is currently no pension obligation in

respect of those costs. When the costs are recognised in the income statement, the extent to which

the committed contributions fall short determines the amount that is to be covered by contributions

of another party in future, which is recognised as an adjustment to service cost in the income

statement. Under circumstances where contributions are renegotiated, such as following a statutory

valuation, an adjustment will be recognised in the income statement, whilst changes in actuarial

assumptions continue to be recognised through other comprehensive income.

The Directors consider this judgement to be the most appropriate interpretation of IAS 19 to reflect

the specific circumstances of the RPS where the contract commitment is only to pay contributions

during the period in which we run the contract.

Introduction

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FirstGroup Annual Report and Accounts 2024

185

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Actuarial assumptions

The UK schemes’ retirement benefit obligations are discounted at a rate set by reference to market

yields at the end of the reporting period on high‑quality corporate bonds. Significant judgement

is required when setting the criteria for bonds to be included in the population from which the yield

curve is derived. The most significant criteria considered for the selection of bonds include the

issue size of the corporate bonds, quality of the bonds and the identification of outliers which

are excluded. Management follows actuarial advice from a third party when determining these

judgements. Another key estimate is the longevity of members. We take specialist advice on this

from our actuarial advisers which aims to consider the likely experience taking into account each

scheme’s characteristics. Our approach is to review these assumptions for each scheme following

completion of their funding valuations, and more frequently only if appropriate to do so. Given pay

increases for employees in the rail division are under negotiation, the gross figures for the contract

rail pensions disclosures may be under‑ or overstated, but there will be nil impact on the balance

sheet as a result of the contract adjustment.

The Pension Regulator (TPR) has been in discussions with the RPS (the Scheme) regarding the

long‑term funding strategy of the Scheme. Whilst TPR believes that the Scheme should be funded

on a more prudent basis, it is not possible at this stage to determine the impact to ongoing

contribution requirements.

The carrying amount of the Group’s continuing retirement benefit arrangements at 30 March 2024

was a liability of £(25.3)m (2023: asset of £27.8m). Further details and sensitivities are set out in

note 37.

Self‑insurance

Provision is made for all known incidents for which there is self‑insurance using management’s best

estimate of the likely settlement of these incidents. The estimated settlement is reviewed on a regular

basis with independent actuarial advice and the amount provided (including the Incurred But Not

Reported (IBNR) element) is adjusted as required. Given the diversity of claim types, their size, the

range of possible outcomes and the time involved in settling these claims, a material change could

be required to the carrying value of claims provisions in the next financial year. These factors also

make it impractical to provide sensitivity analysis on one single measure and its potential impact

on overall insurance provisions. The Group’s total self‑insurance provisions as at the balance sheet

date were £100.2m (2023: £129.9m) as set out in note 27. Of this £55.7m relates to North America

of which £50.8m is de‑risked with insurance, leaving £4.9m where the actuarial range is £4.7m to

£5.3m (2023: £5.8m and actuarial range £5.1m to £5.8m). A receivable matching the value of the

de‑risked provision of £50.8m is recorded within Other receivables to account for the recovery

from the third party insurer.

Determining the incremental borrowing rate used to measure lease liabilities

The Group is required to determine its incremental borrowing rate (IBR) to measure its lease

liabilities. Judgement is required to determine the components of the IBR used for each lease,

including risk‑free rates, credit risk and any lease‑specific adjustments.

IBRs applied to new (or modified) leases are determined quarterly or at the time of a new franchise.

They depend on the term, country and start and end date of the lease. They are estimated based on

several factors which include the risk‑free rate based on government bond rates, a country‑specific

adjustment and a credit risk adjustment based on the average credit spread of entities with similar

ratings to the Group.

Determining lease expiry dates

In assessing the lease term, the Group is required to make judgements around the current contract

terms for its rail TOCs, and when the contracts are considered likely to expire. The contracts typically

have an initial core term and a full term, whereby the DfT determines whether the contract continues

beyond its core term, and so judgement is required in assessing which expiry date is appropriate to

use for lease terms for each rail contract. If there were to be a change in the judgement regarding

lease expiry dates, this would result in a remeasurement of the right of use asset and lease liabilities.

Climate change

In the preparation of the Group’s consolidated financial statements, management has considered

the potential impact of climate change, particularly in the context of the disclosures included in the

Strategic report (including the Task Force for Climate‑related Disclosures), and the Group’s own

climate‑related ambitions and targets, including its stated Sustainability strategic pillar. This includes

an assessment of how the Group’s accounting estimates and judgements are impacted by the

Group’s pathway to achieving its stated ambitions and targets and delivering on its Sustainability

strategic pillar, as well as by climate‑related risks and opportunities for the Group.

Actions required to drive the Group’s climate‑related ambitions and targets and to deliver on its

Sustainability strategic pillar, including their financial impacts, are factored into the longer‑term

business planning cycles of the Group. The following areas of estimation have been considered

as part of these planning cycles, in addition to those detailed in the Key sources of estimation

uncertainty section. Management do not believe that these areas will have a material impact

on financial reporting estimates and judgements in the next year. Owing to the inherent medium/

longer‑term uncertainty with regard to climate‑related risks and opportunities, it is not currently

possible to assess whether in the future, these areas of estimation and judgement may have a more

material impact on carrying values of assets and liabilities. Management will continue to regularly

assess climate‑related risks in the context of the estimates and judgements made in the preparation

of the Group’s financial statements.

