FirstGroup PLC — Annual Report 2012

Mar 31, 2012

Report and Financial Statements

31 March 2012

Report and financial statements 2012 Contents Page

Directors' report	1
Directors' responsibilities statement	5
Independent auditor's report	6
Profit and loss account	7
Balance sheet	8
Reconciliation of movements in shareholders' funds	9
Statement of total recognised gains and losses	10
Notes to the financial statements	11

Directors' report

The dhectors have pleasure in submitting their annual report and financial statements for the 53 week period ended 31 March 2012.

Principal activities

The company's principal activities are the provision of bus and coach operations in the United Kingdom.

Business review

As shown in the company's profit and loss account on page 7, the company's sales showed a 1.3% increase on the prior period whilst operating profit decreased by 7.9% to £25.6 million. There has been an increase in the level of concessionary support offset by a reduction in revenue from subsidised services. Costs have increased by 3.8% compared to the prior period. Increased fiiel costs and higher inflation has been partially offset by cost efficiency measures.

The balance sheet on page 8 ofthe fmancial statements shows the company's financial position at the period-end. Net assets have decreased from £56.3 million to £48.6 million in the current period, primarily as a result ofthe dividend and movements in actuarial assumptions in relation to the defined benefit pension scheme. The net pension asset recognised on the company's balance sheet has decreased from £15.1 million to £11.3 million.

Capital expenditure, mcluding transfers from other Group companies, was £3.5 million in the period, bemg predommately for the purchase of 16 new hybrid vehicles. Further details are set out in note 12.

Safety remains the highest priority. The directors are continuously developing and improvmg processes to ensure that a 'Safety First' culture is embedded throughout the company and strive to make our services as safe as possible for our customers and staff.

FhstGroup pic manages its operations on a divisional basis. For this reason, the company's directors believe that further key performance indicators for the company are not necessary or appropriate for an imderstandmg ofthe development, performance or position ofthe business. The performance ofthe UK Bus Division of FirstGroup pic, which includes the company, is discussed in the Group's Annual Report which does not form part of this report.

Risks and uncertainties

There are a number of potential risks and uncertainties that could have an impact on the company's long-term performance. The directors have established an ongoing process for identifymg, evaluating and managmg the significant risks and uncertainties faced by the company and continue to assess these on a regular basis in the light of internal and extemal events.

Specific business risks faced by the company include competitive pressures, legislation and regulation and increasing labour, fuel and insurance costs. The directors are aware ofthe continual change in laws and other regulations and the increasing costs of compliance. The dkectors conduct regular reviews of safety procedures, equipment specifications, employment requirements, envhonmental procedures, insurance coverage and other areas to ensure they are appropriate and operating effectively. Labour costs represent the most significant element of the company's operating costs. The directors continue to monitor employee recruitment, training, personal development and remuneration to ensure the company atfracts and retains the right people. Fuel costs also represent a significant proportion of the company's cost base. Fuel prices are dhectly influenced by intemational, political and economic circumstances as well as natural disasters. Wherever possible, the directors seek to minimise the operational and financial impact of such events through fixed price forward conttacts and other operational efficiency measures. Finally, the promotion of a 'Safety Ffrst' culture at all levels throughout the business minimises insurance premiums and other related claims.

Directors' report (continued)

Going concern

The directors have considered the going concem assumption given the current uncertainty ofthe economic climate and have formed the conclusion that there is a reasonable expectation that the company will continue to operate in the foreseeable fiiture. The directors have considered the company forecasts, uncertainties and the financial commitment from the parent company in forming this judgement.

The parent company has provided the directors ofthe company with a letter confmning that it will make available such fimds as may be required to enable the company to meet its obligations for a period of at least 12 months from signing the financial statements. The directors have made enquiries and understand that the parent company has adequate resources to be able to provide this financial support.

After making enquiries and considermg the above facts, the dfrectors therefore have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable fiiture. Accordingly, they continue to adopt the going concem basis in preparing the fmancial statements.

Outlook

The ttadmg envhonment for the next 12 months is set to continue to be challengmg. In spite of this, the dfrectors remam optunistic about the current and fiiture opportunities to grow the business with mnovative ideas, improved service quality and reliability while retaining a tight conttol on costs.

The dfrectors remain confident that the company's activities will generate a satisfactory result in the coming period.

Environmental

FhstGroup pic recognises the unportance of its envhonmental policies, monitors its unpact on the envfronment, and designs and unplements policies to reduce any damage that might be caused by the Group's activities. The company operates m accordance with Group policies, which are described in the Group's Annual Report, which do not form part of this Report. Initiatives designed to mmimise the company's impact on the envhonment include safe disposal of waste, recyclmg and reducmg energy consumption.

Through our core business activities we are committed to providing a safe, good quality, reUable and cost effective public ttansport to all our customers. Our core business sttategy is to mcrease customer numbers and encourage a greater move towards the use of bus ttansport. This will support the needs of society to achieve more sustainable ttavel. We recognise the environmental unpacts arismg from our busmess activities and are committed to reducing these tiirough effective envhonmental management.

Employees

Details ofthe number of employees and related costs can be found in note 4 to the financial statements.

Financial matters

The results for the financial period are given in the profit and loss account on page 7.

