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
1
FY 2024 highlights
3
At a glance
Strategic report
4
Chairman’s statement
6
How our markets work
9
Our business model
10 Chief Executive Officer’s review
15 Chief Executive Officer’s Q&A
17 Our strategic framework
30 Key performance indicators
34 Business review
40 Financial review
48 Responsible business
74
Climate-related financial disclosures
85
Risk management
96
Viability and going concern
98 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
1
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
Adjusted1 operating profit/(loss)
204.3
(1.9)
202.4
161.0
(6.6)
154.4
Adjusted operating profit margin
4.3%
4.3%
3.4%
3.2%
Adjusted profit/(loss) before tax
139.0
(2.2)
136.8
104.2
(6.3)
97.9
Adjusted EPS2
16.7p
(0.3)p
16.4p
10.9p
(0.9)p
11.6p
Dividend per share
5.5p
3.8p
Adjusted net cash3
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)
EPS2
(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.
1 ‘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.
2 ‘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.
3 ‘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
2
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 17
First Rail
First Rail is one of the largest UK operators for
nearly three decades, with experience in running
all types of passenger rail services. We have
a track record of working successfully with a
wide range of partners under various types of
contracts, as well as delivering significant rail
infrastructure projects. We have three Department
for Transport (DfT)-contracted operations: West
Coast Partnership (WCP) which includes Avanti
West Coast (Avanti), Great Western Railway
(GWR), South Western Railway (SWR), and two
open access operations: Hull Trains and Lumo.
We operate London Trams on behalf of Transport
for London (TfL) and Heathrow Express (HEX)
on behalf of Heathrow Airport.
Read more on page 37
First Bus
First Bus is one of the largest regional bus
companies in the UK, carrying more than a million
passengers a day. We serve more than 20% of the
population in the UK with our local bus services.
We are a leading operator in the majority of our
local areas, including major urban centres such
as Glasgow, Bristol and Leeds. As well as
commercial networks, we also run buses on
behalf of organisations ranging from schools
to distribution centres and major
construction sites.
Read more on page 34
1.14m
passenger
journeys a day
50
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 aglance
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
3
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
4
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.
5
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
of 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.
£4.4bn
of annual revenue generated
by regional bus operators
2.6bn
passenger journeys are
made outside of London
a year
The UK’s regional bus market
6
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.
7
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
£10bn
of contract-backed passenger
revenue in a typical year
Market attractions
8
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 our people on page 65
Our network and fleets
We operate c.4,500 buses and more than 3,700
locomotives and rail carriages across the UK.
Our innovation
We embrace new technologies and ways of working
to deliver easier, more convenient, efficient and
sustainable mobility solutions for our customers
and partners.
Read more about innovation on page 60
Our expertise
We have depth of experience and proven expertise
in bus and rail transport and an unwavering focus
on safety and reliability.
Our relationships
Our long-established relationships and deep
engagement with local and national government
decision makers at all levels are essential to our
success as a partner of choice.
Our stable financial platform
Our business is cash generative, and we maintain
an investment grade credit rating to enable
long‑term service continuity and allow us to
grow and diversify our portfolio.
Read more about our financial
platform on page 40
Delivering for our stakeholders
Customers
Safe, reliable, value-for-money and
easy-to‑use travel services for millions
of passengers each year.
Investors
Sustainable financial performance and
long-term value creation, with a disciplined
capital allocation policy balanced between
investment, growth and shareholder returns.
Government
Efficient and reliable transport services
that meet wider policy objectives such as
levelling up, decarbonisation and air quality.
Employees
A workforce representative of our
communities. Quality jobs with opportunities
to grow and learn in a safe, supportive and
inclusive working environment.
Communities
Stronger economies and local communities
through good local services and community
engagement activities.
Strategic partners and suppliers
Long-term relationships that optimise value,
mitigate risk and increase sustainability
and ethical standards in our value chain.
Read more about engaging
with our stakeholders on page 98
Our four strategic pillars will
support us to drive value-accretive
sustainable growth and lead the
way in our sector.
First Bus
Agile operations, on trajectory to deliver
10% margin. Revenues are principally derived
from fare revenue comprising 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 also receive funding, including
the Bus Services Operators Grant in England,
with similar schemes in Scotland and Wales.
Read more about the bus market
and First Bus on pages 6 and 34
First Rail
Lower risk, cash generative operations with
increasing contribution from open access
and additional services.
Under the terms of the DfT concession-based
NRCs, operators bear no revenue risk and
very limited cost risk under an annual budget
agreed with the DfT. Operators earn an annual
management fee for service delivery, with the
opportunity to earn additional revenue based
on performance.
Open access operators make all commercial
decisions and retain all revenue and cost
opportunity and risk.
Read more about the rail market
and First Rail on pages 8 and 37
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
9
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
10
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.
80%
of our First Bus
ticket transactions
are now digital
11
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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
12
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
13
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 CO2 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
14
Introduction
Strategic report
Governance report
Financial statements
FirstGroup Annual Report and Accounts 2024
Read more on page 17
Leading the way with our new strategy
Q
What led you to identify the four
strategic pillars?
A
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.
Q
How did you develop the strategy
and how are you implementing your
new strategy across the Group?
A
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
15
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.
Q
Why is diversification
important?
A
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
Q
What role does innovation play in
supporting the Group’s strategy?
A
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.
Q
What does ‘deliver day in, day out’
mean for your businesses?
A
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.
Q
Why is modal shift
a separate pillar?
A
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.
Q
How does the new strategy
reinforce the Group’s commitment
to sustainability and
responsible business?
A
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
16
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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 18
Drive
modal shift
Drive a step change from car
and air travel to bus and train
Read more on page 21
Diversify
our portfolio
Invest to grow and diversify
our portfolio and ensure
our business is resilient
Read more on page 27
Lead in
environmental
and social
sustainability
Deliver our decarbonisation
commitments and support
prosperity, growth and green
jobs in the communities we serve
Read more on page 24
strategic
Our
pillars
17
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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
18
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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
19
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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
20
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FirstGroup Annual Report and Accounts 2024
Drive
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
21
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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.
7%
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
22
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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 CO2 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.
23
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&
Lead
social
environmental
in
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
24
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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 CO2 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 CO2 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
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Our strategic framework continued
Case study
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
26
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
27
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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
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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
Case study
Acquisition of
York Pullman
Bus Company
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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)
0
-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
1 ’Adjusted Operating profit’ is shown before
net adjusting items.
2 ’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.
3 ‘Adjusted net cash’ is bonds, bank and other
debt net of free cash (i.e. excludes IFRS 16
lease liabilities and ring-fenced cash).
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Key performance indicators continued
Responsible business KPIs
Scope 1&2 emissions
(tCO2e)
REM
695,213
tCO2e
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
(tCO2e/£m revenue)
REM
159
tCO2e/£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
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.
1 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.
2 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
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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
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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
a 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 destination1 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
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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
9%
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 employed1
11.5%
8.3%
320bps
1 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
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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
to 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
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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
36
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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
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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
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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.
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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
profit1
£m
Adjusted
operating
margin1
%
Revenue
£m
Adjusted
operating
profit1
£m
Adjusted
operating
margin1
%
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/eliminations2
(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 operations3
–
(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.
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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 adjustment1
10.2
6.9
Taxation
(32.0)
(20.4)
Non-controlling interest
(6.5)
(5.1)
Group adjusted earnings1
110.7
85.6
1 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 TOCs2
39.5
38.7
First Rail – Open Access and Additional Services EBITDA1
37.6
32.5
Group central costs (EBITDA basis1)
(21.8)
(21.2)
Group EBITDA adjusted for First Rail DfT contracted TOCs’ management fees
187.8
155.0
1 IAS 17 basis.
2 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.
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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)
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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)
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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
1.26
1.22
1.11
Canadian Dollar
1.71
1.77
1.68
1.76
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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
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.
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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
11 June 2024
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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.
£100m
joint venture with Hitachi
£150m
Green Hire Purchase
Finance Facility
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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
£150m
Green Hire Purchase
Finance Facility signed
by First Bus
1,000
electric bus batteries
to be funded by a
landmark joint venture
with Hitachi
£350m
new fleet of 23 Avanti
electric or bi-mode
trains being introduced
Up to 95%
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
10
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
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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
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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
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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
C
o
n
n
e
c
t
i
n
g
p
e
o
p
l
e
a
n
d
c
o
m
m
u
n
it
i
e
s
Mobility
Beyond
Today
O
u
r
s
u
s
t
a
i
n
a
b
il
it
y
s
t
r
a
t
e
g
y
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.
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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 54-59
Zero
carbon
Eliminate the carbon emissions
associated with our operations.
FirstGroup formed a strategic joint venture with Hitachi and separately signed a £150m
Green Hire Purchase Finance Facility to finance the purchase of electric bus bodies
Avanti and SWR had their targets validated by the SBTi
A new electric charging partnership with Openreach was also announced this year,
which allows its electric vehicles fleet to charge at First Bus depots
Air
quality
Improve local air quality in
our towns and cities through
our cleaner fleets.
SWR became the first rail company to trial a Pluvo air purifying totem
First Bus has now retrofitted over 1,600 diesel buses with exhaust after-treatment systems
We took part in the Rail Safety and Standards Board’s Air Quality Monitoring Network trial
Climate
resilience
Incorporate climate adaptation
measures to improve the resilience
of our services and capitalising
on opportunities for the move
to a low-carbon economy.
Conducted emissions avoidance studies at Lumo and Hull Trains that found customers can
save up to 95% of emissions using their services
We are preparing our first Group-wide climate transition plan aligned with Transition Plan
Taskforce framework
Member of the rail industry Climate Adaptation Working Group
Innovating for
our customers
and society
Read more on pages 60-64
Enabling
the shift
Help more people to use
bus and rail services, leading to
fewer car journeys being made.
Submitted the first phase of an application for a new open access rail service between
London and Sheffield to the ORR
SWR began the launch of a new fleet of 90 Arterio trains for more efficient and
comfortable journeys
Driving
innovation
Embrace new technologies and
ways of working to deliver easy,
convenient and sustainable
mobility solutions for
our customers.
Partnered with AI firm Prospective to improve service efficiency in First Bus
Lumo introduced LumoFlex for flexible ticketing options
Avanti introduced wayfinding technology to help visually impaired customers
navigate stations
Using our
influence
Collaborate and partner
with stakeholders to shape
the sustainable communities
of the future.
Aligned to the Sustainable Rail Blueprint from the Rail Safety and Standards Board
SWR achieved a milestone 100 station adopters across their network
First Bus worked closely with the Mayoral Combined Authority in South Yorkshire
to review connectivity on the bus network and agree a series of new routes
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Responsible business continued
Our Sustainability framework continued
Strategic priority
Focus area
Goals
Progress in FY 2024
Supporting
our people
Read more on pages 65-68
Diversity
and inclusion
We value diversity and inclusion,
and our workforce represents the
communities we serve, increasing
effective participation and
equal opportunities.
Launched ‘First Connections’ a personal development programme aimed at women and
ethnically diverse colleagues
New Group-wide diversity and inclusion targets introduced
500 colleagues from under-represented groups completed leadership
development programmes
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
First Bus, who partner 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
Wellbeing
Our culture means that our
employees are supported
towards good mental and
physical wellbeing.
Following staff feedback surveys introduced SmartHealth a confidential health service
100% of First Bus directly employed staff were paid at or above the Real Living Wage
SWR introduced award-winning mental and physical wellbeing initiatives
Foundations
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
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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
£150m
Green Hire Purchase Finance
Facility signed by FirstGroup
£350m
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
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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 CO2/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
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.”
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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.
78%
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
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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 tCO2e (7,274 tCO2e in
FY 2023), while Scope 2 emissions (location
based) total 25 tCO2e, bringing the combined
total for Scope 1 and Scope 2 emissions
to 6,869 tCO2e and resulting in an intensity
ratio of 304 tCO2 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 (tCO2e) 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 (tCO2e/£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 (tCO2e/£m)1
159†
169
185
185
265
Scope 1 and Scope 2 emission % change
(2020 baseline)
-27%
-28%
-23%
-26%
† All assured metrics are highlighted with a † symbol.
1 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).
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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 (CO2e).
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.
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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%†
6%
3.3%
1.1%
0.3%
Total bus fleet
4,425
4,441
4,926
5,030
5,619
Carbon emission per vehicle distance (gCO2e/vkm)
(Scope 1, 2 location based and Out of scope)
897†
1,103
1,112
964
975
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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
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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
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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 CO2 than driving, with
5.42 kgCO2e by train compared to 67.2 kgCO2e
by car. Customers at all locations along Hull
Trains’ route to London King’s Cross can view
the CO2 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 kgCO2e while
the equivalent journey flying emits 149
kgCO2e. A single passenger could therefore
take 22 one-way rail trips before creating
the same emissions as a single flight.
Saving
95% CO2
saving
vs car
95% CO2
saving
vs car
96% CO2
saving
vs plane
Route
Stevenage
to
Edinburgh
London
King’s
Cross to
Edinburgh
London
King’s
Cross to
Newcastle
Avoided
emissions
Travelling
by rail
emits 20
times less
CO2 less
than by car.
Travelling
by rail
emits 21
times less
CO2 less
than by car.
Travelling
by rail
emits 27
times less
CO2 less
than flying.
By rail
(kgCO2e)
6.29
6.77
4.63
By petrol
car
(kgCO2e)
129.92
142.25
98.93
By plane
(with RF*)
(kgCO2e)
155.76
149.16
126.21
* RF: Radiative Forcing
Full results available at: www.lumo.co.uk/-/media/Arup
Lumo-Avoided-Emissions-Study.pdf
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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.
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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.
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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
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Our gender breakdown
FY 20241
Women
Men
Total
Number
% Number
%
Total
population
6,442
20.8 24,553
79.2 30,995
Senior
management2
17
32.8
35
67.2
52
Board
4
44.4
5
55.6
9
FY 20232
Women
Men
Total
Number
% Number
%
Total
population
6,540
20.8 24,937
79.2 31,477
Senior
management2
12
23.5
39
76.5
51
Board
4
44.4
5
55.6
9
1 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.”
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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
75
apprentices learning at the UK’s
first engineering academy for
zero emission buses and coaches
26%
of new apprentices recruited
this year were women
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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%.
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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.
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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.
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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
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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.
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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
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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.
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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 76
b) Describe management’s role in assessing and managing climate‑related
risks and opportunities.
Management’s role
Read more on page 76
Strategy
a) Describe the climate‑related risks and opportunities the organisation has identified
over the short, medium and long term.
Climate‑related risks and opportunities
and scenario analysis
Read more on page 77
b) Describe the impact of climate‑related risks and opportunities on the
organisation’s businesses, strategy and financial planning.
Impact on strategy and financial planning
Read more on page 78
c) Describe the resilience of the organisation’s strategy, taking into consideration
different climate‑related scenarios, including a 2°C or lower scenario.
Strategy resilience
Read more on page 79
Risk management
a) Describe the organisation’s processes for identifying and
assessing climate‑related risks.
Approach to risk management
Read more on page 81
b) Describe the organisation’s processes for managing climate‑related risks.
Risk mitigation actions
Read more on pages 81 to 83
c) Describe how processes for identifying, assessing and managing climate‑related
risks are integrated into the organisation’s overall risk management.
Approach to risk management
Read more on page 81
Metrics and targets
a) Disclose the metrics used by the organisation to assess climate‑related risks
and opportunities in line with its strategy and risk management process.
Metrics and targets
Read more on page 84
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks.
Greenhouse gas emissions table
Metrics and targets
Read more on pages 57 to 59
Read more on pages 57 to 59 and our
Environmental Performance Report
www.firstgroupplc.com/responsibility/
responsibility-reports/2024.aspx
c) Describe the targets used by the organisation to manage climate‑related risks
and opportunities and performance against targets.
Metrics and targets
Read more on page 84
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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
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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
No
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
0%
by 2100
‑50%
by 2100
‑75%
by 2100
Net zero
by 2070
Net zero
by 2050
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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
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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
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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
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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.
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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.
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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
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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 (tCO2e 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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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:
1) 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;
2) 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;
3) one-off safety, regulatory non‑compliance,
climate or technology incidents leading
to short‑term reduced revenue and/or
additional costs of up to £30m;
4) loss of NRCs at the end of their core
contractual periods, reducing operating
profit and cash inflows to the Group; and
5) 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
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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
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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.
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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
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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
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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.
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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
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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.uk.
A 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.
B 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.
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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
Lynas1
Ant
Green
Graham
Sutherland
Ryan
Mangold
Board
6/6
6/6
6/6
6/6
6/6
5/6
6/6
6/6
6/6
Short‑notice Board
1/1
1/1
1/1
1/1
1/1
1/1
1/1
1/1
1/1
Audit
–
–
–
4/4
4/4
3/4
–
–
–
Remuneration
–
4/4
–
4/4
4/4
3/4
–
–
Nomination
3/3
3/3
3/3
3/3
3/3
2/3
3/3
–
–
Responsible Business
–
4/4
4/4
4/4
–
3/4
4/4
–
–
Overall
10/10
18/18
14/14
22/22
18/18
17/22
14/14
7/7
7/7
1 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
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Strategic report
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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
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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
N
E
E
Key
A
Audit Committee
B
Responsible Business Committee
R Remuneration Committee
E
Executive Committee
N Nomination Committee
Chair
Graham Sutherland
Chief Executive Officer
David Martin
Chairman
Ryan Mangold
Chief Financial Officer
106
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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
R
B
N
Myrtle Dawes
Independent Non‑Executive Director
B
N
Anthony Green
Group Employee Director
Key
A
Audit Committee
B
Responsible Business Committee
R Remuneration Committee
E
Executive Committee
N Nomination Committee
Chair
B
N
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
A
B
N
R
Peter Lynas
Senior Independent
Non‑Executive Director
A
R
B
N
Jane Lodge
Independent Non‑Executive Director
A
R
N
Key
A
Audit Committee
B
Responsible Business Committee
R Remuneration Committee
E
Executive Committee
N 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
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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
1 Basis on which the company
generates and preserves value
This is covered in the Strategic report on pages 4
to 102.
2 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.
3 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.
4 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.
5 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
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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.
6 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.
E 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.
F 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.
G 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.
7 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
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Board continued
8 Concerns held by a NED
on resignation
No such concerns have been raised during the
period under review.
9 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
I
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
5
55.6%
4
4
80%
Women
4
44.4%
0
1
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)
8
88.9%
4
5
100%
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
1
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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Strategic report
Financial statements
FirstGroup Annual Report and Accounts 2024
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
L 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
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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
17 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.
20 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
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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
H 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.
15 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.
J 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 held1
Chairman
David Martin
15 August 2019
August 2025
2
Non‑Executive Directors
Sally Cabrini
24 January 2020
January 2026
1
Myrtle Dawes
1 April 2022
April 2025
2
Claire Hawkings
1 January 2022
January 2025
3
Jane Lodge
30 June 2021
June 2024
4
Peter Lynas
30 June 2021
June 2024
2
Employee Director
Ant Green
15 September 2020
September 2026
1
Executive Directors
Graham Sutherland
16 May 2022
n/a
3
Ryan Mangold
31 May 2019
n/a
3
1 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
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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
24 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.
25 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.
26 Annual Report to describe work
of Committee
This Report discharges this Code Provision.
116
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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
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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
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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
N Fair, balanced and understandable
assessment of prospects
27 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.
O 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.
29 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.
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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
30 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.
31 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.
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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.
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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.
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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.
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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.
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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 tCO2e 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
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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
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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
0%
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 tCO2/£1m
212 tCO2/£1m
Performance
Total (as % of maximum)
100%
£156.6m
£67.7m
80%
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
2%
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
3%
EABP
23%
LTIP
57%
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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.
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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
EABP1
Adjusted Group operating profit
Adjusted Group cash flow
Operational performance
Personal objectives
LTIP
EPS
Relative TSR
ESG Scorecard
1 The Remuneration Committee makes a holistic safety assessment at year end which can reduce the formulaic outturn to reflect
safety performance.
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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
shares
LTIP2,3
Other4
Total
variable
remuneration
Total
remuneration
Graham Sutherland – CEO
FY 2024 £’000s
567
1
28
596
399
399
–
4
802
1,398
FY 2023 £’000s1
484
1
24
509
341
341
–
–
682
1,191
Ryan Mangold – CFO
FY 2024 £’000s
475
14
71
560
335
335
1,623
4
2,297
2,857
FY 2023 £’000s
461
14
69
544
325
325
2,312
–
2,962
3,506
1 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.
2 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.
3 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.
4 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.1
No Director has a prospective benefit under a defined benefit pension.
1 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.
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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)1
60%
£105.8m
£135.1m
£156.6m
100%
60%
Adjusted Group cash flow2
10%
£(3.5)m
£38.2m
£67.7m
100%
10%
Personal objectives
30%
N/A
N/A
See below
80%
24%
1 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.
2 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.
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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).
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The overall bonus payout for FY 2024 was therefore as follows:
Graham Sutherland
Ryan Mangold
Maximum EABP opportunity (% of salary)
150%
150%
EABP Achieved (as % of maximum)
94%
94%
EABP (% of salary)
141%
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
0%
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
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 CO2 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.
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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)1
Value attributable
to share price
movement
(£’000)2
Value of
dividend
equivalents due
(£’000)
Value of
resultant
award
(£’000)
Chief Financial Officer
934,274
100%
£1,563
£775
£60
£1,623
1 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).
2 £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 EPS2
Relative TSR vs
FTSE 2503
Additional ZE4 buses
in service/on order
by 31 March 2026
Scope 1&2 emissions
(tCO2e)5 reduction6
Weighting
50%
35%
7.5%
7.5%
Threshold (20% vesting)1
12.1p
Median
600
12%
Maximum (100% vesting)
15.7p
Upper quartile
850
15%
1 Vesting will be on a straight‑line basis between threshold and maximum.
2 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.
3 Relative TSR will be assessed against the FTSE 250 Index, excluding investment trusts.
4 Zero emission.
5 Tonnes of carbon dioxide equivalent (tCO2e) per £1m of revenue.
6 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.
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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 grant1
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
1 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
0
50
100
150
200
£
FirstGroup plc
Total shareholder return
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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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
1753
2664
4225
788
840
2,2466
3207
1348
1,1919
1,398
EABP (% of maximum potential)
57
15.9
–1
–2
–
N/A
33.4
–
–
97
N/A
N/A
94
94
LTIP vesting (% of maximum potential)
–
–
16.3
–
–
N/A
12.5
12
14.6
88.5
N/A
N/A
–
–
1 No EABP was paid to Tim O’Toole in 2017, he received a conditional deferred share award instead.
2 No EABP was paid to Tim O’Toole in 2018.
3 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.
4 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.
5 Remuneration for Matthew Gregory as Chief Executive from 13 November 2018 to 31 March 2019.
6 Remuneration for Matthew Gregory as Chief Executive from 1 April 2021 to 13 September 2021.
7 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.
8 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.
9 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
Benefits1
Total
Basic Fee
Committee
Chair
SID
Taxable
Benefits1
Total
David Martin2
310
–
–
30
340
366
–
–
52
418
Sally Cabrini
60
12
–
2
74
58
12
–
1
71
Myrtle Dawes
60
–
–
6
66
58
–
–
6
64
Claire Hawkings
60
12
–
2
74
58
12
–
3
73
Jane Lodge
60
12
–
4
76
58
12
–
2
72
Peter Lynas
60
–
12
1
73
58
–
12
2
72
Anthony Green3
60
–
–
–
60
58
–
–
–
58
1 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.
2 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.
3 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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Strategic report
Governance report
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%
0%
Ryan Mangold
150%
0%
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
FTSE2502
Additional
ZE4 buses
in service/
on order by
31 March
2027
Scope 1&2
emissions
(tCO2e)5
reduction6
Gender
diversity
in senior
leadership
Ethnic
diversity
in senior
leadership
Weighting
50%
30%
7.5%
7.5%
2.5%
2.5%
Threshold (20% vesting)1
16.7p
Median
700
24%
reduction
37.4%
8.2%
Maximum (100% vesting)
21.4p
Upper
quartile
990
26%
reduction
38.7%
9.6%
1 Vesting will be on a straight‑line basis between threshold and maximum.
2 Relative TSR will be assessed against the FTSE 250 Index (excluding Investment Trusts).
4 Zero emission.
5 Tonnes of carbon dioxide equivalent (tCO2e).
6 From SBT base year 2020.
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Governance report
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
Plan1
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
30.03.242
Exercise
price
(£)
Face value
of awards
(£)3
Date on which
awards vest/
become
exercisable4
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
–
1,734,0575
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
1 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.
2 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.
3 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).
4 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.
