TRANSFORMING TRAVEL
ANNUAL REPORT 2005
Principal and Registered Ofﬁce
FırstGroup plc
395 King Street
Aberdeen AB24 5RP
Telephone: 01224 650100
Facsimile: 01224 650140
Registered in Scotland 
number SC157176
London Ofﬁce
FırstGroup plc
Third Floor
E Block
Macmillan House
Paddington Station
London W2 1FG
Telephone: 020 7291 0505
Facsimile: 020 7636 1338
The paper used to produce this report is
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www.fırstgroup.com
FirstGroup plc Annual Report 2005
Designed and produced by Paufﬂey Ltd  www.paufﬂey.com   Printed by Royle Corporate Print 02 Group overview
03 Financial highlights
04 Chairman’s statement
05 Chief Executive’s review
13 Financial review
17 Board of Directors
18 Corporate governance
23 Directors’ remuneration report
30 Directors’ report
32 Directors’ responsibilities
33 Financial statements contents
34 Consolidated proﬁt and loss account
35 Balance sheets
36 Consolidated cash ﬂow statement
36 Reconciliation of net cash ﬂows to movement in net debt
37 Consolidated statement of total recognised gains and losses
37 Reconciliation of movements in equity shareholders’ funds
38 Notes to the ﬁnancial statements
60 Independent auditors’ report
61 Group ﬁnancial summary
62 Shareholder information
THAT’S IT FOR THIS YEAR, BUT IF YOU WANT 
MORE INFORMATION ON FIRSTGROUP OR YOU
WANT TO BOOK YOUR JOURNEY PLEASE PAY 
US A VISIT AT WWW.FIRSTGROUP .COM WE ARE THE UK’S LARGEST SURFACE TRANSPORT
COMPANY, WITH A TURNOVER OF £2.7 BILLION 
PER YEAR AND SOME 67,000 EMPLOYEES ACROSS 
THE UK AND NORTH AMERICA. 
OUR VISION IS QUITE SIMPLY, TO TRANSFORM
TRAVEL BY PROVIDING PUBLIC TRANSPORT
SERVICES THAT ARE SAFE, RELIABLE, HIGH 
QUALITY, PERSONAL AND ACCESSIBLE. 
THIS MEANS FINDING SMART, YET PRACTICAL
SOLUTIONS TO EVERYDAY TRANSPORT ISSUES. 
IN THIS REPORT WE DEMONSTRATE HOW WE 
ARE DELIVERING OUR PROMISES TO OUR
CUSTOMERS, EMPLOYEES, SHAREHOLDERS 
AND THE COMMUNITIES THAT WE SERVE.
01 GROUP OVERVIEW
UK BUS
We are the UK’s largest bus operator, running
more than one in ﬁve of all local bus services. 
A ﬂeet of some 9,300 buses carries 2.8 million
passengers every day in over 40 major towns
and cities. The majority of our operations are in
urban areas where the bus is the most effective
means of tackling trafﬁc congestion. We are
working in partnership with local authorities and
other stakeholders to provide cost effective,
transport solutions that improve services and
offer more choice for passengers.
UK RAIL
We are one of the UK’s largest rail operators 
with four passenger rail franchises: First 
Great Western, First Great Western Link, 
First TransPennine Express and First ScotRail.
We also operate Hull Trains, a non-franchised
open access operator. We run nearly one-sixth
of the UK passenger rail network, with a
balanced portfolio of intercity, commuter and
regional rail operations. We also provide freight
services through GB Railfreight. We have a
strong track record of delivery and of investing 
in improved services, such as new rolling stock
and customer facilities across all of our 
rail operations.
NORTH AMERICA
Headquartered in Cincinnati, Ohio, our three
operations are spread across the US 
and Canada. 
First Student
We are the second largest provider of student
transportation in North America with a ﬂeet of
over 20,000 yellow school buses, carrying 
nearly 2 million students every day across 
the US and Canada. 
First Transit
We are one of the largest private sector
providers of transit management and
contracting, managing public transport systems
on behalf of transit authorities in cities such as
Atlanta, Los Angeles, Houston and Seattle. 
We are also one of the largest providers of
airport shuttle bus services in the US, serving
airports in cities such as Cincinnati, Miami and
Philadelphia. We also manage call centres,
paratransit operations and other light 
transit activities.
First Services
Our Services operation is the largest private
sector provider of vehicle maintenance and
support services in the US. We provide ﬂeet
maintenance for public sector customers such
as the Federal Government, cities and ﬁre and
police departments. We also provide a range of
services including vehicle maintenance, logistics
support and facilities management to public and
private sector clients including the US Navy 
and US Air Force. 
02 FINANCIAL HIGHLIGHTS
2005 2004
Turnover (£m) 2,693.4 2,479.0
Operating proﬁt
1
(£m) 211.6 204.1
Proﬁt before taxation (£m) 128.9 122.8
Proﬁt on ordinary activities after tax (£m) 96.2 92.2
Adjusted basic earnings per share
1
(pence) 28.2 27.3
Basic earnings per share (pence) 22.5 22.3
Dividend per share (pence) 12.815 11.65
EBITDA
2
(£m) 319.2 307.1
EBITDA: interest cover
3
6.6x 7.2x
1
Before goodwill amortisation, bid costs, other exceptional items and proﬁt on disposal of ﬁxed assets.
2
Operating proﬁt before goodwill amortisation, bid costs, other exceptional items and proﬁt on disposal of ﬁxed assets, plus depreciation.
3
Calculated as EBITDA
2
divided by net interest payable and similar charges before exceptional items.
TURNOVER UP 8.6% TO £2,693M
ADJUSTED BASIC EARNINGS PER SHARE UP 3.3% TO 28.2P
DIVIDEND PER SHARE UP 10.0% TO 12.815P
UK RAIL: EXCELLENT OPERATING PERFORMANCE – 
SHORTLISTED FOR FOUR NEW FRANCHISES
NORTH AMERICA: CONTINUED EXPANSION, NOW OPERATING 
>20,000 SCHOOL BUSES
UK BUS: REVENUE UP 6% – FURTHER GROWTH IN URBAN 
QUALITY PARTNERSHIP AREAS
TURNOVER (£m)
UK Bus £960.7m
UK Rail £1,059.7m
North America £665.8m
Excluding other turnover £7.2m. 
OPERATING PROFIT (£m)
UK Bus £107.1m
UK Rail £67.7m
North America £61.2m
Operating profit in UK Rail is stated after charging the
finance cost of assets, which is implicit in the operating
lease rentals, whereas UK and US Bus operating profits
are stated before finance charges. Interest costs, as
disclosed in note 6 to the accounts, were £48.3m.
Excluding central items of £15.4m and financing 
element of leases £9.0m. 
03 CHAIRMAN’S STATEMENT
04
OUR STRATEGY REMAINS TO INCREASE SHAREHOLDER VALUE
BY CONTINUING TO GROW IN OUR CORE BUSINESSES AND
EXPLORE OPPORTUNITIES TO DEVELOP IN NEW MARKETS. WE
REMAIN COMMITTED TO A PROGRESSIVE DIVIDEND POLICY AND
SHARE REPURCHASES WHILE RETAINING OUR CREDIT RATING.
The accident at Ufton Nervet in November, 
in which one of our First Great Western
trains collided with a vehicle obstructing the
line at a level crossing, resulted in the tragic
loss of seven lives, including our train driver.
On behalf of the Board of FirstGroup plc and
all of our employees I would like to express
our condolences to the families of the
bereaved and to the injured.
The safety of passengers and staff is 
our highest priority. Buses and trains 
remain among the safest ways to travel 
and we continuously strive to improve 
our performance to achieve the 
highest standards. 
I am pleased to report another year of good
progress across the Group. Turnover has
increased to £2,693m (2004: £2,479m) 
and proﬁt before tax increased to £128.9m
(2004: £122.8m). EBITDA (Group operating
proﬁt* plus depreciation) increased to
£319.2m (2004: £307.1m). Adjusted basic
earnings per share has increased to 28.2p
(2004: 27.3p) and the Board has proposed 
a ﬁnal dividend, subject to approval by
shareholders, of 8.69p making a full year
payment of 12.815p, an increase of 10%.
Before goodwill amortisation and exceptional
items, the dividend is covered 2.2 times 
and will be paid on 26 August 2005 to
shareholders on the register on 22 July
2005. The dividend increase reﬂects the
Board’s conﬁdence in the Group’s strong
cash generation and growth prospects. 
The Board is conﬁdent that this level of
dividend growth is sustainable for the
medium term.
A number of strategic acquisitions and rail
franchise wins occurred during the year
which further strengthened our core
business. In October we commenced
operation of First ScotRail, Scotland’s
national railway and the UK’s largest rail
franchise, providing over 2,000 passenger
services a day. We have also been shortlisted
for four new rail franchises; Greater Western,
Integrated Kent, Thameslink/Great Northern
and Docklands Light Railway. In North
America we made the strategic acquisition,
through First Services, of SKE Support
Services Inc. enabling us to enter the large
Federal services market and almost doubling
the size of our existing services operation. 