A final dividend of £25.0 million was paid prior to the period end (2011: £25.0 million). In accordance with FRS 21 this was recognised m the financial statements when approved.

Fixed assets

In the opinion ofthe dhectors, there were no material differences between the market values ofthe company's assets and their net book values.

Directors' report (continued)

Supplier payment policy

It is the company's policy to abide by the payment terms agreed with suppliers whenever it is satisfied that the supplier has provided the goods and services in accordance with agreed terms and conditions. A number of significant purchases, such as commitments under finance leases and hire purchase conttacts and under operating leases are paid by dhect debit. At 31 March 2012 the company had 76 days' (2011: 65 days') purchases outstanding.

Financial instruments

The company's principal financial assets are bank balances and ttade debtors. The company's credit risk is primarily attributable to its ttade debtors. The amounts presented in the balance sheet are net of provisions for doubtfiil debts. The company has no significant concenttation of credit risk, with exposure spread over a large number of customers. The credit risk on liquid fimds is limited because the coimterparties are banks. Although certam risks, for example fiiel price, are hedged on a group basis, the company does not directly enter into any derivative fmancial instruments. In order to maintain liquidity and ensure that sufficient fimds are available for ongoing operations and fiiture developments the company uses a mix of intercompany loans and finance leases.

Directors

The directors who held office throughout the period and subsequently appointed are as follows:

(Resigned 16 May 2011, reappointed 1 March 2012)
(Appointed 16 May 2011, resigned 17 April 2012)
(Appointed 6 June 2011, resigned 13 Febmary 2012)

Employee involvement

Communication with employees is effected mainly through regular briefing and negotiating meetings between the directors, the senior management and employee representatives on the centtal and depot negotiatmg committees. The briefmg meetings enable senior management to consult employees and to ascertain their views on matters likely to affect their interests.

Disabled persons

The company recognises its obligations to give disabled people fiill and fair consideration for all vacancies within the statutory medical requirement which have to be met for certain grades of staff. Wherever reasonable and practicable, the company will retain newly disabled employees and at the same time provide flill and fair opportunities for the career development of disabled people.

Directors' report (continued)

Audit information

Each ofthe persons who is a dfrector at the date of approval of this report confirms that:

• as far as the director is aware, there is no relevant audit information of which the company's auditor is unaware; and
• the director has taken all the steps that he/she ought to have taken as a director in order to make himselfherself 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 provision of S418 ofthe Companies Act 2006.

Auditor

Deloitte LLP have indicated then- willingness to be reappointed for another term and appropriate arrangements are being made for them to be deemed reappointed as auditor in the absence of an Annual General Meeting.

Approved by the Board of Dfrectors And signed by order ofthe board

T M Broxton Dhector

29 August 2012

Directors' responsibilities statement

The dfrectors are responsible for preparing the Annual Report and the financial statements m accordance with applicable law and regulations.

Company law requfres the directors to prepare financial statements for each financial period. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kmgdom Accounting Standards and applicable law). Under company law the dfrectors must not approve the financial statements unless they are satisfied that they give a tme and fair view of the state of affahs ofthe company and ofthe profit or loss ofthe company for that period. In preparing these fmancial statements, the directors are reqiured to:

• select suitable accoimting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and pmdent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the fmancial statements; and
• prepare the fmancial statements on the going concem basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's ttansactions and disclose with reasonable accuracy at any time the financial position ofthe company and enable them to ensure that the fmancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets ofthe company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FIRST WEST YORKSHIRE LIMITED

We have audited the financial statements of Fhst West Yorkshire Lmiited for the 53 week period ended 31 March 2012 which comprise the profit and loss account, the balance sheet, the reconcihation of movement in shareholders' ftmds, the statement of total recognised gains and losses and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accoimting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, m accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the flillest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for tiiis report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explahied more ftilly in the Directors' Responsibilities Statement, the directors are responsible for the preparation ofthe financial statements and for being satisfied that they give a tme and fair view. Our responsibility is to audit and express and opinion on the financial statements m accordance with applicable law and Intemational Standards on Auditmg (UK and Ireland). Those standards require us to comply with tiie Auditing Practices Board's Ethical Standards for Auditors.

Scope ofthe audit ofthe financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation ofthe financial statements. In addition, we read all the financial and non-financial mformation in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the unplications for our report.

Opinion on financial statements

In our opinion the financial statements:

• give a tme and fair view ofthe state ofthe company's affairs as at 31 March 2012 and of its profit for the 53 week period then ended;
• have been properly prepared m accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements ofthe Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Dkectors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect ofthe following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or retums adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and retums; or
• certain disclosures of dfrectors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

James Boyle CA (Senior Statutory Auditor) for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor Edinburgh, United Kmgdom 29 August 2012

Profit and loss account 53 weeks ended 31 March 2012

	tes	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Turnover	2	136,601	134,793
Operatmg costs	3	(111,033)	(107,019)
Operating profit Net interest receivable	7	25,568 12,131	27,774 11,912
Profit on ordinary activities before taxation Tax on profit on ordinary activities	8 9	37,699 (8,008)	39,686 (10,482)
Profit for the period, transferred to reserves	19	29,691	29,204

All activities relate to continuing operations.