5 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
at
30.03.241
Unvested
EABP/SAYE/
SIP Shares2,3
Unvested
LTIP
Shares4
Vested but not
exercised
EABP/
LTIP awards
Shareholding
requirement
as % of salary
Current
shareholding
as % of
salary5,6,7,8
%
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 Directors9
David Martin10
15 Aug 19
–
–
–
–
–
–
–
–
Sally Cabrini
24 Jan 20
10,000
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
10,000
–
–
–
–
–
–
Jane Lodge
30 June 21
15,000
15,000
–
–
–
–
–
–
Peter Lynas
30 June 21
80,000
80,000
–
–
–
–
–
–
1 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.
2 EABP shares are deferred shares that are subject to continued employment, but not subject to further performance conditions.
3 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.
4 LTIP awards are conditional share awards and nil cost options subject to ongoing performance conditions.
5 Based on the closing mid‑market share price on 30 March 2024 (£1.804).
6 Graham Sutherland has until 16 May 2027 to meet his current shareholding guideline.
7 Ryan Mangold has until 31 May 2024 to meet his current shareholding guideline.
8 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.
9 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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Governance report
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 employees1
GS2
RM3
DM4,5
SC4
MD6
CH7
JL7
PL7,8
AG4
%
change
to
FY 2024
Salary/Fees
6.0%
3.0%
3.0%
0.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
Benefits9
(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%
3.0%
–
–
–
–
–
–
–
%
change
to
FY 2023
Salary/Fees
5.9%
N/A
2.4%
0.0%
0.0%
N/A
0.0%
0.0%
(14.6%)
0.0%
Benefits
(7.3%)
N/A
0.0%
56.5%
(41.8%)
N/A
N/A
24.0%
116.2%
0.0%
Annual Bonus
(32.3%)
N/A
(0.7%)
–
–
–
–
–
–
–
%
change
to
FY 2022
Salary/Fees10
11.1%
N/A
7.1%
7.1%
6.1%
N/A
N/A
N/A
N/A
0.0%
Benefits
4.2%
N/A
0.0%
N/A
N/A
N/A
N/A
N/A
N/A
0.0%
Annual Bonus
576.6%
N/A
N/A
–
–
–
–
–
–
–
%
change
to
FY 2021
Salary/Fees10
(2.4%)
N/A
(6.7%)
(6.7%)
(5.7%)
N/A
N/A
N/A
N/A
N/A
Benefits
9.4%
N/A
0.0%
(100.0%)
0.0%
N/A
N/A
N/A
N/A
0.0%
Annual Bonus
(66.2%)
N/A
N/A
–
–
–
–
–
–
–
1 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.
2 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.
3 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.
4 David Martin, Sally Cabrini and Anthony Green were appointed to the Board in FY 2020. FY 2020 fees have been annualised for comparison purposes.
5 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.
6 Myrtle Dawes was appointed to the Board on 1 April 2022; as such, no comparison to FY 2022 is available.
7 Claire Hawkings, Jane Lodge and Peter Lynas were appointed to the Board in FY 2022. FY 2022 fees have been annualised for comparison purposes.
8 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.
9 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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Governance report
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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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 profit1
202.4
154.4
31%
Distributions to shareholders2
103.7
45.9
126%
Total employee pay3
1,572.0
1,520.3
3.4%
1 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.
2 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.
3 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.
Annual report on remuneration continued
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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
943,536,831
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 continued
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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 continued
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 continued
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 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 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 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
Not applicable
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Remuneration Policy continued
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 continued
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
0
4,000
£1,297
£2,682
£3,271
£620
3,000
2,000
1,000
XXX
XXX
XXX
XXX
XXX
Minimum
On-target
Maximum
Maximum with share price appreciation
XXX
100%
48% 34%
23%
19%
33%
18%
27%
54%
44%
Fixed
EAPB
LTIP
0
3,000
2,000
1,000
XXX
XXX
XXX
XXX
XXX
XXX
XXX
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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Remuneration Policy continued
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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Remuneration Policy continued
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
P 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.
Q 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.
R 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
48
Greenhouse gas emissions
57
Likely future developments in
the business
13
Risk factors and principal risks;
going concern and viability statements
85 to 97
Governance arrangements;
human rights and anti‑corruption
and bribery matters
73
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.
Shares
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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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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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.
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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.
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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.
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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.
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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
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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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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
6
(4,521.7)
(4,601.1)
LGPS pension settlement and related charges
4
(146.9)
–
Total operating costs
6
(4,668.6)
(4,601.1)
Operating profit
5,6
46.5
153.9
Investment income
8
16.7
12.3
Finance costs
8
(82.0)
(69.1)
(Loss)/profit before tax
(18.8)
97.1
Tax
9
15.1
(10.4)
(Loss)/profit from continuing operations
(3.7)
86.7
(Loss)/profit from discontinued operations
21
(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
10
(2.4)p
11.8p
Diluted earnings per share
10
(2.4)p
11.4p
Adjusted results (from continuing operations)1
Adjusted operating profit
4
204.3
161.0
Adjusted profit before tax
139.0
104.2
Adjusted EPS
10
16.7p
11.6p
Adjusted diluted EPS
16.1p
11.2p
1 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
37
(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
29
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
11
111.0
99.6
Other intangible assets
12
10.4
10.8
Property, plant and equipment
13
2,155.4
2,329.7
Deferred tax assets
26
39.6
47.0
Retirement benefit assets
37
6.4
44.6
Derivative financial instruments
25
0.4
0.1
Financial asset
25
99.6
117.6
Investments
14
2.6
2.5
2,425.4
2,651.9
Current assets
Inventories
16
25.9
26.0
Trade and other receivables
17
852.6
848.3
Contingent consideration receivable
17
–
72.3
Current tax assets
4.4
–
Cash and cash equivalents
20
496.5
791.4
Derivative financial instruments
25
2.0
7.4
1,381.4
1,745.4
Assets held for sale
18
0.6
8.9
Total assets
3,807.4
4,406.2
Current liabilities
Trade and other payables
19
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
22
626.5
554.7
Derivative financial instruments
25
3.4
2.6
Provisions
27
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
22
1,018.3
1,512.3
Derivative financial instruments
25
1.3
1.9
Retirement benefit liabilities
37
31.7
16.7
Provisions
27
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
28
37.5
37.5
Share premium
693.3
693.2
Hedging reserve
29
(1.8)
(0.7)
Other reserves
29
22.4
22.4
Own shares
29
(20.4)
(15.4)
Translation reserve
30
(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
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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
Share
capital
(note 28)
£m
Share
premium
£m
Hedging
reserve
(note 29)
£m
Other
reserves
(note 29)
£m
Own
shares
(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
87.1
8.2
95.3
Other comprehensive income/(loss) for the period
–
–
3.3
–
–
7.7
(113.7)
(102.7)
(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)
–
(31.6)
Liability for shares not yet bought back
–
–
–
–
–
–
(43.9)
(43.9)
–
(43.9)
Dividends paid
–
–
–
–
–
–
(14.7)
(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
–
6.4
Deferred tax on share‑based payments
–
–
–
–
–
–
0.9
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)
(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)
–
(74.7)
Liability for shares not yet bought back
–
–
–
–
–
–
(41.1)
(41.1)
–
(41.1)
Non-controlling interest buy-out
–
–
–
–
–
–
–
–
(2.2)
(2.2)
Dividends paid
–
–
–
–
–
–
(29.5)
(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
–
15.6
Deferred tax on share‑based payments
–
–
–
–
–
–
(0.3)
(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
32
626.6
644.8
Tax paid
(2.2)
(1.0)
Interest paid
(81.1)
(70.0)
Net cash from operating activities
32
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
20
496.5
791.4
Bank overdraft
22
(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
33
(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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Financial statements
FirstGroup Annual Report and Accounts 2024
1
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.
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
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2
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.
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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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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.
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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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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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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.
Notes to the consolidated financial statements continued
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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.
Notes to the consolidated financial statements continued
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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.
Notes to the consolidated financial statements continued
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2
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.
Notes to the consolidated financial statements continued
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3
Revenue
2024
£m
2023
£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.
4
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
(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.
Reconciliation of operating profit to adjusted operating profit on a continuing basis
2024
£m
2023
£m
Operating profit on a continuing basis
46.5
153.9
Adjustments for:
LGPS pension settlement and related charges
146.9
–
Legal claims in North America and the UK
10.5
–
First Bus divisional restructuring costs
–
7.0
Strategic items
–
(1.4)
Greyhound Canada
0.4
1.5
Total operating profit adjustments on a continuing basis
157.8
7.1
Adjusted operating profit on a continuing basis (note 5)
204.3
161.0
Reconciliation of operating profit/(loss) to adjusted operating profit on a discontinued basis
2024
£m
2023
£m
Operating (loss)/profit from discontinued operations
(5.3)
31.3
Adjustments for:
Transit earnout charge
2.3
33.8
Retirement benefit restructuring charges
1.1
–
Gain on disposal of Greyhound properties
–
(71.4)
Strategy costs
–
(0.3)
Total operating profit adjustments from discontinued operations
3.4
(37.9)
Adjusted operating loss from discontinued operations
(1.9)
(6.6)
Reconciliation of profit/(loss) before tax to adjusted profit before tax and adjusted earnings
2024
£m
2023
£m
(Loss)/profit before tax (including discontinued operations)
(24.4)
128.7
Adjusting operating profit items – continuing operations
157.8
7.1
Adjusting operating profit items – discontinued operations
3.4
(37.9)
Adjusted operating profit items – total operations
161.2
(30.8)
Adjusted profit before tax including discontinued operations
136.8
97.9
Rail management fee-based operations – IFRS 16 adjustment
10.2
6.9
Adjusted tax charge
(32.1)
(20.7)
Non‑controlling interests1
(6.5)
(5.1)
Adjusted earnings including discontinued operations
108.4
79.0
1 Statutory non‑controlling interests in 2024 and 2023 principally reflect Avanti West Coast and South Western Railway.
Notes to the consolidated financial statements continued
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Reconciliation to non‑GAAP measures and performance continued
Reconciliation of tax charge to adjusted tax charge
2024
£m
2023
£m
Tax (credit)/charge (note 9)
(15.0)
33.4
Tax effect of adjusting items (note 10)
42.5
(12.7)
Adjustments attributable to changes in tax rates and laws
–
1.4
Write-back of previously unrecognised deferred tax assets (note 9)
5.3
–
Write-down of previously recognised deferred tax assets (note 9)
(0.7)
(1.4)
Adjusted tax charge (including discontinued)
32.1
22.4
Adjusted tax charge – continuing operations
32.0
22.1
Adjusted tax charge – discontinued operations
0.1
0.3
The Group has revised its definition of adjusted earnings 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.
Adjusting items – 2024
The principal adjusting items in the year for the continuing business 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 relating to the settlement charge and other costs relating to
the termination were recognised during the period. 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
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, offsetting the small write-off of the
residual asset on settlement.
Adjusting items – 2023
The principal adjusting items in the prior year 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.
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 year.
Adjusting items – discontinued operations
First Transit earnout
Following the announcement on 26 October 2022 of EQT Infrastructure’s agreement to sell First
Transit to Transdev North America, Inc., the Group now estimates 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.
Notes to the consolidated financial statements continued
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Reconciliation to non‑GAAP measures and performance continued
First Bus EBITDA comprises:
2024
£m
2023
£m
Pre‑IFRS 16 EBITDA
132.5
105.0
IFRS 16 adjustments1
15.6
15.9
First Bus adjusted EBITDA per segmental results table (note 5)
148.1
120.9
First Rail EBITDA comprises:
2024
£m
2023
£m
Non-management fees-based TOCs pre-IFRS 16 EBITDA
37.6
32.5
Group’s share of management fee income available for dividends (net of tax and non-controlling interest)
39.5
38.7
Tax on management fee income
15.0
10.2
Non-controlling interest
6.5
5.1
IFRS 16 adjustments1
521.9
574.5
First Rail adjusted EBITDA per segmental results table (note 5)
620.5
661.0
Group items EBITDA comprises:
Pre‑IFRS 16 EBITDA
(21.8)
(21.2)
IFRS 16 adjustments1
1.9
1.7
Group items adjusted EBITDA per segmental results table (note 5)
(19.9)
(19.5)
First Rail adjusted operating profit comprises:
Non-management fees-based TOCs
36.4
31.5
Group’s share of management fee income available for dividends (net of tax and non-controlling interest)
39.5
38.7
Tax on management fee income
15.0
10.2
Non-controlling interest
6.5
5.1
IFRS 16 adjustments1
45.9
39.3
First Rail adjusted operating profit per segmental results table (note 5)
143.3
124.8
Reconciliation of pre-IFRS 16 adjusted EBIT to post-IFRS 16 adjusted EBIT
Pre-IFRS 16 adjusted EBIT
156.6
119.1
IFRS 16 adjustments1
47.7
41.9
Post-IFRS 16 adjusted EBIT
204.3
161.0
1 IFRS 16 adjustments to EBITDA principally reflect the add back of operating lease rental costs charged to the income statement before the adoption of IFRS 16. IFRS 16 adjustments to operating profit reflect operating lease rental costs less depreciation charges
on right of use assets.
Notes to the consolidated financial statements continued
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5
Business segments and geographical information
For management purposes, the Group is organised into three operating divisions – First Bus, First Rail and Greyhound.
The divisions are managed separately in line with the differing services that they provide and the geographical markets in which they operate. There is a clear distinction between each division and
no judgement is required to identify each reportable segment. With regard to prior year comparative data, the properties related to the retained Greyhound US business were classified as held for
sale and treated as discontinued up to their disposal in December 2022. Greyhound Canada was retained and was categorised as a Continuing Operation, although trading operations have ceased.
The segment results for the 53 weeks ended 30 March 2024 are as follows:
Continuing Operations
Discontinued Operations
First Bus
£m
First Rail
£m
Greyhound
£m
Group Items/
eliminations1
£m
Continuing
Operations
£m
Greyhound
£m
Group items1
£m
Total
£m
Passenger revenue
769.1
3,030.1
–
–
3,799.2
–
–
3,799.2
Contract revenue
188.4
–
–
(35.5)
152.9
–
–
152.9
Rail contract subsidy receipts
–
456.8
–
–
456.8
–
–
456.8
Other revenues
54.7
251.5
–
–
306.2
–
–
306.2
Revenue
1,012.2
3,738.4
–
(35.5)
4,715.1
–
–
4,715.1
EBITDA2
148.1
620.5
–
(20.0)
748.6
(1.8)
–
746.8
Depreciation
(73.9)
(513.8)
–
(2.0)
(589.7)
(0.1)
–
(589.8)
Software amortisation
(1.0)
(1.7)
–
(0.6)
(3.3)
–
–
(3.3)
Capital grant amortisation
10.4
38.3
–
–
48.7
–
–
48.7
Segment results
83.6
143.3
–
(22.6)
204.3
(1.9)
–
202.4
Other adjustments (note 4)
(146.9)
–
(0.4)
(10.5)
(157.8)
(1.1)
(2.3)
(161.2)
Operating profit/(loss)3
(63.3)
143.3
(0.4)
(33.1)
46.5
(3.0)
(2.3)
41.2
Investment income
1.7
1.6
–
13.4
16.7
0.1
–
16.8
Finance costs
(4.2)
(61.5)
–
(16.3)
(82.0)
(0.4)
–
(82.4)
Profit/(loss) before tax
(65.8)
83.4
(0.4)
(36.0)
(18.8)
(3.3)
(2.3)
(24.4)
Tax
15.0
Loss after tax
(9.4)
Continuing Operations
Discontinued Operations
First Bus
£m
First Rail
£m
Greyhound
£m
Group Items/
eliminations1
£m
Continuing
Operations
£m
Greyhound
£m
Group items1
£m
Total
£m
Capital additions
200.8
45.5
–
0.3
246.6
–
–
246.6
Capital additions comprises intangible asset additions and acquisitions (note 12) and property, plant and equipment acquisitions, additions and transfers from right of use assets (note 13).
Notes to the consolidated financial statements continued
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Business segments and geographical information continued
Balance sheet4
Total
assets
£m
Total
liabilities
£m
Net assets/
(liabilities)
£m
Greyhound retained
54.2
(78.9)
(24.7)
First Bus
895.5
(315.3)
580.2
First Rail
2,164.1
(994.9)
1,169.2
3,113.8
(1,389.1)
1,724.7
Group items
152.5
(91.8)
60.7
Borrowings and cash
496.5
(1,644.8)
(1,148.3)
Taxation
44.0
(40.0)
4.0
Total
3,806.8
(3,165.7)
641.1
Greyhound (held for sale)
0.6
–
0.6
Total
3,807.4
(3,165.7)
641.7
1 Group items comprise central management and other items.
2 EBITDA is adjusted operating profit less capital grant amortisation plus depreciation plus software amortisation.
3 Although the segment results are used by management to measure performance, statutory operating profit by operating division is also disclosed for completeness.
4 Segment assets and liabilities are determined by identifying the assets and liabilities that relate to the business of each segment but excluding intercompany balances, net debt and taxation.
Notes to the consolidated financial statements continued
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5
Business segments and geographical information continued
The segment results for the 52 weeks ended 25 March 2023 were as follows:
Continuing Operations
Discontinued Operations
First Bus
£m
First Rail
£m
Greyhound
£m
Group Items/
eliminations1
£m
Continuing
Operations
£m
Greyhound
£m
Group items1
£m
Total
£m
Passenger revenue
660.0
2,713.8
–
–
3,373.8
–
–
3,373.8
Contract revenue
149.9
–
–
(40.7)
109.2
–
–
109.2
Rail contract subsidy receipts
–
893.0
–
–
893.0
–
–
893.0
Other revenues
92.6
286.4
–
–
379.0
4.0
–
383.0
Revenue
902.5
3,893.2
–
(40.7)
4,755.0
4.0
–
4,759.0
EBITDA2
120.9
661.0
–
(19.5)
762.4
(6.6)
–
755.8
Depreciation
(68.6)
(651.2)
–
(2.1)
(721.9)
–
–
(721.9)
Software amortisation
(1.7)
(6.3)
–
(0.6)
(8.6)
–
–
(8.6)
Capital grant amortisation
7.8
121.3
–
–
129.1
–
–
129.1
Segment results
58.4
124.8
–
(22.2)
161.0
(6.6)
–
154.4
Other adjustments (note 4)
(7.0)
–
(1.5)
1.4
(7.1)
71.7
(33.8)
30.8
Operating profit/(loss)3
51.4
124.8
(1.5)
(20.8)
153.9
65.1
(33.8)
185.2
Investment income
–
2.0
–
10.3
12.3
0.5
–
12.8
Finance costs
(2.5)
(49.4)
–
(17.2)
(69.1)
(0.2)
–
(69.3)
Profit before tax
48.9
77.4
(1.5)
(27.7)
97.1
65.4
(33.8)
128.7
Tax
(33.4)
Profit after tax
95.3
Continuing Operations
Discontinued Operations
First Bus
£m
First Rail
£m
Greyhound
£m
Group Items/
eliminations1
£m
Continuing
Operations
£m
Greyhound
£m
Group items1
£m
Total
£m
Capital additions
150.1
56.7
–
1.1
207.9
–
–
207.9
Capital additions comprises intangible asset additions and acquisitions (note 12) and property, plant and equipment acquisitions, additions and transfers from right of use assets (note 13).
Notes to the consolidated financial statements continued
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Notes to the consolidated financial statements continued
5
Business segments and geographical information continued
Balance sheet4
Total
assets
£m
Total
liabilities
£m
Net assets/
(liabilities)
£m
Greyhound retained
79.8
(101.6)
(21.8)
First Bus
775.5
(263.6)
511.9
First Rail
2,460.4
(1,092.1)
1,368.3
3,315.7
(1,457.3)
1,858.4
Group items
251.5
(89.4)
162.1
Borrowings and cash
791.4
(2,067.0)
(1,275.6)
Taxation
47.0
(41.7)
5.3
Total
4,405.6
(3,655.4)
750.2
Greyhound (held for sale)
0.6
–
0.6
Total
4,406.2
(3,655.4)
750.8
1 Group items comprise central management and other items.
2 EBITDA is adjusted operating profit less capital grant amortisation plus depreciation plus software amortisation.
3 Although the segment results are used by management to measure performance, statutory operating profit by operating division is also disclosed for completeness.
4 Segment assets and liabilities are determined by identifying the assets and liabilities that relate to the business of each segment but excluding intercompany balances, net debt and taxation.
Geographical information
The Group’s operations are located predominantly in the United Kingdom, with the prior year also including residual United States of America and Canada segment assets. The following table provides
an analysis of the Group’s revenue by geographical market:
Revenue
2024
£m
2023
£m
United Kingdom/Republic of Ireland
4,715.1
4,755.0
Total continuing operations
4,715.1
4,755.0
United States of America – discontinued operations
–
4.0
Total discontinued operations
–
4.0
Total revenue
4,715.1
4,759.0
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Notes to the consolidated financial statements continued
5
Business segments and geographical information continued
The following is an analysis of non‑current assets excluding financial instruments, deferred tax and pensions, the carrying amount of segment assets, and additions to property, plant and equipment and
intangible assets, analysed by the geographical area in which the assets are located:
Non‑current assets excluding
financial instruments deferred
tax and pensions
Additions to property,
plant and equipment and
intangible assets
Carrying amount of
segment total assets
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
United Kingdom/Republic of Ireland
2,376.4
2,557.6
246.6
207.9
3,708.6
4,278.8
Canada – continuing operations
–
–
–
–
1.1
0.7
Unallocated corporate items
–
–
–
–
44.0
47.0
Total – continuing operations
2,376.4
2,557.6
246.6
207.9
3,753.7
4,326.5
United States of America – discontinued operations
2.6
2.6
–
–
53.7
79.7
Total – discontinued operations
2.6
2.6
–
–
53.7
79.7
2,379.0
2,560.2
246.6
207.9
3,807.4
4,406.2
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Notes to the consolidated financial statements continued
6
Operating profit
Operating profit has been arrived at after charging/(crediting):
2024
£m
2023
£m
Depreciation – owned assets
98.6
171.4
Depreciation – right of use assets
491.1
550.5
Operating commitments
496.6
516.2
Other intangible asset amortisation charges
3.3
8.6
Capital grant amortisation
(48.7)
(129.1)
Cost of inventories recognised as an expense
261.4
268.1
Employee costs (note 7)
1,572.0
1,517.9
Gain on disposal of property, plant and equipment
(5.7)
(0.7)
Impairment charges
3.8
13.6
Reversal of impairment
–
(4.3)
Auditor’s remuneration (see below)
3.4
3.4
Rail franchise payments
1.1
3.4
LGPS pension settlement and related charges
146.9
–
Foreign exchange
2.8
(0.4)
Other operating costs1
1,642.0
1,682.5
Operating costs – continuing operations
4,668.6
4,601.1
Operating costs/(income) – discontinued operations2
5.3
(27.3)
Operating costs – continuing and discontinued operations
4,673.9
4,573.8
1 Other operating costs includes £46.4m (2023: £32.6m) received or receivable from government bodies in respect of bus service
operator grants and fuel duty rebates.
2 Discontinued operations’ operating income in 2023 consisted primarily of the Greyhound US property gains on disposal
(£71.4m), partly offset by the First Transit earnout charge (£33.8m). See note 4 for more details.
Amounts payable to PricewaterhouseCoopers LLP and its associates by the Company and its
subsidiary undertakings for continuing and discontinued operations in respect of audit and non‑audit
services are shown below:
2024
£m
2023
£m
Fees payable to the Company’s auditor for the audit of the Company’s
annual accounts
0.2
0.2
Fees payable to the Company’s auditor and its associates for the audit
of the Company’s subsidiaries pursuant to legislation
3.0
3.0
Total audit fees
3.2
3.2
Audit‑related assurance services
0.1
0.1
Other non‑audit services
0.1
0.1
Total non‑audit fees
0.2
0.2
Fees payable to PricewaterhouseCoopers LLP and its associates for non‑audit services to the
Company are not required to be disclosed because the consolidated financial statements are
required to disclose such fees on a consolidated basis.
Details of the Group’s policy on the use of auditors for non‑audit services, the reasons why the
auditor was used rather than another supplier and how the auditor’s independence and objectivity
were safeguarded are set out in the Corporate Governance report on page 122. No services were
provided pursuant to contingent fee arrangements.
Non‑audit services principally reflect the review of the half yearly financial information and other
regulatory reporting.
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7
Employee costs
The average monthly number of employees including discontinued operations (including Executive
Directors) was:
2024
Number
2023
Number
Operational
25,913
26,708
Administration
3,426
3,275
29,339
29,983
Less – discontinued operations
–
–
29,339
29,983
The aggregate remuneration including discontinued operations (including Executive Directors) comprised:
2024
£m
2023
£m
Wages and salaries
1,354.9
1,296.8
Social security costs
136.0
137.1
Pension costs (note 37)
81.1
86.4
1,572.0
1,520.3
Less – discontinued operations
–
(2.4)
1,572.0
1,517.9
Wages and salaries include a charge in respect of share‑based payments of £15.6m (2023: £6.4m).
