Annual Report and Annual General Meeting

27 June 2022

FirstGroup plc

LEI: 549300DEJZCPWA4HKM93

Annual Report and Financial Statements and Annual General Meeting

In accordance with LR 9.6.1R, FirstGroup plc (the “Company”) has today submitted copies of the documents listed below to the Financial Conduct Authority’s National Storage Mechanism.  These documents will shortly be available for inspection at:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism

• 2022 Annual Report and Financial Statements (the “2022 Annual Report”);
• Notice of the 2022 Annual General Meeting (the “2022 AGM Notice”);
• Form of Proxy; and
• Notice of Availability.

As required by DGTR 6.3.5R (3), the 2022 Annual Report, the 2022 AGM Notice and the Form of Proxy are also available on the Company’s website at www.firstgroupplc.com.

A condensed set of the FirstGroup plc financial statements, including information on important events that have occurred during the year and their impact on the financial statements, were included in the Company’s announcement of its full year results published on 14 June 2022 (“Final Results Announcement”).  The Final Results Announcement is available for viewing on the Company’s website at www.firstgroupplc.com.

DGTR 6.3.5R requires that certain information relating to all listed companies’ financial results be communicated in unedited full text through a Regulatory Information Service. The content of the Final Results Announcement, together with the information set out below in the Appendix, which is extracted from the 2022 Annual Report, constitute the material required to satisfy the requirements of DGTR 6.3.5R. Cross-references and page numbers in the Appendix refer to sections in the 2022 Annual Report.  This announcement is not a substitute for reading the 2022 Annual Report.

Enquiries:

David Blizzard

Company Secretary

[phone]

APPENDIX

DIRECTORS’ RESPONSIBILITY STATEMENT

Statement of Directors’ responsibilities in respect of the Financial Statements

The Directors are responsible for preparing the Annual Report and Accounts 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 resume 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

The Directors consider that the Annual Report and Accounts and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s and company’s position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed in Board of Directors 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’s 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
• 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

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 Directors’ Remuneration Report on pages 122 to 147.

	52 weeks ending 26 March 2022 £m	52 weeks ending 27 March 2021 £m
Basic salaries1	1.6	1.1
Benefits in kind	-	0.1
Fees	0.9	0.7
Share based payment	2.6	0.1
Total	5.1	2.0

¹ Basic salaries include cash emoluments in lieu of retirement benefits and car allowance

PRINCIPAL RISKS

To deliver our strategy, it is important that we understand and manage the risks that face the Group. The table below outlines our principal risks:

Risk description, Group		Mitigation		Comment on risk change during the year
External Risks
Economic conditions
The Group’s success depends on adapting to economic fluctuations which may negatively impact performance through increased costs, changing customer needs, reduced demand and/or reduced opportunities for growth. Globally, the economic outlook is less certain, and the Group specifically has experienced increased fuel costs related to the Russia-Ukraine war. All these market changes have the potential to decrease the Group’s available financial resources to invest capital in innovative solutions that drive demand. Additionally, when these economic uncertainties are combined with rising fuel prices, they may further increase costs to the Group that they cannot pass to consumers particularly in our First Bus divisions.		In order to adapt to market uncertainties and continue to drive demand, the Group continues to be customer-focused and strives to provide innovative transport solutions. Whilst the Group has implemented hedging processes to offset temporary economic impacts driven by inflation and supply chain events we also continue to focus on strategic ventures to develop new innovative service offerings (e.g., fleet and ticket initiatives) in order to provide our customers with attractive transport solutions and retain customer demand through unstable economic conditions.		Although it is not yet clear the impacts of other macro-economic factors, the Group has continued to hedge exposure to FX and fuel fluctuations to minimize material impacts and fares are generally increased by wider inflation levels that offsets cost pressures. This has allowed for a certain level of visibility into pricing that can be built into the UK bus forecasting models.
Risk description, Group		Mitigation		Comment on risk change during the year
Climate change
Businesses globally continue to come under increasing pressure from all stakeholders, particularly policy makers and investors, to demonstrate strong progress on their climate-related performance. The pandemic has further increased the public’s awareness of global environmental challenges and the threat posed by climate change. 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 greenhouse gas emissions by 2050. All companies that operate in the UK or are owned by UK-based companies will be substantially impacted by decarbonisation policies introduced to meet this target. As a result, the Group is under increased pressure and scrutiny from both investors and government bodies to provide evidence of our strategic plans in place to mitigate climate change risks. 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. 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 and reduced profitability.		The Group’s strategic framework for sustainability, Mobility Beyond Today, sets out the company’s ambition to be the partner of choice for innovative and sustainable transport. Climate change has been an integral part of our risk management framework for many years and, through Mobility Beyond Today, has become an integral part of core business strategy. In FY 2021, FirstGroup became 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 2022, we have developed a science-based carbon reduction target for our Scope 1 and 2 emissions, submitted this for validation to SBTi, and are modelling 1.5°C trajectories to 2035 to inform our transition plans and interim targets. As part of this work, we have also completed a full inventory of our Scope 3 emissions and are developing a supply chain engagement plan to promote carbon reductions across our value chain. First Bus has set a target to operate a zero emissions fleet by 2035, starting with a commitment to stop purchasing any new diesel buses after 2022. First Rail is supporting the UK Government’s target to remove all diesel-only trains from service by 2040, with electrification of our First Rail routes already delivering a reduction in carbon emissions per passenger kilometre. We continue to work with government and industry partners to support further electrification of Britain’s rail network and implement alternative technologies such as battery power to help achieve zero emission trains. While eliminating carbon emissions associated with our operations, we are actively supporting a modal shift to public transport to further reduce emissions from transport. We also continue to embed the TCFD recommendations to assess and mitigate impacts from climate change onto our business and build long-terms climate resilience across our operations. Business continuity plans are in place for all areas of our businesses in case of extreme weather or other physical events. More details on our climate-related performance can be found in the non-financial KPI section (page 54), our Mobility Beyond Today update (page 35), our 2022 TCFD report (pages 60-67) and Environmental Performance Report (at www.firstgroupplc.com)		The Group recognises the continued pressure and opportunity to create a more sustainable world and maintains our commitment to invest in new technologies and collaborate with partners to 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 continue to build business resilience for the long term.
Risk description, Group		Mitigation		Comment on risk change during the year
Geopolitical
The political landscape within which the Group operates is constantly changing. The Group’s operations depend on government policy, funding regimes and infrastructure initiatives continuing to support private company operators in public transportation. Inability to maintain rail contracts and/or leverage national funding and develop government partnerships, including the ability to attract and retain resources with the knowledge and skills necessary to maintain/develop government partnerships, may result in the reduction and/or elimination of rail contracts and/or an inability to sustain and develop new bus routes resulting in adverse financial impacts.		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 capability gap disruptions by defining a new operating model to support government infrastructure initiatives and has partnered with third-party consultants to help further drive the change portfolio and ensure the Group has the requisite skills and capabilities to leverage national funding.		After the UK government announced significant funding for the bus sector, including infrastructure investments to transform bus services across the country, both national and local governments continue to demonstrate willingness to support service provision whilst passenger volumes continue to recover, while underpinning investment to strengthen bus networks for the longer term. Additionally, the DfT and UK Government continues to support the delivery of rail services through lower-risk fee-based contracts, that better align the risk and reward for running the network than the traditional franchising model. See pages 26-29 for additional Information on the negotiation of the outstanding National Rail Contract agreements.