The accompanying notes are an integral part of this profit and loss account.

Balance Sheet At 31 March 2012

	tes		31 March 2012		26 March 2011
Assets employed:		£000	£000	£000	£000
Fixed assets
Goodwill	11		708		776
Tangible assets	12		75,050		80,800
Current assets			75,758		81,576
Stocks	13	1,517		1,661
Debtors	14	15,478		10,914
Cash at bank and in hand		87,733		104,856
		104,728		117,431
Creditors: amounts falling due within one year	15	(113,234)		(124,156)
Net current liabilities			(8,506)		(6,725)
Total assets less current liabilities			67,252		74,851
Creditors: amounts falling due after more tiian one year	15		(19,595)		(21,786)
Provisions for liabilities	16		(10,293)		(11,863)
Net assets excluding pension asset			37,364		41,202
Pension asset	22		11,281		15,075
Net assets including pension asset			48,645		56,277
Financed by:
Capital and reserves
Called up share capital	18		16,717		16,717
Share premium account	19		1,251		1,251
Other reserves	19		14,702		14,702
Profit and loss account	19		15,975		23,607
Shareholders' funds			48,645		56,277

The accompanying notes are an mtegral part of this balance sheet.

These fmancial statements (Company Registtation Number 1990370) were approved by the Board of dhectors on 29 August 2012 and were signed on its behalf by:

T M Broxton Dfrector

Reconciliation of movements in shareholders' funds 53 weeks ended 31 March 2012

	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Profit for the fmancial period Share based payments (note 6) Other recognised gains and losses relating to the period (net) Dividends paid (note 10)	29,691 152 (12,475) (25,000)	29,204 180 5,948 (25,000)
Net (decrease) / mcrease to shareholders' ftmds	(7,632)	10,332
Opening shareholders' fimds	56,277	45,945
Closing shareholders' fimds	48,645	56,277

Statement of total recognised gains and losses 53 weeks ended 31 March 2012

	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Profit for the fmancial period	29,691	29,204
Actuarial (loss) / gain relating to the pension scheme (note 22)	(16,020)	8,400
UK deferred taxation attributable to actuarial loss / (gain)	3,845	(2,268)
Reduced deferred tax Hability arismg from decrease in tax rate	(300)	(184)
Total recognised gains and losses for the period and since last report	17,216	35,152

Notes to the Financial Statements 53 weeks ended 31 March 2012

1. Principal accounting policies

The accounting policies have been applied consistently throughout the current and preceding period.

(a) Basis of preparation

The fmancial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. The fmancial statements are made up to the Saturday nearest to the year end for each financial period.

(b) Going concern

The directors have considered the going concem assumption given the current uncertainty of the economic climate and have formed the conclusion that there is a reasonable expectation that the company will continue to operate in the foreseeable fiiture. The directors have considered the company forecasts, uncertainties and the financial commitment from the parent company in forming this judgement.

The parent company has provided the dfrectors ofthe company with a letter confirming that it will make available such ftinds as may be required to enable the company to meet its obligations for a period of at least 12 months from signing the financial statements. The directors have made enquiries and understand that the parent company has adequate resources to be able to provide this financial support.

After making enquiries and considering the above facts, the directors therefore have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable ftiture. Accordingly, they continue to adopt the going concem basis in preparing the fmancial statements.

(c) Cash flow statement

The company is a wholly owned subsidiary of FirstGroup pic, a company registered in Scotland. Accordingly, the company has taken advantage ofthe exemption offered by Financial Reporting Standard 1 enabling it not to produce a cash flow statement as the parent company has included a consolidated cash flow statement within its Group fmancial statements.

(d) Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.

Depreciation is provided to write off the cost less residual value of tangible fixed assets over their estimated useftil economic lives as follows:

	50 years sttaight line
	period of lease
	15 years sttaight line
	7 or 12 years sttaight line
	12 years sttaight line
	9 years sttaight line
-	3 to 8 years sttaight line
	- - - - - -

No depreciation is provided on freehold land.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

1. Principal accounting policies (continued)

(e) Goodwill

Purchased goodwill is capitalised and classified as an intangible fixed asset on the balance sheet. Prior to 1 April 1998, purchased goodwill was written off to reserves in the year it was acquired. This goodwill has not been reinstated. On disposal ofthe businesses concemed this goodwill is included in determining the gain or loss on disposal in the profit and loss account.

All capitalised goodwill in the balance sheet at the period end is being amortised over a period of 20 years on a sttaight line basis.

(f) Leases and hire purchase

Assets held under finance lease, which are those leases where substantially all the risks and rewards of ownership ofthe asset have passed to the company, and under hire purchase conttacts are recorded in the balance sheet as tangible fixed assets. Depreciation is provided on these assets over their estimated useftil lives or lease term, as appropriate.

Future obligations under finance leases and hire purchase conttacts are included in creditors, net of fmance charges. Payments are apportioned between the finance element, which is charged to the profit and loss accoimt as interest, and the capital element, which reduces the outstanding obligations. The finance charges are calculated m relation to the reducing amount of obligations outstanding and are charged to the profit and loss account on the same basis.

All other leases are operating leases and the rental charges are taken to the profit and loss account on a sttaight line basis over the Ufe ofthe lease.