Disclosures on Directors’ remuneration, share options, long‑term incentive schemes and pension
entitlements required by the Companies Act 2006 and those specified for audit by the Financial
Conduct Authority (FCA) are contained in the tables/notes within the Annual report on remuneration
on pages 130 to 143. Directors’ emoluments in aggregate were £5.0m (2023: £5.1m).
8
Investment income and finance costs
The average monthly number of employees including discontinued operations (including Executive
Directors) was:
2024
£m
2023
£m
Investment income
Bank interest receivable
(14.7)
(6.3)
Interest on pensions
(2.1)
(6.5)
Total investment income (including discontinued operations)
(16.8)
(12.8)
Finance costs
Bonds
11.9
13.5
Bank interest and facility fees
5.8
3.5
Finance charges payable in respect of lease liabilities
62.1
50.6
Finance charges payable in respect of asset backed financial liabilities
1.4
1.5
Interest on long‑term provisions
0.8
0.2
Interest on pensions
0.4
–
Total finance costs (including discontinued operations)
82.4
69.3
Finance costs are stated after charging fee expenses of £0.7m (2023: £0.6m). There was no interest
capitalised into qualifying assets in either the current or prior period.
Investment income of £0.1m (2023: £0.5m) and finance costs of £0.4m (2023: £0.2m) relate to
discontinued operations (note 21).
Notes to the consolidated financial statements continued
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Notes to the consolidated financial statements continued
9
Tax on profit/(loss) on ordinary activities
2024
£m
2023
£m
Current tax charge
1.3
1.1
Adjustments with respect to prior years
(3.0)
1.7
Total current tax (credit)/charge (including discontinued operations)
(1.7)
2.8
Origination and reversal of temporary differences
(11.0)
40.9
Adjustment in respect of prior years
2.3
(10.3)
Adjustments attributable to changes in tax rates and laws
–
(1.4)
Writing down of previously recognised deferred tax assets
0.7
1.4
Write back of previously unrecognised deferred tax assets
(5.3)
–
Total deferred tax (credit)/charge (note 26)
(13.3)
30.6
Total tax (credit)/charge (including discontinued operations)
(15.0)
33.4
Tax (credit)/charge attributable to:
Profit from continuing operations
(15.1)
10.4
Profit from discontinued operations
0.1
23.0
UK corporation tax is calculated at 25% (2023: 19%) of the estimated assessable profit for the year. Tax for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Deferred tax
has been provided at 25% on temporary differences at the balance sheet date.
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Notes to the consolidated financial statements continued
9
Tax on profit/(loss) on ordinary activities continued
As the Group’s parent company is domiciled and listed in the UK, the Group uses the UK corporation tax rate to reconcile its effective tax rate. The tax charge for the year can be reconciled to the
UK corporation tax rate as follows:
2024
£m
2024
%
2023
£m
2023
%
(Loss)/profit from continuing operations before income tax expense
(18.8)
n/a
97.1
n/a
(Loss)/profit from discontinued operations before income tax expense
(5.6)
n/a
31.6
n/a
(Loss)/profit from total operations
(24.4)
100.0
128.7
100.0
Tax at the UK corporation tax rate of 25% (2022: 19%)
(6.1)
25.0
24.5
19.0
Non-deductible expenditure
0.7
(2.9)
7.6
5.9
Non-taxable income
(5.8)
23.8
–
–
Capital expenditure super deduction
–
–
(1.9)
(1.5)
Tax rates outside of the UK
0.5
(2.0)
6.7
5.2
Unrecognised losses
0.9
(3.7)
1.2
1.0
Other adjustments in relation to prior years
(0.6)
2.5
(8.6)
(6.7)
Writing-down of previously recognised deferred tax assets
0.7
(2.9)
1.4
1.1
Write-back of previously unrecognised deferred tax assets
(5.3)
21.7
–
–
Increased deferred tax rates on current year temporary differences
–
–
3.9
3.1
Adjustments attributable to changes in tax rates and laws
–
–
(1.4)
(1.1)
Tax (credit)/charge and effective tax rate for the year
(15.0)
61.5
33.4
26.0
Future years’ tax charges would be impacted if the final liability for currently open years is different from the amount currently provided for. The future tax charge may also be affected by the levels and
mix of profits in the countries in which we operate including differing foreign exchange rates that apply to those profits. Changes to the prevailing tax rates and tax rules in any of the countries in which
we operate may also impact future tax charges. There may be an impact, from 2025 onwards, of the UK’s enactment of the Organisation for Economic Co-operation and Development’s Global Anti-Base
Erosion Model Rules (Pillar Two). The Group has applied the temporary exemption issued by the International Accounting Standards Board from the accounting for deferred taxes under IAS 12. Accordingly,
the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes. The Group does not anticipate a material quantitative impact from
Pillar Two legislation for the 2025 financial year.
In addition to the amount charged/(credited) to the income statement, deferred tax relating to actuarial gains/(losses) on defined benefit pension schemes of £20.2m (2023: £(37.2)m) and cash flow hedges
of £0.5m (2023: £1.3m) have been charged/(credited) to comprehensive income together with a further £(1.0)m (2023: £(7.8)m) on cash flow hedges and £0.3m (2023: £(0.9)m) on share‑based payments
taken directly to equity. These amount to a total charge/(credit) of £20.0m (2023: £(44.6)m) recognised in other comprehensive income and equity.
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Notes to the consolidated financial statements continued
10 Earnings per share (EPS)
EPS is calculated by dividing the loss/profit attributable to equity shareholders of £(15.9)m (2023: profit of £87.1m) by the weighted average number of ordinary shares of 662.9m (2023: 739.5m). The number
of ordinary shares used for the basic and diluted calculations is shown in the table below.
The difference in the number of shares between the basic calculation and the diluted calculation represents the weighted average number of potentially dilutive ordinary share options.
2024
Number
m
2023
Number
m
Weighted average number of shares used in basic calculation
662.9
739.5
Executive share options
26.2
24.0
Weighted average number of shares used in the diluted calculation
689.1
763.5
The adjusted EPS is intended to highlight the recurring operating results of the Group before certain other adjustments as set out in note 4, and before IFRS 16 charges relating to the Group’s management
fee-based Rail operations. A reconciliation is set out below:
2024
2023
£m
EPS
(pence)
£m
EPS
(pence)
Basic (loss)/profit/EPS
(15.9)
(2.4)
87.1
11.8
Management fee-based Rail operations – IFRS 16 adjustments
10.2
1.5
6.9
1.0
Other adjustments (note 4)
161.2
24.3
(30.8)
(4.2)
Non‑controlling interest
–
–
3.1
0.4
Tax effect of Other adjustments
(42.5)
(6.4)
12.7
1.7
Adjustments attributable to changes in tax rates and laws
–
–
(1.4)
(0.2)
Write down of previously recognised deferred tax assets
0.7
0.1
1.4
0.2
Write back of previously unrecognised deferred tax assets
(5.3)
(0.8)
–
–
Adjusted profit and EPS attributable to the ordinary equity holders of the Company
108.4
16.4
79.0
10.7
Adjusted (loss)/EPS from discontinued operations
(2.3)
(0.3)
(6.6)
(0.9)
Adjusted profit/EPS from continuing operations
110.7
16.7
85.6
11.6
2024
pence
2023
pence
Diluted EPS
(2.4)
11.4
Adjusted diluted EPS
15.7
10.3
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Notes to the consolidated financial statements continued
10 Earnings per share (EPS) continued
The adjusted EPS on a continuing basis is set out below:
2024
2023
£m
EPS
(pence)
£m
EPS
(pence)
Basic (loss)/profit/EPS
(10.2)
(1.5)
78.5
10.6
Management fee-based Rail operations – IFRS 16 adjustments
10.2
1.5
6.9
1.0
Other adjustments (note 4)
157.8
23.7
7.1
1.0
Non-controlling interest
–
–
3.1
0.4
Tax effect of Other adjustments
(42.5)
(6.3)
(10.0)
(1.4)
Adjustments attributable to changes in tax rates and laws
–
–
(1.4)
(0.2)
Write-down of previously recognised deferred tax assets
0.7
0.1
Write back of previously unrecognised deferred tax assets
(5.3)
(0.8)
1.4
0.2
Adjusted profit/EPS from continuing operations
110.7
16.7
85.6
11.6
2024
pence
2023
pence
Diluted EPS
(1.5)
10.3
Adjusted diluted EPS
16.1
11.2
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Notes to the consolidated financial statements continued
11 Goodwill
2024
£m
Cost
At 26 March 2023
99.6
Additions1
11.4
At 30 March 2024
111.0
Accumulated impairment losses
At 26 March 2023
–
At 30 March 2024
–
Carrying amount
At 30 March 2024
111.0
At 26 March 2023
99.6
1 Additions of £11.4m relate mainly to goodwill on the acquisition of York Pullman Bus Company Limited.
Goodwill in the above table primarily relates to First Bus.
Impairment testing
At the year end, the carrying value of goodwill was reviewed for impairment in accordance with
IAS 36 Impairment of Assets.
In carrying out this review, climate‑related impacts were considered, in line with the TCFD disclosures.
This work assessed FirstGroup’s potential exposure to climate‑related transition and physical risks,
across different climate scenarios, over the short, medium and long term, and estimated cumulative
Enterprise Value at Risk over the period FY 2025 to FY 2029.
Transition risks included potential impacts from increased carbon prices and route constraints
due to new zero emission zones, as well as technology costs from an accelerated shift to a zero
emission fleet and the impairment of carbon‑intensive vehicles. Physical risks concentrated mainly
on flooding as the most material impact. Key findings are outlined on pages 74 to 84 of this Report
and focus on direct risks to FirstGroup.
For impairment calculations, the 2.5°C (‘Stated Policy’) scenario modelled by Marsh was used,
which identified technology risks as ‘medium impact’ and flooding risks as ‘low impact’ over the
next four years.
Full detailed impairment testing has been performed on a value in use basis on First Bus. The value
of the Franchised TOC asset base is protected by the passthrough and termination arrangements of
the respective EMA/ERMAs or NRCs, such that no impairment is expected to arise on these assets.
The Group prepares cash flow forecasts derived from the Board-approved plan for 2024/25 to
2026/27 which takes account of both past performance and expectations for future developments.
Cash flows beyond the plan period are extrapolated using estimated long‑term growth rates which
do not exceed the long‑term average growth rate for the market. Cash flows are discounted using
a pre‑tax discount rate derived from a market participant’s weighted average cost of capital,
benchmarked to externally available data.
Impairment testing – First Bus
First Bus value in use has been assessed based on the projected cash flows for 2024/25 to 2026/27
from the Board‑approved forecasts. These have been extrapolated to perpetuity cash flows and
discounted to a net present value based on the following assumptions.
First Bus has £412m of positive headroom at 30 March 2024 (25 March 2023: £496m) based on
a 10.3% discount rate (2023: 10.0%) and 10.8% terminal margin (2023: 11.2%), which reflects
the impact of expected future passenger volumes and yields, as well as planned resizing of
the network.
Break‑even would arise at:
15.1% discount rate (with a 10.8% terminal margin);
5.6% terminal margin (applying the cap to just the final year/terminal value) using a 10.3% discount
rate; or
7.2% terminal margin throughout the forecast period and terminal margin (applying the cap in all
years at 7.2%, not just in the terminal years) using a 10.3% discount rate.
As the break‑even points lie outside management’s range of reasonable expectation, no impairment
of First Bus is proposed.
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Notes to the consolidated financial statements continued
12 Other intangible assets
Software
£m
Total
£m
Cost
At 27 March 2022
32.0
32.0
Additions
4.2
4.2
Transfers from property, plant and equipment
3.6
3.6
At 25 March 2023
39.8
39.8
At 26 March 2023
39.8
39.8
Additions
2.4
2.4
Disposals
(5.2)
(5.2)
Transfers
4.0
4.0
At 30 March 2024
41.0
41.0
Accumulated amortisation and impairment
At 27 March 2022
19.6
19.6
Charge for year
8.6
8.6
Transfers from property, plant and equipment
0.8
0.8
At 25 March 2023
29.0
29.0
At 26 March 2023
29.0
29.0
Charge for year
3.3
3.3
Disposals
(4.2)
(4.2)
Transfers
2.5
2.5
At 30 March 2024
30.6
30.6
Carrying amount
At 30 March 2024
10.4
10.4
At 25 March 2023
10.8
10.8
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Notes to the consolidated financial statements continued
13 Property, plant and equipment
Owned assets
Land and buildings
£m
Passenger carrying
vehicle fleet
£m
Other plant and
equipment
£m
Total
£m
Cost
At 27 March 2022
203.6
799.1
662.8
1,665.5
Acquisitions2
20.2
7.6
0.5
28.3
Additions
16.1
80.1
79.2
175.4
Disposals
(8.2)
(134.0)
(23.8)
(166.0)
Reclassified as assets held for sale
(18.4)
–
(2.7)
(21.1)
Transfers
(0.2)
0.7
(4.4)
(3.9)
At 25 March 2023
213.1
753.5
711.6
1,678.2
At 26 March 2023
213.1
753.5
711.6
1,678.2
Acquisitions2
–
3.1
0.1
3.2
Additions
31.1
135.5
74.4
241.0
Disposals
(7.3)
(74.5)
(76.1)
(157.9)
Reclassifications
(1.8)
13.4
(5.7)
5.9
Transfers to right of use assets
–
(2.7)
(14.7)
(17.4)
At 30 March 2024
235.1
828.3
689.6
1,753.0
Accumulated depreciation and impairment
At 27 March 2022
76.9
484.2
448.0
1,009.1
Charge for year
3.6
48.3
119.5
171.4
Disposals
(2.4)
(104.1)
(22.9)
(129.4)
Impairment1
(4.3)
4.5
2.0
2.2
Reclassified as assets held for sale
(11.3)
–
(1.6)
(12.9)
Transfers
(2.0)
–
1.1
(0.9)
At 25 March 2023
60.5
432.9
546.1
1,039.5
At 26 March 2023
60.5
432.9
546.1
1,039.5
Charge for year
11.5
53.2
33.9
98.6
Disposals
(3.2)
(67.6)
(59.7)
(130.5)
Impairment1
–
–
2.6
2.6
Reclassifications
(5.9)
8.3
(7.7)
(5.3)
At 30 March 2024
62.9
426.8
515.2
1,004.9
Carrying amount
At 30 March 2024
172.2
401.5
174.4
748.1
At 25 March 2023
152.6
320.6
165.5
638.7
1 The impairment charge in the current year of £2.6m relates to Rail contracts. The impairment reversal in the prior year of £4.3m relates to Southampton properties, which were subsequently transferred to assets held for sale. The impairment charge in the prior
year of £6.5m primarily relates to the write-down of passenger carrying vehicles as a result of fleet resizing.
2 Acquisitions of £3.2m (2023 £28.3m) relate to continuing operations (see note 31).
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Notes to the consolidated financial statements continued
13 Property, plant and equipment continued
An amount of £0.8m (2023: £0.8m) in respect of assets under construction is included in the carrying amount of land and buildings, plant and equipment.
At 30 March 2024 the Group had entered into contractual capital commitments amounting to £61.8m (2023: £125.0m), principally representing purchase of passenger carrying vehicles, electrical
infrastructure and TOC commitments.
Right of use assets
Rolling stock
£m
Land and buildings
£m
Passenger carrying
vehicle fleet
£m
Other plant and
equipment
£m
Total
£m
Cost
At 27 March 2022
2,585.6
55.9
60.2
7.5
2,709.2
Additions
1,200.2
16.2
1.3
1.3
1,219.0
Disposals
(4.1)
(0.9)
(9.8)
(0.3)
(15.1)
Foreign exchange movements
–
0.2
–
–
0.2
At 25 March 2023
3,781.7
71.4
51.7
8.5
3,913.3
At 26 March 2023
3,781.7
71.4
51.7
8.5
3,913.3
Additions
183.3
4.3
6.5
2.8
196.9
Disposals
(221.6)
(10.6)
(0.5)
(0.4)
(233.1)
Transfers from owned assets
–
–
2.7
14.7
17.4
At 30 March 2024
3,743.4
65.1
60.4
25.6
3,894.5
Accumulated depreciation and impairment
At 27 March 2022
1,609.7
22.5
35.6
5.1
1,672.9
Charge for period
528.7
8.5
11.8
1.5
550.5
Lease impairment1
7.1
–
–
–
7.1
Disposals
(0.8)
(0.3)
(7.1)
(0.2)
(8.4)
Foreign exchange movements
–
0.2
–
–
0.2
At 25 March 2023
2,144.7
30.9
40.3
6.4
2,222.3
At 26 March 2023
2,144.7
30.9
40.3
6.4
2,222.3
Charge for period
470.3
8.7
10.2
1.9
491.1
Lease impairment
1.2
–
–
–
1.2
Disposals
(220.6)
(6.4)
(0.3)
(0.1)
(227.4)
At 30 March 2024
2,395.6
33.2
50.2
8.2
2,487.2
Carrying amount
At 30 March 2024
1,347.8
31.9
10.2
17.4
1,407.3
At 25 March 2023
1,637.0
40.5
11.4
2.1
1,691.0
1 The impairment of £1.2m in the current year and £7.1m in the prior year both relate to GWR.
The discounted lease liability relating to the right of use assets included above is shown in note 23.
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Notes to the consolidated financial statements continued
13 Property, plant and equipment continued
Owned assets and right of use assets
Rolling stock
£m
Land and buildings
£m
Passenger carrying
vehicle fleet
£m
Other plant and
equipment
£m
Total
£m
Carrying amount
At 30 March 2024
1,347.8
204.1
411.7
191.8
2,155.4
At 25 March 2023
1,637.0
193.1
332.0
167.6
2,329.7
The maturity analysis of lease liabilities is presented in note 23.
Amounts recognised in income statement (including discontinued operations)
2024
£m
2023
£m
Depreciation expense on right of use assets
491.1
550.5
Interest expense on lease liabilities
62.1
50.6
Impairment charge
1.2
7.1
Expense relating to short‑term leases
–
2.0
Expense relating to leases of low-value assets
0.1
2.1
554.5
612.3
14 Investments
2024
£m
2023
£m
Other investments
2.6
2.5
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Notes to the consolidated financial statements continued
15 Subsidiaries and non-controlling interests
A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given below.
A full list of subsidiaries, joint ventures and associates is disclosed in note 40.
The non‑controlling interests of the Group are First Trenitalia West Coast Limited (70% ownership and voting rights) and First MTR South Western Trains Limited (70% ownership and voting rights).
The registered addresses are disclosed in note 40. The non‑controlling interest share of profit for the financial year is a profit of £3.1m which relates to First Trenitalia West Coast Limited and £3.4m
which relates to MTR South Western Trains Limited.
UK and Ireland local bus and coach operators
Rail companies
Ensign Bus Company Limited
First Greater Western Limited
First Aberdeen Limited1
Hull Trains Company Limited
First Beeline Buses Limited
First Trenitalia West Coast Limited (70%)
First Cymru Buses Limited
First MTR South Western Trains Limited (70%)
First Eastern Counties Buses Limited
East Coast Trains Limited
First Essex Buses Limited
First Glasgow (No. 1) Limited1
First Glasgow (No. 2) Limited1
First Hampshire and Dorset Limited
First Manchester Limited
First Midland Red Buses Limited
First Potteries Limited
First South West Limited
First South Yorkshire Limited
First West of England Limited
First West Yorkshire Limited
First York Limited
Last Passive Limited2
Leicester CityBus Limited
Somerset Passenger Solutions Limited
York Pullman Bus Company Limited
All subsidiary undertakings are wholly owned by FirstGroup plc at the end of the year except where percentage of ownership is shown above. All these companies above are incorporated in United Kingdom and registered in England and Wales except those:
1 Registered in Scotland.
2 Incorporated in the Republic of Ireland.
All shares held in subsidiary undertakings are ordinary shares.
All of these subsidiary undertakings are owned via intermediate holding companies.
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Notes to the consolidated financial statements continued
16 Inventories
2024
£m
2023
£m
Spare parts and consumables from continuing operations
25.9
26.0
In the opinion of the Directors there is no material difference between the balance sheet value of inventories and their replacement cost. There was no material write‑down of inventories during the current
or prior year.
17 Trade and other receivables
Amounts due within one year (from discontinued operations)
2024
£m
2023
£m
Contingent consideration receivable
–
72.3
Amounts due within one year (from continuing operations)
2024
£m
2023
£m
Trade receivables
400.1
386.1
Loss allowance
(41.7)
(49.0)
Trade receivables net
358.4
337.1
Other receivables
187.6
210.3
Amounts recoverable on contracts
38.9
22.5
Prepayments
38.7
90.8
Accrued income
229.0
187.6
852.6
848.3
Movement in accrued income:
2024
£m
2023
£m
Balance as at 25 March 2023/26 March 2022
187.6
115.7
Additions
222.5
119.4
Accrued income invoiced during the year
(181.1)
(47.5)
Balance as at 30 March 2024/25 March 2023
229.0
187.6
The loss allowance relates solely to credit loss allowances arising from contracts with customers.
Other receivables includes £64.5m (2023: £67.1m) of VAT receivables, £14.1m (2023: £8.6m) of receivables from government bodies for fuel duty rebates, and £50.8m (2023: £73.3m) of insurance recoveries.
Amounts recoverable on contracts relates to amounts due from governmental and similar bodies for agreed contractual changes.
Accrued income principally comprises amounts relating to contracts with customers billed each month. Any amount previously recognised as accrued income is reclassified to trade receivables at the point
at which it is invoiced to the customer.
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Notes to the consolidated financial statements continued
17 Trade and other receivables continued
Credit risk
Credit risk is the risk that financial loss arises from failure by a customer or counterparty to meet its obligations under a contract.
Credit risk exists in relation to the Group’s financial assets, which comprise trade receivables, amounts recoverable on contracts and accrued income of £668.0m (2023: £596.2m), cash and cash equivalents
of £496.5m (2023: £791.4m) and derivative financial instruments of £2.4m (2023: £7.5m).
The Group’s maximum exposure to credit risk for all financial assets at the balance sheet date was £1,166.9m (2023: £1,395.1m). The exposure is spread over a large number of unconnected counterparties
and the maximum single concentration with any one counterparty was £215.0m (2023: £286.0m) at the balance sheet date.
The Group’s credit risk is primarily attributable to its trade receivables, amounts recoverable on contracts and accrued income. The amounts presented in the balance sheet are net of credit loss
allowances, estimated by the Group’s management based on prior experience and their assessment of the current economic environment. The credit loss allowance at the balance sheet date was
£41.7m (2023: £49.0m).
Most trade receivables, amounts recoverable on contracts and accrued income are with public or quasi-public bodies, principally the DfT, Network Rail and local authorities in the UK. The Group does not
consider any of these counterparties to be a significant risk. Each division within the Group has a policy governing credit risk management on receivables.
The counterparties for bank balances and derivative financial instruments are mainly represented by lending banks and large banks with a minimum of ‘A’ credit ratings assigned by international credit
rating agencies. These counterparties are subject to approval by the Board. Group Treasury policy limits the maximum deposit with any one counterparty to £150.0m and limits the maximum term to
three months.
Impairment of trade receivables amounts recoverable on contracts and accrued income
The Group applies the IFRS 9 simplified approach to measuring expected credit losses for all trade receivables, amounts recoverable on contracts and accrued income at each reporting date.
Provision matrices are used to measure expected losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns, such as geographical
region, service type, and customer type and rating. The calculation reflects the probability‑weighted outcome and reasonable and supportable information that is available at the reporting date about
past events, current conditions and forecasts of future economic conditions.
Trade receivables, amounts recoverable on contracts and accrued income are written off when there is no reasonable expectation of recovery.
Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
The majority of the Group’s customers are governmental or similar bodies and hence there are not considered to be any issues with the recoverability of these receivables. Further there have not been
any significant issues with the recoverability of non‑governmental receivables.
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17 Trade and other receivables continued
The gross carrying amount of trade receivables, amounts recoverable on contracts and accrued income for which the loss allowance is measured at an amount equal to the lifetime expected credit losses
under the simplified method, is analysed below:
Days past due: 2024
Carrying
amount
£m
Current
£m
Less than
30 days
£m
30‑90 days
£m
90‑180 days
£m
Over
180 days
£m
Expected credit loss rate
6.2%
–%
0.4%
1.0%
1.2%
84.9%
Gross carrying amount of trade receivables, amounts recoverable on contracts and accrued income
668.0
478.7
103.5
28.9
8.7
48.2
Loss allowance (from continuing operations)
41.7
–
0.4
0.3
0.1
40.9
Days past due: 2023
Carrying
amount
£m
Current
£m
Less than
30 days
£m
30‑90 days
£m
90‑180 days
£m
Over
180 days
£m
Expected credit loss rate
8.2%
0.7%
6.6%
42.7%
88.7%
60.2%
Gross carrying amount of trade receivables, amounts recoverable on contracts and accrued income
596.2
494.2
29.0
24.1
14.2
34.7
Loss allowance (from continuing operations)
49.0
3.3
1.9
10.3
12.6
20.9
The table above is an aggregation of different provision matrices for each of the customer segment groupings, as outlined above. The expected loss rate for each ageing category is the weighted average
loss rate across these groupings. The ‘current’ category consists primarily of receivables from groupings for which, based on historical losses and both the current and forecast economic conditions,
the expected credit losses are negligible, resulting in the application of a close to 0% loss rate.