I am pleased to report the successful
integration of this business which we expect
to be able to expand further. During the year
we made a signiﬁcant acquisition in our
North American student business adding 
a further 1,900 school buses to our ﬂeet. 
Dr Mike Mitchell, previously Business
Change Director, who stepped down from
the Board last year prior to his planned
retirement, left the Group in April 2005 and
subsequently took up the post of Director
General of Railways at the Department for
Transport. I would like to thank Mike for his
contribution to the Group and wish him 
every success in his new role.
I would like to take this opportunity to thank
our employees for their continued hard work
and commitment in delivering another year of
strong growth and earnings, including those
employees at First North Western who left
the Group during the year. I would also like
to welcome new employees including those
at First ScotRail and First Great Western Link
and staff who joined through acquisitions
made in North America.
Our UK Bus business continues to generate
strong cash ﬂows and we are actively
working with Government and Local
Authorities to introduce services that meet
the needs of the communities, alongside bus
priority schemes and other measures to
reduce trafﬁc congestion. We look forward 
to building on our strong record of delivery 
in the rail industry and submitting our exciting
proposals for the development of new
franchises. In North America we continue 
to grow our Student, Transit and Services
businesses. Since we entered the market six
years ago we have grown First Student by
some 10,000 buses and overall we have
increased earnings in our North American
businesses by over 70%.
Our strategy remains to increase shareholder
value by continuing to grow in our core
businesses and explore opportunities to
develop in new markets. While we continue
to invest for growth we remain committed 
to a progressive dividend policy and share
repurchases of up to £30m per annum, 
while retaining our BBB credit rating.
Martin Gilbert
Chairman
*Operating proﬁt referred to in this statement and in the
Chief Executive’s Review and Financial Review refers to
operating proﬁt before goodwill amortisation, bid costs
and other exceptional items. CHIEF EXECUTIVE’S REVIEW
OVERVIEW
Safety
The safety and security of our passengers
and staff is at the forefront of everything we
do and we continue to promote a culture 
of ‘Safety First’ throughout our business. 
We continually assess our processes and
working practices and strive to meet the
highest possible standards. I am pleased to
report that during the period we have again
seen some encouraging trends in key safety
indicators and we will continue to ensure 
that we build on these improvements. The
separate Corporate Responsibility Report
details the progress we have made to further
improve our performance in respect of safety,
environmental management and other key
areas of our business.
Results
I am very pleased to report another
successful year with expansion in our core
markets in the US and UK. Group turnover
increased by 8.6% to £2,693m (2004:
£2,479m). Operating proﬁt was £211.6m
(2004: £204.1m). The Group generated
EBITDA (operating proﬁt plus depreciation) 
of £319.2m (2004: £307.1m) enabling us to
continue to invest in the business as well as
increasing the dividend by 10% and returning
£29.7m to shareholders through the further
repurchase of equity during the year. 
Since the acquisition of our North American
business and the growth of our UK rail
operations the Group’s revenue proﬁle has
substantially altered. Some 80% of the
revenue in our North American operations 
is secured under medium-term contracts.
The Group has contracts with government
agencies and other large organisations in
both North America and the UK representing
a secure revenue stream worth £4.9 billion.
As we expand our North American
businesses and continue to grow our UK 
rail operations we expect this ﬁgure to
increase signiﬁcantly. 
UK RAIL
The UK Rail division operates passenger 
and freight services in the UK. Passenger 
rail franchises consist of First Great Western,
First Great Western Link, First TransPennine
Express and First ScotRail. We also operate
Hull Trains, a non-franchised open access
intercity passenger train operator, and 
we provide rail freight services through 
GB Railfreight. 
Results
Turnover in the Group’s rail division 
increased to £1,059.7m (2004: £945.0m)
and operating proﬁt was £67.7m (2004:
£49.8m). These excellent results reﬂect 
the strong operating performance and
increased passenger volumes across all 
of our train operating companies and the
commencement of First ScotRail in 
October 2004.
Current operations
On 17 October we commenced operation of
First ScotRail. The handover went smoothly
and, despite the adverse weather at the start
of the year, operator delays have been
reduced by 5% on the comparable period
last year. This reﬂects the enormous effort
and investment being applied to ﬂeet
reliability and performance. Passenger
journeys have increased by 8% on the
comparable period last year and we have
introduced an improved timetable to provide
increased capacity and cleaner, more
frequent services. In April we introduced the
ﬁnal delivery of new Class 170 Turbostar
trains, funded by the Scottish Executive and
Strathclyde Passenger Transport, which will
provide longer trains and extra seats on a
number of routes. In February we launched
JourneyCheck, the UK’s ﬁrst fully integrated
train information service, enabling
passengers to receive instant information 
on how services are running and details of
planned engineering works using real time
information via website, WAP and PDA
phones and through SMS text messaging. 
First TransPennine Express, which
commenced operation on 1 February 2004,
05
THE SAFETY AND SECURITY OF OUR PASSENGERS AND STAFF IS
AT THE FOREFRONT OF EVERYTHING WE DO AND WE CONTINUE
TO PROMOTE A CULTURE OF ‘SAFETY FIRST’ THROUGHOUT 
OUR BUSINESS. CHIEF EXECUTIVE’S REVIEW CONTINUED
has performed well with passenger income
increased by 11.5%. Passenger volumes are
running ahead of our expectations as a result
of increased road congestion on the main
commuter corridor between Manchester and
Leeds. A new timetable was introduced in
December offering passengers faster journey
times, additional services and extra capacity.
In March work commenced to build a new
train-care depot in Manchester with a
second new depot planned for York. In
spring 2006 we will introduce 51 new
Siemens trains for the franchise, offering
passengers in the region a modern, high-
performance intercity ﬂeet and a step-
change in the quality of service we are 
able to offer.
Operational performance on First Great
Western has continued to improve. In
January we opened a new First Class
business lounge at London Paddington 
for passengers. Our investment in the new
lounge recognises that the ability to ‘work 
on the move’ is a key attraction of train 
travel and provides a range of facilities
including a meeting room, internet access 
as well as complimentary newspapers 
and refreshments. In February, First Great
Western launched the redesigned High
Speed Train carriages in preparation for the
Greater Western franchise bid. A number 
of improvements have been made to the
exterior including a striking new livery. The
interior has been redesigned, with customer
input, to create a contemporary and modern
on-board environment with improved
customer services such as an updated 
buffet facility and Wi-Fi technology. 
We were delighted that First Great Western’s
Chippenham Station won the award for
‘Station Excellence’ at the HSBC Rail
Awards. This award, which has been won 
by First Great Western for the last two years,
follows a signiﬁcant investment in the
refurbishment of the station. 
On 1 April 2004 we commenced operation of
the First Great Western Link franchise which
operates surburban services from London
Paddington. In December we launched an
integrated timetable for First Great Western
and First Great Western Link. This major
overhaul to the scheduling of services enables
us to offer up to 20% increased capacity on
surburban services and improved long
distance services to Wales and the South
West. In June we will launch the new
Heathrow Connect service, in partnership with
British Airports Authority, calling at intermediate
stops between London Paddington and
Heathrow using new electric trains.
Hull Trains, our non-franchised, open access
intercity train company operating between
London Kings Cross and Hull, performed well
during the year with passenger growth of
20%. In June we introduced a new weekday
service and received further regulatory
approval in December for an additional
Saturday service. 
GB Railfreight
GB Railfreight (GBRf), our rail freight
company, has continued to show
encouraging growth. New business was 
won during the year including contracts for
Royal Mail and the Tarmac Group. During 
the period GBRf took delivery of new
container wagons and refurbished
locomotives to support the new contracts.
We were delighted that GBRf won ‘Rail
Business of the Year’ and picked up the
‘Rolling Stock Excellence’ award at the
HSBC Rail Awards in February this year. 
We believe that there is scope to further
expand this business by offering a high level
of service and a ﬂexible business model.
Franchise bidding
We are delighted to be shortlisted for a
further four new enlarged rail franchises:
Integrated Kent, Greater Western,
Thameslink/Great Northern and Docklands
Light Railway. We have an excellent track
record of delivery and operation of various
types of railway franchises including intercity,
London commuter, suburban and regional
railways. In addition we have managed and
20%
WE LAUNCHED A NEW INTEGRATED TIMETABLE FOR 
FIRST GREAT WESTERN AND FIRST GREAT WESTERN LINK
DESIGNED TO BRING CUSTOMER AND PERFORMANCE
BENEFITS SUCH AS BETTER PUNCTUALITY AND RELIABILITY,
IMPROVED CONNECTIONS AND INCREASED CAPACITY, BY 
UP TO 20%, ON PEAK TIME SERVICES.
06 06 implemented the introduction of new rolling
stock across four of our rail franchises. 
We have a highly experienced team in place
and look forward to consulting widely and
working with all of the stakeholders to
develop exciting proposals for the future 
of these franchises.
