Introduction Strategic report Governance report Financial statements

Risk management

Managing the risks and opportunities our business

faces is a crucial part of achieving long-term success.

The Group has set its strategic goals around Our risk management approach
sustainable development and shareholder value. A  ead more about our risk
R
We take a holistic approach to risk management, management processes in
crucial part to achieving our long‑term success is first building a picture of the principal risks at the the Governance report on
our ability to manage the risks and opportunities our divisional level, then consolidating those principal page 102
business faces. Our risk management framework risks alongside Group risks into a Group view. During
holistically considers the impacts of both the changing the year we introduced regular meetings for the
transport market and our UK‑focused operations. We Executive Committee focused entirely on risk. During
keep ahead of potential risks by scanning the horizon these sessions outputs from the consolidation of the
for emerging risks, training our people and investing principal risks, and from the identification and analysis
in awareness campaigns and external advice. Our of emerging risks are considered and approved before
principal risks and uncertainties are detailed on pages being presented to the Audit Committee and Board
69 to 75. for review and approval. The objective of this process
is to ensure all key risks to the Group are reviewed
regularly, are actively monitored, and mitigating
controls are put in place to ensure that the risk impact
on the organisation is managed within the risk appetite
and tolerance levels set by the Board.

Responsibility Process
Board and Audit Committee
The Board has overall responsibility for the Group’s The Board reviews and
systems of internal control and their effectiveness. confirms Group and
divisional risks and
The Audit Committee has a specific responsibility to
the Audit Committee
review and validate the systems of risk management
reviews the Group’s risk
and internal control.
management process.

The Executive Committee acts as Executive Risk The Executive

Committee and reviews the Group’s risk management Committee meet
Executive Internal processes. Internal Audit provides assurance on the quarterly to review
Committee Audit key risk mitigating controls and ensures that the audit and challenge Group
plan is appropriately risk‑based. and divisional risk
submissions.

The divisions and Corporate Functions management Divisional and Group

teams have responsibility for the identification, risk champions
assessment and management of risks, developing maintain and update
appropriate mitigating actions and the maintenance of risk registers for their
risk registers. function or division.
Divisions Risks and mitigating
actions are monitored
through normal
business management
processes.

FirstGroup Annual Report and Accounts 2023 67

Introduction Strategic report Governance report Financial statements

Risk management continued

Our risk management Emerging risks

framework and structure Our risk management approach and methodology
Whilst some risks such as financial resource risk are includes review and identification of risks which
managed at a Group level, all our businesses are may develop or already exist that may be difficult to
responsible for identifying, assessing and managing quantify, but may lead to a significant impact on the
the risks they face with appropriate assistance, review Group. Emerging risks are reported to the Executive
and challenge from the Group functions. Committee and the Board to consider whether to
establish them as principal risks. To identify and
We seek to continue to improve the quality of risk assess emerging risks we conduct risk workshops,
management information generated by our divisions. run deep dive sessions with risk owners, engage
The Group has developed a risk appetite framework specialists and perform scenario analysis.
which informs the business about the Board’s appetite
for certain risks and informs the risk assessment.
Our risk management framework is shown in the
below diagram. Our current risk management
structure is shown in the opposite table.

Risk management framework

Top down Bottom up

Strategic risk management Operational risk management

Review external environment

Robust assessment of principal Assess effectiveness
and emerging risks Board/Audit of risk management system
Set risk appetite and parameters Committee Report on principal and
Determine strategic action points emerging risks and uncertainties

Regular meeting dedicated to risk

management to identify principal
and emerging risks Consider completeness of identified risks
Executive and adequacy of mitigating actions
Direct delivery of strategic actions in line with Committee
risk appetite and tolerance levels Consider aggregation of risk exposure
across the business
Monitor key risk indicators and provide
direction for risks mitigating activities

Report current and emerging risks

Execute strategic actions
Divisions Identify, evaluate and mitigate operational risks
Report on key risk indicators
recorded in risk register