Movement in the loss allowance for trade receivables
2024
£m
2023
£m
At 26 March 2023/27 March 2022
49.0
15.2
Amounts written-off during the year
(1.2)
(3.2)
Increase in allowance recognised in the income statement
13.6
1.2
Amounts recovered during the year
(0.6)
(8.2)
Reversal of provision
(19.1)
–
Amounts transferred from liquidated damages
–
44.0
At 30 March 2024/25 March 2023
41.7
49.0
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Notes to the consolidated financial statements continued
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Notes to the consolidated financial statements continued
18 Assets held for sale
Movement in assets held for sale
£m
At 26 March 2023
8.9
Net book value of disposals
(8.3)
At 30 March 2024
0.6
19 Trade and other payables
Amounts falling due within one year (from continuing operations)
2024
£m
2023
£m
Trade payables
277.4
338.8
Other payables
291.2
210.8
Accruals
539.9
621.6
Deferred income
129.0
125.5
Season ticket deferred income – Rail
21.1
17.7
1,258.6
1,314.4
Movement in deferred income
2024
£m
2023
£m
Balance as at 26 March 2023/27 March 2022
125.5
109.8
Additions
177.2
131.5
Recognised during the period
(162.9)
(115.8)
Loss of TPE operations
(10.8)
–
Balance as at 30 March 2024/25 March 2023
129.0
125.5
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Deferred income and season ticket deferred income principally comprises amounts relating
to contracts with customers.
Other payables includes £21.7m (2023: £15.2m) for the purchase of property, plant and equipment where increased payment terms have been agreed with the supplier due to the nature of the payable.
Other payables also include deferred capital grants from government or other public bodies of £162.2m (2023: £116.1m).
The average credit period taken for trade purchases is 41 days (2023: 36 days). The Group has controls in place to ensure that all payments are paid within the appropriate credit timeframe. The Directors
consider that the carrying amount of trade and other payables approximates to their fair value.
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Notes to the consolidated financial statements continued
20 Cash and cash equivalents
2024
£m
2023
£m
Cash and cash equivalents
496.5
791.4
The fair value of cash and cash equivalents approximates to the carrying value. Cash and cash equivalents includes ring‑fenced cash of £249.6m (2023: £369.6m). Ring‑fenced cash is cash held in the
Group which has restrictions around its use or distribution. The most significant ring‑fenced cash balances are held by the Group’s First Rail subsidiaries. All non‑distributable cash in franchised Rail
subsidiaries is considered ring‑fenced under the terms of the National Rail Contract. Ring‑fenced cash balances of £4.0m (2023: £5.4m) are held outside the First Rail subsidiaries. These other ring-fenced
cash balances include two elements: (1) funds of £4.0m (2023: £4.1m) withheld from the de-risking insurer as permitted under the de-risking agreement, and (2) balances of £nil (2023: £1.3m) within former
First Transit subsidiaries which were retained by the Group following the sale of First Transit, where those subsidiaries act as a disbursement agent on behalf of their customers and the cash is only allowed
to be used to settle customer liabilities.
21 Discontinued operations
Discontinued operations
2024
£m
2023
£m
Revenue
–
4.0
Operating (costs)/income
(5.3)
27.3
Operating (loss)/profit
(5.3)
31.3
Investment income
0.1
0.5
Finance costs
(0.4)
(0.2)
(Loss)/profit before tax
(5.6)
31.6
Tax
(0.1)
(23.0)
(Loss)/profit for the year after tax
(5.7)
8.6
Attributable to:
Equity holders of the parent
(5.7)
8.6
Non‑controlling interests
–
–
(5.7)
8.6
EPS
2024
pence
2023
pence
Basic EPS
(0.9)
1.2
Diluted EPS
(0.9)
1.1
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Notes to the consolidated financial statements continued
21 Discontinued operations continued
Cash flow
2024
£m
2023
£m
Net cash outflow from operating activities
(4.2)
(139.7)
Net cash inflow from investing activities
74.7
126.9
Net cash flow from financing activities
–
–
Net increase/(decrease) in cash generated
70.5
(12.8)
Other comprehensive income/loss
2024
£m
2023
£m
Actuarial (loss)/gain on defined benefit pension schemes
(1.2)
0.2
Hedging instrument movements
0.4
(0.4)
Exchange differences on translation of discontinued operations
(6.6)
6.8
Total
(7.4)
6.6
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Notes to the consolidated financial statements continued
22 Borrowings
2024
£m
2023
£m
On demand or within one year
Lease liabilities (note 23)2,3
492.8
447.4
Asset backed financial liabilities (note 23)3
6.2
17.3
Bank overdraft
27.8
82.9
Loan notes (note 24)
–
0.6
Bond 6.875% (repayable 2024)1
99.7
6.5
Total current liabilities
626.5
554.7
Within one to two years
Lease liabilities (note 23)2,3
385.0
381.6
Asset backed financial liabilities (note 23)3
7.9
5.9
Bond 6.875% (repayable 2024)
–
184.2
392.9
571.7
Within two to five years
Lease liabilities (note 23)2,3
546.2
825.9
NextGen battery debt
3.0
–
Asset backed financial liabilities (note 23)3
13.6
12.1
562.8
838.0
Over five years
Lease liabilities (note 23)2,3
34.5
93.7
NextGen battery debt
10.2
–
Asset backed financial liabilities (note 23)3
17.9
8.9
62.6
102.6
Total non‑current liabilities at amortised cost
1,018.3
1,512.3
1 Prior year includes accrued interest only.
2 The right of use assets relating to lease liabilities are shown in note 13.
3 The maturity analysis of lease liabilities and asset backed financial liabilities is presented in note 23.
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Notes to the consolidated financial statements continued
22 Borrowings continued
Fair value of bonds issued
Cash flow
Par value
£m
Interest
payable
Month
2024
Fair value
£m
2023
Fair value
£m
Bond 6.875% (repayable 2024)
96.2
Annually
September
100.1
192.2
The fair value of the bond is inclusive of accrued interest. The fair value is calculated by discounting the future cash flow that will arise under the contracts.
Effective interest rates
The effective interest rates at the balance sheet dates were as follows:
2024
Maturity
2023
Maturity
Bank overdraft
SONIA +1%
–
SONIA + 1%
–
Syndicated loan facilities
SONIA + 0.73%
August 2026
SONIA + 0.73%
August 2026
Bond 2024
6.94%
September 2024
6.93%
September 2024
HP contracts and finance leases
Average fixed
rate of 4.1%
Various
Average fixed
rate of 3.3%
Various
Loan notes
N/A
N/A
SONIA + 0.5%
March 2024
2024
£m
2023
£m
Pounds sterling
1,644.7
2,066.9
Euro
–
–
Canadian dollar
–
0.1
1,644.7
2,067.0
Borrowing facilities
The Group had £300.0m (2023: £300.0m) of undrawn committed borrowing available under its Revolving Credit facility as at March 2024. In addition there was £129.8m (2023: £nil) committed headroom
available under the Husk Financer facility and £54.9m (2023: £nil) under the NextGen Battery facility. Total undrawn bank borrowing facilities at year end stood at £501.0m (2023: £316.5m) of which £484.7m
(2023: £300.0m) was committed and £16.3m (2023: £16.5m) was uncommitted.
Capital management
The Group aims to maintain an investment grade credit rating and appropriate balance sheet liquidity headroom. The Group has a net debt to EBITDA ratio of 1.5 times as at March 2024 for the continuing
Group (2023: 1.7 times).
Liquidity within the Group has remained strong. At year end there was £705.2m (2023: £638.9m) of committed headroom and free cash. The Group’s Treasury policy requires a minimum of £250m
of committed headroom at the year end and half year for the budget year, and £200m for year two of the three‑year plan.
The Group’s net debt, excluding accrued bond interest, at 30 March 2024,
was £1,144.7m (2023: £1,269.1m) as set out in the Financial review on page 43.
The Group’s primary objectives of capital management is to ensure that the Group is able to continue as a going concern, to maintain an optimal capital structure and adequate liquidity headroom to deliver
on shareholder and stakeholder expectations. The Group’s capital structure consists of equity and net debt. The Group actively manages its capital structure and will adjust it when appropriate should
economic conditions change. The Group’s debt is monitored on the basis of a gearing ratio, being net debt divided by EBITDA, further details of which are provided in the Chief Financial Officer’s review.
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Notes to the consolidated financial statements continued
23 Lease liabilities and asset backed financial liabilities
The Group had the following lease liabilities and asset backed financial liabilities at the balance sheet dates, excluding liabilities relating to the discontinued operations:
Lease liabilities
Asset backed
financial liabilities
Maturity analysis
2024
£m
2023
£m
2024
£m
2023
£m
Due in less than one year
539.4
503.1
6.5
17.9
Due in more than one year but not more than two years
414.1
421.5
8.5
6.3
Due in more than two years but not more than five years
574.6
878.8
16.2
13.7
Due in more than five years
44.9
105.0
23.7
10.9
1,573.0
1,908.4
54.9
48.8
Less future financing charges
(114.5)
(159.8)
(9.3)
(4.6)
1,458.5
1,748.6
45.6
44.2
Lease liabilities have a fair value of £1,458.5m and asset backed financial liabilities have a fair value of £49.3m (2023: lease liabilities £1,748.6m, asset backed financial liabilities £43.3m).
The total cash outflow for the lease liabilities and asset backed financial liabilities recorded on the balance sheet amounted to £506.9m and £19.3m respectively (2023: £546.9m and £10.6m).
The right of use assets related to the lease liabilities is presented in note 13.
24 Loan notes
The Group had the following loan notes issued as at the balance sheet dates relating to continuing operations:
2024
£m
2023
£m
Due in less than one year
–
0.6
In the prior year, the loan notes had an average effective borrowing rate of 2.6%. They were redeemed upon maturity in March 2024.
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Notes to the consolidated financial statements continued
25 Financial instruments
Non‑derivative financial instruments
2024
£m
2023
£m
Total non‑derivatives
Total non‑current assets
99.6
117.6
Total assets
99.6
117.6
Certain pension partnership structures were implemented during 2022. These structures involved the creation of special purpose vehicles (SPVs) to hold cash to fund the Bus and Group pension schemes
if required based on a designated funding mechanism. Management have concluded that these amounts represent financial assets under IAS 32.
Derivative financial instruments
Total derivatives
Total non‑current assets
0.4
0.1
Total current assets
2.0
7.4
Total assets from continuing operations
2.4
7.5
Total current liabilities
3.4
2.6
Total non‑current liabilities
1.3
1.9
Total liabilities from continuing operations
4.7
4.5
Derivatives designated and effective as hedging instruments carried at fair value
Non‑current assets
Fuel derivatives (cash flow hedge)
0.4
–
Currency forwards (cash flow hedge)
–
0.1
0.4
0.1
Current assets
Fuel derivatives (cash flow hedge)
2.0
3.3
Currency forwards (cash flow hedge)
–
4.1
2.0
7.4
Current liabilities
Fuel derivatives (cash flow hedge)
2.7
2.6
Currency forwards (cash flow hedge)
0.7
–
3.4
2.6
Non‑current liabilities
Currency forwards (cash flow hedge)
0.2
0.1
Interest rate swaps (NextGen)
0.5
–
Fuel derivatives (cash flow hedge)
0.6
1.8
1.3
1.9
The Group enters into derivative transactions under International Swaps and Derivatives Association Master Agreements that allow for the related amounts to be set‑off in certain circumstances.
The amounts set out as Fuel derivatives and Currency forwards in the table above represent the derivative financial assets and liabilities of the Group that may be subject to the above arrangements
and are presented on a gross basis. Derivative liabilities of £nil (2023: £nil) were subject to netting arrangements. Total cash flow hedges are a liability of £2.3m (2023: £3.0m asset).
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The following (profits) were transferred from equity into inventory as basis adjustments during the year:
2024
£m
2023
£m
Operating (profits)
(4.0)
(31.2)
Fair value of the Group’s financial assets and financial liabilities (including trade and other receivables and trade and other payables) on a continuing basis:
2024
Fair value
Carrying
value
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets and derivatives
Trade and other receivables
–
668.0
–
668.0
668.0
Derivative financial instruments
–
2.4
–
2.4
2.4
Financial liabilities and derivatives
Borrowings1
–
1,621.0
–
1,621.0
1,616.9
Trade and other payables
–
1,096.4
–
1,096.4
1,096.4
Derivative financial instruments
–
4.7
–
4.7
4.7
1 Includes lease liabilities and asset backed financial liabilities as set out in note 23.
The estimated fair value of cash and cash equivalents, financial assets and bank overdrafts are a reasonable approximation to the carrying value of these items.
2023
Fair value
Carrying
value
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets and derivatives
Contingent consideration receivable
–
72.3
–
72.3
72.3
Trade and other receivables
–
596.2
–
596.2
596.2
Derivative financial instruments
–
7.5
–
7.5
7.5
Financial liabilities and derivatives
Borrowings1
0.6
1,984.1
–
1,984.7
1,984.1
Trade and other payables
–
1,198.3
–
1,198.3
1,198.3
Derivative financial instruments
–
4.5
–
4.5
4.5
Level 1: Quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data.
The estimated fair value of cash and cash equivalents and bank overdrafts are a reasonable approximation to the carrying value of these items.
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Financial assets/(liabilities)
Fair values
at 30 March
2024
£m
Fair values
at 25 March
2023
£m
Fair value
hierarchy
Valuation technique(s) and key inputs
Derivative contracts
1) Fuel derivatives
(0.9)
(1.1)
Level 2
Discounted cash flow; future cash flows are estimated based on forward fuel prices
and contract rates and then discounted at a rate that reflects the credit risk of the
various counterparties.
2) Currency forwards
(0.9)
4.1
Level 2
Discounted cash flow; future cash flows are estimated based on forward foreign
exchange rates and contract rates and then discounted at a rate that reflects the
credit risk of the various counterparties.
3) Interest rate swaps
(0.5)
–
Level 2
Future cash flows are estimated based on interest rates and then discounted at a rate
that reflects the credit risk of the various counterparties.
The following table illustrates the carrying value of all financial assets and liabilities held by the Group on a continuing basis.
2024
Classification of financial instruments
Assets and
liabilities at
amortised
costs
£m
At fair value
through profit
and loss
£m
At fair value
through OCI
£m
Total
£m
Financial assets and derivatives
Cash and cash equivalents
496.5
–
–
496.5
Trade and other receivables
668.0
–
–
668.0
Non‑derivative financial instruments
99.6
–
–
99.6
Derivative financial instruments
–
–
2.4
2.4
1,264.1
–
2.4
1,266.5
Financial liabilities and derivatives
Interest bearing loans and borrowings1
1,621.0
–
–
1,621.0
Trade and other payables
1,096.4
–
–
1,096.4
Derivative financial instruments
–
–
4.7
4.7
2,717.4
–
4.7
2,722.1
1 Includes lease liabilities and asset backed financial liabilities as set out in note 23.
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Notes to the consolidated financial statements continued
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2023
Classification of financial instruments
Assets and
liabilities at
amortised
costs
£m
At fair value
through profit
and loss
£m
At fair value
through OCI
£m
Total
£m
Financial assets and derivatives
Cash and cash equivalents
791.4
–
–
791.4
Trade and other receivables
596.2
–
–
596.2
Non‑derivative financial instruments
117.6
–
–
117.6
Derivative financial instruments
–
–
7.5
7.5
1,505.2
–
7.5
1,512.7
Financial liabilities and derivatives
Interest bearing loans and borrowings
2,067.0
–
–
2,067.0
Trade and other payables
1,198.3
–
–
1,198.3
Derivative financial instruments
–
–
4.5
4.5
3,265.3
–
4.5
3,269.8
Cash flow hedges
As at 30 March 2024
Commodity
price risk
Electricity
price risk
Foreign
exchange
price risk
Nominal amount of hedging
0.46m bbls
70,080 MWh
$55.3m
< 1 year
0.32m bbls
39,408 MWh
$39.1m
1 – 2 years
0.14m bbls
30,672 MWh
$16.2m
2 – 5 years
–
–
–
> 5 years
–
–
–
Average hedged rate
$99.63/bbl
£113.5/MWh
1.240
Maturity
Apr24-Mar26
Apr24-Mar26
Apr24-Mar26
Carrying amount of hedging instruments
Assets – Derivatives (£m)
2.4
–
–
Liabilities – Derivatives (£m)
(0.1)
(3.2)
(0.9)
(Liabilities – Borrowings (£m)
–
–
–
Carrying amount of hedged item
Liabilities – Borrowings (£m)
n/a
n/a
n/a
Accumulated amount of fair value hedging adjustments included in carrying amount of hedged item
Liabilities – Borrowings (£m)
n/a
n/a
n/a
Changes in fair value of hedged item used for calculating hedge effectiveness
(8.1)
3.8
(1.3)
Changes in fair value of hedging instrument used in calculating hedge effectiveness
8.1
(3.8)
1.3
Changes in fair value of hedging instrument accumulated in cash flow hedge reserve
1.9
(1.3)
(1.8)
No gains and losses on derivatives designated for hedge accounting have been charged through the consolidated income statement in either the current or prior year.
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Notes to the consolidated financial statements continued
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Financial risk management
The Group is exposed to financial risks including liquidity risk, credit risk and certain market‑based risks principally being the effects of changes in foreign exchange rates, interest rates and fuel prices.
The Group manages these risks within the context of a set of formal policies established by the Board. Certain risk management responsibilities are formally delegated by the Board, principally to a
sub‑committee of the Board and to the Chief Financial Officer and to the Treasury Committee. The Treasury Committee comprises the Chief Financial Officer and certain senior finance employees
and is responsible for approving hedging transactions permitted under Board‑approved policies, monitoring compliance against policy and recommending changes to existing policies.
Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulty in meeting obligations associated with financial liabilities. The objective of the Group’s liquidity risk management is to ensure sufficient
committed liquidity resources exist. The Group has a diversified debt structure largely represented by medium-term unsecured syndicated committed bank facilities, medium- to long‑term unsecured
bond debt and finance leases. It is a policy requirement that debt obligations must be addressed well in advance of their due dates.
The Group’s Treasury policy requires a minimum of £250m of committed headroom at the year end and half year for the budget year, and £200m for year two of the three‑year plan. At year end,
the total amount of these facilities stood at £532.4m (2023: £300.0m), and committed headroom was £484.7m (2023: £300.0m), in addition to free cash balances of £220.5m (2023: £338.9m). The next
material contractual expiry of revolver bank facilities is in August 2026.
The average duration of net debt (excluding ring‑fenced cash) at 30 March 2024 was 2.4 years (2023: 2.7 years).
The following tables detail, on a continuing basis, the Group’s expected maturity of payables for its borrowings, derivative financial instruments and trade and other payables. The amounts shown in these
tables are prepared on an undiscounted cash flow basis and include future interest payments in the years in which they fall due for payment.
2024
< 1 year
£m
1-2 years
£m
2-5 years
£m
> 5 years
£m
Total
£m
Borrowings1
677.4
423.5
596.7
79.7
1,777.3
Fuel derivatives
2.7
0.6
–
–
3.3
FX forwards
0.7
0.2
–
–
0.9
Interest rate derivatives
–
0.5
–
–
0.5
Trade and other payables
1,096.4
–
–
–
1,096.4
1,777.2
424.3
596.7
79.7
2,878.4
2023
< 1 year
£m
1-2 years
£m
2-5 years
£m
> 5 years
£m
Total
£m
Borrowings1
563.1
578.1
839.5
104.6
2,085.3
Fuel derivatives
(2.6)
(1.8)
–
–
(4.4)
FX forwards
–
(0.1)
–
–
(0.1)
Trade and other payables
1,198.3
–
–
–
1,198.3
1,758.8
576.2
839.5
104.6
3,279.1
1 Includes lease liabilities and asset backed financial liabilities as set out in note 23.
No derivative financial instruments had collateral requirements or were due on demand in any of the years. Derivative financial instruments are net settled.
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Notes to the consolidated financial statements continued
25 Financial instruments continued
Currency risk
Currency risk is the risk of financial loss to foreign currency net assets, earnings and cash flows reported in pounds sterling due to movements in exchange rates.
‘Certain’ and ‘highly probable’ foreign currency transaction exposures 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 is also exposed to currency risk relating to its UK fuel costs which are denominated in US dollars. This is hedged through entering a series of average rate forward contracts on a similar
profile to our fuel hedging programme. Forward currency risk is designated in the cash flow hedges, however valuation movements arising from changes in currency‑basis spreads are excluded from the
relationships as costs of hedging. At the balance sheet date the value to be recorded in a separate component of equity was immaterial, and as such no separate reserve has been shown within the primary
financial statements.
IFRS 7 requires the Group to show the impact on profit after tax and hedging reserve on financial instruments from a movement in exchange rates. The following analysis details the Group’s sensitivity to a
10% strengthening in pounds sterling against the US dollar. A 10% weakening in pounds sterling against the US dollar would have an equal but opposite effect to that shown below. The analysis has been
prepared based on the change taking place at the beginning of the financial year and being held constant throughout the reporting period. A positive number indicates an increase in earnings or equity
where pounds sterling strengthens against the US dollar.
2024
£m
2023
£m
Impact on profit after tax
0.4
0.2
Impact on hedging reserve
(0.1)
(0.1)
Interest rate risk
The Group has variable rate debt and cash and therefore net income is exposed to the effects of changes to interest rates. The Group Treasury policy objective is to maintain fixed interest rates at a
minimum of 75% of on‑balance sheet net debt over the medium term, so that volatility is substantially reduced year‑on‑year to EPS. The policy objective is primarily achieved through fixed rate debt.
The policy on interest rate risk within operating leases is to hedge 100% by agreeing fixed rentals with the lessors. The main floating rate benchmarks on variable rate debt are US dollar SONIA and
sterling SONIA.
At 30 March 2024, 100% (2023: 99%) of gross debt (pre-IFRS 16 and overdraft) was fixed. This fixed rate protection had an average duration of 2.3 years (2023: 1.8 years).
Interest rate risk within operating leases is hedged 100% by agreeing fixed rentals with the lessors prior to inception of the lease contracts.
The following sensitivity analysis details the Group’s sensitivity to a 100 basis points (1%) increase in interest rates throughout the reporting period with all other variables held constant.
2024
£m
2023
£m
Impact on profit after tax
4.8
5.7
Diesel fuel price risk
The Group purchases its fuel on a floating price basis and is therefore exposed to changes in diesel prices, primarily in relation to First Bus operations. The Group’s policy objective is to maintain a
significant degree of fixed price protection in the short term with lower levels of protection in the medium term, so that the businesses affected are protected from any sudden and significant increases
and have time to prepare for potentially higher costs, whilst retaining some access for potentially lower costs over the medium term. To achieve this the Group operates a progressive hedging policy.
The policy hedge target levels differ by division but are monitored monthly and appropriate actions taken to maintain satisfactory hedge levels. Gasoil or Diesel derivatives are used to hedge UK exposure.
Risk component hedging has been adopted under IFRS 9, meaning that the hedged price risk component of the purchased diesel matches that of the underlying derivative commodity. The hedged
risk component is considered to be separately identifiable and reliably measurable. Gasoil is considered to be the core risk component of the fuel grade ultimately purchased and there is a very strong
correlation between the movements in the prices of the derivative underlying and the purchased fuel. Variances in pricing of the derivative commodities and the purchased fuel are primarily driven by further
refinement of the fuel or the associated transportation costs which were excluded from the hedge relationship. Currently First Bus diesel exposure is hedged 68% to March 2025 and 32% to March 2026.
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Notes to the consolidated financial statements continued
25 Financial instruments continued
The Group has entered into swaps for periods from April 2024 to March 2026 with the majority of these swaps relating to the 52 weeks ending 31 March 2025. The swaps give rise to monthly cash flow
exchanges with counterparties to offset the underlying settlement of floating price costs, except where they have a deferred start date. Gains or losses on fuel derivatives are recycled from equity into
inventory on qualifying hedges to achieve fixed rate fuel costs within operating results.
The following analysis details the Group’s sensitivity on profit after tax and equity if the price of diesel fuel had been $10 per barrel higher during the 53 weeks ending 30 March 2024 and at the year end:
2024
£m
2023
£m
Impact on profit after tax
(0.5)
(0.3)
Impact on hedging reserve
2.7
3.5
Electricity price risk
The Group purchases electricity on a floating price basis and is therefore exposed to changes in electricity prices, primarily in relation to First Bus and Group operations. The Group’s policy objective is
to maintain a significant degree of fixed price protection in the short term, so that the businesses affected have time to prepare for prices after the current hedge period expires. To achieve this the Group
uses cash flow hedge financial instruments to achieve significant fixed price certainty.