Outlook UK Rail
The strong performance of our rail operations
reﬂects the innovation and investment we
have put into the business. Our aim is to
bring a consistently high standard of service
at affordable prices to our passengers. 
We have an active programme of new
franchise bids under way which offer 
excellent prospects for the future growth 
of the division.
NORTH AMERICA
In North America the Group is the second
largest operator of student transportation
with over 20,000 yellow school buses
carrying nearly 2 million students every day
across the US and Canada. We operate the
largest transit contracting and management
business in North America and we have an
expanding services division. 
Results
This has been another year of strong 
growth within our North American Division.
Turnover from our three businesses
increased to £665.8m or $1,230.2m 
(2004: £620.7m or $1,051.6m), an increase
in dollar terms of 17%. Operating proﬁt 
was £61.2m or $113.2m (2004: £63.5m or
$109.2m). Operating proﬁt in First Student
was impacted by $5.2m as a result of fewer
trading days in the year due primarily to a
late Labor Day in the calendar, which meant
that the North Eastern and mid Atlantic
regions of the US had a later school start,
and the early occurrence of Easter this year.
The lost revenue days will be added to the
end of the school year and therefore will be
recognised in our results in 2005/06. 
Our three North American businesses
continue to generate excellent returns with
EBITDA of £108.1m or $199.9m (2004:
£107.1m or $183.7m) and remain self-
financing for maintenance capital expenditure,
organic growth and in-ﬁll acquisitions. 
First Student
I am pleased with the performance of this
business during the year. During the period 
we retained over 90% of our current
business that came up for renewal. US Dollar
turnover increased by 9.4%. Operating proﬁt
was impacted by the reduced number of
trading days this period, as outlined above,
which will be added to 2005/06. In addition
we also experienced an increase in state
employer’s payroll taxes in the states in
which we operate. We now operate over
20,000 yellow school buses in the US and
Canada. The increase in the period is largely
due to the acquisition of Cardinal Coach
Lines, made in the last quarter of the year,
which operates some 1,900 school buses in
the provinces of Alberta, British Columbia,
Ontario and the North West Territories of
Canada and Los Angeles, California. We
continued to make good progress
throughout the year gaining contracts to
operate approximately 700 buses gained
through new business wins, in-ﬁll
acquisitions and organic growth within
existing contracts. 
Looking forward we are conﬁdent that we
will be able to continue to grow through a
combination of organic growth, share shift,
conversions and acquisitions at our target
margins.
First Transit
US Dollar turnover increased by 15.2% and
operating proﬁt by 3.7%. We won new
contracts to operate and manage transit
systems in Virginia, Massachusetts, Ohio,
New Hampshire, Idaho, Georgia, California,
Pennsylvania, New Jersey, Texas, Arkansas,
South Carolina and North Carolina. During
the year we were very pleased to retain the
contract to operate the largest paratransit
call centre in New York and to win two
WE CONTINUE TO EXPAND OUR NORTH AMERICAN SCHOOL
BUS OPERATION. WE NOW OPERATE OVER 20,000 YELLOW
SCHOOL BUSES, CARRYING NEARLY 2 MILLION STUDENTS
ACROSS THE USA AND CANADA EVERY DAY.
>20,000
NORTH AMERICA TURNOVER ($m)
Student $674.4m
Transit $380.7m
Services $175.1m
07 CHIEF EXECUTIVE’S REVIEW CONTINUED
further contracts for call centres in Portland,
Oregon. In November we acquired a small
business in New York providing paratransit
services in the Greater Buffalo area. We have
signiﬁcantly developed our shuttle business,
providing buses at airports, universities and
for corporate organisations. We are now one
of the largest operators of airport shuttle
services in the US, providing bus services at
airports in cities such as Cincinnati, Miami,
Houston and Philadelphia. During the year
we were pleased to win further shuttle
service contracts to serve Baltimore Airport
and for the University of Texas.
First Transit’s strategy is to focus on the
higher margin, faster growing call centre,
paratransit, logistics consultancy and
public/private shuttle bus markets where 
we can utilise our management expertise
and continue to proﬁtably expand these
businesses.
First Services
This has been a very successful year for our
Services division, which provides a range of
outsourced vehicle maintenance, operations
and support services to the public and
private sectors. US Dollar turnover increased
by 67.6% and operating proﬁt by 96.1%
reﬂecting eight months trading contribution
from our support services business acquired
in August, together with strong growth in
First Vehicle Services.
We were very pleased to retain all of our
contracts that came up for renewal during
the period. In addition, we won new
business to provide vehicle maintenance
services to customers including the State of
Virginia, City of Pittsburgh and McGuire Air
Force Base in New Jersey.  
We were particularly pleased that two of our
vehicle maintenance contracts received
recognition, from leading industry
publications, in the categories of ‘Best
Fleets’ and ‘Top Fleet Managers’ in the US.
In August we acquired SKE Support
Services Inc., now First Support Services,
which has annualised turnover of $88m and
provides a range of services including vehicle
ﬂeet maintenance, logistics support and
facilities management to the US Federal
Government and the private sector. 
In December, First Support Services, 
with their partners The Day and Zimmerman
Group Inc. and Parsons Corporation, won 
the substantial contract to provide a range 
of land-based support services to the 
US Navy. 
We are delighted with the performance of
this strategic acquisition which has
integrated well and provides us with entry 
to the growing US Federal market, one of
North America’s largest procurers of 
support services. 
Investment 
Our North American business is self-funding
for maintenance capital expenditure and
growth through contract wins and in-ﬁll
acquisitions. Each new investment, including
new contract bids, must meet our internal rate
of return targets. All of the acquisitions made
by this division have delivered excellent returns
reinforcing our rigorous criteria for investment. 
Outlook North America
We are extremely pleased with the
performance of our North American division
which continues to deliver excellent returns
for shareholders. We are conﬁdent that
further growth will be achieved through our
proven strategy of combining organic growth
with well matched acquisitions. 
UK BUS
The Group is the largest bus operator in the
UK with a ﬂeet of 9,300 buses, and a market
share of approximately 23%. We carry some
2.8 million passengers every day.
Results
Turnover increased to £960.7m (2004:
£906.2m) and operating proﬁt before lease
OUR NORTH AMERICAN SERVICES DIVISION HAD A VERY
SUCCESSFUL YEAR, ALMOST DOUBLING IN SIZE AND
EARNINGS. THE STRATEGIC ACQUISITION OF SKE GAVE 
US ENTRY TO THE GROWING US FEDERAL MARKET, ONE 
OF THE LARGEST PROCURERS OF SUPPORT SERVICES 
IN NORTH AMERICA.
08 ﬁnancing costs was £107.1m (2004:
£111.2m). Operating proﬁt was impacted 
by £5.0m as a result of a strike in South
Yorkshire that was settled in the summer. We
continue to focus on service quality with the
aim of improving vehicle reliability and
minimising lost mileage. During the year we
have made signiﬁcant investment in our
maintenance and engineering functions. We
expect to see the full beneﬁt of this increased
investment over the next few years and are
encouraged to see that during the period
lost mileage was signiﬁcantly reduced. While
margins remain under pressure in UK Bus
our focus is to achieve sustainable growth in
proﬁts through high-quality customer service
and increased patronage.
Contracted bus services
We have continued to see good growth in our
London bus operations. Growth in the
London tendered bus market is moderating
following the successful implementation of the
congestion charge in 2003 and the substantial
increase in buses introduced to meet the
additional service requirements. We are well
placed with enlarged depot facilities at
Willesden Junction that will enhance our
competitive advantage if the congestion
charge is extended to West London. Similarly
we are developing a facility in Dagenham that
will provide increased capacity and position us
well for the signiﬁcant demographic growth
anticipated in the Thames Gateway area. 
In addition to developing our commercial
services we have grown our contracted bus
and coach operations. Private Hire and
Contract business is now organised on a
national basis and a dedicated sales and
delivery team is in place. During the period
contracts were secured with customers
including Network Rail, Virgin Trains, National
Express Coaches and Manchester Metrolink.
We operated contract services in connection
with special events such as the Glastonbury
Festival, York Railfest and Royal Ascot.
Urban areas
In urban operations outside London, which
represent almost 60% of UK Bus turnover,
we continue to see growth in those areas
where we are able to work with Local
Authorities to provide trafﬁc management
measures to improve congestion. Passenger
growth continues to be driven by a mixture
of marketing initiatives and partnerships with
Local Authorities to develop bus priority
schemes. Our policy is to target capital
investment to those areas where there is 
a clear commitment to support the use of
public transport. 
Passenger growth was strong in areas such
as Bristol and York where we have Quality
Partnerships in place. The Overground, our
successful simpliﬁed route and fares
structure, continues to provide growth in
areas such as Leicester and Leeds where
passenger growth has increased by up to
60% on individual routes since introduction.
In York, where we have seen passenger
growth of up to 40% on individual routes, 
we now operate ﬁve Park and Ride schemes.
During the year we carried over 3 million
passengers in our Park and Ride operations
across the city.