(g) Government grants and subsidies

Amounts receivable for tendered services and concessionary fare schemes are included in tumover. Rebates in respect of duty paid on ftiel are netted off operating costs. Grant mcome is credited to other creditors and is released to the profit and loss account over the estimated usefiil lives of the assets to which they relate. The grant mcome is shown net of operating costs.

(h) Stocks

Stocks are valued at the lower of cost and net realisable value. Provision is made for obsolete and slow moving or defective items where appropriate.

(i) Taxation

UK corporation tax is provided at amounts expected to be paid (or recovered) using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

The taxation liability is reduced wholly or in part by the surrender of losses by Group undertakings. The tax benefits arising from Group reUef are recognised m the fmancial statements of the surrendering undertaking.

The charge for taxation is based on fhe profit for the period and takes into account taxation deferred because of timmg differences between the tteatment of certam items for taxation and accountmg purposes. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timmg differences are expected to reverse, based on the tax rates and laws that have been enacted by the balance sheet date.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

1. Principal accounting policies (continued)

(j) Pension costs

Company specific schemes

The company operates a defined benefit scheme (West Yorkshire Superannuation Fund), which is held in separately administtated ftmds.

The amounts charged to operating profit regardmg the defmed benefit scheme are the current service costs and gains and losses on settlements and curtailments. They are included as part of staff costs. Past service costs are recognised immediately m the profit and loss account if the benefits have vested. If the benefits have not vested immediately, the costs are recognised over the period until vesting occurs. The interest costs and the expected retum on the assets are shown as a net amount of other financial costs or credits included within interest payable. Actuarial gains and losses are recognised immediately m the statement of total recognised gains and losses.

Pension scheme assets are measured at fan values and liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of retum on a high quality corporate bond or equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least ttiennially and are updated at each balance sheet date. The resulting defmed benefit asset or liability, net of related deferred tax, is presented separately after otiier assets on the face of the balance sheet.

Group schemes

The company is unable to separately identify its share of the schemes assets and habilities for the First UK Bus Pension Scheme and the FirstGroup Pension Scheme. It therefore accounts for the schemes as if they were defined conttibution schemes and includes certam disclosures in the financial statements in respect ofthe Group schemes. Conttibutions are charged to the profit and loss account as they become payable.

(k) Turnover

UK Bus tumover principally comprises amounts receivable from ticket sales and concessionary fare schemes. Ticket sales are recognised in the period in which the service is provided. Concessionary amounts are recognised in the period in which the service is provided based on a predetermined formula as agreed with the relevant local authority. Other bus and services revenue from conttacts with government bodies and similar organisations are recognised as the services are provided.

(1) Share based payment

The company's parent 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 determined at the grant date ofthe equity-settled share-based payments is expensed on a sttaight line basis over the vesting period, based on the Group's estunate ofthe shares that will eventually vest and is adjusted for the effects of non-market based vesting conditions.

Fah value is measured by use of a Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-ttansferability, exercise resttictions, and behavioural considerations.

(m) Insurance

FirstGroup pic's policy is to self-msure high frequency, low value claims withm the busmesses. To provide protection above these types of losses, cover is obtained through third party insurance policies. Provision is made under FRS 12 for the estimated cost of settling uninsured claims for incidents occurring prior to the balance sheet date.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

Turnover and profit on ordinary activities before taxation

Tumover represents the amounts receivable for services supplied to customers durmg the period and amounts receivable for tendered services and concessionary fare schemes.

The whole ofthe tumover and profit on ordmary activities before taxation derives from the company's prmcipal activities within the United Kingdom. The company has one principal class of busmess, namely the provision of passenger ttansport services.

Operating costs

	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Raw materials and consumables	21,046	19,139
Staff costs (note 4)	68,226	64,129
Other extemal charges	12,638	14,576
Depreciation and other amounts written off tangible fixed assets	9,055	9,108
Amortisation of goodwill	68	67
	111,033	107,019

4. Employee numbers and costs

The average number of persons employed by the company (including directors) during the period was as follows:

	53 weeks ended 31 March 2012 No.	52 weeks ended 26 March 2011 No.
Drivers Maintenance and ttaffic Administtation	1,841 490 87	1,864 514 55
	2,418	2,433

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

4. Employee numbers and costs (continued)

The aggregate payroll costs ofthese persons were as follows:

53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Wages and salaries 58,577	54,458
Social security costs 4,652	4,326
Other pension costs 4,845	5,165
Share based payments 152	180
68,226	64,129

5. Directors' remuneration

Three dfrectors (2011: two) received remuneration from other Fu-stGroup companies totalling £325,000 (2011: £83,000), it is not considered practicable to allocate this between services provided to those companies, and services provided in their capacity as directors of First West Yorkshire Limited.

The remuneration ofthe directors who are remunerated by the company during the period was as follows:

	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Aggregate emoluments (excluding pension conttibutions)	656	491

Retirement benefits accmed to no directors under the company defmed benefit schemes (2011: 1) and to 5 directors under other FhstGroup pic defmed benefit schemes, tteated as money purchase schemes (2011: 3).

Directors' emoluments mclude salary, fees, bonuses, company conttibutions to money purchase pension schemes, sums paid by way of expense allowances subject to UK mcome tax and the money value of other noncash benefits and exclude share options, other company pension contributions and payments made under longterm mcentive schemes.