Going concern and viability

There may be a risk of increased future costs and capital investment requirements to ensure

compliance with environmental regulatory requirements (for example carbon taxes/charges,

or other emissions‑related restrictions), and to achieve the Group’s stated sustainability targets

and ambitions. However, the Group believes that there is likely to be an increasing modal shift

towards public transport, as awareness grows among customers of climate‑related issues, and

with governmental support for transport decarbonisation, which could create new opportunities

for the Group.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

186

Notes to the consolidated ﬁnancial statements

continued

Significant accounting policies

continued

Carrying value of non‑current assets

Environmental regulatory requirements, in parallel with the Group’s climate‑related targets and

ambitions, may further accelerate the transition to electrification of vehicle fleets. Transitional risks

relating to the evolution of climate‑related technologies may alter the expected obsolescence profile

of existing vehicle fleets. These factors may impact the Group’s estimates of the useful lives of

existing assets, their residual values, and the risk of asset impairment. The Group monitors closely

the accounting estimates in relation to its vehicle fleets to ensure they remain reasonable.

Provisions

Climate‑related legislative and regulatory changes may, in future, require the Group to assess

whether environmental provisions are necessary, for example the potential introduction of carbon

taxes/charges. In parallel with the work towards achieving its climate‑related ambitions and targets,

the Group tracks such legislative changes to ensure the impact on the business is well understood

and managed effectively.

Other areas of the financial statements which may also be impacted by climate‑related risks and

opportunities include:



Share‑based payments – certain of the Group’s share‑based payments arrangements include

a sustainability target (see note 36), and the Group’s ability to meet these targets may impact

the amount or timing of any share‑based payments.



Deferred tax assets – recoverability of deferred tax assets is dependent on future profitability,

which may be impacted by climate‑related factors.



Borrowing facilities – during the year, the Group has entered into innovative funding arrangements

for the future purchase of both electric bus batteries and electric bus bodies (chassis and

drivetrain). The timing of the utilisation of these facilities to support the Group’s decarbonisation

and sustainability targets may impact levels of borrowing and finance costs for the Group.

Going concern

The Board carried out a review of the Group’s financial projections for the 18 months to

30 September 2025 and evaluated whether it was appropriate to prepare the full year results on a

going concern basis. In doing so, the Board considered whether any material uncertainties exist that

cast doubt on the Group’s and the Company’s ability to continue as a going concern over the going

concern period.

Consistent with prior years, the Board’s going concern assessment is based on a review of future

trading projections, including whether banking covenants are likely to be met and whether there

is sufficient committed facility headroom to accommodate future cash flows for the going

concern period.

Divisional management teams prepared detailed, bottom‑up projections for their businesses

reflecting the impact of macroeconomic considerations on the operating environment, assumptions

on passenger volumes and government support, as well as the impact of actions required to address

the Group’s climate‑related targets and ambitions, and having regard to the risks and uncertainties

to which the Group is exposed.

Base case scenario

The Board considered the annual budget to 31 March 2025 and medium‑term plan to be the base

case scenario for the purpose of the going concern assessment for the FY 2024 year end. These

projections were the subject of a series of executive management reviews and were used to

establish the base case scenario that was used for the purposes of the going concern assessment.

The base case assumes a continuing recovery in passenger volumes and yields in FY 2025, with

some offset from a reduction in direct government funding. The Rail base case also reflects the

expiry in May 2025 of the South Western Railway contract and the uncertainty regarding its renewal.

The macro projections in the updated base case assume that the UK operates in a low‑growth,

cautiously recovering economy. The annual budget and medium‑term plan also capture the

expected financial impact of the actions required to support the Group’s climate‑related targets

and ambitions.

Downside scenario

In addition, a downside case was also modelled which assumes a more adverse macroeconomic

recovery profile. In First Bus the downside case assumes a reduction in passenger volumes

driving a 25% reduction in Bus profitability, as well as the impact of other unexpected cost inflation.

In First Rail, the downside case assumes TOC performance fee awards at 50% of expected levels,

potential expiry of the GWR NRC at the end of its core period, and volume and revenue reductions in

Hull Trains and Lumo driving a 25% reduction in Open Access profitability. The downside scenario also

considers potential impacts of a significant climate‑related event or unbudgeted decarbonisation

costs, as well as the risk of one‑off safety, regulatory non‑compliance or technology incidents.

Mitigating actions

If the performance of the Group were to be more adversely impacted than assumed in the base case

or downside case scenarios, the Group would reduce and defer planned growth capital expenditure

and further reduce costs in line with a lower‑volume operating environment to the extent that

the essential services we operate in First Bus are not required to be run for the governments and

communities we support.

Going concern statement

Based on the review of the financial forecasts for the period to September 2025 and having regard

to the risks and uncertainties to which the Group is exposed, the Directors have a reasonable

expectation that the Group has adequate resources to continue in operational existence for at least

the 12‑month period from the date on which the financial statements were approved, including

compliance with banking covenants under both the base case and downside scenarios. Accordingly,

they continue to adopt a going concern basis of accounting in preparing the consolidated financial

statements in this full year report.

Introduction

Strategic report

Governance report

Financial statements

FirstGroup Annual Report and Accounts 2024

187

Notes to the consolidated ﬁnancial statements

continued

Revenue


	2024	2023
	£m	£m
Services rendered	3,952.1	3,483.0
First Rail contract subsidy receipts	456.8	893.0
Other revenues	306.2	379.0
Revenue from continuing operations	4,715.1	4,755.0
Discontinued operations	–	4.0
Revenue	4,715.1	4,759.0

Disaggregated revenue by operating segment is set out in note 5.

Other revenues principally represent funding mechanisms in First Bus and the First Rail businesses.

Reconciliation to non‑GAAP measures and performance

In measuring the Group and divisional adjusted operating performance, additional financial

measures derived from the reported results have been used by management in order to eliminate

factors which distort year‑on‑year comparisons, and to enable the like‑for‑like monitoring of the

Group’s recurring operations over time. The Group’s adjusted performance is used to explain

year‑on‑year changes when the effect of certain items is significant, including strategic items