In March we launched our premium urban
travel concept known as ftr. The Secretary
of State for Transport joined over 175 key
stakeholders, including Local Authorities, to
launch the ‘Streetcar’ vehicle which will be
used to deliver the ftr package. We
developed Streetcar in partnership with the
Wright Group and Volvo after consulting
extensively with customers, engineers and
drivers. It is designed to offer an economical
alternative to light rail services, giving
passengers an exceptionally high-quality,
light rail-like, product with dedicated road
space in congested areas, but with the route
ﬂexibility of a bus. The advantage of ftr is
that it can be introduced quickly, without
major upheaval on roads and at a fraction of
the cost of a light rail scheme. The ﬁrst ftr
service will begin in York later this year and
detailed plans are being developed for other
IN JULY WE OPENED OUR FIFTH PARK 
AND RIDE SITE IN YORK WHICH IS ALREADY
OPERATING OVER 15,000 JOURNEYS PER
WEEK. DURING THE YEAR MORE THAN 
3 MILLION PASSENGERS USED OUR PARK 
AND RIDE SERVICES ACROSS YORK.
09
P +
Park and Ride
09 CHIEF EXECUTIVE’S REVIEW CONTINUED
WE HAVE LAUNCHED A NEW CONCEPT IN PUBLIC TRANSPORT.
f t r LOOKS LIKE A TRAM, USES DEDICATED ROAD SPACE 
IN CONGESTED AREAS, BUT HAS THE ROUTE FLEXIBILITY OF 
A BUS. OUR AIM IS TO TAKE 10% OF CAR JOURNEYS OFF THE
ROADS, ON THE CORRIDORS THAT f t r SERVES, WITHIN FIVE
TO SIX YEARS.
schemes in cities such as Leeds, Shefﬁeld,
Swansea, Reading, Bath and Glasgow. 
We continue to develop new initiatives to
promote our services to a wide range of
customers. During the year we successfully
piloted a high-frequency, low fare shuttle
service using mid-life vehicles to link lower-
income inner city suburbs with the city centre
in Leicester. This proved extremely
successful with encouraging passenger and
revenue growth and we plan to extend this
trial to other targeted areas during 2005.
Rural operations
In our rural operations, which represent
approximately 20% of our UK Bus business,
we are developing projects that will meet the
Government’s joint objectives of social
inclusion and reducing trafﬁc congestion.
Kickstart funding, which provides support for
services which have the potential to become
commercially viable, is already active in
Scotland and has recently been introduced
in England and Wales with further schemes
expected later in the year. 
We continually look for innovative ways in
which we can better serve the rural
communities in which we operate. Our dial-
a-ride service operating in Carmarthenshire
recently won the ‘Community Transport
Award’ at the Welsh Transport Awards. In
the South West we have worked with
Plymouth and Cornwall councils to provide a
new ﬂeet of specially branded buses for
operation on the ferry bus corridor between
South East Cornwall and Plymouth, a key
travel to work corridor.
Yellow school bus
During the year we were pleased to
commence operation of two further yellow
school bus operations in Northampton and
Carmarthenshire. This initiative continues to
attract interest and it is our view that, with
support from Government and Local
Authorities, there is signiﬁcant potential to
develop this business.
Investment
We have continued to focus our capital
expenditure in urban areas with high
passenger growth such as Glasgow,
Portsmouth, Halifax and Huddersﬁeld. During
the year £66.2m was spent on new, low-ﬂoor,
easy access vehicles and £11.7m has been
spent on facilities, including a new depot in
Chelmsford. New buses have also been
ordered for Aberdeen, Bath, Edinburgh,
Leicester, Manchester, Northampton and
Swansea and will be delivered later this year.
Costs
This was a year of signiﬁcant investment in
our engineering function with the continued
roll out of standardised maintenance
procedures across all companies and
depots, new approaches to the timing of
inspection and repair, together with greater
emphasis on staff training. We expect these
reforms to reduce unit costs over the
medium term.
Lost mileage, our principal measure of
service quality, improved during the year 
and we have targeted further reductions for
2005/06. Towards the end of last year the
Trafﬁc Commissioners and Department for
Transport published new standards for bus
service punctuality, and Local Authorities in
England were given new duties to take
account of bus services under the Trafﬁc
Management Act. We are currently
developing Punctuality Improvement
Partnerships with local highway authorities 
to progress these changes which we 
believe will give further impetus to bus
priority measures.
Outlook UK Bus
We welcome the Government’s
announcement that free concessionary travel
for pensioners and disabled people will be
introduced in England from April 2006. We
will be reviewing our networks in advance of
the introduction to enable concessionary fare
passengers to beneﬁt from the new travel
opportunities that will be created.
10 FirstGroup
Poland
Czech
Republic
WE WERE THE FIRST IN OUR INDUSTRY TO SOURCE BUS
DRIVERS AND ENGINEERS FROM ALTERNATIVE LABOUR
MARKETS, IN PARTICULAR EASTERN EUROPE. SO FAR WE
HAVE RECRUITED SOME 350 STAFF FROM POLAND, THE
CZECH REPUBLIC, PORTUGAL, MALTA AND SLOVAKIA TO
ADDRESS THE IMPORTANT ISSUE OF RECRUITMENT AND
RETENTION IN OUR INDUSTRY. 
Our UK Bus business continues to generate
strong cash ﬂows. Overall revenue growth
has been strong and we expect this to
continue in the current year. Our focus
remains on increasing passenger volumes,
continuing to develop the business in other
areas such as contracted bus services, while
maintaining a rigorous cost control and
process improvement programme.
EMPLOYEES
We further strengthened the Executive
Management Team with the appointments of
Nicola Shaw, formerly Managing Director of
Operations at the Strategic Rail Authority and
Andrew Haines, formerly Managing Director
of South West Trains. Nicola, who joins as
Business Change Director, will focus on the
Group’s bus operations. Andrew will become
Managing Director of the Rail Division. Both
are highly respected within the industry and I
am conﬁdent that they will make a signiﬁcant
contribution to the Group. 
I would like to thank all our staff for their
continued commitment to the Group. Our
aim is to offer our staff opportunities to
develop and grow to reach their full potential.
We continually engage with our staff to better
understand their views and concerns
through a range of informal meetings 
at depot level to a more formal staff
satisfaction survey.
The recruitment and retention of high-quality
staff is a key issue within our industry. We
continue to implement a range of initiatives
within our operating companies to address
this important issue. In our UK Bus division
we were the ﬁrst in the industry to source
drivers and engineers from alternative labour
markets primarily in Eastern Europe. We
have recruited some 350 staff from Poland,
the Czech Republic, Portugal, Malta and
Slovakia. We are pleased that employee
turnover in our North American division has
reduced again this year. 
We continue to encourage our staff to further
their development and careers within the
Group. During the year we extended our
National Vocational Qualiﬁcation (NVQ) and
BTEC programmes in the UK. Some 16% of
bus drivers are now qualiﬁed to NVQ level 2
in Road Passenger Transport and within the
last year 60 supervisors and managers
gained qualiﬁcations in Team Leadership. We
are actively developing workplace learning
centres, in partnership with the Transport
and General Workers Union, and now have
32 learning centres reaching 30% of
employees in the UK. We have plans to
signiﬁcantly increase the coverage over 
the next two years so that more of our 
UK employees can gain access to 
workplace learning. 
In the US, both First Transit and First Vehicle
Services participate in the Automotive
Service Excellence (ASE) programme for
training and testing technicians. Within First
Transit 35% of eligible employees hold ASE
certiﬁcates and within First Vehicle Services
the ﬁgure is 70%. First Vehicle Services
continues to support staff development
through non-vocational training and
encourages employees in self-development
activities. At First Student we have
introduced the ‘Smith System of Defensive
Driving’ to enable school bus drivers 
to perform their duties safely in all 
trafﬁc conditions.
In FirstGroup America we continue to
develop our management training
programmes. First Student implemented two
new programmes this year. The ﬁrst is
designed to update managers on
communication techniques, interviewing and
recruitment, ﬁnancial reporting and customer
service skills. The second programme has
been designed for new Contract Managers
and covers First Student’s approach to
safety, operations management and human
resources such as the importance of
diversity in the workplace. 
First Transit continues to train frontline
supervisors in an intensive four-day training
course through ‘First Transit University’ which
11 CHIEF EXECUTIVE’S REVIEW CONTINUED
teaches new and existing managers the
Company’s approach to safety, operations
management, client relations and human
resources. First Transit has also formed a
General Managers Advisory Group with
representatives from eight contract locations.
The Advisory Group provides a focus group
to discuss speciﬁc issues for feedback to 
the Board.
ENVIRONMENT AND
COMMUNITY
Our environmental management framework
is now well established and all our
companies and depots are audited against
the requirements of the Group Environmental
Management System. During the year we
established the Group Environment Forum to
set the minimum performance standards for
each operating company and identify key
objectives and targets for improvement. 
As a result of local depot initiatives and
incentives for staff, energy usage in our
depots continued to reduce during the year.