68 FirstGroup Annual Report and Accounts 2023

 Introduction Strategic report Governance report Financial statements

Risks associated with climate change Principal risks and uncertainties

 ead more about
R
We continue to disclose our performance against We outline our principal risks below and on the climate‑related risks on
TCFD recommendations, how effectively we are following pages with an overview of the associated pages 44, 63 and 71
managing climate‑related risks and opportunities existing mitigation activities, and corresponding
and how this may affect our operations and delivery movement of the risk. The Board defines the risk
of our strategy. We continue to explore the specific appetite for each of these principal risks. The overall
impact our business might face from such risks and risk appetite for the Group is balanced between risk
opportunities, and how the business needs to adapt averse for safety, security and regulatory compliance
to ensure we have adequate risk mitigating activities. risks to neutral or risk accepting for areas that can
Through applying our risk management framework, drive future growth for the Group.
we identify, assess and report climate related risks
Our risk management methodology continues to aim
and opportunities as part of our principal risks. Key
at identifying the principal and emerging risks that
activities include:
could:
■ Embedding climate change within our risk ■ adversely impact the safety or security of the Group’s
management framework, both at Group level and
employees, customers and assets
within divisional risk registers to ensure that risks are
recorded and reported across the business. ■ have a material impact on the financial or operational
performance of the Group
■ Driving commitment for managing and monitoring
climate related risks by aligning our responsible ■ impede achievement of the Group’s strategic
business and sustainability targets with the objectives and financial targets
recommendations of the TCFD and TPT. ■ adversely impact the Group’s reputation or
■ Challenging our strategy to make sure we mitigate stakeholder expectations
risks and maximise opportunities from the transition to
a low‑carbon economy.

Principal risks
The following table provides an overview of our principal risks, their risk direction and severity using individually assessed impact, likelihood
and velocity scores. Understanding these risk parameters aids effective risk management and delivery of our strategy.

Key Severity (Impact x Likelihood x Velocity)

FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing Low High

External risks
Economic conditions
Geopolitical
Climate change

Strategic risks
Contracted business
Growth within the sector

Operational risks
Financial Resources
Safety
Pension scheme funding
Regulatory compliance
Data security and consumer privacy, including cyber-security
Human resources

How to use this scale:

During execution of the review and placement of the principal risks on the above table, management considered financial impacts to the
divisions and the Group. Specifically, the ‘High’ end of the scale represents a combination of a catastrophic financial impact of greater than
£50m and the ‘Low’ end considers financial impacts less than £10m.

FirstGroup Annual Report and Accounts 2023 69

Introduction Strategic report Governance report Financial statements

Risk management continued

Key FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing

Risk description Mitigation Developments in the

risk profile during the year
External risks

Economic conditions
The Group’s success depends on adapting to ■ We work with our key stakeholders, Government Although it is not yet clear the
economic fluctuations which may negatively departments and sector bodies to ensure an impacts of other macro‑economic
impact performance through increased costs, acceptable level of passenger services are factors, the Group has continued
changing customer needs, declining passenger delivered whilst at the same time designing and to hedge exposure to foreign
demand, reduced operations due to industrial running our operations based on current demand exchange and fuel fluctuations to
actions and/or reduced opportunities for levels. minimise material cost impacts and
growth. Globally, the economic outlook is ■ We continue to be customer‑focused and to fare baskets are normally increased
less certain, and the Group specifically has provide innovative transport solutions, by adapting in line with inflation to help offset
experienced increased industrial relations to market uncertainties and to drive demand. cost pressures. This has allowed for
activity, higher fuel costs due to the macro- a certain level of visibility that can be
economic environment. All these market ■ We continue to utilise our fuel and energy hedging built into the business forecasting
changes have the potential to decrease the processes to offset temporary economic impacts models.
Group’s financial performance and available driven by inflation and supply chain challenges.
financial resources to invest capital in innovative ■ In First Bus we have commenced a programme to
solutions that drive demand. install photovoltaic panels to generate electricity for
Whilst passenger demand in our key markets partially covering depot electricity demands.
has been stable and is continuing to improve ■ We continue to focus on developing new
from the impact of the pandemic, there is no innovative service offerings to our customers to
certainty of passenger volumes continuing to diversify the business through unstable economic
recover and the funding regimes that apply conditions.
remain uncertain in the medium term.