Strategic Risks
Contracted business
The Group’s contracted businesses are dependent on the ability to secure and renew contracts on profitable terms, effectively manage affiliates, deliver under contract terms and avoid termination. Additionally, the ability of the Group to achieve performance targets is dependent on our ability to exceed passenger performance metrics laid out in rail contracts. Failure to do so would result in reduced revenue and profitability and/or negative impact on delivering the Group’s strategic objectives.		Contracts have been re-negotiated and concluded at SWR and TPE under the DfT’s National Rail Contract structure framework, and negotiations are ongoing for the WCP contract award. The contract structure is now concession-based with a fixed management fee plus performance incentives resulting in a far better balance of risk and reward. As the largest incumbent with four UK rail operations expected to be in place until at least May 2023 for TPE and SWR (with an option for the DfT to extend for two years), negotiations are ongoing for an award in GWR and Avanti in line with the respective prior information Notices issued by the DfT to up to 2028 and 2032 respectively. Furthermore, we have the extensive operational expertise needed to meet requirements for the contract performance incentives. Our First Rail teams who focus on DfT negotiations and ensure that future commitments to UK rail will have an appropriate balance of potential risks and rewards for shareholders.		The transition from franchising to contracts has led to a better 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. As the largest incumbent, the Group has the operational structure and expertise to exceed passenger delivery against performance targets and to build on our base business with no limited revenue risk. Additionally, future contracts now commit to a minimum of two-years awards and are expected to be longer allowing for better financial and portfolio planning. Additionally, future contract awards are expected to be longer dated in contract length as per the PIN’s allowing for better financial portfolio planning.
Risk description, Group		Mitigation		Comment on risk change during the year
Competition and emerging technologies
The Group’s market share and competitiveness is dependent on effectively competing in areas of pricing and service options. Our success is also dependent on identifying and developing innovative offerings in line with the Group’s goal to the be the partner of choice for innovative and sustainable transport, accelerating the transition to a zero carbon world. Our main competitors include the private car and other transportation service providers (e.g. ride share etc.). Zero emission and emerging technologies such as autonomous vehicles and on-demand schemes provide opportunities to grow and develop our market segments. The Group may also begin to experience more competitors for rail contracts as a result of the decreased contingent capital requirements of the National Rail Contract structure. Failure to effectively compete in the market and/or develop new and innovative options could result in decreased customer retention, decreased demand, reduced revenue, negatively impacting the effective execution of FirstGroup’s strategy and/or other adverse financial and reputational impacts.		To meet our goal to be the partner of choice for innovative and sustainable transport, we continue to focus on service quality and delivery in order to attract passengers and other customers to our portfolio of businesses. We are leaders in the operation and maintenance of electric vehicles, and we continue to invest in the technology and services to support connected and on-demand travel. The Group also continues to have dedicated consumer experience teams in our divisions who help implement innovative customer convenience solutions (e.g. real-time seat capacity, contactless and capped ticketing, smart tickets, 5G/WiFi, data driven pricing) who focus on improving access to our services and our overall service to customers. Wherever possible the Group works with local and national bodies to promote measures aimed at increasing demand for public transport.		Changes in demand for public transportation due to increased remote work environments has led to reduced passenger volumes. Although the lasting impact to commuting behaviours and consumer travel demand continues to evolve, the Group’s passenger volumes continued to increase following the lifting of restrictions. The Group has continued to invest in emerging technologies this year, including autonomous and electric vehicles, and services to support connected and on-demand travel, including mobility as a service (MaaS). We continue to increase the number of low and zero emission vehicles operating in our buses and open access trains fleet, Hull Trains and Lumo, and to focus on providing easy and convenient mobility, encouraging the switch from private car journeys to our services.
Risk description, Group		Mitigation		Comment on risk change during the year
Transactions
The Group’s operational success in organic growth is dependent on effectively identifying and executing acquisitions and transactions. Our success is also dependent on the outcomes of favourable results of the transactions executed in the sale of First Student and First Transit through the Transit earn out, realising the value of the retained Greyhound real estate portfolio and fully discharging the retained Greyhound legacy pension and insurance liabilities. Additionally, the Group faces additional risk of continued industry consolidation, specifically within the bus operations. 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, customers, employee retention, etc.), negative reputational impacts, the inability to meet financial obligations, and/or the inability to meet financial goals/projections.		The Group actively seeks out and reviews mergers and acquisition (M&A) opportunities that would be beneficial to our portfolio. We continued to gather insights from our strategic advisors and contacts within the business to evaluate potential transactions. Greyhound retained legacy insurance liabilities in the USA have been re-insured in the market to reduce exposure as well as further cash contributed to the legacy pension arrangements and investment strategy amendments to reduce future volatility and better match the liabilities as the respective schemes progress towards ultimate buyout. Greyhound retained real estate portfolio disposals continue to progress with a number of property sales since disposal to Flix Mobility in October 2021 for a total of £150 million.		With the sale of the North American operations complete, we continue to focus on managing the outcomes of the transaction to ensure maximum value to the Group. We are closely monitoring any Transit earnout provisions to position us most favourably at time of settlement. Greyhound legacy insurance and pension de-risking has been completed to significantly reduce the risk of these exposures.