For example, water usage fell by a further
4.4% and energy consumption by 6% in our
UK Bus division alone. Our bus operating
companies reduced the overall general
waste arising by a further 5%. As part of our
ongoing awareness campaign an additional
7,027 staff have received environmental
training over the past 12 months.
During the year we continued to support
Future Forests, a ‘carbon neutral’ tree 
planting initiative to offset CO 2
emissions.
Through our support 1,500 trees have 
been planted in Devon. In connection with
Future Forests we also supported an
awareness campaign for primary school
children in the South West to promote 
the environmental beneﬁts associated with
public transport.
We are pleased to feature in the FTSE4Good
Environmental Index as well as in the
Business in the Community Corporate Social
Responsibility Index, covering the broader
corporate social responsibility issues. In
recognition of our commitment to improving
the environment we were delighted to
receive the National Green Apple Award 
for the fourth consecutive year as well as
environmental awards from Network Rail, 
the Bus Industry Awards and the Railway
Industry Innovation Awards.
During the year the Group and its staff in 
the UK and North America have continued 
to support a number of local and national
charities. All of our operating companies
support local events either through donations,
sponsorship or use of resources and facilities
made available to them by the Group. Further
details of all these activities can be found in
our Corporate Responsibility Report which is
published separately and is available on our
website www.ﬁrstgroup.com.
GROUP OUTLOOK
I look forward to continued growth in our
three North American businesses all of which
have highly dependable revenue streams of
which approximately 80% are covered by
medium-term contracts. In UK Rail we are
well positioned to beneﬁt from rail
refranchising having been shortlisted for four
new rail franchises, worth up to £1.1 billion
of turnover, in the current round. In UK Bus
we are seeing further growth in areas where
we can work with Local Authorities to
implement bus priority and other trafﬁc
management measures and we continue 
to focus on cost control and process
improvements. Our strategy remains to use
the Group’s strong free cash ﬂows to invest
in the business and explore opportunities for
growth in new markets, increase dividends
and buy back shares, while maintaining a
strong balance sheet. I am conﬁdent about
our future prospects. Trading in the new
ﬁnancial year has started well and is in line
with our expectations.
Moir Lockhead
Chief Executive
-6.0%
OUR ENVIRONMENTAL MANAGEMENT FRAMEWORK IS NOW
WELL ESTABLISHED AND WE ARE ENCOURAGED BY THE
CONTINUED REDUCTION IN ENERGY USAGE IN OUR DEPOTS.
IN THE BUS DIVISION ALONE, ENERGY CONSUMPTION 
FELL BY A FURTHER 6% THIS YEAR AS A RESULT OF LOCAL
DEPOT INITIATIVES AND INCENTIVES FOR STAFF.
12 FINANCIAL REVIEW
13
OVERVIEW
The Group has a portfolio of businesses in
the UK and North America which generate
strong and predictable revenue streams with
48% of turnover arising from contracts with
government and statutory bodies in the UK
and North America. The Group’s strong free
cash ﬂows are used to increase shareholder
value by investing for growth, increasing
dividends and repurchasing shares. 
The results for the year to 31 March 2005
have to be taken in the context of the
changes in rail franchises. First Great Eastern
and Anglia were exited at the start of the
year and First Great Western Link
commenced on 1 April 2004. Subsequently
we lost the First North West Trains franchise.
However the award of the First ScotRail
franchise together with a very strong
performance by First TransPennine Express
resulted in UK Rail exceeding last year’s
operating proﬁt by £17.9m.
The overall results represent a 5.0%
improvement in proﬁt before tax with
operating proﬁt and adjusted basic earnings
per share (EPS) up by 3.7% and 3.3%
respectively despite a 9.5% drop in the
average US$ exchange rate compared to
2003/04. The ﬁnal dividend has been set at
8.69 pence per share which together with
the interim dividend of 4.125 pence gives a
full year dividend of 12.815 pence, an
increase of 10% on 2003/04. We are
conﬁdent that this level of dividend growth
can be sustained in the medium term.
Dividend cover, pre-goodwill amortisation
and exceptional items, was 2.2 times. In
addition during 2004/05 we have invested
over £170m in capital expenditure and
acquisitions and have returned £29.7m to
shareholders through share repurchases.
Over the last ﬁve years the Group has
returned £115m to shareholders by way 
of share buy-backs.
The Group has a strong balance sheet
backed by a secure long-term ﬁnancial
structure with an average debt duration of
9.0 years at 31 March 2005. The ﬁnancial
structure was further enhanced in March
2005 with the signing of a new committed
£520m ﬁve-year bank facility which
signiﬁcantly improved pricing and terms 
and increased the duration of the Group’s
medium term committed borrowing facilities.
RESULTS
Turnover was £2,693.4m (2004: £2,479.0m),
an increase of 8.6%. Operating proﬁt was
£211.6m (2004: £204.1m), an increase of
3.7% and proﬁt before tax was up 5.0%. 
The results for the year reﬂect a particularly
strong performance from the Rail division
where the performances of all our new
franchises have exceeded expectations.
There were lower proﬁts in UK Bus due to a
strike in South Yorkshire and North American
proﬁts were down due to a lower number of
operating days during the year, increased
costs of unemployment taxes and adverse
foreign exchange movements year on year.
UK Bus turnover was £960.7m (2004:
£906.2m), an increase of 6.0%. Operating
proﬁt was £107.1m (2004: £111.2m), a
reduction of 3.7%. In our London division we
successfully increased activity by starting
contracts to operate 91 additional buses and
revenues have increased by 13% when
compared to last year. UK Bus results were
hit by a strike in South Yorkshire that had a
proﬁt impact of approximately £5m. The year
also saw a £7m investment in engineering
that has already led to improved reliability
and lower lost mileage. This investment is
supported by the arrival of over 300 new
buses during the ﬁrst quarter of 2005/06.
Consequently we anticipate another strong
year of revenue growth.
UK Rail turnover was £1,059.7m (2004:
£945.0m), an increase of 12.1%. Operating
proﬁt was £67.7m (2004: £49.8m), an
increase of 35.9%. Inclusion of the operating
results for a full year of First TransPennine
Express and First Great Western Link
franchises and the commencement of the
First ScotRail franchise more than made up
for the loss of the First Great Eastern and
First North Western franchises. The ﬁrst full
year of First TransPennine Express saw an
11.5% increase in passenger revenue.
Similarly First ScotRail has started well with
strong revenue growth.
North American turnover was £665.8m
(2004: £620.7m). At constant exchange
rates, this represents an increase of 17.0%.
Operating proﬁt was £61.2m (2004:
£63.5m). In US Dollar terms this represents
an increase of 3.7%. During the year, both
First Transit and First Services delivered
improved proﬁts. First Services operating
proﬁt increased year on year by 96.1% and
included the successful acquisition of SKE,
gaining entry to the important Federal market.
First Student earnings were adversely
affected by £2.8m due to a lower number 
of operating days in the year compared to
2003/04 which is expected to be recovered
in 2005/06. In addition First Student results
Year to 31 March 2005 Year to 31 March 2004
Operating Operating Operating Operating
Turnover proﬁt
1
margin
1
Turnover proﬁt
1
margin
1
Divisional results £m £m % £m £m %
UK Bus 960.7 107.1 11.1 906.2 111.2 12.3
UK Rail 1,059.7 67.7 6.4 945.0 49.8 5.3
North America 665.8 61.2 9.2 620.7 63.5 10.2
Financing elements of leases
2
– (9.0) – – (8.3) –
Other
3
7.2 (15.4) – 7.1 (12.1) –
Total Group 2,693.4 211.6 7.9 2,479.0 204.1 8.2
1
Before goodwill amortisation, bid costs, other exceptional items and proﬁt on disposal of ﬁxed assets.
2
Financing element of UK PCV operating lease costs.
3
Tram operations, central management, Group information technology and other items.
Throughout the ﬁnancial review, operating proﬁt, operating margin and EBITDA are deﬁned as being before goodwill
amortisation, bid costs and other exceptional items. FINANCIAL REVIEW CONTINUED
14
were impacted by £3.6m due to higher costs
for State Unemployment Taxes in many of
the States in which it operates. This reﬂects
changes in the way that the rules are
applied. The Cardinal acquisition sees the
number of yellow school buses operated rise
to 20,200 and this coupled with the reversal
of the 2004/05 operating days issue means
that prospects for 2005/06 remain excellent. 
Central costs were higher than last year due
to a number of non-recurring initiatives
including an upgrade of information
technology systems, the International
Financial Reporting Standards convergence
project and development of new human
resources policies and procedures.
PROPERTY
Property gains on disposal of £3.3m (2004:
£19.6m) were realised during the year as
part of the Group’s ongoing programme of
disposing of older UK Bus depots in high
value city centre locations and reinvesting 
in out of town brownﬁeld sites with more
modern and efﬁcient facilities.
GOODWILL
The goodwill amortisation charge was
£25.8m (2004: £25.9m) with favourable
foreign exchange movements of £0.8m
offsetting £0.7m of incremental goodwill on
acquisitions made either during 2004/05 or
the preceding ﬁnancial year.