No directors exercised share options during the current or preceding period.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

5. Directors' remuneration (continued)

The emoluments ofthe highest paid director amounted to:

	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Aggregate emoluments	265	212
Defined benefit scheme
Accmed pension at end of period Accraed lump sum at end of period	8	5
	38	26

The highest paid dfrector exercised no share options durmg the period but did become entitled to receive shares under the FirstGroup long term incentive plan.

Share based payments

Save as you earn (SAYE)

The Group operates an HMRC approved savings related share option scheme. Grants were made as set out below. The scheme is based on eligible employees bemg granted options and then agreement to opening a sharesave account with a nominated savings carrier and to save weekly or monthly over a specified period. Sharesave accoimts are held with Yorkshire Buildmg Society. The right to exercise the option is at the employee's discretion at the end ofthe period previously chosen for a period of six months.

	SAYE	SAYE	SAYE	SAYE	SAYE
	Dec 2007		Dec 2008 Dec 2009	Dec 2010	Dec 2011
	Options	Options	Options	Options	Options
	Number	Number	Number	Number	Number
Outstanding at the begmnmg ofthe period	123,300		1,948,802 2,626,093	2,965,613	-
Awarded durmg the period	-	-		-	2,947,057
Exercised during the period	(559)	(1,726)	(4,327)	(846)	-
Lapsed durmg the period	(122,741)		(141,266) (285,598)	(295,487)	(39,293)
Outstanding at the end ofthe period	-		1,805,810 2,336,168	2,669,280	2,907,764
Exercisable at the end ofthe period	-	1,805,810		-	-
Weighted average exercise price (pence)	583.0	371.0	310.0	319.0	271.5
Weighted average share price at date of exercise (pence)	347.6	319.5	325.5	316.2	N/A

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

6. Share based payments (continued)

The fair values ofthe options granted during the last two years were measured using a Black-Scholes model. The inputs into the Black-Scholes model were as follows:

	2012	2011
Weighted average share price (pence)
-SAYE December 2010	-	387.0
-SAYE December 2011	319.2	-
Weighted average exercise price (pence)
-SAYE December 2010		319.0
-SAYE December 2011	271.5	-
Expected volatility
-SAYE December 2010		35%
-SAYE December 2011	35%	_
Expected life (years)
- SAYE schemes	3	3
Rate of interest
- SAYE December 2010	-	1 4 %
- SAYE December 2011	0.6%
Expected dividend yield
-SAYE December 2010	-	4.8%
- SAYE December 2011	7.0%	-

Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous five years. The expected life used m the model has been adjusted based on management's best estimate, for the effects of non-ttansferability, exercise resttictions, 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 ofthe recognition ofthe expense will be sensitive to it. Fair values for the SAYE include a 10%> p.a. pre-vesting leaver assumption.

The Group used the mputs noted above to measure the fair value ofthe new share options

The Group has allocated the expense amongst its ttading subsidiary undertakings based on the number of employees participating in the scheme. The company has recognised a total expense of £152,000 (2011: £180,000) relatmg to equity-settled share-based payment ttansactions.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

7. Net interest receivable and similar income

	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Interest payable
Interest recharge from Group undertakings	(325)	(395)
Interest on pension scheme liabilities	(12,700)	(12,900)
Fmance leases and hire purchase conttacts	(544)	(393)
	(13,569)	(13,688)
Interest receivable
Retum on pension scheme assets	25,700	25,600
	12,131	11,912

8. Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging / (crediting):	53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
Auditor's remuneration:
Fees payable to the Company's auditor for the audit ofthe Company's annual
accounts	88	94
Depreciation and other amounts written off tangible fixed assets
- owned assets	6,761	7,366
- held under fmance leases and hire purchase conttacts	2,294	1,742
Amortisation of goodwill	68	67
Government grants	(533)	(600)
Rentals payable under operating leases
- plant and machmery	170	124
- land and buildings	338	346

There were no fees payable to Deloitte LLP and their associates for non-audit services to the company during the period (2011: £nil).

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

9. Tax charge on profit on ordinary activities

31 March	53 weeks 52 weeks ended ended 26 March 2012 2011 £000 £000
Current taxation
- Group relief payable	7,624 8,559
- Adjustments in respect of prior periods	361 (193)
Total current taxation	7,985 8,366
Deferred taxation
- Origination and reversal of timing differences	(283) 78
- Adjustment m respect of prior periods	(164) 137
- Effect of decrease in tax rate on opening deferred tax balance	(1,061) (355)
	(1,508) (140)
Deferred taxation on pension scheme movements 2,451	2,471
• Effect of decrease in tax rate on opening deferred tax balance	(920) (215)
1,531	2,256
Total deferred taxation	23 2,116
Total tax charge on profit on ordmary activities 8,008	10,482

The standard rate of taxation for the period, based on the UK standard rate of corporation tax, is 26°/o (2011: 28%). The actual current tax charge for the current and previous period differed from the standard rate for the reasons set out in the following reconciliation:

53 weeks ended 31 March 2012 %	52 weeks ended 26 March 2011 %
Standard rate of taxation 26.0	28.0
Factors affecting charge
- Expenses not deductible for tax purposes 0.2	0.1
- Capital allowances less than depreciation / (in excess of) 0.5	(0.1)
- Other timing differences (6.5)	(6.4)
- Prior periods' tax charge 1.0	(0.5)
Current taxation rate for the period 21.2	21.1

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

9, Tax charge on profit on ordinary activities (continued)

Durmg the period the UK government enacted legislation to reduce the main rate of UK corporation tax to 26% witii effect from 1 April 2011.