Geopolitical
The Group operates in a political landscape that ■ Whilst the Group collaborates with industry Both national and local
is constantly changing. This has the potential to bodies to help anticipate government policy and/ governments in the UK continue
cause instability where the Group’s operations or funding regime changes in order to adjust to support public transport service
have some reliance on government policy and operations, the Group is an apolitical organisation providers. Passenger volumes and
funding to support public transport operators. and does not have the ability to control or profitability continue to recover,
Significant industry reform and changes in substantially influence government policy. underpinning the investment to
government transport policies, an inability to ■ The Group has been able to mitigate resourcing strengthen bus networks for the
maintain or participate in bus and rail contracts challenges by partnering with third‑party longer term.
and/or participate in public transportation consultants to help further drive the change
funding available may result in the reduction or portfolio and ensure the Group has the requisite
elimination of bus services and rail contracts. skills and capabilities to leverage national funding.
Further, failure to attract and retain resources
with the knowledge and skills necessary to
■ The Group deploys hedging techniques to
maintain/develop government partnerships for counterbalance potential negative impact on
rail operations and local government for bus certain costs due to adverse developments in
contracts, may result in adverse financial impact international affairs.
for the Group.
Developments in international affairs, such
as international tensions, including the
conflict in Ukraine and changes in regulations
in Europe and UK following Brexit, may
impact the Group’s commitments to deliver
decarbonisation capex investments, or impact
the Group’s supply chain, resulting in financial
loss and potential reputational damage.

70 FirstGroup Annual Report and Accounts 2023

 Introduction Strategic report Governance report Financial statements

Key FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing

Risk description Mitigation Developments in the

risk profile during the year
Climate change
Businesses globally continue to come under ■ Climate change has been an integral part of our The Group recognises the
increasing pressure from all stakeholders, risk management framework for many years and, continued pressure and opportunity
particularly policy makers and investors, through our strategic framework for sustainability to create a more sustainable world
to demonstrate strong progress on their ‘Mobility Beyond Today’, has become an integral and maintains our commitment
climate‑related commitments and performance. part of business strategy. to invest in new technologies
Inadequate attention to our climate‑related ■ Our ‘Mobility Beyond Today’ framework sets out and collaborate with partners
risks and opportunities, as well as emerging the Group’s ambition to be the partner of choice to create a cleaner future. Our
technologies, could negatively impact the for innovative and sustainable transport. TCFD implementation work, the
Group’s performance, reputation and growth. climate‑related commitments we
■ FirstGroup was the first bus and rail operator in have made and the strategies
The UK government has set a legally binding the UK to formally commit to setting an ambitious we are developing to meet them
target for net‑zero greenhouse gas emissions science‑based target aligned with limiting global will ensure we are managing our
by 2050. All companies that operate in the UK warming to 1.5°C and reaching net‑zero emissions climate transition risks effectively
or are owned by UK‑based companies will by 2050 or earlier. During FY2023, we completed and continue to build business
be substantially impacted by decarbonisation our submission of a science‑based target and resilience for the long term. We have
policies introduced to meet this target. had our target formally approved by the SBTi. Our also started work on a Group‑wide
As a result, the Group is under increased target is to achieve a 63% reduction in our Scope
transition plan in line with upcoming
pressure and scrutiny from both investors and 1 and 2 emissions by FY 2035 from a FY 2020
TPT recommendations.
government bodies to provide evidence of base year. It also includes the following Scope 3
our strategic plans in place to mitigate climate commitments – to reduce emissions from FERA by While recognising the risks, as a
change risks. 20% by FY 2028, from a FY 2020 base year, and public transport provider we are
that 75% of our suppliers by emissions covering also focused on the opportunities
Climate change poses both physical and purchased goods & services and capital goods from modal shift and the vital role
transition risks to our business, from weather will have science‑based targets by FY 2028. we play in reducing congestion
events impacting our assets, operations, service
We are modelling 1.5°C trajectories to 2035 to on the roads, improving air quality
delivery and customer demand, to changes ■

inform our transition plans and interim targets, and and facilitating the transition to a
in policy, technology and market expectations
are developing a supply chain engagement plan to zero‑carbon world.
impacting our capital and operational costs,
our reputation, and access to funding. Delays promote carbon reductions in our value chain.
in implementing our strategic plans to mitigate ■ As part of our decarbonisation goals, First Bus has
climate‑related risks, including transitioning set a target to operate a zero emissions fleet by
our fleets to zero emissions, could result in 2035. We continue to increase the percentage of
lost business, reduced revenue, reputational zero emission buses in our fleet year on year.
impacts and reduced opportunities from
modal shift.
■ First Rail is supporting the UK Government’s target
to remove all diesel‑only trains from service by
2040. We continue to work with government and
industry partners to support further electrification
of Britain’s rail network, shift to bi‑modes trains
where full electrification is not possible, and
implement alternative technologies such as battery
power to help achieve zero emission trains.
■ 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 performance
can be found in the non‑financial KPI section
(page 37), our Mobility Beyond Today update
(page 39), our 2023 TCFD report (pages 57 to 65)
and Environmental Performance Report (at www.
firstgroupplc.com)