The Group has entered into swaps for periods from April 2024 to March 2026, with the majority of these swaps relating to the 52 weeks ending 31 March 2025. The swaps give rise to monthly cash flow
exchanges with counterparties to offset the underlying settlement of floating price costs, except where they have a deferred start date. Gains or losses on electricity derivatives will be recycled from equity
to the income statement on qualifying hedges to achieve fixed rate electricity costs within operating results.
The following analysis details the Group’s sensitivity on profit after tax and equity if the price of electricity had been £50 per MWh higher during the 53 weeks ending 30 March 2024 and at the year end:
2024
£m
2023
£m
Impact on profit after tax
(0.2)
(1.0)
Impact on hedging reserve
2.6
1.2
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Notes to the consolidated financial statements continued
26 Deferred tax
The major deferred tax (assets)/liabilities recognised by the Group and movements thereon during the current and prior reporting periods are as follows:
Accelerated
tax depreciation
£m
Retirement
benefit schemes
£m
Other
temporary
differences
£m
Tax losses
£m
Total
£m
At 26 March 2022
(6.1)
48.6
(44.9)
(33.7)
(36.1)
Charge/(credit) to income statement
28.0
(2.8)
10.6
(5.2)
30.6
Credit to other comprehensive income and equity
–
(37.2)
(7.4)
–
(44.6)
Acquisitions and disposals of subsidiaries
4.7
–
0.3
–
5.0
Foreign exchange and other movements
(1.9)
–
–
–
(1.9)
At 25 March 2023
24.7
8.6
(41.4)
(38.9)
(47.0)
Charge/(credit) to income statement
7.0
(33.4)
14.2
(1.1)
(13.3)
Charge/(credit) to other comprehensive income and equity
–
20.2
(0.2)
–
20.0
Acquisitions and disposals of subsidiaries
0.7
–
–
–
0.7
At 30 March 2024
32.4
(4.6)
(27.4)
(40.0)
(39.6)
With respect to the total net deferred tax asset of £39.6m, UK net deferred tax assets of £38.7m have been recognised as the Group forecasts sufficient taxable profits in future periods and a deferred
tax asset of £0.9m relating to the US is recognised because it is probable that book gains will arise on the remaining US property portfolio.
No deferred tax has been recognised on tax losses of £457.9m (2023: tax losses of £460.8m) as there are insufficient future profits forecast in North America and some UK entities may cease to trade
before their tax losses can be utilised.
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27 Provisions
Insurance
claims
£m
Legal and
other
£m
Total
£m
At 25 March 2023
129.9
81.2
211.1
Charged to the income statement
8.9
25.3
34.2
Utilised in the year
(37.0)
(20.5)
(57.5)
Notional interest
0.8
–
0.8
Foreign exchange movements
(2.4)
(0.3)
(2.7)
At 30 March 2024
100.2
85.7
185.9
Current liabilities
35.7
38.9
74.6
Non‑current liabilities
64.5
46.8
111.3
At 30 March 2024
100.2
85.7
185.9
Current liabilities
45.5
40.4
85.9
Non‑current liabilities
84.4
40.8
125.2
At 25 March 2023
129.9
81.2
211.1
The insurance claims provision arises from estimated exposures for incidents occurring prior to the balance sheet date. It is anticipated that the majority of such claims will be settled within the next
four years although certain liabilities in respect of lifetime obligations of £1.1m (2023: £1.3m) can extend for more than 25 years. The utilisation of £37.0m (2023: £37.1m) represents payments made against
the current liability of the preceding year as well as the settlement of claims resulting from incidents occurring in the current year.
The insurance claims provisions, of which £55.7m (2023: £78.6m) relates to legacy Greyhound claims, includes £50.8m (2023: £73.3m) which is recoverable from insurance companies and a receivable
is included within other receivables in note 17.
Legal and other provisions relate to estimated exposures for cases filed or thought highly likely to be filed for incidents that occurred prior to the balance sheet date. It is anticipated that most of these
items will be settled within ten years. Also included are provisions in respect of costs anticipated on the exit of surplus properties which are expected to be settled over the remaining terms of the
respective leases and dilapidation, other provisions in respect of contractual obligations under rail franchises and restructuring costs. The dilapidation provisions are expected to be settled at the
end of the respective franchise.
Notes to the consolidated financial statements continued
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Notes to the consolidated financial statements continued
28 Called up share capital
Number
of shares
million
£m
Allotted, called up and fully paid (ordinary shares of 5p each)
Balance as at 26 March 2023
750.6
37.5
SAYE/BAYE exercises
0.1
–
Balance as at 30 March 2024 (ordinary shares of 5p each)
750.7
37.5
The Company has one class of ordinary shares which carries no right to fixed income.
On 16 December 2022, the Company announced a share buyback programme to purchase up to £75m of ordinary shares. This programme completed on 3 August 2023 having repurchased 63,868,786 shares
for a total consideration of £75.5m including transaction costs.
On 8 June 2023, the Company announced a share buyback programme to purchase up to £115m of ordinary shares. At 30 March 2024, the Company had repurchased 46,854,557 shares for a total
consideration of £74.7m, including transaction costs. As at 30 March 2024, a total of £115.8m has been deducted from retained earnings in respect of the shares already repurchased, directly associated
transaction costs, and the remaining commitment to purchase up to £115m of ordinary shares.
During the year, 0.1m shares were issued to satisfy principally SAYE and BAYE exercises.
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Notes to the consolidated financial statements continued
29 Reserves
The share premium account represents the premium on shares issued since 1999 and arose principally on the rights issue on the Ryder acquisition in 1999 and the share placings in 2007 and 2008.
The reserve is non‑distributable. The hedging reserve records the movement on designated hedging items. The own shares reserve represents the cost of shares in FirstGroup plc purchased in the market
and either held as treasury shares or held in trust to satisfy the exercise of share options.
Hedging reserve
The movements in the hedging reserve were as follows:
2024
£m
2023
£m
Balance at 25 March 2023/26 March 2022
(0.7)
19.3
Transfer to hedging reserve through consolidated statement of comprehensive income
Diesel derivatives
8.1
2.0
Electricity derivatives
(3.8)
(1.2)
Interest rate swaps – NextGen
(0.5)
–
Currency forwards
1.3
(7.1)
5.1
(6.3)
Tax on derivative hedging instrument movements through statement of comprehensive income
(0.5)
(1.3)
Transfer from hedging reserve to the balance sheet:
Diesel derivatives
(5.5)
(27.7)
Electricity derivatives
2.1
–
Currency forwards
(0.6)
(3.4)
(4.0)
(31.1)
Tax on derivative hedging instrument movements to the balance sheet
1.0
7.8
0.9
(11.6)
Cumulative loss on hedging instruments reclassified to the income statement
(2.7)
10.9
Balance at 30 March 2024/25 March 2023
(1.8)
(0.7)
Own shares
The number of own shares held by the Group at the end of the year was 125,292,999 (2023: 42,774,044) FirstGroup plc ordinary shares of 5p each. Of these, 14,379,907 (2023: 13,068,899) were held by
the FirstGroup plc Employee Benefit Trust, 32,520 (2023: 32,520) by the FirstGroup plc Qualifying Employee Share Ownership Trust and 157,229 (2023: 157,229) were held as treasury shares, with a further
110,723,343 (2023: 29,515,396) held as treasury shares as part of the share buyback programmes. Both trusts and treasury shares have waived the rights to dividend income from the FirstGroup plc
ordinary shares. The market value of the shares at 30 March 2024 was £226.0m (2023: £43.3m).
Capital
redemption
reserve
£m
Capital
reserve
£m
Total other
reserves
£m
Balance at 30 March 2024/25 March 2023
19.7
2.7
22.4
The capital redemption reserve represents the cumulative par value of all shares bought back and cancelled, less the associated transaction costs and stamp duty. The capital reserve arose on acquisitions
made in 2000. Neither reserve is distributable.
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Notes to the consolidated financial statements continued
30 Translation reserve
2024
£m
2023
£m
At 25 March 2023/26 March 2022
(16.3)
(24.0)
Movement for the financial year
(6.6)
7.7
At 30 March 2024/25 March 2023
(22.9)
(16.3)
The translation reserve records exchange differences arising from the translation of the balance sheets of foreign currency denominated subsidiaries offset by movements on loans used to hedge the net
investment in those foreign subsidiaries.
31 Acquisition of businesses and subsidiary undertakings
2024
£m
2023
£m
Provisional fair value of net assets acquired:
Property, plant and equipment
3.2
28.3
Current assets
2.5
11.8
Other liabilities
(1.5)
(8.0)
4.2
32.1
Goodwill
11.3
6.1
Satisfied by cash paid and payable
15.5
38.2
Acquisitions in 53 weeks to 30 March 2024
On 23 February 2024, the Group completed the acquisition of York Pullman Bus Company Ltd, which operates five coach services brands providing home-to-school and college contracted services,
private hire operations including rail replacement services, and a small number of local bus routes on behalf of several local authorities.
The total consideration of £15.5m represents £15.0m paid during the period, and £0.5m to be paid in future periods. This includes cash acquired of £1.5m included in current assets.
The business acquired during the year contributed £1.2m to Group revenue from continuing operations and £0.3m profit to Group operating profit from continuing operations from the date of acquisition.
If the acquisition of the business had been completed on the first day of the financial year, revenue from the acquisition for the year would have been £11.2m and operating profit from the acquisition would
have been £2.8m.
Acquisitions in 52 weeks to 25 March 2023
On 9 March 2023, the Group completed the acquisition of Ensign Bus Company Ltd, which has strong positions in business‑to‑business and regional commercial bus operations in Essex, as well as a
vehicle refurbishment and re‑sale operation.
The total consideration of £35.7m represents £34.7m paid during the period and £1.0m to be paid in future periods, and includes cash acquired of £6.6m included in current assets.
The business acquired during the year contributed £1.2m to Group revenue from continuing operations and £0.1m profit to Group operating profit from continuing operations from the date of acquisition.
If the acquisition of the business had been completed on the first day of the financial year, Group revenue from the acquisition for the year would have been £28.4m and Group operating profit would have
been £3.0m.
On 26 October 2022, the Group completed the acquisition of Airporter Ltd, a provider of bus services and supplier of coaches, mini buses and private vehicles for hire.
The total consideration of £2.5m was fully paid in the year.
The business acquired during the year contributed £0.3m to Group revenue from continuing operations and £0.2m profit to Group operating profit from continuing operations from the date of acquisition.
If the acquisition of the business had been completed on the first day of the financial year, Group revenue from the acquisition for the year would have been £1.8m and Group operating profit would have
been £1.0m.
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FirstGroup Annual Report and Accounts 2024
Notes to the consolidated financial statements continued
32 Net cash from operating activities
2024
£m
2023
£m
Operating profit from:
Continuing operations
46.5
153.9
Discontinued operations
(5.3)
31.3
Total operations
41.2
185.2
Adjustments for:
Depreciation charges
589.7
721.9
Capital grant amortisation
(48.7)
(129.1)
Software amortisation charges
3.4
8.6
Loss on disposal of subsidiaries and businesses
–
3.7
Impairment
3.8
13.6
Reversal of impairment
–
(4.3)
Share‑based payments
15.6
6.4
Profit on disposal of property, plant and equipment
(5.7)
(71.7)
Operating cash flows before working capital and pensions
599.3
734.3
Decrease in inventories
0.1
2.9
Increase in receivables
(3.1)
(159.4)
(Decrease)/increase in payables due within one year
(103.1)
53.8
Decrease in financial assets
23.7
–
Decrease in contingent consideration receivable
–
33.8
Decrease in provisions due within one year
(12.4)
(31.8)
Decrease in provisions due over one year
(15.5)
(1.2)
Settlement of foreign exchange hedge
(1.1)
(1.2)
Local Government Pension Scheme refund
23.1
11.8
Defined benefit pension payments lower than income statement charge
115.6
1.8
Cash generated by operations
626.6
644.8
Tax paid
(2.2)
(1.0)
Interest paid¹
(81.1)
(70.0)
Net cash from operating activities2
543.3
573.8
1 Interest paid includes £62.1m relating to lease liabilities (2023: £50.6m).
2 Net cash from operating activities is stated after an inflow of £5.1m (2023: inflow of £35.1m) in relation to financial derivative settlements.
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Notes to the consolidated financial statements continued
33 Analysis of changes in net debt
At
25 March
2023
£m
Cash flow
£m
Foreign
exchange
movements
£m
Other
£m
At
30 March
2024
£m
Components of financing activities:
Bonds
(184.2)
88.0
–
–
(96.2)
Lease liabilities1
(1,748.6)
506.9
–
(216.8)
(1,458.5)
Asset backed financial liabilities
(44.2)
19.3
–
(20.7)
(45.6)
Share of NextGen battery debt
–
(13.1)
–
(0.1)
(13.2)
Other debt
(0.6)
0.6
–
–
–
Total components of financing activities
(1,977.6)
601.7
–
(237.6)
(1,613.5)
Cash
421.8
(178.3)
3.4
–
246.9
Bank overdrafts
(82.9)
56.0
–
(0.9)
(27.8)
Ring‑fenced cash
369.6
(120.0)
–
–
249.6
Cash and cash equivalents
708.5
(242.3)
3.4
(0.9)
468.7
Net debt (including held for sale – discontinued operations)
(1,269.1)
359.4
3.4
(238.5)
(1,144.8)
1 Lease liabilities ‘other’ includes £216.8m net inception of new leases. This comprises £222.5m inception of new leases, being £191.7m of rolling stock leases, £9.2m of passenger carrying vehicle leases and £21.6m of property and other leases, offset by £5.7m
termination of leases. Termination of leases includes £1.0m in relation to rolling stock leases, £0.2m in relation to passenger carrying vehicle leases and £4.5m relating to property and other leases.
At
25 March
2022
£m
Cash flow
£m
Foreign
exchange
movements
£m
Other
£m
At
30 March
2023
£m
Components of financing activities:
Bonds
(199.9)
15.7
–
–
(184.2)
Lease liabilities1
(1,083.2)
546.9
–
(1,212.3)
(1,748.6)
Asset backed financial liabilities
(35.5)
10.6
–
(19.3)
(44.2)
Other debt
(0.6)
–
–
–
(0.6)
Total components of financing activities
(1,319.2)
573.2
–
(1,231.6)
(1,977.6)
Cash
319.6
106.2
(4.0)
–
421.8
Bank overdrafts
(87.5)
4.9
–
(0.3)
(82.9)
Ring‑fenced cash
468.1
(98.5)
–
–
369.6
Cash and cash equivalents
700.2
12.6
(4.0)
(0.3)
708.5
Net debt (including held for sale – discontinued operations)
(619.0)
585.8
(4.0)
(1,231.9)
(1,269.1)
1 Lease liabilities ‘other’ includes £1,212.3m net inception of new leases. This comprises £1,219.0m inception of new leases, being £1,200.2m of rolling stock leases, £1.3m of passenger carrying vehicle leases and £17.5m of property and other leases, offset by £6.7m
termination of leases. Termination of leases includes £3.3m in relation to rolling stock leases, £2.7m in relation to passenger carrying vehicle leases and £0.7m relating to property and other leases.
Accrued interest of £3.5m (2023: £6.5m) is excluded from the values above and derivative valuations are presented as the clean values.
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Notes to the consolidated financial statements continued
34 Contingent liabilities
To support subsidiary undertakings in their normal course of business, FirstGroup plc and
certain subsidiaries have indemnified certain banks and insurance companies who have issued
performance bonds for £59.8m (2023: £55.0m) and letters of credit for £164.3m (2023: £169.9m).
The performance bonds primarily relate to First Rail franchise operations of £56.7m and residual
North American obligations of £3.2m. The letters of credit relate substantially to insurance
arrangements in the UK and North America. The parent company has committed further support
facilities of up to £103.4m to First Rail Train Operating Companies of which £78.5m remains
undrawn. Letters of credit remain in place to provide collateral for legacy Greyhound insurance
and pension obligations.
The Group is party to certain unsecured guarantees granted to banks for overdraft and cash
management facilities provided to itself and subsidiary undertakings. The Company has given
certain unsecured guarantees for the liabilities of its subsidiary undertakings arising under certain
HP contracts, finance leases, operating leases and certain pension scheme arrangements.
It also provides unsecured cross guarantees to certain subsidiary undertakings as required by
VAT legislation. First Bus subsidiaries have provided unsecured guarantees on a joint and several
basis to the Trustees of The First Bus Pension Scheme. One of the Company’s North American
subsidiaries participated in multi‑employer pension plans in which their contributions were pooled
with the contributions of other contributing employers. The funding of those plans is reliant on the
ongoing involvement of third parties.
In its normal course of business the Group has ongoing contractual negotiations with Government
and other organisations. The Group is party to legal proceedings and claims which arise in the
normal course of business, including but not limited to employment and safety claims. The Group
takes legal advice as to the likelihood of success of claims and counterclaims. No provision is made
where due to inherent uncertainties, no accurate quantification of any cost, or timing of such cost,
which may arise from any of the legal proceedings can be determined.
The Group’s operations are required to comply with a wide range of regulations, including
environmental and emissions regulations. Failure to comply with a particular regulation could result
in a fine or penalty being imposed on that business, as well as potential ancillary claims rooted in
non‑compliance.
First MTR South Western Trains Limited (FSWT), a subsidiary of the Company and the operator
of the South Western railway contract, is a defendant to collective proceedings before the
UK Competition Appeal Tribunal (the CAT) in respect of alleged breaches of UK competition law.
Stagecoach South Western Trains Limited (SSWT) (the former operator of the South Western
network) is also a defendant to these proceedings, but agreed a settlement of the claim against it
with the class representative (CR) which was approved by the CAT on 10 May 2024 and, as a result,
the claim that was originally brought against it will not be proceeding. Separate sets of proceedings
have been issued against London & South Eastern Railway Limited and related entities (LSER) and
against Govia Thameslink Railway Limited and related entities (GTR) in respect of the operation
of other rail services. The three sets of proceedings are being heard together. The CR alleges that
FSWT, LSER and GTR breached their obligations under UK competition law by not making boundary
fares sufficiently available for sale, and/or by failing to ensure that customers were aware of the
existence of boundary fares and/or bought an appropriate fare in order to avoid being charged twice
for part of a journey. A collective proceedings order (CPO) has been made by the CAT in respect of
the proceedings. The proceedings have been split into three trials, the first two of which have been
set for June/July 2024 and June 2025, respectively, with no date currently set for the final trial. In
March 2022, FSWT, the Company and the CR executed an undertaking under which the Company
has agreed to pay to the CR any sum of damages and/or costs which FSWT fails to pay, and which
FSWT is legally liable to pay to the CR in respect of the claims (pursuant to any judgment, order or
award of a court or tribunal), including any sum in relation to any settlement of the claims.
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FirstGroup Annual Report and Accounts 2024
Notes to the consolidated financial statements continued
35 Operating commitments
2024
£m
2023
£m
Minimum payments made under contractual terms recognised in the income statement for the year:
Plant and machinery
5.5
6.9
Track and station access
473.1
492.7
Hire of rolling stock
–
1.0
Other assets
18.0
15.6
496.6
516.2
At the balance sheet dates, the Group had outstanding commitments for future payments under non‑cancellable operating contracts, which fall due as follows:
2024
£m
2023
£m
Within one year
484.1
481.1
In the second to fifth years inclusive
747.8
1,135.8
After five years
1.1
0.5
1,233.0
1,617.4
Included in the above commitments are contracts held by the First Rail businesses with Network Rail for access to the railway infrastructure, track, stations and depots of £1,206.9m (2023: £1,573.9m).
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Notes to the consolidated financial statements continued
36 Share‑based payments
Equity‑settled share option plans
The Group recognised total expenses of £15.6m (2023: £6.4m) related to equity‑settled share‑based payment transactions.
All Employee Plans
(a) Save as you earn (SAYE)
The Group operates an HMRC-approved savings‑related share option scheme and at the start of the year there were no outstanding options. The scheme is based on eligible employees being granted
options and their agreement to opening a sharesave account with a nominated savings carrier and to save weekly or monthly over a specified period. Sharesave accounts are held with Computershare.
The right to exercise the option is at the employee’s discretion at the end of the period previously chosen for a period of six months. The plan rules set out the treatment of those who leave employment
before the end of the savings contract. The scheme was offered again in FY 2024 following a break of several years. More than 3,450 employees accepted the invitation to join the scheme and just less
than 15m options were granted at a price of 111 pence per share. Further information is provided in the table below.
SAYE
Aug 2023
Options
Number
Outstanding at the beginning of the year
–
Granted during the year
14,955,244
Exercised during the year
(1,080)
Lapsed during the year
(514,634)
Outstanding at the end of the year
14,439,530
Exercisable at the end of the year
5,280
Weighted average exercise price (pence)
111
Weighted average share price at date of exercise (pence)
168.2
(b) Buy as you earn (BAYE)
BAYE enables eligible employees to purchase shares from their gross income. Until August 2023, the Company provided two matching shares for every three shares bought by employees, subject to a
maximum Company contribution of shares to the value of £20 per month. With the relaunch of the SAYE scheme in FY 2024 (see above) the Company decided to stop the matching shares in the BAYE plan
to facilitate a larger SAYE scheme than would have been possible had the matched funding continued. If the shares are held in trust for five years or more, no income tax and national insurance will be
payable. The matching shares will be forfeited if the corresponding partnership shares are removed from trust within three years of award.
At 30 March 2024 there were 4,356 (2023 5,667) participants in the BAYE scheme. During the year, scheme participants have purchased 1,450,052 shares with the Company contributing 195,729
matching shares.
Discretionary plans
Prior to FY 2022 the discretionary awards were structured as nil cost options. Since that date the awards have been granted as conditional shares, there is no economic difference for the Company or
participants as a result of this change.
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Notes to the consolidated financial statements continued
36 Share‑based payments continued
(c) Deferred bonus shares (DBS)
DBS awards vest over a three‑year period following the financial year that they relate to and are typically settled by equity.
DBS 2013
Options
Number
DBS 2014
Options
Number
DBS 2015
Options
Number
DBS 2016
Options
Number
DBS 2017
Options
Number
DBS 2018
Options
Number
DBS 2019
Options
Number
DBS 2020
Options
Number
DBS 2021
Options
Number
DBS 2022
Options
Number
DBS 2023
Options
Number
Outstanding at the beginning of the year
106,094
108,038
108,187
61,668
25,356
24,648
346,901
500,212
887,555
2,102,149
–
Granted during the year
–
–
–
–
–
–
–
–
–
–
831,260
Forfeited during the year
–
–
–
–
–
–
–
–
–
–
–
Exercised during the year
(90,510)
(41,867)
(55,566)
(24,130)
(13,023)
(9,869)
(276,017)
(341,846)
(230,101)
(343,020)
–
Lapsed during the year
(15,564)
–
–
–
–
–
(2,336)
(9,565)
(17,744)
(62,674)
–
Outstanding at the end of the year
nil
66,171
52,621
37,538
12,333
14,779
68,548
148,801
639,710
1,696,455
831,260
Exercisable at the end of the year
nil
66,171
52,621
37,538
12,333
14,779
68,548
148,801
93,885
–
–
Weighted average share price at date of exercise (pence)
119.5
127.5
123.1
137.5
147.5
112.3
136.6
147.3
151.2
160.5
n/a
(d) Long‑Term Incentive Plan (LTIP)
LTIP awards granted in 2019 had a TSR versus comparator group, EPS and a ‘Road’ ROCE performance measure. The awards granted in 2020 had two TSR measures (given the difficulty of setting targets
during the pandemic), one to the FTSE 250 and one to a comparator group. The LTIP awards granted in 2021, 2022 and 2023 have relative TSR, EPS and sustainability targets. Where the threshold
measures are exceeded, the awards are settled by equity.
LTIP 2019
Options
Number
LTIP 2020
Options
Number
LTIP 2021
Options
Number
LTIP 2022
Options
Number
LTIP 2023
Options
Number
Outstanding at the beginning of the year
512,636
5,136,713
2,588,698
8,603,684
–
Granted during the year
–
–
–
–
7,553,190
Forfeited during the year
–
–
–
–
–
Lapsed during the year
–
(527,391)
–
(1,163,613)
(197,298)
Exercised during the year
(512,636)
(4,609,322)
–
–
–
Outstanding at the end of the year
–
–
2,588,698
7,440,071
7,355,892
Exercisable at the end of the year
–
–
–
–
–
Weighted average share price at date of exercise (pence)
139.4
140.0
n/a
n/a
n/a
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Notes to the consolidated financial statements continued
36 Share‑based payments continued
(e) Executive Share Plan (ESP)
ESP awards vest over a three‑year period following the financial year that they relate to and are typically settled by equity.