Subsequently a resolution passed by Parliament on 26 March 2012 has reduced the mam rate of UK corporation tax to 24% from 1 April 2012. The impact of this rate reduction has reduced the deferred tax liability on UK timing differences.

Legislation to reduce the mam rate of UK corporation tax from 24% to 23% from 1 April 2013 has been included in Fmance Bill 2012. Further reductions to the mam rate of UK corporation tax are proposed to reduce the rate to 22% from 1 April 2014. None ofthese expected fiiture rate reductions had been substantively enacted at the balance sheet date and, therefore, are not included in these fmancial statements.

The effective tax rate for the period to 31 March 2013 and 31 March 2014 is expected to reduce accordingly.

10. Dividends

		53 weeks ended 31 March 2012 £000	52 weeks ended 26 March 2011 £000
	Amounts recognised as disttibutions to equity holders in the period:
	Final dividend for the period	25,000	25,000
11.	Goodwill
			£000
	Cost
	At 27 March 2011 and 31 March 2012		1,507
	Amortisation
	At 27 March 2011		731
	Charge for period		68
	At 31 March 2012		799
	Net book value
	At 31 March 2012		708
	At 26 March 2011		776

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

12. Tangible fixed assets

	Land and buildings v( £000	Passenger carrying shicle fleet £000	Other plant and equipment £000	Total £000
Cost
At 27 March 2011	4,680	127,878	15,558	148,116
Additions	125	3,242	11	3,378
Intta Group ttansfers m	- -	433 (592)	-	433
Intta Group ttansfers out Disposals	(115)	(3,783)	(15) (88)	(607) (3,986)
At 31 March 2012	4,690	127,178	15,466	147,334
Depreciation
At 27 March 2011	1,123	54,058	12,135	67,316
Charge for period	95	8,290	670	9,055
Intta Group ttansfers in	-	356	-	356
Intta Group ttansfers out Disposals	- (57)	(555) (3,751)	(9) (71)	(564) (3,879)
At 31 March 2012	1,161	58,398	12,725	72,284
Net book value
At 31 March 2012	3,529	68,780	2,741	75,050
At 26 March 2011	3,557	73,820	3,423	80,800
The net book value of land and buildings comprises:			31 March 2012 £000	26 March 2011 £000
Freehold			3,336	3,482
Long leasehold			125	-
Short leasehold			68	75

Depreciation is not provided on the land element of freehold property which amounts to £967,000 (2011: £967,000).

£24.3 million (2011: £23.2 million) ofthe net book value ofthe passenger carrying vehicle fleet was acquhed under finance leases and hire purchase conttacts. The depreciation charges on these assets during the period was £2.3 million (2011: £1.7 million).

3,529

3,557

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

13. Stocks

	31 March 2012 £000	26 March 2011 £000
Spare parts and consumables	1,517	1,661

There is no material difference between the balance sheet value ofthe stocks and their replacement cost.

14. Debtors

	31 March 2012 £000	26 March 2011 £000
Amounts due within one year
Trade debtors	549	656
Amounts owed by group undertakings	11,079	7,094
Other debtors	1,850	1,855
Other prepayments and accmed income	2,000	1,309
	15,478	10,914

15. Creditors

	31 March 2012 £000	26 March 2011 £000
Amounts falling due within one year
Obligations under fmance leases and hire purchase conttacts	4,859	5,741
Trade creditors	7,039	6,908
Amoimts owed to group undertakings	94,815	103,134
Corporation tax	1	1
Other tax and social security	1,960	2,163
Other creditors	1,011	2,200
Accmals and deferred income	3,549	4,009
	113,234	124,156
Amounts falling due after more than one year
Obligations under fmance leases and hhe purchase conttacts	15,003	16,560
Other creditors	4,592	5,226
	19,595	21,786

Other creditors are grants received for the acquisition of buses and is amortised over the life ofthe bus. The balance will unwind over the next 10 years.

Analysis of borrowings
Obligations under flnance leases and hire purchase contracts
Due in more than one year but not more than two years	3,609	2,912
Due in more than two years but not more than five years	9,614	10,226
Due in more than five years	1,780	3,422
	15,003	16,560

Finance lease and hire purchase conttacts are secured on the assets to which they relate.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

16. Provisions for liabilities

	Insurance claims £000	Deferred tax £000	Total £000
At 27 March 2011 Charge / (credit) to the profit and loss account Utilised in the period	2,190 2,201 (2,263)	9,673 (1,508)	11,863 693 (2,263)
At 31 March 2012	2,128	8,165	10,293

Details ofthe deferred tax provision (excluding deferred tax m the pension asset) are given ui note 17.