BID COSTS AND OTHER 
EXCEPTIONAL ITEMS
Bid costs of £11.9m (2004: £6.7m) were
incurred during the year and comprised
principally rail refranchising costs for the
ScotRail, Integrated Kent, East Coast and
Greater Western franchises. There were no
other costs categorised as exceptional
during the year (2004: £6.8m).
INTEREST PAYABLE AND 
SIMILAR CHARGES
The net interest charge was £48.3m (2004:
£42.8m) with the increase of £5.5m
principally due to a higher average level of
net debt and an increase in the notional
interest charge on long-term insurance
provisions. The net interest charge is covered
6.6 times (2004: 7.2 times) by earnings
before interest, taxation, depreciation and
amortisation (EBITDA).
There was no exceptional interest charge
during 2004/05 whereas in 2003/04 there
was an exceptional charge of £18.7m in
relation to the cancellation of certain interest
rate swaps.
TAXATION
The taxation charge on proﬁt before goodwill
amortisation, bid costs and other exceptional
items was £44.4m (2004: £48.4m)
representing an effective rate of 27.2%
(2004: 30.0%). The reduction in the effective
rate reﬂects favourable settlements achieved
during the year and it is anticipated that
these beneﬁts will extend into 2005/06. 
Tax relief on US goodwill, bid costs and other
exceptional items reduced the tax charge to
£32.7m (2004: £30.6m). No tax has been
provided on property gains as it is not
envisaged that tax will become payable on
these gains. 
The actual cash cost of taxation to the
Group was £19.0m (2004: £21.3m) which 
is 15% (2004: 17%) of proﬁt before tax. The
group pays a minimal amount of tax on its
proﬁts in the US. At 31 March 2005, in
excess of $200m of accumulated tax losses
were carried forward to be used against
future proﬁts in the US. We therefore believe
that the level of the cash tax in the US will
remain at a minimal level for the medium
term. A full reconciliation of the cash tax rate
to the UK standard rate of corporation tax is
set out in note 8 to the ﬁnancial statements.
DIVIDENDS
The ﬁnal dividend of 8.69 pence per ordinary
share together with the interim dividend of
4.125 pence per ordinary share, gives a full
year dividend of 12.815 pence, an increase
of 10.0%. The ﬁnal dividend will be paid on
26 August 2005 to shareholders on the
register of members at the close of business
on 22 July 2005.
EPS
Adjusted basic EPS, before goodwill
amortisation, bid costs, other exceptional
items and proﬁt on disposal of ﬁxed assets,
was 28.2 pence (2004: 27.3 pence), an
increase of 3.3%. Basic EPS was 22.5
pence (2004: 22.3 pence). 15
CASH FLOW
The Group’s businesses continue to
generate strong operating proﬁts which are
converted into cash. EBITDA for the year
was £319.2m (2004: £307.1m) up 3.9%.
EBITDA from North American operations
was up 8.8% in US Dollar terms. EBITDA 
by division is set out above.
During the period there was a working
capital outﬂow of £62.0m of which the
largest element was the working capital
outﬂow on the loss of the First Great Eastern
and First North Western franchises.
Offsetting this was an inﬂow of a similar
magnitude on the commencement of the
First Great Western Link and First ScotRail
franchises. In addition there was a working
capital outﬂow of £17m in relation to cash
settlements with the SRA and a £12m
outﬂow from the reversal of the First
TransPennine position from last year. Pension
payments of £12m were made during the
year over and above the proﬁt and loss
charge and growth in both the UK and North
America accounted for £17m of the working
capital outﬂow. 
CAPITAL EXPENDITURE AND 
ACQUISITIONS
Capital expenditure, as set out in note 12 to
the ﬁnancial statements, was £135.3m
(2004: £164.7m). Capital expenditure was
predominantly in North American operations
of £36.7m, UK Bus operations of £70.4m,
UK Rail £14.1m and UK properties £11.7m.
All the acquisitions made in 2004/05 were in
North America. The principal acquisitions
during the year were SKE Support Services,
Inc which gained the Group entry into the
rating, which must not be less than ‘A’ rated. 
The Group does not enter into speculative
ﬁnancial transactions and uses ﬁnancial
instruments for certain risk management
purposes only.
Interest rate risk
With regard to net interest rate risk, the
Group reduces exposure by using a
combination of ﬁxed rate debt and interest
rate derivatives to achieve an overall hedged
position over the medium term of between
75% to 100%. 
Commodity price risk
In the year, the UK was insulated from the
rise in crude oil prices due to a fully hedged
position. North America also beneﬁted from
having 80% of its requirements hedged
against crude oil price risk. Looking ahead,
we now have over 80% coverage of our UK
requirements for 2005/06 (total annual usage
2.5m barrels) at an average rate of $36 per
barrel (2004/05: average of $25 per barrel).
In North America (total annual usage 0.7m
barrels) for 2005/06 we have 64% coverage
on crude oil price risk at an average price 
of $27 per barrel (2004/05: average of 
$27 per barrel).
We anticipate that the impact of rising fuel
prices will be partly mitigated by future
pricing/yield activities.
Foreign currency risk
Group policies on currency risk affecting
cash ﬂow and proﬁts are maintained to
minimise exposures to the Group by using 
a combination of hedge positions and
derivative instruments where appropriate.
With regard to balance sheet translation risk,
Year to 31 March 2005 Year to 31 March 2004
Turnover EBTIDA EBTIDA Turnover EBTIDA EBTIDA
EBITDA by division £m £m % £m £m %
UK Bus 960.7 160.5 16.7 906.2 163.4 18.0
UK Rail 1,059.7 72.6 6.9 945.0 55.2 5.8
North America 665.8 108.1 16.2 620.7 107.1 17.3
Financing element of leases – (9.0) – – (8.3) –
Other 7.2 (13.0) – 7.1 (10.3) –
Total Group 2,693.4 319.2 11.9 2,479.0 307.1 12.4
Federal market, and Cardinal Coach Lines
Limited which operates 1,900 yellow school
buses. In addition three smaller yellow school
bus businesses and one Call Centre were
acquired. The total consideration for all
acquisitions made during the year was
£37.2m and provisional goodwill arising 
on all acquisitions amounted to £25.8m.
FUNDING AND RISK 
MANAGEMENT
In February 2005 the Group’s BBB 
stable rating was reconﬁrmed by Standard
and Poors.
At the year end, total bank borrowing
facilities amounted to £595.9m of which
£526.6m is committed. Of these £526.6m
committed facilities, £213.6m were utilised at
31 March 2005, of which £180.2m was
drawn in cash and the balance of £33.4m
drawn in letters of credit. 
The maturity proﬁle of committed banking
facilities is regularly reviewed and well in
advance of their expiry such facilities are
extended or replaced. In March 2005 the
Group entered into a new ﬁve-year £520m
bank facility provided by a strong bank group.
At 31 March 2005 the Group’s debt maturity
proﬁle was 9.0 years (2004: 9.7 years). 
As the Group is a net borrower, it minimises
cash and bank deposits, which arise
principally in the Rail companies. The Group
can only withdraw cash and bank deposits
from the Rail companies on a permanent
basis to the extent of retained proﬁts. The
Group limits deposits to short terms, and
with any one bank to the maximum of £30m,
depending upon the individual bank’s credit FINANCIAL REVIEW CONTINUED
16
the Group hedges part of its exposure to the
impact of exchange rate movements on
translation of foreign currency net assets by
holding currency swaps and net borrowings
in foreign currencies. At 31 March 2005
foreign currency net assets were hedged
35% (2004: 34%).
NET DEBT
The Group’s net debt at 31 March 2005 was
£663.1m and was comprised as above.
BALANCE SHEET AND 
NET ASSETS
Net assets increased by £3.2m over the year
principally reﬂecting retained earnings for the
year of £39.1m, net movement in minority
interest (net of dividends paid to minority
shareholders) for the year of £8.5m. These
positive movements were partly offset by
unfavourable foreign exchange movements
of £14.2m and share repurchases of
£29.7m.
SHARES IN ISSUE
During the year 9.4m shares were
repurchased for a total consideration of
£29.7m (see notes 22 and 23). Of these
4.2m shares were cancelled during the year
whereas 5.2m shares were held as Treasury
Shares at year end. As at 31 March 2005
there were 393.6m (2004: 403.0m) shares 
in issue excluding Treasury Shares. The
weighted average number of shares in 
issue for the purpose of EPS calculations
(excluding own shares held in trust for
employees and Treasury Shares) was
399.2m (2004: 410.0m).
FOREIGN EXCHANGE
The results of the North American businesses
have been translated at an average rate of
£1:$1.85 (2004: £1:$1.69). The period end
rate was £1:$1.87 (2004: £1:$1.81).
PENSIONS
Pensions and post retirement costs have
continued to be accounted for on a SSAP
24 basis. The total charge to the proﬁt and
loss account was £47.0m (2004: £34.2m).