ESP 2015
Options Number
ESP 2016
Options Number
ESP 2017
Options Number
ESP 2018
Options Number
ESP 2019
Options Number
ESP 2020
Options Number
ESP 2021
Options Number
ESP 2022
Options Number
ESP 2023
Options Number
Outstanding at the beginning of the year
82,213
47,245
181,175
395,721
1,414,679
1,226,403
2,255,545
251,294
–
Granted during the year
–
–
–
–
–
–
–
–
56,637
Forfeited during the year
–
–
–
–
–
–
–
–
–
Lapsed during the year
–
–
–
–
(28,933)
(5,047)
(174,250)
(6,636)
–
Exercised during the year
(40,822)
(2,356)
(124,035)
(243,181)
(960,125)
(937,400)
(955,098)
(45,300)
(44,678)
Outstanding at the end of the year
41,391
44,889
57,140
152,540
425,621
283,956
1,126,197
199,358
11,959
Exercisable at the end of the year
41,391
44,889
57,140
152,540
425,621
283,956
410,210
10,038
–
Weighted average share price at date of exercise/release (pence)
152.5
160.6
150.9
136.6
130.9
145.9
156.3
158.3
171.1
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Notes to the consolidated financial statements continued
36 Share‑based payments continued
The fair values of the awards granted during the last two years were measured using a Black‑Scholes model except for the TSR element of the LTIPs which were measured using a Monte Carlo model.
The inputs into the models were as follows:
2024
£m
2023
£m
Weighted average share price at grant date (pence)
– DBS
135.8
110.6
– LTIP
136.2
112.8
– ESP
138.8
99.9
Weighted average exercise price at grant date (pence)
– DBS
–
–
– LTIP
–
–
– ESP
–
–
Expected volatility (%)
– DBS
N/A
N/A
– LTIP
59
60
– ESP
N/A
N/A
Expected life (years)
– DBS
3.0
3.0
– SAYE schemes
N/A
N/A
– LTIP
3.0
2.62
– ESP
3.0
3.0
Rate of interest (%)
– DBS
N/A
N/A
– LTIP
–
–
– ESP
–
–
Expected dividend yield (%)
– DBS
–
–
– LTIP
–
–
– ESP
–
–
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous five years. 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.
Allowances have been made for the SAYE schemes for the fact that, amongst a group of recipients some are expected to leave before an entitlement vests. The accounting charge is then adjusted over
the vesting period to take account of actual forfeitures, so although the total charge is unaffected by the pre‑vesting forfeiture assumption, the timing of the recognition of the expense will be sensitive to it.
Fair values for the SAYE include a 10% per annum pre‑vesting leaver assumption whereas the Executive, LTIP and deferred share plans exclude any allowance for pre‑vesting forfeitures.
The Group used the inputs noted above to measure the fair value of the new conditional awards.
2024
£m
2023
£m
Weighted average fair value of options at grant date
– DBS
135.2
105.4
– LTIP
135.3
84.9
– ESP
128.2
99.9
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FirstGroup Annual Report and Accounts 2024
37 Retirement benefit schemes
The Group supports defined contribution (DC) and defined benefit (DB) schemes for the benefit
of employees across the following business areas:
UK Bus and Group – DB schemes: The First UK Bus Pension Scheme and The FirstGroup Pension
Scheme. DC schemes: The First Bus Retirement Savings Plan and the Enhanced Lifetime Savings
Plan. The Group terminated its participation in two Local Government Pension Schemes on
31 October 2023, with affected employees enrolled into The First Bus Retirement Savings Plan.
North America – legacy schemes from operations which have now been sold.
Rail – sponsoring four sections of the Railways Pension Scheme (RPS) relating to the Group’s
obligations for its TOCs, with an additional section for its Open Access Hull Trains business.
Since the obligations to the TOC arrangements are considered to be limited to contributions
during the period of the contract, these are fundamentally different to the obligations to the other
pension arrangements.
Each of these groups of arrangements have therefore been shown separately.
Overall, the duration of the Company’s obligations is approximately 16 years although the durations
of the individual schemes tend to vary with the UK exposures tending to be of longer duration and
the North American exposures tending to be of shorter duration.
The pension schemes in the UK and USA are operated independently of the Group by the relevant
pension scheme’s trustee. All pension scheme assets are held separately from FirstGroup’s assets.
The managers or trustees (as appropriate) of the pension schemes are responsible for the investment
policy, although the sponsor is consulted.
The market value of the assets as at 30 March 2024 for all non‑contract rail operation defined benefit
schemes totalled £1,413m (2023: £2,534m). The present value of scheme liabilities for all non-
contract rail operation defined benefit schemes totalled £1,438m (2023: £2,342m).
(a) First Bus and Group (including open access rail operators)
Defined contribution plans (shown on a continuing basis)
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. The total expense recognised in the consolidated income
statement of £31.6m (2023: £28.1m) represents contributions payable to these plans by the Group at
rates specified in the rules of the plans.
The Group operates defined contribution plans for all Group and First Bus employees and First Rail
employees who are not eligible to join a defined benefit arrangement. They receive a company match
to their contributions, which varies by salary and/or service.
Defined benefit plans (shown on a continuing basis)
The Group has full responsibility for the retirement benefits for former and current employees
of Group, First Bus and Hull Trains who are members of the schemes described in the following
paragraphs, bearing all the risks and responsibilities of sponsorship of these schemes. These
comprise three funded defined benefit plans across its First Bus and Group operations (including
Hull Trains which, unlike the majority of First Rail operations, is operated under open access),
covering approximately 24,700 former and current employees. All of these schemes are closed
to new entrants.
Triennial valuations assess the cost of future service (where relevant) and the funding position.
The employer and trustees are required to agree on assumptions for the valuations and to agree
the contributions that result from these. Deficit recovery contributions may be required in addition
to future service contributions. In agreeing contribution rates, reference must be made to the
affordability of contributions by the employer.
At their last valuations, the defined benefit schemes had funding levels between 74% and 94%
(2023: 74% and 99%).
Surplus after benefits have been paid/secured, can be repaid to the employer, in line with the rules
of the schemes.
The First UK Bus Pension Scheme
This provides pension benefits to employees in First Bus. Historically it provided salary-related
benefits on a shared cost basis, but from April 2013, new members were enrolled in the defined
contribution section. The scheme closed to defined benefit accrual on 5 April 2018. In 2023, the
defined contribution section was transferred out into a standalone scheme, The First Bus Retirement
Savings Plan.
The FirstGroup Pension Scheme
A smaller FirstGroup Pension Scheme provides defined benefit pensions to Group employees
in addition to certain First Bus employees. This scheme closed to defined benefit accrual on
5 April 2018. A project is under way to merge The First UK Pension Scheme into The FirstGroup
Pension Scheme.
The rules governing both these schemes grant the employer influence over the allocation of any
residual surplus once the beneficiaries’ rights have been secured. Accordingly, the net surplus/deficit
is recognised in full for these schemes.
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
Local Government Pension Schemes
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 (LGPS)
in which they were admitted bodies. An adjusting income statement expense for settlement charges and related costs of £146.9m has been recognised, 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. The termination of participation has removed £543.3m and £153.9m
of obligations and £679.8m and £159.5m of assets from the Group’s balance sheet for the Greater Manchester Pension Fund and North East Scotland Pension Fund respectively during FY 2024.
From a cash perspective, there were no payments required in relation to the exit from the Greater Manchester Pension Fund, while a payment of £23.1m was made from the North East Scotland Pension
Fund to the Group. The closure to accrual and previously held irrecoverable surplus amounts are recognised within the settlement charge disclosed below.
The Hull Trains Shared Cost Section of the Railways Pension Scheme
Hull Trains participates in its own Section of the Railways Pension Scheme. This scheme, which closed to new entrants in March 2024, but remains open to the accrual of benefits for current members,
provides salary‑related benefits. Costs relating to accrual and to any deficit are shared with members. Any deficit is now fully borne by the sponsor – the impact of this currently has a negligible impact on
the accounting balance sheet.
The table below is set out to show the movements in the fair value of schemes’ assets (Assets) along with the movements in the present value of Defined benefit obligations (DBO) (Liabilities) for the
Bus and Group and Hull Trains Defined Benefit schemes:
2024
2023
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
At beginning of period
2,166.9
1,972.5
2,930.1
2,571.7
Income statement
Operating
– Current service cost
–
5.8
–
8.5
– Past service gain including curtailments
–
(5.0)
–
–
– Settlement in relation to LGPS participation termination
(839.3)
(697.2)
–
–
Total operating
(839.3)
(696.4)
–
8.5
Interest income/cost
81.2
74.8
84.0
72.5
Total income statement1
(758.1)
(621.6)
84.0
81.0
Amounts paid to/(from) scheme
Employer contributions
6.0
–
(7.5)
–
Employee contributions
0.7
0.7
1.2
1.2
Benefits paid
(100.2)
(100.2)
(121.6)
(121.6)
Total
(93.5)
(99.5)
(127.9)
(120.4)
Expected closing position
1,315.3
1,251.4
2,886.2
2,532.3
Change in financial assumptions
–
(87.4)
–
(632.8)
Change in demographic assumptions
–
(14.3)
–
(43.6)
Employee share of changes
–
0.2
0.2
(1.6)
Return on assets in excess of discount rate
(167.5)
–
(719.5)
–
Experience
–
11.9
–
118.2
Total
(167.5)
(89.6)
(719.3)
(559.8)
At end of period
1,147.8
1,161.8
2,166.9
1,972.5
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
2024
2023
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
(Deficit)/surplus before adjustment
(14.0)
194.4
Impact of shared cost
–
(0.3)
Adjustment for irrecoverable surplus2
–
(156.7)
(Deficit)/surplus in schemes
(14.0)
37.4
The amount is presented in the consolidated balance sheet as follows:
Non‑current assets
6.0
44.6
Non‑current liabilities
(20.0)
(7.2)
(14.0)
37.4
1 In addition there was a financing charge of £4.3m relating to the interest on the asset ceiling as shown in the table below.
2 The irrecoverable surplus represented the amount of the surplus that the Group could not recover through reducing future Company contributions to LGPS, see below.
Adjustment for First Bus irrecoverable surplus
Movements in the adjustment for the First Bus irrecoverable surplus were as follows:
2024
£m
2023
£m
At beginning of period
(156.7)
(162.3)
Interest on irrecoverable surplus
(4.3)
(4.7)
Gain on settlement of LGPS arrangements
161.0
–
Actuarial gain on irrecoverable surplus
–
10.3
At end of period
–
(156.7)
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
Asset Allocation
At March 2024
Quoted
£m
Unquoted
£m
Total
£m
Equity
16.1
163.6
179.7
Other return seeking assets
–
27.2
27.2
Real estate
–
3.5
3.5
Fixed income/liability driven
680.0
243.7
923.7
Other income generating
–
1.0
1.0
Annuities
–
–
–
Cash and cash equivalents
12.7
–
12.7
708.8
439.0
1,147.8
At March 2023
Quoted
£m
Unquoted
£m
Total
£m
Equity
145.9
164.4
310.3
Other return seeking assets
22.0
56.8
78.8
Real estate
–
21.9
21.9
Fixed income/liability driven
1,428.2
145.9
1,574.1
Other income generating
–
1.1
1.1
Annuities
–
129.6
129.6
Cash and cash equivalents
51.1
–
51.1
1,647.2
519.7
2,166.9
(b) North America
Greyhound pension arrangements
The Group has retained certain responsibilities for the provision of retirement benefits for some legacy schemes.
The Group operates a legacy DB arrangement in the US (2023: one), while in Canada, there is a legacy plan (2023: one) with a DB and a DC section, and a small unfunded supplementary executive
retirement plan (SERP).
The Group has commenced the termination of all its legacy pension schemes in North America.
In July 2023, a buy-in was secured for all members of the Canadian DB plan other than for a small number of members for whom lump sums were payable. Surplus funds of £5.0m remain in the plan as at
the balance sheet date. After excess contributions are refunded to the employer, the plan rules require that any surplus on termination is distributed amongst members. This surplus is considered to be an
increase in the value of benefits and the resulting increase in DBO is being treated as OCI experience. Reflecting the position at the date of the transaction, this requirement to distribute surplus will increase
obligations by £4.6m such that the net surplus is £0.4m, to be refunded to the employer on termination. The buy-in provides a direct match to the underlying benefits thereby eliminating future balance sheet
volatility in respect of these obligations. The buy-in assets at the year end are categorised as annuities in the table below.
Separately, the Group conducted both a lump sum exercise and partial buy-out for the legacy DB arrangements in the US. The partial buy-out was completed in August 2023 and resulted in c.£56m of
assets and liabilities as at year end being removed from the Group’s balance sheet.
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
The table below is set out to show the movements in the fair value of schemes’ assets (Assets) along with the movements in the present value of defined benefit obligations (DBO) (Liabilities) for the
North American defined benefit schemes:
2024
2023
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
At beginning of period (including held for sale)
366.8
369.5
412.4
408.7
Income statement
Operating
– Current service cost
–
3.4
–
2.1
– Past service gain including curtailments and settlements
(57.7)
(58.9)
–
–
Total operating
(57.7)
(55.5)
–
2.1
Interest income/cost
15.1
15.2
16.5
16.2
Total income statement
(42.6)
(40.3)
16.5
18.3
Amounts paid to/(from) scheme
Employer contributions
0.6
–
4.5
–
Employee contributions
–
–
–
–
Benefits paid
(43.2)
(43.2)
(46.9)
(46.9)
Total
(42.6)
(43.2)
(42.4)
(46.9)
Expected closing position
281.6
286.0
386.5
380.1
Change in financial assumptions
–
(5.1)
–
(27.2)
Change in demographic assumptions
–
4.7
–
–
Employee share of change in DBO
–
–
–
–
Return on assets in excess of discount rate
(7.5)
–
(33.9)
–
Experience
–
–
–
1.6
Total
(7.5)
(0.4)
(33.9)
(25.6)
Currency gain/loss
(9.3)
(9.5)
14.2
15.0
At end of period
264.8
276.1
366.8
369.5
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
2024
2023
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Surplus/(deficit)
Calculated as at 30 March
(11.3)
(2.7)
Opening irrecoverable surplus
(6.8)
(14.6)
Change in irrecoverable surplus
6.8
7.0
Currency gain/(loss) on irrecoverable surplus
–
0.8
Presented in the consolidated balance sheet as Non‑current liabilities
(11.3)
(9.5)
Asset Allocation
At March 2024
Quoted
£m
Unquoted
£m
Total
£m
Fixed income/liability driven
109.4
–
109.4
Annuities
–
148.2
148.2
Cash and cash equivalents
7.2
–
7.2
116.6
148.2
264.8
At March 2023
Quoted
£m
Unquoted
£m
Total
£m
Fixed income/liability driven
336.2
(27.2)
309.0
Cash and cash equivalents
57.5
0.3
57.8
393.7
(26.9)
366.8
First Transit management contracts
The Group retained ten First Transit Management Contracts following the sale of First Transit in 2021. As at the balance sheet date, the Group had ceased to sponsor any Transit Management pension
arrangements following the expiry of the last remaining contracts.
Details of the assets and liabilities of these schemes is as follows:
2024
£m
2023
£m
Assets
–
14.0
Liabilities
–
(21.8)
Deficits in schemes
–
(7.8)
Amounts recoverable from contracting authorities
–
7.8
Net deficits in schemes
–
–
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
(c) Rail contracts
The Railways Pension Scheme (RPS)
The Group is responsible for collecting and paying contributions for a number of sections of the Railways Pension Scheme (RPS) as part of its obligations under the contracts which it holds for its TOCs.
These responsibilities continue for the periods of the TOCs and are passed to future contract holders when those TOCs terminate. Management of the RPS is not the responsibility of the Group, nor is it
liable to benefit from any future surplus or fund any deficit of those funds.
As at the balance sheet date, the Group sponsored four sections of the RPS, relating to its contracting obligations for its TOCs. The RPS is managed by the Railways Pension Trustee Company Limited and
is subject to regulation from the Pensions Regulator and relevant UK legislation.
The RPS is a shared cost arrangement. All costs, and any deficit or surplus, are shared 60% by the employer and 40% by the members.
For the TOC sections, under the contractual arrangements with the DfT, the employer’s responsibility is to pay the contributions following triennial funding valuations while it operates the contracted
services. These contributions are subject to change on consideration of future statutory valuations, though the Group is fully protected from any such changes through its contracts with the DfT. At the end
of the contract, any deficit or surplus in the scheme section passes to the subsequent train operating company with no compensating payments from or to the outgoing TOC.
The statutory funding valuations of the various Rail Pension Scheme sections in which the Group is involved (last finalised with an effective date of 31 December 2022) and the IAS 19 actuarial valuations
are carried out for different purposes and may result in materially different results. The IAS 19 valuation is set out in the disclosures below.
The accounting treatment for the time‑based risk‑sharing feature of the Group’s participation in the RPS is not explicitly considered by IAS 19 Employee Benefits (Revised). The contributions currently
committed to being paid to each TOC section are lower than the share of the service cost (for current and future service) that would normally be calculated under IAS 19 (Revised) and the Group does not
account for uncommitted contributions towards the sections’ current or expected future deficits. Therefore, the Group does not need to reflect any deficit on its balance sheet. A TOC adjustment (asset)
exists that exactly offsets any section deficit that would otherwise remain after reflecting the cost sharing with the members. This reflects the legal position that some of the existing deficit and some of
the service costs in the current year will be funded in future years beyond the term of the current contract and committed contributions.
The TOC adjustment on the balance sheet date reflects the extent
to which the Group is not currently committed to fund the deficit.
Movements in the TOC contract adjustment in a period arise from and are accounted for as follows:
Any service cost for the period for which the contribution schedule requires no contributions from the entity are reflected as an adjustment to the service cost in the income statement, which is considered
to be in line with paragraphs 92‑94 of IAS 19 (Revised).
Under circumstances where contributions are renegotiated, such as following a statutory valuation, any adjustment necessary to reflect an obligation to fund past service cost will be recognised in the
income statement.
At the previous year end, we noted that The Pensions Regulator (TPR) had been in discussion with the RPS (the Scheme) regarding the assumptions used to determine the Scheme’s funding requirements.
These discussions have now been concluded with the finalisation of the 31 December 2022 triennial valuation.
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
Management do not believe that the current NRCs have impacted the position in relation to the Group’s funding obligations towards the RPS sections and no allowance has therefore been made within
the disclosures for these Agreements.
The disclosed information has been set out to illustrate the effect of this on the costs borne by FirstGroup. In particular, 40% of the costs, gains or losses and any deficit are attributed to the members.
In addition, the total surplus or deficit is adjusted by way of a ‘contract adjustment’ which includes an assessment of the changes that will arise from contracted future contributions and which is the
portion of the deficit or surplus projected to exist at the end of the contract which the Group will not be required to fund or benefit from.
Assets
£m
Liabilities
£m
Adjustment
for employee
share of RPS
deficits (40%)
£m
Contract
adjustment
£m
Net
£m
At 1 April 2023
3,684.3
(3,814.5)
52.1
78.1
–
Impact from non-renewal of TPE contract
(239.2)
267.7
(11.4)
(17.1)
–
Revised opening position, excluding TPE
3,445.1
(3,546.8)
40.7
61.0
–
Income statement
Operating
– Service cost
–
(128.7)
51.5
24.9
(52.3)
– Admin cost
–
(5.8)
2.3
–
(3.5)
Total operating
–
(134.5)
53.8
24.9
(55.8)
Financing
166.1
(165.4)
(0.3)
(0.4)
–
Total income statement
166.1
(299.9)
53.5
24.5
(55.8)
Amounts paid to/(from) scheme
Employer contributions
55.8
–
(22.3)
22.3
55.8
Employee contributions
36.7
–
(14.7)
(22.0)
–
Benefits paid
(141.7)
141.7
–
–
–
Total
(49.2)
141.7
(37.0)
0.3
55.8
Expected closing position
3,562.0
(3,705.0)
57.1
85.8
–
Change in financial assumptions
–
30.7
(12.3)
(18.4)
–
Change in demographic assumptions
74.6
(29.8)
(44.8)
–
Return on assets in excess of discount rate
160.4
–
(64.1)
(96.3)
–
Experience
–
11.0
(4.4)
(6.6)
–
Total
160.4
116.3
(110.6)
(166.1)
–
At 31 March 2024
3,722.4
(3,588.7)
(53.4)
(80.3)
–
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
Assets
£m
Liabilities
£m
Adjustment
for employee
share of RPS
deficits (40%)
£m
Contract
adjustment
£m
Net
£m
At 1 April 2022
3,790.6
(5,066.1)
510.2
765.3
–
Income statement
Operating
– Service cost
–
(236.7)
94.6
89.2
(52.9)
– Admin cost
–
(10.4)
4.2
–
(6.2)
Total operating
–
(247.1)
98.8
89.2
(59.1)
Financing
108.2
(138.1)
12.0
17.9
–
Total income statement
108.2
(385.2)
110.8
107.1
(59.1)
Amounts paid to/(from) scheme
Employer contributions
59.1
–
(23.6)
23.6
59.1
Employee contributions
39.4
–
(15.8)
(23.6)
–
Benefits paid
(140.8)
140.8
–
–
–
Total
(42.3)
140.8
(39.4)
–
59.1
Expected closing position
3,856.6
(5,310.6)
581.6
872.3
–
Change in financial assumptions
–
1,840.2
(736.1)
(1,104.1)
–
Return on assets in excess of discount rate
(172.3)
–
68.9
103.4
–
Experience
–
(344.2)
137.7
206.5
–
Total
(172.3)
1,496.0
(529.5)
(794.2)
–
At 31 March 2023
3,684.3
(3,814.5)
52.1
78.1
–
During the year £5.8m (2023: £10.4m) of gross administrative expenses were incurred, included in benefits paid above.
Finance costs above include interest income of £99.7m (2023: £64.9m) and employee share of interest on assets of £66.4m (2023: £43.3m).
Income statement charges on liabilities above of £299.9m (2023: £385.2m) represent:
2024
£m
2023
£m
Current service costs
80.7
148.2
Interest costs
99.2
82.9
Employee share of change in DBO (not attributable to contract adjustment)
120.0
154.1
299.9
385.2
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37 Retirement benefit schemes continued
Asset Allocation
At 30 March 2024/31 March 2024
Quoted
£m
Unquoted
£m
Total
£m
Equity
–
2,106.4
2,106.4
Other return seeking assets
–
1,166.0
1,166.0
Real estate
–
440.1
440.1
Cash and cash equivalents
9.9
–
9.9
9.9
3,712.5
3,722.4
At 25 March 2023/31 March 2023
Quoted
£m
Unquoted
£m
Total
£m
Equity
–
2,069.3
2,069.3
Other return seeking assets
–
1,177.8
1,177.8
Real estate
–
426.5
426.5
Cash and cash equivalents
10.7
–
10.7
10.7
3,673.6
3,684.3
The Rail contracts’ assets are invested in pooled funds created specifically for the Rail schemes. As such, these assets have been categorised as unquoted.
(d) Valuation assumptions
The valuation assumptions used for accounting purposes have been made uniform to Group standards, as appropriate, when each scheme is actuarially valued.
At 25 March 2023/31 March 2023
First Bus
2024
%
First Rail
2024
%
North America
2024
%
First Bus
2023
%
First Rail
2023
%
North America
2023
%
Key assumptions used:
Discount rate
4.86 – 4.88
4.89
4.85 – 5.16
4.67 – 4.69
4.80
4.66 – 4.92
Expected rate of salary increases
N/A
3.70
N/A
3.51
3.22
n/a
Inflation – CPI
2.61 – 2.62
2.60
2.00
2.51 – 2.56
2.72
2.0
Future pension increases
2.582
2.60
n/a
2.532
2.72
n/a
Post‑retirement mortality (life expectancy in years)1
Current pensioners at 65:
19.3
20.1
19.8 – 21.6
19.4
20.7
19.7 – 21.6
Future pensioners at 65 aged 45 now:
19.7
21.5
21.4 – 22.6
19.8
22.2
21.3 – 22.6
1 Life expectancies reflect the largest underlying plans in each region.
2 Weighted average for principal scheme.
The Group reviews its longevity assumptions for each scheme following completion of funding valuations. The assumptions adopted reflect recent scheme experience and views on future longevity which
may include industry-specific adjustment where appropriate. The Group obtains specialist actuarial advice before agreeing longevity assumptions.
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
(e) Sensitivity of retirement benefit obligations to changes in assumptions
The method used to derive the sensitivities is the same as that used to calculate the main disclosures. The exception is longevity where we have instead applied a general rule that one year’s extra life
expectancy adds c.3% to the defined benefit obligation (with resultant impacts on rail and irrecoverable surplus adjustments). This is consistent with the method applied to deriving last year’s sensitivities.
A 1.0% movement in the discount rate would impact the balance sheet position by approximately £150m. A 0.5% movement in the inflation rate would impact the balance sheet position by approximately
£59m. A one‑year movement in life expectancy would impact the balance sheet position by approximately £38m.