Insurance claims accmals due withm one year at 31 March 2012 amounted to £1,145,000 (2011: £1,179,000) and are mcluded in 'accraals and deferred mcome' withm note 15. The amount mcluded within provisions above represents the estimate of amounts due after more than one year.

The insurance claims provision arises from estimated exposures for mcidents occurring prior to the balance sheet date. It is anticipated that the majority of such claims will be settled withm the next six years.

17. Deferred taxation

Provision for deferred taxation consists of the following amounts:

		31 March 2012 £000	26 March 2011 £000
	Capital allowances in excess of depreciation Other tuning differences	8,674 (509)	9,678 (5)
	Deferred tax provision	8,165	9,673
18.	Called up share capital
		31 March	26 March
		2012	2011
		£000	£000
	Allotted, called up and fully paid
	16,717,000 ordinary shares of £1 each	16,717	16,717

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

19. Reserves

	Share premium account £000	Other reserves £000	Proflt and loss account £000
At 27 March 2011	1,251	14,702	23,607
Other recognised gains and losses			(12,475)
Dividends paid			(25,000)
Share based payments (note 6)			152
Profit for the period			29,691
At 31 March 2012	1,251	14,702	15,975
Profit and loss reserve excludmg pension asset			4,694
Pension asset			11,281
At 31 March 2012			15,975

The cumulative amount of goodwill arismg from the acquisition of businesses written off in prior years is £0.5 million (2011: £0.5 million). This goodwill had been eluninated agamst reserves as a matter of accountmg policy and will be charged to the profit and loss account on the disposal ofthe busmess to which it relates.

20. Commitments

Capital commitments, conttacted for at the end ofthe period for which no provision has been made are £18.8 million (2011: £4.7 million).

Commitments for payments in the next fmancial period under operatmg leases are as follows:

	31 March 2012		26 March 2011
	Land and		Land and
	Buildings	Other	Buildings	Other
	£000	£000	£000	£000
Operating leases which expire:
Within one year	8	73	36	6
Between two and five years	13	53	70	88
After five years	291	-	227	-
	312	126	333	94

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

21. Other commitments

The company has guaranteed the bank overdrafts of certain fellow subsidiary undertalcings. The amount outstanding at the end ofthe period under the guarantees was £nil (2011: £nil).

The company is a member of a Value Added Tax ("VAT") group covermg a number of subsidiary undertakmgs. All members ofthe VAT group are jointly and severally liable m respect of any VAT owed to HMRC.

Together with certain other Group companies, the company has guaranteed the bank loans of its holdmg company under various term facilities. The amount of guaranteed bank loans at the end ofthe period was £407 million (2011: £654.5 million).

22. Pension scheme

West Yorkshire Superannuation Pension Fund (WYSF)

The company is a member of a defmed benefit pension scheme, which is ftinded. The scheme's assets are held and managed independently ofthe company's finances by independent investment managers appointed by the trastees ofthe scheme.

The scheme is subject to ttiennial valuation by mdependent actuaries, the last valuation bemg carried out in 2010 using the projected unit method.

The main financial assumptions used in this update were as follows:

				2012	2011	2010
Rate of increase in salaries				3.75%	4.20%	4.40%
Rate of increase of pensions in payment				1.75%	2.40%	3.40%
Rate of increase of pensions in deferment			1.75%	2.40%	3.40%
Discoimt rate				4.65%	5.50%	5.60%
Inflation assumption - RPI			2.75%	3.20%	3.40%
Inflation assumption - CPl				1.75%	2.40%
	The assets in the scheme and the expected rate of retum were:
	2012	2011	2010	2012	2011	2010
	Expected	Expected	Expected
	Rate of	Rate of	Rate of	Value	Value	Value
	Return	Return	Return	£m	£m	£m
Equities	8.4%	8.85%	9.05%	191.1	227.5	221.3
Bonds	4.25%	5.20%	5.30%	55.6	50.0	51.8
Property	6.4%	6.85%	7.60%	11.2	11.5	15.2
Other	6.26%	6.87%	6.36%	37.5	39.8	35.3
				295.4	328.8	323.6

The expected rate of retum has been based on the long term expectation of the retum against the asset classifications. The retum on assets differs from the discount rate because the standard requires that the discount rate be set with reference to the yield on corporate bonds. Typically, the assets actually held will be expected to provide a retum that is higher than the discount rate.

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

22. Pension scheme (continued)

The balance sheet position for the company:

	2012 £m	2011 £m	2010 £m
Total fair value of assets Present value of scheme liabilities	295.4 (278.4)	328.8 (238.5)	323.6 (320.5)
Irrecoverable surplus	(2.2)	(69.6)	-
Surplus in the scheme Related deferred tax liability	14.8 (3.5)	20.7 (5.6)	3.1 (0.9)
Net pension asset	11.3	15.1	2.2
Analysis of amount charged / (credited) to operating profit:
		2012 £m	2011 £m
Current service costs		2.9	3.5
Total operating charge		2.9	3.5
Amounts charged to the profit and loss accoimt:
		2012 £m	2011 £m
Expected retum on pension scheme assets Interest on pension scheme habilities		25.7 (12.7)	25.6 (12.9)
Net retum (chargeable as fmance cost)		13.0	12.7
Current service cost (chargeable as operatmg cost)		(2.9)	(3.5)
Net pension income		10.1	9.2
Amounts recognised in the statement of total recognised gains and losses:	osses:
		2012 £m	2011 £m
Actual retum less expected retum on pension scheme assets		(44.1)	(6.5)
Experience gains and losses arising on scheme liabilities		(24.0)	71.7
Changes in assumptions underlying the present value of scheme liabilities	)ilities	(15.3)	12.8
Movement in irrecoverable surplus		67.4	(69.6)
		(16.0)	8.4

The irrecoverable surplus represents the amount of the surplus that the Company could not recover through reducing fiiture cash conttibutions to the West Yorkshire Superannuation Pension Fund.