Operational Risks
Financial resources
As set out in further detail in note 25 to the financial statements on pages 207 to 209, treasury risks include liquidity risks, risks arising from changes to foreign exchange and interest rates and fuel price risk. Liquidity risk includes the risk that the Company is unable to refinance debt as it becomes due. Foreign currency and interest rate movements may impact the profits, balance sheet and cash flows of the Group. Ineffective hedging arrangements may not fully mitigate losses or may increase them. The Group is credit rated by Standard & Poor’s and Fitch. 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 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 Company may not be able to negotiate sufficient headroom 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 a result of the sale of the North American operations and the significant deleveraging in the period, the business is in a much stronger credit position and has a well-capitalised balance sheet with net debt (before IFRS 16 and ring-fenced cash). Credit is more available within the markets and the Group has sufficient cash and an a unutilised £300m sustainability-linked committed revolving credit facility balance to cover repayment on our bond to provide substantial debt facilities if required.
Risk description, Group		Mitigation		Comment on risk change during the year
Pandemic
Covid-19 has altered the way in which the Group operates and serves our communities. Our success depends on effectively managing operations to match modifying levels of passenger demand in line with government support requirements and continuing to anticipate and adapt to changes in consumer commuting and travel behaviours, especially for our Hull Trains and Lumo businesses which do not qualify for government support. Failure to balance operational changes to attune to consumer behaviours to future passenger demand levels as the UK continues to progress out of the crisis created by the pandemic, whilst also maintaining the necessary level of passenger volumes to qualify for government support, may result in adverse reputational or financial impacts.		To adapt operations to changing passenger demand and commuting patterns, whilst also meeting government pandemic funding requirements, the Group continues to implement new policies and procedures across all vehicle fleets. These policies and procedures include processes to track policy developments, modelling scenarios for efficiency of service levels, and fare strategies. Under National Rail Contracts the Group will not experience revenue risk as a result of decreased demand. However, our Hull Trains and Lumo businesses along with our bus businesses, have a greater risk of loss caused by decreased demand. While the Group saw demand increase during the last year, to adapt our operations to potential changes in commuting and travel behaviour, the Group has dedicated teams to assess and monitor workforce and route planning service levels, reducing these where necessary. The dedicated teams use advanced data analytics that reduce the overall time needed to adjust schedules. As end markets have emerged from Covid-19, the Group has begun to reshape routes and timetables to align with demand. The actions taken via these plans will be based on real-time passenger flow data now available following digital transformation initiatives.		Whilst the Group has implemented reduced service levels In Bus to c.85-90% of pre-pandemic levels in line with the grant funding in First Bus and variable costs, the Group remains vulnerable if passenger demand levels remain depressed as the UK emerges from the pandemic, given that grant funding is expected to reduce.
Risk description, Group		Mitigation		Comment on risk change during the year
Safety
The Group is 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 risks include terrorism, adverse weather, human error and increased traffic/congestion on public roadways. A safety incident, or a threat of an incident, could lead to reduced public confidence in public transportation overall and potentially reduce demand for our services.		In order to promote and maintain our culture of safety, all divisions have extensive safety plans and safety training for our drivers and employees. Access to vehicles is controlled to prevent against malicious access. Mechanical safety controls (speed monitoring, cameras, etc.) are implemented across our fleet of vehicles. Whilst the Group has implemented preventative safety measures and procedures, we recognise that 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.		Although the Group continues to assess, update and implement safety procedures across our businesses, risk mitigation in this area continues to be a focus.
Pension scheme funding
The Group sponsors or participates in several significant defined benefit pension schemes. Within the schemes, the Group’s future cash contributions and funding requirements are dependent on investment performance, movements in discount rates, expectations of future inflation and life expectancy In order to maintain adequate cash funding and prevent adverse financial impacts or reputational damage, the Group must monitor the performance of our fund investments and movements in other contributing factors (e.g. discount rates, life expectancy, etc.).		In order to effectively monitor our funding requirements, all our cash models/forecasts include significant pension deficit funding. The Group also uses third party experts to advise on investment strategies and liability management, monitor movements in discount rates and inflation expectations. We continue to replace our defined benefit schemes with defined contribution arrangements where possible. We are also focusing on diversifying asset classes and reallocating riskier investments to investments that better match the characteristics of the liabilities as funding levels improve. Under the First Rail contracting arrangements, the Group’s train operating companies are not responsible for any residual deficit at the end of a franchise contract with no cost risk during the contract so there is only short-term cash flow risk within any particular franchise.		The Group has closed most of its defined benefit schemes in its divisions to future accrual. This will lead to the natural reduction of the size and volatility of the pension funding risk over time. As part of the sale of the North American businesses and the capital return to shareholders, £220m was contributed to the First Bus pension scheme and £117m placed in an escrow arrangement where this cash could be returned to the Group in certain scenarios depending on the achievement of low dependency funding levels In 2024 and 2030 valuation for the First Bus and FirstGroup schemes respectively. Furthermore, significant cash contributions have been made into the legacy Greyhound pension arrangements in USA and Canada that have significantly de-risked these exposures.