Management considers that the figures provide a suitable indication of the potential impact of reasonably possible changes in the financial assumptions and one‑year change in the mortality assumption.
No allowance has been made for any consequent change in the value of assets held.
(f) Consolidated statement of comprehensive income
Amounts presented in the consolidated statement of comprehensive income comprise:
2024
£m
2023
£m
Actuarial gain on DBO
206.5
2,079.7
Actuarial (loss) on assets
(14.6)
(925.7)
Actuarial (loss) on contract adjustments
(276.7)
(1,323.7)
Gain on settlement of LGPS arrangements
161.0
–
Adjustment for irrecoverable surplus
7.1
18.8
Actuarial gains/(losses) on defined benefit schemes
83.3
(150.9)
(g) Cash contributions
The estimated amounts of employer contributions expected to be paid to the defined benefit schemes during the 52 weeks ending 29 March 2025 is £62m based on current contributions schedules in force
(30 March 2024: £64m).
Notes to the consolidated financial statements continued
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37 Retirement benefit schemes continued
(h) Risks associated with defined benefit plans
Other than for the First Rail TOCs, the number of employees in defined benefit plans is reducing rapidly, as these plans are closed to new entrants, and plans are being terminated. This will serve to limit the
risks associated with DB pension provision by the Group.
Despite remaining open to new entrants and future accrual, the risks posed by the RPS are limited, as under the contractual arrangements with DfT, the First Rail TOCs are not responsible for any residual deficit
at the end of a contract. Furthermore, under these contractual arrangements with the DfT, the First Rail TOCs are indemnified against any short-term cash flow risks arising from future triennial valuations.
The key risks relating to the other defined benefit pension arrangements and the steps taken by the Group to mitigate them are as follows:
Risk
Description
Mitigation
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond
yields; if assets underperform this yield, this will create a deficit. The assets held in the
defined benefit arrangements are intended to meet the long‑term funding objectives
of those arrangements, and therefore results in some risk in the short term and has
the potential for material adverse movements relative to the liabilities as valued for
accounting purposes.
Asset liability modelling has been undertaken to ensure that any risks taken are
expected to be rewarded and, in relation to the Company’s largest pension exposures,
further work is being undertaken to ensure that the investment strategy remains the
most appropriate.
Inflation risk
A significant proportion of the UK benefit obligations are linked to inflation and
higher inflation will lead to higher liabilities.
Investment strategy reviews have led to increased inflation hedging, mainly through
swaps or holding Index Linked Gilts in the UK schemes.
Uncertainty over level
of future contributions
Contributions to defined benefit schemes can be unpredictable and volatile
as a result of changes in the funding level revealed at each valuation.
The Group engages with the trustees and plan managers to consider how contribution
requirements can be made more stable. The level of volatility and the Group’s ability
to control contribution levels varies between arrangements.
Life expectancy
The majority of the scheme’s obligations are to provide benefits for the life of the
member, so increases in life expectancy will result in an increase in the liabilities.
Linking retirement age to State Pension Age (as in The First Bus Pension Scheme) has
mitigated this risk to some extent.
Legislative risk
Future legislative changes are uncertain. In the past these have led to increases in
obligations, through introducing pension increases, vesting of deferred pensions,
equalisation of certain benefits for men and women or reduced investment return
through the ability to reclaim Advance Corporation Tax.
The Group receives professional advice on the impact of legislative changes.
Notes to the consolidated financial statements continued
247
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Governance report
Financial statements
FirstGroup Annual Report and Accounts 2024
38 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Remuneration of key management personnel
The remuneration of the Directors, which comprise the plc Board who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures. Further information about the remuneration of individual Directors is provided in the Annual report on remuneration on pages 130-143.
2024
£m
2023
£m
Basic salaries1
1.9
1.7
Fees
0.7
0.8
Share‑based payment
2.4
2.5
5.0
5.0
1 Basic salaries include cash emoluments in lieu of retirement benefits, bonuses and car allowances.
39 Events after the reporting period
On 31 May, the majority of the Bus Scheme’s assets and liabilities were transferred into a newly created section of the Group Scheme, leaving c.£70m in the Bus Scheme. The Group anticipates starting the
winding-up process of the Bus Scheme as soon as possible. Eligible members who decline a lump sum payment option will be transferred to the Group Scheme in due course, at which point the merger
will be completed. The two Sections will remain segregated for funding and investment purposes and there is no impact to be reflected in the Group’s financial statements.
Notes to the consolidated financial statements continued
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Governance report
Financial statements
FirstGroup Annual Report and Accounts 2024
40 Information about related undertakings
In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries and equity
accounted investments as at 30 March 2024 is disclosed below. Unless otherwise stated, the
Group’s shareholding represents ordinary shares held indirectly by FirstGroup plc, the entities are
unlisted, and have one type of ordinary share capital, the year end is 30 March. The Group’s interest
in the voting share capital is 100% unless otherwise stated. No subsidiary undertakings have been
excluded from the consolidation:
Subsidiaries – wholly owned and incorporated in the United Kingdom
A E & F R Brewer Limited,5 Heol Gwyrosydd, Penlan, Swansea, SA5 7BN
Airport Buses Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Airport Coaches Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Airporter Limited,3,7 21 Arthur Street, Belfast, BT1 4GA
Butler Woodhouse Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Cawlett Limited,1,4,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
CCB Holdings Limited,4,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
CentreWest Limited,3,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
CentreWest London Buses Limited,3,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
CentreWest ESOP Trustee (UK) Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Chester City Transport Limited,5 Bus Depot, Wallshaw Street, Oldham, OL1 3TR
Crosville Limited,5 Bus Depot, Wallshaw Street, Oldham, OL1 3TR
Don Valley Buses Limited,5 Olive Grove, Sheffield, South Yorkshire, S2 3GA
East Coast Trains Limited,7,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
East West Rail Limited,5,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
ECOC (Holdings) Limited,1,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Ensign Bus Company Limited,3,7 The Rifle Range, Juliette Close, Purfleet Industrial Park, Aveley,
South Ockendon, Essex, RM15 4YF
Evolutionary Rail Limited,3,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FB Canada Holdings Limited,3,4 395 King Street, Aberdeen, AB24 5RP
FG Canada Investments Limited,3,4 395 King Street, Aberdeen, AB24 5RP
FG Properties Limited,3,8 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FGI Canada Holdings Limited,3,4 395 King Street, Aberdeen, AB24 5RP
FK Cross London Limited,7 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Aberdeen Limited,3,7 395 King Street, Aberdeen, AB24 5RP
First Beeline Buses Limited,3,7 Hoeford, Gosport Road, Fareham, Hampshire, PO16 0ST
First Bus Central Services Limited,3,8 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Bus Pension GP Limited,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Bus Retirement Savings Plan Trustee Limited,4 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
First Capital Connect Limited,3,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Capital East Limited,3,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
First Capital North Limited,4,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First CentreWest Buses Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First City Line Ltd,3,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Coaches Limited,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
First Customer Contact Limited,8,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Cymru Buses Limited,3,7 Heol Gwyrosydd, Penlan, Swansea, SA5 7BN
First Dublin Metro Limited,5,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Eastern Counties Buses Limited,3,7 Davey House, 7b Castle Meadow, Norwich, Norfolk, NR1 3DE
First Essex Buses Limited,3,7 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
First European Holdings Limited,1,3,5 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
First Games Transport Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Glasgow Limited,1,5 100 Cathcart Road, Glasgow, G42 7BH
First Glasgow (No.1) Limited,7 100 Cathcart Road, Glasgow, G42 7BH
First Glasgow (No.2) Limited,3,7 100 Cathcart Road, Glasgow, G42 7BH
First Greater Western Limited,7,9 Milford House, 1 Milford Street Swindon, Wiltshire SN1 1HL
First Hampshire & Dorset Limited,3,7 Hoeford, Gosport Road, Fareham, Hampshire, PO16 0ST
First Information Services Limited,1,3,8 395 King Street, Aberdeen, AB24 5RP
First International (Holdings) Limited),1,3,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First International No.1 Limited,3,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First London Cableway Limited,7 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Manchester Limited,3,7 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Merging Pension Schemes Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Midland Red Buses Limited,3,7 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First North West Limited,3,4 Wallshaw Street, Oldham, OL1 3TR
First Northern Ireland Limited,3,7 21 Arthur Street, Belfast, BT1 4GA
First Pioneer Bus Limited,3,5 Wallshaw Street, Oldham, OL1 3TR
First Potteries Limited,3,7 Abbey Lane, Leicester, England, LE4 0DA
First Provincial Buses Limited,4,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Rail (Commuter) Limited,5,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Rail Holdings Limited,1,4,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Rail Procurement Limited,1,3,8,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Rail Support Limited,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First ScotRail Limited,3,9 395 King Street, Aberdeen, AB24 5RP
Notes to the consolidated financial statements continued
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FirstGroup Annual Report and Accounts 2024
40 Information about related undertakings continued
First Shared Services Limited,5 395 King Street, Aberdeen, AB24 5RP
First South West Limited,3,7 Union Street, Camborne, Cornwall, TR14 8HF
First South Yorkshire Limited,3,7 Olive Grove, Sheffield, South Yorkshire, S2 3GA
First Student UK Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First TransPennine Express Limited,7,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First Travel Solutions Limited,7 Unit 5 Petre Court, Petre Road Clayton Business Park,
Clayton Le Moors, Accrington, BB5 5HY
First Wessex National Limited,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
First West of England Limited,7 Enterprise House, Easton Road, Bristol, BS5 0DZ
First West Yorkshire Limited,7 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
First York Limited,3,7 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
FirstBus (North) Limited,1,3,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstBus (South) Limited,1,3,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstBus Group Limited,4,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstBus Investments Limited,1,3,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup American Investments,3,4 395 King Street, Aberdeen, AB24 5RP
FirstGroup Canadian Finance Limited,1,3,6 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup Construction Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup Energy Limited,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup Holdings Limited,1,8 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup Pension GP Limited,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup (QUEST) Trustees Limited,1,5,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
FirstGroup US Finance Limited,1,3,6 395 King Street, Aberdeen, AB24 5RP
FirstGroup US Holdings,3,4 395 King Street, Aberdeen, AB24 5RP
Fleetrisk Management Limited,3,5 Olive Grove, Sheffield, South Yorkshire, S2 3GA
G.E. Mair Hire Services Limited,5 395 King Street, Aberdeen, AB24 5RP
G.A.G. Limited,1,3,4 Enterprise House, Easton Road, Bristol, BS5 0DZ
GB Railways Group Limited,1,3,4,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Great Western Trustees Limited,5,9 Milford House, 1 Milford Street, Swindon, SN1 1HL
Grenville Motors Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
GRT Bus Group Limited,1,3,4 395 King Street, Aberdeen, AB24 5RP
Gurna Limited,3,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Halesworth Transit Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Hampshire Books Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Hull Trains Company Limited,7,9 The Point, 8th Floor, 37 North Wharf Road, London, England, W2 1AF
Indexbegin Limited,5 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
KCB Limited,5 100 Cathcart Road, Glasgow, G42 7BH
Kirkpatrick of Deeside Limited,5 395 King Street, Aberdeen, AB24 5RP
LCB Engineering Limited,3,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Leicester CityBus Limited,3,7 Abbey Lane, Leicester, England, LE4 0DA
Lynton Bus and Coach Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Lynton Company Services Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Mainline Partnership Limited,1,3,4,5 Olive Grove, Sheffield, South Yorkshire, S2 3GA
Midland Travellers Limited,5 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
Mistral Data Limited,8,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
North Devon Limited,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Northampton Transport Limited,5 Bus Depot, Westway, Chelmsford, Essex, CM1 3AR
Project Coral Limited,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Quickstep Travel Ltd,5 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
Reiver Ventures Properties Limited,4,5 395 King Street, Aberdeen, AB24 5RP
Reiver Ventures Limited,1,5 395 King Street, Aberdeen, AB24 5RP
Reynard Buses Limited,5 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
Rider Holdings Limited,3,4 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
Rider Travel Limited,5 Hunslet Park Depot, Donisthorpe Street, Leeds, West Yorkshire, LS10 1PL
Scott’s Hospitality Limited,3 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Sheafline (S.U.T.) Limited,5 Olive Grove, Sheffield, South Yorkshire, S2 3GA
Sheffield & District Traction Company Limited,5 Olive Grove, Sheffield, South Yorkshire, S2 3GA
Sheffield United Transport Limited,5 Olive Grove, Sheffield, South Yorkshire, S2 3GA
Skillplace Training Limited,5 Heol Gwyrosydd, Penlan, Swansea, SA5 7BN
Smiths of Portland Limited,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
SMT Omnibuses Limited,1,5 395 King Street, Aberdeen, AB24 5RP
Southampton CityBus Limited,3,4 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Southampton City Transport Company Limited,4,5 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
Specialist Passenger Solutions Ltd,3,7 J24 Hinkley Point C, Park and Ride, Huntworth Business Park,
Bridgwater, TA6 6TS
Streamline Buses (Bath) Limited,1,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
Taylors Coaches Limited,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
The FirstGroup Pension Scheme Trustee Limited,8 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
The First UK Bus Pension Scheme Trustee Limited,5 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
Totaljourney Limited,1,5,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
Tram Operations Limited,7,9 Tramlink Depot, Coomber Way, Croydon, CR0 4TQ
Transportation Claims Limited,8 Aquis House, 49‑51 Blagrave Street, Reading, RG1 1PL
Notes to the consolidated financial statements continued
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40 Information about related undertakings continued
Truronian Limited,3,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
West Dorset Coaches Limited,4,5 Enterprise House, Easton Road, Bristol, BS5 0DZ
Western National Holdings Limited,4,5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
York Pullman Bus Company Limited,7 2 Clifton Moor Business Village, York, North Yorkshire, YO30 4XG
YPBC Limited,4 2 Clifton Moor Business Village, York, North Yorkshire, YO30 4XG
Subsidiaries – wholly owned and incorporated in the United States of America
Durham City Transit Company,7 Inc. 112 S French Street Suite 105, Wilmington, Delaware 19801
FirstGroup Management,5 Inc. 112 S French Street Suite 105, Wilmington, Delaware 19801
FirstGroup Services,5 Inc. 112 S French Street Suite 105, Wilmington, Delaware 19801
Laidlaw Transportation Holdings,5 Inc. 112 S French Street Suite 105, Wilmington, Delaware 19801
Transit Management of Dutchess County,7 Inc. 112 S French Street Suite 105, Wilmington,
Delaware 19801
Subsidiaries – not wholly owned but incorporated in the United States of America
Transportation Realty Income Partners LP (50%),7 600 Vine Street Suite 1400, Cincinnati, Ohio 45202
Subsidiaries – wholly owned and incorporated in Ireland
Aeroporto Limited,4 25‑28 North Wall Quay, Dublin
Last Passive Limited,7 25–28 North Wall Quay, Dublin
Subsidiaries – wholly owned and incorporated in Panama
First Transit de Panama, Inc.5 Morgan & Morgan, Costa del Este, MMG Tower, 23rd Floor, Panama City
Subsidiaries – wholly owned and incorporated in Canada
GCT Holdings Ltd,4 Blake, Cassels & Graydon LLP, 3500, 855 – 2 Street SW, Calgary, Alberta, T2P 4J8
GCT Investment Limited Partnership,4 Blake, Cassels & Graydon LLP, 3500, 855 – 2 Street SW,
Calgary, Alberta, T2P 4J8
Greyhound Canada Transportation ULC,7 Blake, Cassels & Graydon LLP, 595 Burrard Street,
P.O. Box 49314, Suite 2600, Three Bentall Centre, Vancouver, British Columbia V7X 1L3
Subsidiaries – not wholly owned but incorporated in Canada
GACCTO Limited (50%),5 130 King Street West, #1600, Toronto, Ontario M5X 1J5
Subsidiaries – not wholly owned but incorporated in the United Kingdom
Careroute Limited (80%),5 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First/Keolis Holdings Limited (55%),1,3,9 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
First/Keolis TransPennine Holdings Limited (55%),3,4,9 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
First/Keolis TransPennine Limited (55%),3,9 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
First MTR South Western Trains Limited (70%),7,9 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
First Trenitalia West Coast Rail Limited (70%),7,9 8th Floor, The Point, 37 North Wharf Road,
London, W2 1AF
NextGen AssetCo Limited (50%),7 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
NextGen MidCo Limited (50%),6 8th Floor, The Point, 37 North Wharf Road, London, W2 1AF
1 Directly owned by FirstGroup plc.
2 All shares held in subsidiary undertakings are ordinary shares, with the exception of Leicester CityBus Limited where the
Group owns 100% of its redeemable cumulative preference shares and 94% of its ordinary shares.
3 For the year ending 30 March 2024 these subsidiaries are exempt from audit of individual accounts under S479A of the
UK Companies Act 2006.
4 Primary business is a holding company.
5 Primary business is a dormant company.
6 Primary business is an intragroup financing company.
7 Primary business is the provision of transportation services.
8 Primary business is an administrative or support services company.
9 Rail companies with 31 March year end.
Certain pension partnership structures (FirstBus Pension Limited Partnership and FirstGroup Pension Limited Partnership)
were implemented during the 52 weeks ending 26 March 2022. These structures involved the creation of special purpose
vehicles (SPVs) to hold cash to fund the Bus and Group pension schemes if required, based on a designated funding mechanism.
The first accounting period end for these SPVs was 31 March 2023. The SPVs are consolidated into FirstGroup plc’s consolidated
accounts, and therefore under Partnership (Accounts) Regulations 2008, Regulation 7, the SPVs are exempt from the requirement
to prepare individual entity annual accounts.
Notes to the consolidated financial statements continued
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Group financial summary
Unaudited
Consolidated income statement (includes discontinued operations)
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Group revenue
4,715.1
4,759.0
5,588.0
6,844.8
7,754.6
Operating profit before amortisation charges and other adjustments
202.4
154.4
226.8
220.4
256.8
Amortisation charges
–
–
(0.4)
(4.1)
(4.9)
Other adjustments
(161.2)
30.8
579.7
69.5
(404.6)
Operating profit/(loss)
41.2
185.2
806.1
285.8
(152.7)
Finance costs
(82.4)
(69.3)
(153.5)
(172.0)
(146.9)
Investment income
16.8
12.8
1.5
2.0
–
(Loss)/profit before tax
(24.4)
128.7
654.1
115.8
(299.6)
Tax
15.0
(33.4)
(12.1)
(24.7)
(25.0)
(Loss)/profit for the year
(9.4)
95.3
642.0
91.1
(324.6)
EBITDA
746.8
755.8
862.1
1,178.9
1,108.9
Per share measures
pence
pence
pence
pence
pence
Adjusted continuing EPS1
16.7
11.6
1.6
(2.8)
6.8
Basic EPS
(2.4)
11.8
60.2
6.5
(27.0)
Dividend per share
5.5
3.8
1.1
–
–
Consolidated balance sheet
£m
£m
£m
£m
£m
Non‑current assets
2,425.4
2,651.9
2,267.2
2,641.2
6,225.1
Net current (liabilities)/assets
(621.7)
(253.9)
(546.8)
(876.8)
(701.9)
Non‑current liabilities
(1,051.3)
(1,530.9)
(753.1)
(2,817.7)
(3,927.5)
Held for sale – continuing operations
–
8.3
–
–
–
Held for sale – discontinued operations
0.6
0.6
38.5
2,342.9
–
Non‑current provisions
(111.3)
(125.2)
(120.7)
(135.5)
(419.0)
Net assets
641.7
750.8
885.1
1,154.1
1,176.7
Share data
Number of shares in issue
millions
millions
millions
millions
millions
At year end
750.7
750.6
750.2
1,221.8
1,219.5
Average (excluding treasury shares and shares in trusts)
662.9
739.5
1,057.5
1,203.6
1,210.9
Share price
pence
pence
pence
pence
pence
At year end
180
101
107
92
50
High
188
140
107
95
138
Low
102
94
73
31
28
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FirstGroup Annual Report and Accounts 2024
Group financial summary continued
Unaudited
2024
2023
2022
2021
2020
Market capitalisation
£m
£m
£m
£m
£m
At year end
1,154
803
1,124
610
1,105
Continuing operations
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Revenue
4,751.1
4,755.0
4,591.1
4,318.8
4,039.6
Adjusted operating profit
204.3
161.0
106.7
112.2
81.3
Operating profit/(loss)
46.5
153.9
122.8
171.0
38.2
EBITDA
748.6
762.4
731.2
782.8
623.3
First Bus
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Revenue
1,012.2
902.5
789.9
698.9
835.9
Adjusted operating profit
83.6
58.4
45.2
36.6
46.1
Operating profit/(loss)
(63.3)
51.4
45.2
30.8
32.4
EBITDA
148.1
120.9
104.4
100.8
113.2
First Rail
Revenue
3,738.4
3,893.2
3,801.2
3,619.9
3,203.7
Adjusted operating profit
143.3
124.8
87.8
108.1
70.4
Operating profit/(loss)
143.3
124.8
91.8
203.8
69.3
EBITDA
620.5
661.0
649.9
711.1
540.3
1 The Group has revised its definition of adjusted earnings 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 2023 comparatives only 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.
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Notes
2024
£m
2023
£m
Non‑current assets
Trade and other receivables
3
513.4
506.9
Derivative financial instruments
4
–
0.1
Investments
5
738.2
740.7
1,251.6
1,247.7
Current assets
Cash and cash equivalents
118.9
371.4
Trade and other receivables
3
3.3
2.7
Derivative financial instruments
4
–
4.1
122.2
378.2
Total assets
1,373.8
1,625.9
Current liabilities
Trade and other payables
7
357.8
313.3
Derivative financial instruments
4
0.7
0.1
358.5
313.4
Net current (liabilities)/assets
(236.3)
64.8
Non‑current liabilities
Trade and other payables
–
184.2
Derivative financial instruments
7
0.2
–
0.2
184.2
Total liabilities
358.7
497.6
Net assets
1,015.1
1,128.3
Equity
Share capital
8
37.5
37.5
Share premium
693.3
693.2
Other reserves
115.9
117.2
Own shares
9
(20.4)
(15.4)
Retained earnings
188.8
295.8
Total equity
1,015.1
1,128.3
The Company reported a profit for the 53 weeks ending 30 March 2024 of £37.6m (2023: profit of £232.3m).
Ryan Mangold
11 June 2024
Company number SC157176
Company balance sheet
As at 30 March 2024/25 March 2023
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Company statement of changes in equity
For the 53 weeks ended 30 March 2024/52 weeks ended 25 March 2023
Share
capital
£m
Share
premium
£m
Own
shares
£m
Hedging
reserve
£m
Merger
reserve
£m
Capital
reserve
£m
Capital
Redemption
reserve
£m
Retained
earnings
£m
Total
equity
£m
Balance at 27 March 2022
37.5
692.8
(9.0)
(10.2)
64.0
93.8
19.7
105.9
994.5
Profit/(loss) for the year
–
–
–
–
–
–
–
232.3
232.3
Other comprehensive (loss)/income for the year
–
–
–
0.0
–
–
–
–
0.0
Total comprehensive gain/(loss) for the year
–
–
–
0.0
–
–
–
232.3
232.3
Transactions with owners in their capacity as owners
Shares issued
–
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)
Movement in EBT and treasury shares
–
–
(6.4)
–
–
–
–
(8.6)
(15.0)
Share‑based payments
–
–
–
–
–
–
–
6.4
6.4
Dividends paid
–
–
–
–
–
–
–
(14.8)
(14.8)
Reclassification to retained earnings
–
–
–
–
(50.1)
–
–
50.1
–
Balance at 25 March 2023
37.5
693.2
(15.4)
(10.2)
13.9
93.8
19.7
295.8
1,128.3
Balance at 26 March 2023
37.5
693.2
(15.4)
(10.2)
13.9
93.8
19.7
295.8
1,128.3
Profit for the year
–
–
–
–
–
–
–
37.6
37.6
Other comprehensive loss for the year
–
–
–
(1.3)
–
–
–
–
(1.3)
Total comprehensive gain/(loss) for the year
–
–
–
(1.3)
–
–
–
37.6
36.3
Transactions with owners in their capacity as owners
Shares issued
–
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)
Movement in EBT and treasury shares
–
–
(5.0)
–
–
–
–
(11.5)
(16.5)
Share‑based payments
–
–
–
–
–
–
–
12.2
12.2
Dividends paid
–
–
–
–
–
–
–
(29.5)
(29.5)
Balance at 30 March 2024
37.5
693.3
(20.4)
(11.5)
13.9
93.8
19.7
188.8
1,015.1
Merger reserves relating to disposal of investments for qualifying consideration, and those relating to the extent related investments are impaired are considered realised and transferred to retained earnings.
The non‑distributable portion of retained earnings is £37.6m (2023 £32.7m).