FirstGroup Annual Report and Accounts 2023 71

Introduction Strategic report Governance report Financial statements

Risk management continued

Key FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing

Risk description Mitigation Developments in the

risk profile during the year
Strategic risks

Contracted business
The Group’s contracted businesses are The rail contract structure is now concession- The transition from the previous
dependent on the ability to secure and renew based with a fixed management fee plus franchising regime to National
contracts on profitable terms, manage affiliate performance incentives resulting in a far better Rail Contracts (with only the West
contracts effectively, deliver in accordance balance of risk and reward. Coast partnership now outstanding
with contract terms and avoid termination. of FirstGroup’s rail businesses)
A National Rail Contract (or ‘An NRC’) was
Additionally, the ability of the Group to achieve has led to a better balance of risk
negotiated and concluded for GWR in June 2022.
performance targets is dependent on our ability and reward via reduced revenue
The SWR NRC was extended on existing terms in
to exceed performance metrics laid out in rail risk, minimal cost and contingent
February 2023 and now runs until May 2025. The
contracts. capital risk, and will continue to
Secretary of State announced on 11 May that the
provide more consistent cash
Failure to do so would result in reduced revenue TPE NRC would expire at the end of the core term
generation each year. As the largest
and profitability and/or negative impact on on 28 May. The West Coast Partnership ERMA
rail operator in the UK by revenue,
delivering the Group’s strategic objectives. arrangement was given two six-month extensions
the Group has the operational
in the year and now runs until October 2023.
structure and expertise to exceed
Negotiations remain ongoing for the WCP National
passenger delivery against
Rail Contract award to commence at the end of the
performance targets and to build
ERMA period based on the DfT’s Prior Information
on our base business. Additionally,
Notice which covers the period to 2032.
future contracts and are expected
We have the extensive operational expertise to be longer allowing for better
needed to meet requirements for the contract financial and portfolio planning, as
performance incentives. Negotiations with per the Prior Information Notices
the DfT take place at a First Rail level, and the allowing for better financial portfolio
teams ensure that future and ensure that future planning.
commitments to UK rail will have an appropriate
balance of potential risks and rewards for
shareholders.
In First Bus, there has been an increase in
contracted and tendered business in the B2B
market, as well as the acquisitions of Ensign Bus
and Airporter.

Growth within the sector

The Group’s operational success from both ■ The Group actively seeks out and reviews mergers General economic and political
organic and inorganic growth is dependent on and acquisitions (M&A) opportunities that would environment remains uncertain,
effectively responding to customer demand be beneficial to our portfolio. preventing the risk direction from
and identifying and executing acquisitions and ■ We continue active dialogue with our shareholders decreasing.
transactions. The Group faces additional risk and investors and gather insights from our The Group releases regulatory
of continued industry consolidation, specifically strategic advisors and contacts within the announcements on material
within the bus sector. business to evaluate potential transactions. acquisitions and other material
Failure to identify and/or execute acquisitions transactions. The Group engages
and other transactions in a timely manner, with shareholders on significant
along with the failure to complete transactions issues.
in accordance with agreed terms, could result
in negative impact on business operations
(contracts, employee retention, etc.), negative
reputational impacts, and the inability to meet
financial goals and obligations.