Risk description, Group		Mitigation		Comment on risk change during the year
Data security and consumer privacy, including cyber-security
The Group continues to see an increase of mobile and internet sales across all divisions. These mobile and internet channels gather large amounts of data which require safeguards in order to protect our customer’s data and to comply with the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). Whilst this data requires compliance with consumer privacy regulations, it also makes us a target of data security attacks by third parties. The Board has also implemented a clear policy on ransomware attacks should these occur. In addition to maintaining infrastructures that protect consumer data, our operations rely on information technology systems. Cyber-attacks, computer malware, viruses, spamming and phishing attacks have become more prevalent and may result in a breach of our systems. A breach of our facilities and/or networks could disrupt our operations and impair our ability to protect consumer data, and/or compromise our confidential business information. A failure to prevent, mitigate or detect security breaches and/or improper access to our business and/or customer information and/or comply with consumer privacy regulations could result in disruption to our operations, significant penalties and have an adverse impact on consumer confidence in the Group.		To protect our customer data and comply with all data privacy regulations, the Group has implemented IT infrastructure controls across the company. We also have dedicated compliance officers in each division. The Group administers a training programme to all employees, communicating their role in protecting and preventing the unauthorised access to sensitive data. Additionally, in order to comply with user preferences, the operations are implementing a software solution that makes it easier to record and update customer preferences. 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 to the continuity of our operations.		Despite the Group’s continued efforts to mitigate this risk, the risk of a cyber-security attack for all companies remains and has escalated in recent times following heightened geopolitical tensions and increasing numbers of sophisticated threat actors. We continue to be diligent in evaluating and implementing enhanced techniques to protect our systems and data from threats.
Risk description, Group		Mitigation		Comment on risk change during the year
Regulatory compliance
The Group’s operations are subject to a wide range of legislation and regulation. Complying with such legislation and regulations may increase the Group’s operating costs, and non-compliance could lead to financial penalties, investigation expenses, legal costs or reputational damage. The Group’s corporate governance, which is recognised by external ESG ratings as strong and well aligned with stakeholder interests, supports our ability to respond to, and prepare for, financial and ESG laws and regulations. The main regulatory compliance risks specific to the Group that are not covered in other principal risks include workplace compliance (employee wage and hour, meal and break matters, etc.), workplace health and safety and anti-trust/anti-bribery regulations.		To help the Group comply with all legislation and regulations, we have dedicated compliance professionals who ensure applicable laws by locality are followed. We also engage with third party legal experts when necessary to advise on policies and procedures and other related compliance matters. We provide a hotline for employees and third parties to report concerns. To help mitigate non-compliance risk with anti-bribery and anti-trust regulations we maintain robust policies and procedures and our employees receive regular training on the policies. We also complete periodic audits of our training programmes to ensure consistent training and participation.		Although our legislative and regulatory environment continues to change, the Group maintains our commitment to assess and adapt not only our insurance structure but also our policies and procedures to prevent non-compliance.
Risk description, Group		Mitigation		Comment on risk change during the year
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. The costs are impacted by changes in employment markets, new regulatory requirements and diversity and inclusion programmes. A failure to effectively recruit and retain a diverse and talented workforce could have adverse financial, reputational and operational impacts. The employment market for drivers and technicians has become more challenging since the pandemic. This has increased our recruitment and retention costs and may impact operations as consumer travel demand increases. Our employee turnover has also been impacted by current wider economic circumstances, particularly rising inflation.		In order to increase retention and decrease employee costs, the Group has enhanced recruitment practices, including launching a national media campaign to promote job openings and leveraging online channels for all roles. To help prevent overall employee turnover, we continue to focus on improving communication with employees, defining a new people strategy, investing in employee development and diversity and inclusion, and providing market competitive wages and benefits. Employee engagement survey results are reviewed to develop actions to address low performing metrics to further help retain our top talent.		With industry-wide driver shortages stabilised, but at a higher level than historically, we continue to focus on our bus driver recruitment and retention programmes, and on managing our multi-year pay deals with local unions. This will require the Group to assess and adapt our operations in the future. Additionally, employee and community expectations continue to impact our recruitment, retention, diversity and development strategies.