FirstGroup PLC — Audit Report / Information 2016

Feb 29, 2016

26 February 2016

Dear Shareholder

Notice of Adoption of Financial Reporting Standard 101 (FRS 101): Reduced Disclosure Framework

We wish to notify you about certain proposed changes to the information that will be disclosed in FirstGroup plc's (the Company) future annual report and accounts.

The Financial Reporting Council (FRC) (the body responsible for setting UK standards for accounting, auditing and actuarial work) has published a number of new financial reporting standards which replace UK Generally Accepted Accounting Practice (UK GAAP) in its entirety. Companies in the UK and Ireland are required to adopt this new accounting framework in their financial statements for periods commencing on or after 1 January 2015.

Under this new framework, the Group will continue to prepare consolidated accounts under EU-adopted International Financial Reporting Standards (IFRS).

However, the Company proposes to present the financial statements of the parent company, FirstGroup plc, under FRS 101 Reduced Disclosure Framework, whereas historically these had been prepared under UK GAAP.

The Company proposes to adopt FRS 101 for its parent company financial statements for the year ended 31 March 2016 and on an ongoing basis until such time as the Company notifies shareholders of any change to its chosen accounting framework for the parent company financial statements.

The Company's election to adopt FRS 101 for its parent company financial statements does not require shareholder approval. However, as stipulated in FRS 101, the Company is required to notify all shareholders of this election. Any shareholder or shareholders holding in aggregate 5 per cent or more of the total allotted shares in the Company may serve an objection. Objections must be served in writing and delivered to the Group Company Secretary at FirstGroup plc, 395 King Street, Aberdeen AB24 5RP, United Kingdom by no later than 31 March 2016.

If you do not object to the proposal, no further action is necessary.

Yours sincerely,

Robert Welch Group Company Secretary