72 FirstGroup Annual Report and Accounts 2023

 Introduction Strategic report Governance report Financial statements

Key FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing

Risk description Mitigation Developments in the

risk profile during the year
Operational risks

Financial resources
The ability of the Group to service its current ■ The Group monitors our leverage ratios and overall The Group maintains strong bank
debt or other financial obligations relies on its liquidity consistently to ensure we remain within relationships, with good awareness
capability to refinance debt as it becomes due our target range and have adequate financial and understanding of debt market
and the capital allocation policy being applied. resources on a two to three year period looking trends.
forward.
The Group is investment grade credit rated by We have experience in raising
Standard & Poor’s and Fitch. A downgrade ■ As at year end the Group has adjusted net cash material amounts of credit facilities,
in the Group’s credit ratings to below current of £110m and an undrawn £300m committed ensuring we plan alternative
investment grade may lead to increased revolving credit facility that matures in 2026. solutions to mitigate liquidity risk
financing costs and other consequences and in the event of wider refinancing
affect the Group’s ability to obtain financing if requirements.
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.

Safety
The Group is committed to fostering and ■ In order to promote and maintain our culture of The Group continues to assess,
maintaining a culture of safety. However, public safety, all divisions have extensive safety plans and update and implement safety
transport inherently includes safety related safety training for our drivers and employees. procedures across our businesses,
risks, many of which are out of our control. ■ Access to vehicles and trains is controlled to and mitigating activities to reduce
These risks include terrorism, adverse weather, prevent against malicious access. safety incidents from occurring
human error and increased traffic/congestion continue to be a focus.
on public roads. A safety incident, or a threat ■ Mechanical safety controls (speed monitoring,
of an incident, could be caused by mechanical cameras, etc.) are implemented across our fleet of
failures and/or human error and result in vehicles and trains.
adverse financial impact, reputational damage ■ Further, we follow the regulatory regime and
through reduced public confidence in public comply with statutory inspections and monitoring.
transportation and potentially reduce demand
for our services.
■ 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.

FirstGroup Annual Report and Accounts 2023 73

Introduction Strategic report Governance report Financial statements

Risk management continued

Key FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing

Risk description Mitigation Developments in the

risk profile during the year
Pension scheme funding
The Group sponsors or participates in several ■ The Group’s pension schemes are well funded The natural reduction of the size
significant defined benefit pension schemes. and have active programmes to either fully de- and volatility of the pension funding
Within the schemes, the Group’s future cash risk (North American legacy schemes) or meet risk continues, following the Group’s
contributions and funding requirements are the objective of low dependency in the short to closure of most of its defined benefit
dependent on investment performance, medium term (UK Bus and Group schemes). schemes in its divisions to future
movements in discount rates, expectations of ■ The Group uses third party experts to advise on accrual several years ago.
future inflation and life expectancy, and relevant investment strategies and liability management, We continue to maintain a £117m
regulatory requirements. monitor movements in discount rates, mortality escrow arrangement for the Group
In order to maintain adequate cash funding and inflation expectations, with increased hedging and Bus schemes following the sale
and prevent adverse financial impacts techniques applied to mitigate these risks. of the North American business
or reputational damage, the Group must ■ We continue to replace our defined benefit in 2021. The cash in this account
monitor the performance of our pension schemes with defined contribution arrangements could be returned to the Group in
fund investments and movements in other where possible. certain scenarios depending on the
contributing factors (e.g. discount rates, life achievement of low dependency
expectancy, etc.).
■ We are also focusing on diversifying asset classes funding levels, such as the 2024
and reallocating riskier investments to investments and 2030 valuation for the First
that better match the characteristics of the
Bus and FirstGroup schemes
liabilities as funding levels improve.
respectively.
■ 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.

Regulatory compliance
The Group’s operations are subject to a wide ■ To help the Group comply with all applicable Although our legislative and
range of legislation and regulation. Complying legislative and regulatory requirements, we have regulatory environment continues to
with such legislation and regulations may an in-house legal function and a number of change, the Group maintains our
increase the Group’s operating costs, and dedicated subject matter experts, who help to commitment to assess and adapt
non‑compliance could lead to financial ensure relevant national and international laws and not only our insurance structure but
penalties, investigation expenses, legal costs or regulations are followed. also our policies and procedures to
reputational damage. The Group’s corporate ■ Our in-house team is supported by external legal detect and prevent non‑compliance.
governance, which is recognised by external experts where necessary.
ESG ratings as strong and well aligned with
stakeholder interests, supports our ability to ■ We have a comprehensive suite of Group-wide
respond to, and prepare for, financial and ESG policies and procedures, which are implemented
laws and regulations. and managed locally. These include anti‑bribery
and competition law policies, and are supported
The main regulatory compliance risks specific to by regular training on these and other compliance
the Group that are not covered in other principal topics.
risks include workplace compliance (employee
wages and other terms and conditions of
■ We provide a confidential reporting hotline for
employees and third parties to report concerns –
employment etc.), workplace health and safety
the hotline is operated by an independent third
compliance and competition and anti‑bribery
party to ensure objectivity and anonymity.
legislation.