The Group has continued to apply the
transitional rules and disclosures under 
FRS 17. At 31 March 2005, after taking
account of deferred taxation, the FRS 17 net
deﬁcit in the Group pension funds, excluding
Rail franchises, was approximately £139m
(2004: £162m). In addition it should be noted
that a post-tax deﬁcit of £43m (2004: £28m)
relates to Rail franchises where the Group
has an obligation to fund the pension
scheme during the franchise period but 
does not have any liability beyond the end 
of the franchise.
INTERNATIONAL FINANCIAL 
REPORTING STANDARDS (IFRS)
The Group is well advanced in the
conversion to IFRS and will report under
IFRS for the ﬁrst time in the Interim results 
for ﬁnancial year 2005/06. The principal
differences in accounting treatment under
IFRS are considered to be pensions,
goodwill, intangible assets, dividends,
taxation, ﬁnancial instruments and share-
based payments. Although the impact will
vary by division, we do not anticipate a
material impact on Group operating proﬁt.
ACCOUNTING POLICIES
The Group has adopted UITF 38
‘Accounting for ESOP Trusts’. Investments in
own shares are now deducted from
shareholders’ funds whereas previously such
investments were treated as ﬁxed assets.
Further details are set out in note 1 to the
ﬁnancial statements.
Dean Finch
Finance Director
Fixed Variable Total
Analysis of net debt £m £m £m
Cash – 83.8 83.8
Rail ring-fenced cash and deposits – 70.3 70.3
Sterling bond (2013 6.875%) (296.0) – (296.0)
Bond (2019 6.125%)* (231.9) – (231.9)
Sterling bank loans and overdrafts – (227.1) (227.1)
US Dollar bank and other loans and overdrafts (0.9) (1.1) (2.0)
Canadian Dollar bank and other loans and overdrafts (6.9) (8.2) (15.1)
HP and ﬁnance leases (13.7) (10.4) (24.1)
Loan notes (8.7) (12.3) (21.0)
Interest rate swaps, net (57.0) 57.0 –
Total (615.1) (48.0) (663.1)
*The 2019 bond was swapped to US Dollars, and is shown net of arrangement costs and foreign exchange gains
on retranslation to Sterling at year end. BOARD OF DIRECTORS
17
1. MARTIN GILBERT LLD MA LLB CA
Chairman
Chairman of the Nomination Committee
1,3
A Chartered Accountant, he is one of the
founding directors and Chief Executive of
Aberdeen Asset Management PLC. He was
appointed to the Board of FirstGroup plc in
1995. He is Chairman of Chaucer Holdings
PLC and a director of a number of investment
trusts. He is a non-executive director of
Primary Health Properties PLC. Age 49.
2. MOIR LOCKHEAD OBE 
Deputy Chairman and Chief Executive;
Chairman of the Safety Committee
3,4,5
Chief Executive and Deputy Chairman since
the Group's formation in 1995. Originally 
a mechanical engineer he joined Grampian
Transport in 1985 as General Manager and
went on to lead the successful employee
buy-out of GRT Bus Group PLC. In 1996 
he was awarded the OBE for services to 
the bus industry and he is a past President 
of the Confederation of Passenger Transport.
Age 60.
3. DEAN FINCH BSC MBA ACA
Finance Director
4,5
Appointed to the Board as Commercial
Director in February 2004 and subsequently
appointed Finance Director later that year. 
He is also responsible for all of the Group’s 
rail activities including re-franchising. He joined
the company in 1999 as Commercial Director
Rail Division and was subsequently appointed
Managing Director of the Rail Division in
August 2001. He qualiﬁed as a Chartered
Accountant with KPMG where he worked for
12 years specialising in Corporate Transaction
Support Services including working for the
Ofﬁce of Passenger Rail Franchising on the
privatisation of train operating companies. 
Age 38.
4. DAVID LEEDER BSC FILT
Director UK Bus
4,5
Appointed to the Board in May 2004. 
He joined the Group in 2001 as Managing
Director UK Bus. He has held various senior
posts in the transport industry including 
Chief Executive of Travel West Midlands and
subsequently Group Marketing Director of
National Express Group plc. He is a Fellow 
of the Institute of Logistics and Transport 
and a past President of the Confederation 
of Passenger Transport. Age 39.
5. DAVID DUNN CA
Senior Independent Non-Executive Director; 
Chairman of the Audit Committee
1,2,3
Appointed to the Board as a Non-Executive
Director in December 1999. He is a Chartered
Accountant and is Non-Executive Chairman 
of Brammer plc. He is also a Non-Executive
Director of Croda International plc and 
SMG plc. Age 60.
6. JAMES FORBES CBE MSC BSC CENG MIEE 
Non-Executive Director; Chairman of the
Remuneration Committee
1,2,3
Appointed to the Board in April 2000, he is 
the former Chief Executive of Scottish and
Southern Energy plc. His career began with 
the South of Scotland Electricity Board and 
he has since held various senior posts in the
electricity industry. Age 58.
7. JOHN SIEVWRIGHT MA CA 
Non-Executive Director
1,2,3
Appointed to the Board in May 2002. He is
Managing Director and Chief Operating Ofﬁcer
of Global Markets and Investment Banking for
Merrill Lynch & Co. A Chartered Accountant,
he has held various senior management
positions in banking in London, New York,
Dublin and Japan. He is a member of the
North American Board of the Michael Smurﬁt
Business School, Dublin. Age 50.
8. MARTYN WILLIAMS
Non-Executive Employee Director 
Appointed to the Board as Employee Director
in January 2003. He is employed as a
customer services supervisor in Swansea 
and has worked for the Group for 27 years.
Age 50.
B LOUISE RUPPEL LLB
Company Secretary
1
Member of the Audit Committee
2
Member of the Remuneration Committee
3
Member of the Nomination Committee
4
Member of the Safety Committee
5
Member of the Executive Committee
2. 1. 3. 4. 
5. 6. 7. 8.  CORPORATE GOVERNANCE
18
The Company applies all of the main and supporting principles of good governance set out in section 1 of the Combined Code on Corporate
Governance published by the Financial Reporting Council in July 2003 (the ‘Code’). The way in which it applies those principles is set out
below. Except as described in paragraph 1.1 (b) below, the Company complies with all of the provisions of section 1 of the Code.
1. THE BOARD AND ITS PRINCIPAL COMMITTEES
Details of the Board, its members and its principal committees are set out below. 
1.1 The Board 
(a) Board structure and responsibilities
The Board currently consists of the Chairman, three Executive Directors and four Non-Executive Directors. The Board meets at least eight
times each year and is responsible for setting and reviewing the Company’s strategy and objectives, reviewing the ﬁnancial and operational
performance of each of the Group’s business units, agreeing and reviewing progress against the Group’s annual budgets and setting and
reviewing on a regular basis its longer-term business plans. It also has a schedule of matters speciﬁcally reserved to it including approval of
the annual and interim ﬁnancial statements, ﬁnancing arrangements, material capital commitments, business acquisitions and disposals,
relationships with regulatory authorities and operating and accounting policies.
During the year, the Board met eight times and all members of the Board attended all meetings held whilst they were Directors, with the
exception of John Sievwright who attended seven meetings. The Board also held a number of separate strategy meetings.
(b) Board balance and independence
The independence of the Non-Executive Directors has been reviewed against the deﬁnition of independence in the Code. David Dunn, Jim
Forbes and John Sievwright are considered to be independent within this deﬁnition. As Martyn Williams is an employee of one of the Group’s
subsidiaries, he cannot be considered to be independent. However, the Board feels very strongly that it is extremely beneﬁcial for its
employees to be represented on the Board in this way so that important employee-related issues can be raised at the highest level and a
two-way communication process between the management of the Company and its employees is maintained.
Therefore at present, the Company does not comply with the Code provision that at least one half of the Board, excluding the Chairman, 
is made up of Non-Executive Directors who are considered by the Board to be independent. The Board has engaged Spencer Stuart,
executive search consultants, to assist in the search for a new independent Non-Executive Director. Discussions with a suitable candidate 
are at an advanced stage and it is anticipated that the Company will be in a position to make an announcement on the appointment of 
a new independent Non-Executive Director prior to the Annual General Meeting to be held on 14 July 2005. The appointment of a further
independent Non-Executive Director will ensure compliance by the Company with the Code. The Directors are conﬁdent that notwithstanding
such non-compliance, and as reinforced by the performance evaluation referred to below, the Board and its Committees remain and will
continue to be effective. The Directors are satisﬁed that the current Board possesses the breadth of business, ﬁnancial and international
experience necessary to manage effectively an organisation of the size and complexity of the Group.
(c) Roles of the Chairman and Chief Executive
The Chairman
The Chairman of the Board is Martin Gilbert. He has a written statement of responsibilities which has been approved by the Board:
The Chairman is responsible for: 
• leadership of the Board, ensuring its effectiveness on all aspects of its role and setting its agenda, taking into account the issues relevant 
to the Group and the concerns of all Board members.
• ensuring, with the Chief Executive and Company Secretary, the provision of accurate, timely and clear information to the Board.
• ensuring effective communication with shareholders and that the Board develops an understanding of the views of major investors.