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Financial statements
FirstGroup Annual Report and Accounts 2024
1
Significant accounting policies
Basis of accounting
The separate financial statements of the Company are presented as required by the Companies Act
2006. The financial statements have been prepared on a 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 pages 4-102.
The Company meets the definition of a qualifying entity under Financial Reporting Standard
(FRS 101) ‘Reduced Disclosure Framework’ issued by the Financial Reporting Council.
Accordingly, these financial statements have been prepared in accordance with FRS 101.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available
under that standard in relation to share‑based payments, financial instruments, capital management,
presentation of a cash flow statement, certain related party transactions and the requirement
to present a statement of financial position as at the beginning of the preceding period when
an entity applies an accounting policy retrospectively or makes a retrospective restatement
of its financial statements.
The financial statements for the current period include the results and financial position of the
Company for the 53 weeks ending 30 March 2024. The financial statements for the prior period
include the results and financial position of the Company for the 52 weeks ending 25 March 2023.
Where relevant, equivalent disclosures have been given in the consolidated financial statements.
The principal accounting policies adopted are the same as those set out in note 2 to the
consolidated financial statements except as noted below.
Investments
Investments in subsidiaries and associates are shown at cost less provision for impairment.
For investments in subsidiaries acquired for consideration in the form of shares, including the
issue of shares qualifying for merger relief, cost is measured by reference to the fair value only
of the shares issued.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the
Company’s financial statements in the period in which the dividends are approved by the
Company’s shareholders.
Dividends receivable from the Company’s subsidiaries are recognised only when they are approved
by shareholders.
Key sources of estimation uncertainty
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.
Investment in subsidiaries
Estimation is required in relation to the recoverability of the investments and is sensitive to changes
in cash flow forecasts supporting the recoverable amount. There is a significant risk that material
adjustment to the carrying amounts of the investments and receivables could be required within the
next financial year, including the reversal of prior year impairments. The carrying value of investments
at 30 March 2024 is £738.2m (2023: £740.7m).
2
Profit for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present
its own income statement for the year. The Company reported a profit for the financial year ended
30 March 2024 of £37.6m (2023: profit of £232.3m).
Fees payable to the Company’s auditors for the audit of the Company’s annual financial statements
are disclosed in note 6 of the Group accounts. The Company had no employees in the current or
preceding financial year.
3
Trade and other receivables
2024
£m
2023
£m
Amounts due within one year
Prepayments
3.3
2.7
3.3
2.7
Amounts due after more than one year
Amounts due from subsidiary undertakings
475.5
472.9
Loss allowance
(0.9)
(0.9)
Net amounts due from subsidiary undertakings
474.6
472.0
Deferred tax asset (note 6)
38.8
34.9
513.4
506.9
Notes to the Company financial statements
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Financial statements
FirstGroup Annual Report and Accounts 2024
4
Derivative financial instruments
2024
£m
2023
£m
Total derivatives
Total assets – due after more than one year
–
0.1
Total assets – due within one year
–
4.1
Total assets
–
4.2
Total creditors – amounts falling due within one year
0.7
0.1
Total creditors – amounts falling due after more than one year
0.2
–
Total creditors
0.9
0.1
Derivatives designated and effective as hedging instruments
carried at fair value
Current liabilities
Currency forwards (net investment hedge)
–
0.1
Total liabilities
–
0.1
Derivatives classified as held for trading
Non‑current assets
Currency forwards (cash flow hedge)
–
0.1
Current assets
Currency forwards (cash flow hedge)
–
4.1
–
4.1
Total assets
–
4.2
Current liabilities
Currency forwards (cash flow hedge)
0.7
–
Non‑current liabilities
Currency forwards (cash flow hedge)
0.2
–
Total liabilities
0.9
–
Full details of the Group’s financial risk management objectives and procedures can be found in
note 25 of the Group accounts. As the holding company for the Group, the Company faces similar
risks over foreign currency and interest rate movements.
5
Investments in subsidiary undertakings
Unlisted
subsidiary
undertakings
£m
Cost
At 25 March 2023
1,184.4
Additions
6.5
Write-off of investment
(2.5)
At 30 March 2024
1,188.4
Provision for impairment
At 25 March 2023
443.7
Impairment
6.5
At 30 March 2024
450.2
Carrying amount
At 30 March 2024
738.2
At 25 March 2023
740.7
The carrying value of the investment in subsidiary undertakings is reviewed for impairment on
an annual basis. The recoverable amount is 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. The investments of £738.2m principally relate to an investment in the Group’s former
North American divisions and holding companies of £78.9m and the First Bus business of £659.3m.
The First Bus value in use requires the determination of appropriate assumptions (which are
sources of estimation uncertainty) in relation to the cash flow forecasts, the long-term growth rate
to be applied and the discount rate used to discount the estimated cash flows to present value.
There was no reversal of impairment during the year.
The additions in the year relate to IFRS 2 share‑based charges, which have subsequently
been fully written down.
The investments in First Bus would break even using a discount rate of 12.3% or a reduction
of terminal margin to 9.3%.
A full list of subsidiaries and investments can be found in note 40 to the Group accounts.
Notes to the Company financial statements continued
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FirstGroup Annual Report and Accounts 2024
6
Deferred tax
The deferred tax asset/liability recognised by the Company and the movements thereon are
as follows:
Other
temporary
differences
£m
At 25 March 2023
(34.9)
Credit to income statement
(3.3)
Credit to reserves
(0.6)
At 30 March 2024
(38.8)
The following is the analysis of the deferred tax balances for financial reporting purposes:
2024
£m
2023
£m
Deferred tax asset due after more than one year
(38.8)
(34.9)
7
Creditors
2024
£m
2023
£m
Amounts falling due within one year
Bank overdraft
27.8
82.9
£200m sterling bond – 6.875% 2024
99.7
6.5
Amounts due to subsidiary undertakings
174.0
170.0
Accruals and deferred income
56.3
53.9
357.8
313.3
Amounts falling due after more than one year
£200m sterling bond – 6.875% 2024
–
184.2
–
184.2
Borrowing facilities
The maturity profile of the Company’s undrawn committed borrowing facilities is as follows:
2024
£m
2023
£m
Facilities maturing:
Revolving credit facility – due in more than two years
300.0
300.0
Green HP finance facility – due in more than two years
129.9
–
Details of the Company’s borrowing facilities are given in note 22 to the Group accounts.
8
Called up share capital
Number of
shares million
£m
Allotted, called up and fully paid (ordinary shares of 5p each)
Balance at 25 March 2023
750.6
37.5
SAYE/BAYE exercises
0.1
–
Balance at 30 March 2024 (ordinary shares of 5p each)
750.7
37.5
On 16 December 2022, the Company announced a share buyback programme to purchase
up to £75m of ordinary shares. This programme completed on 3 August 2023 having repurchased
63,868,786 shares for a total consideration of £75.5m including transaction costs.
On 8 June 2023, the Company announced a share buyback programme to purchase up to
£115m of ordinary shares. At 30 March 2024, the Company had repurchased 46,854,557 shares
for a total consideration of £74.7m, including transaction costs. As at 30 March 2024, a total of
£115.8m has been deducted from retained earnings in respect of the shares already repurchased,
directly associated transaction costs, and the remaining commitment to purchase up to £115m
of ordinary shares.
The number of ordinary shares of 5p in issue, excluding treasury shares held in trust for employees,
at the end of the period was 625.4m (2023: 737.3m). At the end of the period 125.3m shares
(2023: 42.8m shares) were being held as treasury shares and own shares held in trust for employees.
9
Own shares
Own shares
£m
At 25 March 2023
(15.4)
Movement in EBT, QUEST and treasury shares during the year
(5.0)
At 30 March 2024
(20.4)
The number of own shares held by the Group at the end of the year was 125,292,999
(2023: 42,774,044) FirstGroup plc ordinary shares of 5p each. Of these, 14,379,907 (2023: 13,068,899)
were held by the FirstGroup plc Employee Benefit Trust, 32,520 (2023: 32,520) by the FirstGroup plc
Qualifying Employee Share Ownership Trust and 157,229 (2023: 157,229) were held as treasury
shares, with a further 110,723,343 (2023: 29,515,396) held as treasury shares as part of the share
buyback programmes. Both trusts and treasury shares have waived the rights to dividend income
from the FirstGroup plc ordinary shares. The market value of the shares at 30 March 2024 was
£226.0m (2023: £43.3m).
Notes to the Company financial statements continued
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Financial statements
FirstGroup Annual Report and Accounts 2024
10 Contingent liabilities
To support subsidiary undertakings in their normal course of business, FirstGroup plc and
certain subsidiaries have indemnified certain banks and insurance companies who have issued
performance bonds for £59.8m (2023: £55.0m) and letters of credit for £164.3m (2023: £169.9m).
The performance bonds primarily relate to First Rail franchise operations of £56.7m and residual
North American obligations of £3.2m. The letters of credit relate substantially to insurance
arrangements in the UK and North America. The parent company has committed further support
facilities of up to £103.4m to First Rail, of which £78.5m remains undrawn. Letters of credit remain
in place to provide collateral for legacy Greyhound insurance and pension obligations.
The Group is party to certain unsecured guarantees granted to banks for overdraft and cash
management facilities provided to itself and subsidiary undertakings. The Company has given
certain unsecured guarantees for the liabilities of its subsidiary undertakings arising under certain
HP contracts, finance leases, operating leases and certain pension scheme arrangements.
It also provides unsecured cross guarantees to certain subsidiary undertakings as required by
VAT legislation. First Bus subsidiaries have provided unsecured guarantees on a joint and several
basis to the Trustees of The First Bus Pension Scheme. One of the Company’s North American
subsidiaries participated in multi‑employer pension plans in which their contributions were pooled
with the contributions of other contributing employers. The funding of those plans is reliant on the
ongoing involvement of third parties.
In its normal course of business the Group has ongoing contractual negotiations with Government
and other organisations. The Group is party to legal proceedings and claims which arise in the
normal course of business, including but not limited to employment and safety claims. The Group
takes legal advice as to the likelihood of success of claims and counterclaims. No provision is made
where due to inherent uncertainties, no accurate quantification of any cost, or timing of such cost,
which may arise from any of the legal proceedings can be determined.
The Group’s operations are required to comply with a wide range of regulations, including
environmental and emissions regulations. Failure to comply with a particular regulation could
result in a fine or penalty being imposed on that business, as well as potential ancillary claims
rooted in non‑compliance.
First MTR South Western Trains Limited (FSWT), a subsidiary of the Company and the operator
of the South Western railway contract, is a defendant to collective proceedings before the UK
Competition Appeal Tribunal (the CAT) in respect of alleged breaches of UK competition law.
Stagecoach South Western Trains Limited (SSWT) (the former operator of the South Western
network) is also a defendant to these proceedings, but agreed a settlement of the claim against it
with the class representative (CR) which was approved by the CAT on 10 May 2024 and, as a result,
the claim that was originally brought against it will not be proceeding. Separate sets of proceedings
have been issued against London & South Eastern Railway Limited and related entities (LSER)
and against Govia Thameslink Railway Limited and related entities (GTR) in respect of the operation
of other rail services. The three sets of proceedings are being heard together. The CR alleges that
FSWT, LSER and GTR breached their obligations under UK competition law by not making boundary
fares sufficiently available for sale, and/or by failing to ensure that customers were aware of the
existence of boundary fares and/or bought an appropriate fare in order to avoid being charged twice
for part of a journey. A collective proceedings order (CPO) has been made by the CAT in respect of
the proceedings. The proceedings have been split into three trials, the first two of which have been
set for June/July 2024 and June 2025, respectively, with no date currently set for the final trial. In
March 2022, FSWT, the Company and the CR executed an undertaking under which the Company
has agreed to pay to the CR any sum of damages and/or costs which FSWT fails to pay, and which
FSWT is legally liable to pay to the CR in respect of the claims (pursuant to any judgment, order or
award of a court or tribunal), including any sum in relation to any settlement of the claims.
Notes to the Company financial statements continued
259
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Strategic report
Governance report
Financial statements
FirstGroup Annual Report and Accounts 2024
Shareholder information
Annual General Meeting
The AGM will be held on 26 July 2024 at Queen Elizabeth II Centre, Broad Sanctuary, Westminster,
London, SW1P 3EE.
The Notice of AGM is available on the Company’s website and will have been posted to you if you
have chosen to receive hard copy communications from the Company. Either a Form of Proxy or
online Voting Card has been posted to all shareholders registered on the Company’s register
of members.
We are intending to hold the AGM as a physical meeting. Any changes to the arrangements will be
communicated to shareholders before the meeting through our website and, where appropriate,
by RIS announcement.
Shareholders are encouraged to submit proxies for the 2024 AGM electronically by logging on
to www.sharevote.co.uk. Electronic proxy appointments must be received by the Company’s
Registrar, Equiniti, no later than 48 hours, excluding non‑business days, before the time fixed
for the AGM.
Shareholders who wish to ask questions relating to the business of the AGM are
encouraged to do so by submitting questions in advance of the AGM by email to
companysecretariat@firstgroup.co.uk, or by post for the attention of the Company Secretary
(see addresses on the next page). We will consider all questions received and, to the extent
practicable, answers will also be published on the Company’s website. For all other queries
regarding the AGM, please contact the Company Secretary.
Website and shareholder communications
A wide range of information on FirstGroup is available at the Company’s website including:
financial information – annual and half-yearly reports as well as trading updates;
share price information – current trading details and historical charts;
shareholder information – AGM results, details of the Company’s advisers and frequently
asked questions; and
news releases – current and historical.
FirstGroup uses its website as its primary means of communication with its shareholders provided
that the shareholder has agreed or is deemed to have agreed that communications may be sent
or supplied in that manner. Electronic communications allow shareholders to access information
instantly as well as helping FirstGroup to reduce its costs and its impact on the environment.
Shareholders that have consented or are deemed to have consented to electronic communications
can revoke their consent at any time by contacting Equiniti.
Shareholders can sign up for electronic communications online by registering with Shareview,
the internet‑based platform provided by Equiniti. In addition to enabling shareholders to register
to receive communications by email, Shareview provides a facility for shareholders to manage
their shareholding online by allowing them to:
receive trading updates by email;
view their shareholdings;
update their records, including change of address;
view payment and tax information; and
vote in advance of Company general meetings.
To find out more information about the services offered by Shareview, please visit
www.shareview.co.uk.
Shareholder enquiries
The Company’s share register is maintained by Equiniti. Shareholders with queries relating
to their shareholding should contact Equiniti directly using one of the methods listed below:
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA
Tel: +44 (0)371 384 2046*
Online: www.shareview.co.uk
* Telephone lines are open from 8.30am to 5.30pm, Monday to Friday.
If you receive more than one copy of the Company’s mailings this may indicate that more than
one account is held in your name on the register. This happens when the registration details of
separate transactions differ slightly. If you believe more than one account exists in your name,
please contact Equiniti to request that the accounts are combined. There is no charge for
this service.
Equiniti also offers a postal dealing facility for buying and selling FirstGroup plc ordinary shares;
please write to them at the address shown above or telephone 0371 384 2248. They also offer
a telephone and internet dealing service which provides a simple and convenient way of dealing
in FirstGroup shares. For telephone dealing call 0345 603 7037 between 8.30am and 4.30pm,
Monday to Friday, and for internet dealing log on to www.shareview.co.uk/dealing.
260
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Strategic report
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Financial statements
FirstGroup Annual Report and Accounts 2024
ShareGift
If shareholders have a small number of shares and the dealing costs or the minimum fee make
it uneconomical to sell them, it is possible to donate these to ShareGift, a registered charity,
which provides a free service to enable you to dispose charitably of such shares. More
information on this service can be found at www.sharegift.org or by calling +44 (0)20 7930 3737.
A ShareGift transfer form can also be obtained from Equiniti.
FirstGroup’s policy on discounts for shareholders
The Group does not offer travel or other discounts to shareholders.
Unsolicited advice on the Company’s shares
Shareholders are advised to be wary of any unsolicited advice, offers to buy shares at a discount,
or offers of free reports about the Company. These are typically from overseas‑based ‘brokers’
who target shareholders, offering to sell them what often turn out to be worthless or high risk
shares. These operations are commonly known as ‘boiler rooms’ and the ‘brokers’ can be very
persistent and extremely persuasive.
Shareholders are advised to deal only with financial services firms that are authorised by the FCA.
You can check a firm is properly authorised by the FCA before getting involved by visiting
www.fca.org.uk/register. If you do deal with an unauthorised firm, you will not be eligible to receive
payment under the Financial Services Compensation Scheme if anything goes wrong. For more
detailed information on how you can protect yourself from an investment scam, or to report a
scam, go to www.fca.org.uk/consumers/report-scam or call 0800 111 6768.
Half‑yearly results
The half‑yearly results, normally announced to the market in November, will continue to be
available on the Company’s website in the form of a press release and not issued to shareholders
in hard copy.
Shareholder information continued
Contact information
Company Secretary
David Blizzard
Tel: +44 (0)20 7291 0505
Registered office
FirstGroup plc
395 King Street
Aberdeen AB24 5RP
Tel: +44 (0)1224 650 100
Corporate office
FirstGroup plc
8th Floor
The Point
37 North Wharf Road
London W2 1AF
Tel: +44 (0)20 7291 0505
Joint corporate brokers
RBC Europe Limited
(trading as RBC Capital Markets)
100 Bishopsgate
London
EC2N 4AA
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London
EC2Y 9LY
External auditor
PricewaterhouseCoopers LLP
40 Clarendon Road
Watford WD17 1JJ
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Financial statements
FirstGroup Annual Report and Accounts 2024
Glossary
Set out below is a guide to commonly used
financial, industry and Group related terms in
the Annual Report and Accounts. These are not
precise definitions and are included to provide
readers with a guide to the general meaning
of the terms.
Adjusted cash flow
Adjusted cash flow is described in the table
shown on page 42 of the Financial review
Adjusted net debt/(cash)
Net debt/(cash) excluding ring‑fenced cash
and IFRS 16 lease liabilities
Adjusted measures (other)
References to ‘adjusted operating profit’,
‘adjusted profit before tax’, ‘adjusted earnings’
and ‘adjusted EPS’ throughout this document
are before items which management has
determined as not being relevant to an
understanding of the Group’s underlying
business performance, as set out in note 4 to
the financial statements. ‘Adjusted earnings’
and ‘adjusted EPS’ also exclude the impact
of IFRS 16 depreciation and interest charges
in relation to the Group’s rail management
fee-based operations, given the Group takes
no cost risk on these rolling stock leases
AGM
Annual General Meeting
ARP
American Rescue Plan
Avanti
Avanti West Coast, a train operating company
BAYE
Buy As You Earn
The Board
The Board of Directors of the Company
BRG
Bus Recovery Grant
CARES Act
Coronavirus Aid, Relief, and Economic Security
Act; the US economic relief package signed
into law on 27 March 2020
CBSSG and CBSSG‑R
COVID‑19 Bus Service Support Grant, a UK
Government measure to secure continuity
of service on crucial bus routes which may
otherwise have ceased during the pandemic.
CBSSG‑Restart (CBSSG‑R) was a
successor scheme
CCFF
Covid Corporate Financing Facility, a UK
Government commercial paper lending facility
CDP
An international non‑profit organisation that
helps companies and cities disclose their
environmental impact
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CGU
Cash Generating Unit
tCO2(e)
Tonnes of Carbon dioxide equivalent, allowing
other volumes of greenhouse gas emissions to
be expressed in terms of carbon dioxide based
on their relative global warming potential.
Usually expressed as per kilometre or per
passenger kilometre
Company
FirstGroup plc, a company registered in
Scotland with number SC157176 whose
registered office is at 395 King Street,
Aberdeen AB24 5RP
CPT
Confederation of Passenger Transport,
the UK bus industry membership body
‘Cont’ or the ‘Continuing operations’
Refer to First Bus, First Rail and Group items
CPI
Consumer price index, an inflation measure
that excludes certain housing‑related costs
Defra
Department for Environment, Food and Rural
Affairs (UK Government)
DfT
Department for Transport (UK Government)
‘Disc’ or the ‘Discontinued’
operations
Refer to First Student, First Transit and
Greyhound US
Dividend
Amount payable per ordinary share on an
interim and final basis
EABP
Executive Annual Bonus Plan
EATS
Exhaust after-treatment systems retrofitted
to older diesel vehicles to improve their air
quality impact
EBITDA
Earnings before interest, tax, depreciation
and amortisation, calculated as adjusted
operating profit less capital grant amortisation
plus depreciation
EBITDA adjusted for First Rail
management fees
First Bus and First Rail EBITDA from open
access and additional services, plus First Rail
attributable net income from management
fee‑based operations, minus central costs
EBT
Employee benefit trust
EDF
Employee Director’s Forum
ED&I
Equality, diversity and inclusion
EMA/ERMA
Emergency Measures Agreements and
Emergency Recovery Measures Agreements
were introduced by the DfT to ensure that rail
services could continue to operate during
the pandemic
EPS
Earnings per share
ESG
Environmental, social and governance
EV
Electric vehicle
GED
Group Employee Director
GHG
Greenhouse gas emissions
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Financial statements
FirstGroup Annual Report and Accounts 2024
Group
FirstGroup plc and its subsidiaries
GWR
Great Western Railway, a train
operating company
IAS
International Accounting Standards
IFRS
International Financial Reporting Standards
KPIs
Key performance indicators, financial
and non‑financial metrics used to define
and measure progress towards our
strategic objectives
LBG
London Benchmarking Group, an organisation
that has created a framework for measuring
community impact
LGPS
Local Government Pension Scheme
Local authority
Local government organisations in the UK,
including unitary, metropolitan, district and
county councils
LTIP
Long‑Term Incentive Plan
M&A
Mergers and acquisitions
NBS
National Bus Strategy, announced by
UK Government in March 2021
NRC
National Rail Contract
NED
Non-Executive Director
Net debt
The value of Group external borrowings
excluding the fair value adjustment for coupon
swaps designated against certain bonds,
excluding accrued interest, less cash balances
Network Rail
Owner and operator of Britain’s rail
infrastructure, a UK public sector company
that operates as a regulated monopoly
Ordinary shares
FirstGroup plc ordinary shares of 5p each
ORR
Office of Rail and Road
PLC
Public limited company
PPM
The UK rail industry’s Public Performance
Measure (punctuality and reliability). Trains
are punctual if they arrive at their destination,
having made all timetabled stops, within five
minutes of scheduled time for London and
South East and regional/commuter services
and ten minutes for long distance trains
RCF
Revolving credit facility
RDG
Rail Delivery Group, the UK rail industry
membership body that brings together
passenger and freight rail companies,
Network Rail and HS2
ROCE
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
RSSB
Rail Safety and Standards Board
SAYE
Save As You Earn
SBT
Science‑based target for reducing greenhouse
gas emissions
ScotZeb
Scottish Zero Emission Bus funding scheme
SECR
Streamlined Energy and Carbon Reporting
regulations, which took effect on 1 April 2019
SID
Senior Independent Director
SWR
South Western Railway, a train
operating company
S&P
S&P Global Rating Agency
TCFD
Task Force on Climate‑Related
Financial Disclosures
TfL
Transport for London, the transport authority
responsible for most aspects of London’s
transport system
TOC
Train operating company
TPE
TransPennine Express, a train operating
company
TSR
Total shareholder return, the growth in value
of a shareholding over a specified period
assuming that dividends are reinvested
to purchase additional shares
USPP
The US Private Placement market is a
US private bond market which is available
to both US and non‑US companies
ZEBRA
Zero Emission Bus Regional Areas
funding scheme
Glossary continued
263
Introduction
Strategic report
Governance report
Financial statements
FirstGroup Annual Report and Accounts 2024
Cautionary comment concerning forward looking statements
This Annual Report and Accounts includes
forward looking statements with respect to
the business, strategy and plans of FirstGroup
and its current goals, assumptions and
expectations relating to its future financial
condition, performance and results. Generally,
words such as ‘may’, ‘could’, ‘will’, ‘expect’,
‘intend’, ‘estimate’, ‘anticipate’, ‘aim’, ‘outlook’,
‘believe’, ‘plan’, ‘seek’, ‘continue’, ‘potential’,
‘reasonably possible’ or similar expressions are
intended to identify forward looking statements.
By their nature, forward looking statements
involve known and unknown risks,
assumptions, uncertainties and other factors
which may cause actual results, performance
or achievements of FirstGroup to be materially
different from any future results, performance
or achievements expressed or implied by such
forward looking statements.
Forward looking statements are not guarantees
of future performance, and shareholders are
cautioned not to place undue reliance on them.
Forward looking statements speak only as of
the date they are made and except as required
by the UK Listing Rules and applicable law,
FirstGroup does not undertake any obligation
to update or change any forward looking
statements to reflect events occurring after
the date of this Annual Report and Accounts.
Nothing in this Annual Report and Accounts
is intended as a profit forecast or estimate for
any period.
264
Introduction
Strategic report
Governance report
Financial statements
FirstGroup Annual Report and Accounts 2024
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FirstGroup plc
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