74 FirstGroup Annual Report and Accounts 2023

 Introduction Strategic report Governance report Financial statements

Key FY 2023 risk is stable FY 2023 risk is decreasing FY 2023 risk is increasing

Risk description Mitigation Developments in the

risk profile during the year
Data security and consumer privacy, including cyber‑security
The Group continues to see an increase of ■ To protect our data and comply with all data The risk of a cyber-attack for all UK
mobile and internet passenger ticket sales privacy regulations, the Group has implemented companies remains high. The
across all divisions. These sales channels IT infrastructure controls across the company. official UK government ‘Cyber
gather large amounts of data which require ■ The Group administers a training programme to Security Breaches Survey 2022’
safeguards in order to protect our customer employees, communicating their role in protecting reported 39% of UK business were
data and comply with applicable data privacy and preventing unauthorised access to subject to a cyber-attack in 2022.
legislation, including the Data Protection Act sensitive data. 83% of these instances were
2018 and the UK and EU General Data phishing attacks, and around one in
Protection Regulation (GDPR). Customer data is ■ We have a dedicated compliance officer in each five (21%) of the respondents
processed by multiple suppliers and vendors of division with responsibility for ensuring the identified a more sophisticated
technological solutions used across the Group. completion of training. attack type such as a denial of
The data is also processed by multiple Group ■ Business continuity plans continue to evolve and service, malware, or ransomware
business divisions and employees. Suppliers of are updated as the transition to greater attack. A ransomware attack is
technology solutions are often targeted by dependency on technology continues in order to more business impacting typically
cyber threat actors which can include criminal minimise the impact of cyber-attacks and the than a denial-of-service attack.
cartels, whose motivation is financial gain. On potential impact on the continuity of our Businesses who are hit with
the 19 April 2023 the National Cyber Security operations. ransomware often risk regulatory
Centre (NCSC) warned the UK of a heightened fines if personal data has been
■ We have ransomware procedures and have tested
alert of a cyber-attack threat from state-aligned compromised in the attack.
our incident response across Group businesses in
groups against critical national infrastructure.
response to a ransomware attack. We continue to be vigilant and
The majority of ransomware attacks are
diligent in evaluating and
delivered as the result of a successful phishing ■ We have a suite of data protection and information
security procedures in place. implementing enhanced techniques
attack. Such incidents could disrupt our
to protect our systems and data
operations and impair our ability to protect Robust due diligence is performed for new
■
from threats.
consumer data, and/or compromise our suppliers, with data protection and information
confidential business information. This may lead security obligations as a prerequisite to be
to long-term financial and reputational damage included in third-party contracts.
with significant costs to recover, including
penalties, and an adverse impact on consumer
confidence in the Group.

Human resources
Employee costs represent the largest ■ We continue to focus on improving communication We continue to focus on our bus
component of the Group’s operating costs. with employees, implementing a new people driver recruitment and retention
These costs include expenses related to strategy and investing in employee development programmes, and on managing
recruitment, retention and talent development. through compelling employee value, diversity our multi‑year pay deals with local
The costs are impacted by changes in and inclusion propositions linked with market unions.
employment markets, regulatory requirements competitive wages and benefits.
We have developed new
and diversity and inclusion programmes. ■ We have an ongoing programme for monitoring
programmes to have effective
A failure to effectively recruit and retain a diverse KPIs, including leveraging exit interview data in and engaging communications
and talented workforce could have adverse designing recruitment activity. with employees to impact our
financial, reputational and operational impacts. ■ Employee engagement survey results are reviewed recruitment, retention, diversity and
to develop actions to address low performing development strategies.
The employment market for drivers and
engineering technicians remains challenging metrics to further help retain our top talent.
under an increasing consumer travel demand.
Our employee turnover has also been impacted
by current wider economic circumstances,
particularly rising inflation and wider labour
availability.

FirstGroup Annual Report and Accounts 2023 75