The cumulative amount of actuarial gains and losses recognised in the statement of total recognised gams and losses smce the adoption of FRS17 is a charge of £12.8 million (2011: £28.8 million).

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

22. Pension scheme (continued)

Movements in the present value of defined benefit obligations were as follows:

				2012 £m	2011 £m
At 27 March 2011				238.5	320.5
Current service cost	2.9	3.5
Interest cost	12.7	12.9
Employee share of change to defined benefit obligations	0.8	0.9
Actuarial loss / (gain)	39.3	(84.5)
Benefits paid				(15.8)	(14.8)
At 31 March 2012	278.4	238.5
Movements in the fair value of scheme assets were as follows:
				2012	2011
				£m	£m
At 27 March 2011				328.8	323.6
Expected retum on scheme assets				25.7	25.6
Employee conttibutions				0.8	0.9
Actuarial loss				(44.1)	(6.5)
Benefits paid				(15.8)	(14.8)
At 31 March 2012				295.4	328.8
History of experience gams and losses
	2012	2011	2010	2009	2008
Present value of defined benefit obligations (£m)	(278.4)	(238.5)	(320.5)	(245.0)	(246.8)
Fah value of scheme assets (£m)	295.4	328.8	323.6	249.8	313.6
Irrecoverable surplus (£m)	(2.2)	(69.6)	-	-	(30.7)
Surplus m the scheme (£m)	14.8	20.7	3.1	4.8	36.1
Experience adjustments on scheme
liabilities
Amount (£m)	24.0	71.7	0.2	(7.2)	(1.1)
Percentage of scheme liabilities	(8.6)	(30.1)	(0.1)	2.9	0.4
Experience adjustments on scheme assets
Amount (£m)	(44.1)	(6.5)	65.0	(78.9)	(31.5)
Percentage of scheme assets	(14.9)	(2.0)	20.1	(31.6)	(10.0)

The estimated amounts of conttibutions expected to be paid to the scheme during the current financial period is £0.8 milhon (2011: £0.9 milhon).

Notes to the Financial Statements (continued) 53 weeks ended 31 March 2012

22. Pension scheme (continued)

First UK Bus Pension Scheme

The company is unable to separately identify its share of the scheme assets and liabilities as conttibutions are set for the scheme as a whole rather than reflecting the underlying actuarial characteristics ofthe employees of the individual employer. It therefore accounts for the scheme as if it were a defmed conttibution scheme. Contributions are charged to the profit and loss account as they become payable.

The deficit on the Group scheme of £31.8 million (2011: £52.4 miUion) will affect the company through periodic adjustments to the company's conttibution rate as determined by the actuary. Additional disclosures requhed under Fmancial Reporting Standard 17 have been made on a group basis m the accounts of FhstGroup pic.

The total conttibutions paid to the scheme by the company in the period was £1.8 million (2011: £ 1.8 million).

At the 31 March 2012 £0.1 million (2011: £0.1 million) was outstandmg as at that date.

The estimated amounts of conttibutions expected to be paid to the scheme during the current financial period is £1.8 million (2011: £1.8 million).

FirstGroup Pension Scheme

The company is unable to separately identify its share of the scheme assets and liabilities as conttibutions are set for the scheme as a whole rather than reflecting the underlying actuarial characteristics ofthe employees of the individual employer. It therefore accounts for the scheme as if it were a defmed conttibution scheme. Conttibutions are charged to the profit and loss account as they become payable.

The deficit on the Group scheme of £5.7 million (2011: £1.5 million) will affect the company through periodic adjustments to the company's conttibution rate as determmed by the actuary. Additional disclosures requhed under Financial Reporting Standard 17 have been made on a group basis in the accounts of FirstGroup pic.

The total conttibutions paid to the scheme by the company in the period was £0.1 million (2011: £0.1 million).

At the 31 March 2012 £nil (2011: £nil) was outstanding as at that date.

The estimated amounts of conttibutions expected to be paid to the scheme during the current financial period is £0.1 million (2011: £0.1 million).

23. Related party transactions

The company is taking advantage ofthe exemption under FRS8 not to disclose ttansactions with wholly owned Group companies that are related parties.

24. Ultimate parent company

The directors regard FirstGroup pic, a company incorporated in Great Britain and registered in Scotland, as the ultimate parent and conttolling company, which is the smallest and largest group that includes the company's results and for which Group financial statements are prepared.

The company's immediate conttolling party is Fhst Bus North Lmiited.

Copies ofthe accounts of FirstGroup pic can be obtained on request from Ground Floor, 50 Eastboume Terrace, London, W2 6LX.