• managing the Board, ensuring that sufﬁcient time is allowed for the discussion of complex or contentious issues.
• ensuring a regular evaluation of the performance of the Board as a whole, its Committees and individual Directors.
• taking the lead in identifying and meeting the development needs of individual Directors and the Board as a whole, with a view to
enhancing the overall effectiveness of the team.
• facilitating the effective contribution of Non-Executive Directors and ensuring constructive relations between Executive and Non-Executive
Directors.
• ensuring, with the Chief Executive and Company Secretary, that new Directors receive a comprehensive induction programme to ensure
their early contribution to the Board.
• encouraging active engagement by all members of the Board.
In accordance with the Company’s Articles of Association, Martin Gilbert is standing for re-election at the Annual General Meeting this year.
The Board is of the opinion, reinforced by the performance evaluation review referred to below, that Martin Gilbert’s signiﬁcant and in-depth
knowledge and experience of the Group’s business, combined with his external business experience enables him to provide effective
leadership of the Board and to continue to make a positive contribution to the Group’s ongoing business.  19
The Chairman’s other signiﬁcant business commitments, which remain unchanged from last year, are described in his biography on page 17.
The Board performance evaluation process conﬁrmed that the other Board members are satisﬁed that Martin Gilbert has the necessary time
available to devote to the proper performance of his duties as Chairman.
The Chief Executive
The Chief Executive is Moir Lockhead. The Chief Executive also has a written statement of responsibilities which has been approved by 
the Board: 
The Chief Executive is responsible for:
• running the day-to-day business of the Group, within the authorities delegated to him by the Board.
• ensuring implementation across the Group of the policies and strategy set by the Board for the Group.
• day-to-day management of the executive and senior management team.
• leading the development of senior management within the Group with the aim of assisting the training and development of suitable
individuals for future Director roles.
• ensuring that the Chairman is kept appraised in a timely manner of the issues facing the Group and of any important events and
developments.
• leading the development of the Group’s future strategy including identifying and assessing opportunities for the growth of its business and
reviewing the performance of its existing businesses.
(d) Senior Non-Executive Director
David Dunn, who chairs the Audit Committee, is the Senior Independent Non-Executive Director. He is available to shareholders if they have
concerns which contact through the normal channels of Chairman, Chief Executive or Finance Director has failed to resolve or for which such
contact is inappropriate.
(e) Information and professional development of Board members
The Board receives detailed papers on the business to be conducted at each meeting well in advance and individual Board members have
direct access to senior executives should they wish to receive additional information on any of the items for discussion. The head of each
operating division attends Board meetings on a regular basis to ensure that the Board is properly informed about the performance of and
current issues facing that division. Management give presentations on current issues facing the business. A number of Board meetings each
year are held on site at operating locations in the UK and USA allowing the Directors to visit the Group’s operations and to discuss key issues
with local operational management and stakeholders.
All Directors have access to the advice and services of the Company Secretary and, if necessary, can seek independent professional advice
at the Company’s expense in the furtherance of their duties. The Company Secretary is responsible for advising the Board on corporate
governance matters and for ensuring compliance with Board procedures. 
Directors receive induction on appointment to the Board, which is tailored to their individual needs. This includes meetings with senior
management and relevant external advisers. In addition, information is provided on their responsibilities and obligations under law, regulation
and best practice guidelines. The induction process is supported during the year by the programme of business presentations and
operational visits described above. 
The Board also receives updates, as required, on changes to the law and the regulatory regimes affecting the Group. 
(f) Performance evaluation
During the course of the year, the Board undertook an evaluation of its performance. The Chairman led the process, assisted by the
Company Secretary. The objectives of this exercise were to ensure that the Board, its Committees and each individual Director continued 
to act effectively and to fulﬁl the duties and responsibilities expected of them, and also to identify any additional training requirements. 
A tailored questionnaire was developed, which each Director completed. The responses were analysed and discussed at a special meeting 
of the Nomination Committee. In addition, the Non-Executive Directors held a separate meeting at which the performance of the Executive
Directors was discussed. The Senior Independent Director held a separate meeting with the Non-Executive Directors to discuss the
evaluation of the performance of the Chairman. No signiﬁcant issues were raised in the course of the evaluation process.
(g) Re-election of Directors
As required by the Company’s Articles of Association, Directors offer themselves for re-election at least once every three years. Any Director
appointed during the year is required to seek re-appointment by shareholders at the next Annual General Meeting. The biographical details 
of all the Directors, including those seeking re-election at the 2005 Annual General Meeting, are set out on page 17. The Company’s Articles 
of Association do not contain any age limits for Directors.
(h) Appointment of Non-Executive Directors
Non-Executive Directors are appointed by the Board for an initial term of three years, subject to re-appointment by shareholders. They have
letters of appointment, which are available on request for inspection. None of the Non-Executive Directors has yet to serve a term of six years. CORPORATE GOVERNANCE CONTINUED
20
(i) Directors’ and ofﬁcers’ liability insurance
The Company maintained Directors’ and Ofﬁcers’ liability insurance cover throughout the year. The cover was renewed on 1 April 2005.
2. COMMITTEES OF THE BOARD
In addition to the Audit, Remuneration and Nomination Committees, the terms of reference for which are published on the Company’s website
and details of which are set out below, the Board has also delegated certain matters to Committees. The principal such Committees are:
2.1 Executive Safety Committee (‘ESC’)
The ESC is chaired by the Chief Executive and meets on a monthly basis. It comprises the Executive Directors, other senior managers and
safety ofﬁcers. The ESC reviews the Group’s safety performance and practices, develops safety policies and procedures and follows up on
outstanding issues. During the year, a number of meetings were attended by independent safety experts and senior representatives of
relevant industry bodies, including Her Majesty’s Railway Inspectorate.
2.2 Executive Management Board (‘EMB’)
The EMB, which comprises the Executive Directors and certain senior business managers, is chaired by the Chief Executive. It acts as a
general operating management committee and meets on a monthly basis to review outstanding issues and to consider the Group’s
operational and ﬁnancial performance.
2.3 Executive Committee
The Executive Committee comprises the Executive Directors and meets on an ad hoc basis to consider matters which arise in the ordinary
course of the Group’s operations. It is chaired by the Chief Executive and has speciﬁc delegated powers within prescribed limits to deal with
matters arising in the ordinary course which need to be considered before the next scheduled Board meeting.
2.4 Nomination Committee and appointments to the Board
The Nomination Committee is chaired by the Chairman and includes David Dunn, Jim Forbes, John Sievwright and Moir Lockhead. Martyn
Williams attends meetings of the Committee at the invitation of the chairman of the Committee to represent the Group’s employees. The
Committee meets as required to discuss appointments to the Board of both Executive and Non-Executive Directors. Its recommendations 
are then put to the full Board for consideration. External search consultants are used to assist the process, where appropriate.
The Employee Director is elected by the Employee Directors’ forum, which comprises the Employee Directors and representatives of each 
of the Company’s UK subsidiaries, and generally serves a three-year term.
During the year, the Committee met twice. Items considered by the Committee include the results of the Board performance evaluation
process described above and also potential appointments to the Board. In its deliberations, the Committee is required to have regard to the
skills and experience needed for the future commercial and strategic development of the Group. All members of the Committee attended
each meeting. 
Although none of the Executive Directors currently holds any such positions, the Company’s policy is to permit Executive Directors to accept 
a limited number of outside non-executive directorships, recognising that this is an effective way to broaden their knowledge and expertise.
However, no such appointment can be taken up without prior Board approval. The Company’s policy on fees relating to such outside
directorships is set out on page 25 of the Directors’ remuneration report.
2.5 Remuneration Committee
The Remuneration Committee, under the chairmanship of Jim Forbes, met four times during the year and, with the exception of John
Sievwright who attended three meetings, all members of the Committee attended all of its meetings. Details of the membership of the
Remuneration Committee are set out in the Directors’ remuneration report on pages 23 to 29, together with a statement of the Group’s
remuneration strategy and policy. Full details of Directors’ remuneration appear on page 26.
2.6 Audit Committee
The Audit Committee is chaired by David Dunn and includes Martin Gilbert, Jim Forbes and John Sievwright. It met four times during the year
and all members attended each of those meetings. The Group Director of Internal Audit and the Company’s external auditors also attended
three of those meetings. Executive Directors and other senior managers attended where requested and as appropriate.
The Board considers that each member of the Committee has sufﬁcient and recent ﬁnancial experience to enable the Committee to discharge
its functions effectively.
Under its remit, the Committee keeps under review the effectiveness of the Company’s ﬁnancial reporting and internal control policies and
procedures for the identiﬁcation, assessment and reporting of risk. It also keeps under review the nature, scope and results of the audits
conducted by the internal audit department and the external auditors, the consistency of accounting policies and reporting across the Group
and it reviews the half-year and full-year ﬁnancial statements before they are presented to the Board.  21
The Committee considers the Group’s compliance with the Code and its related guidance and oversees the objectivity and effectiveness of
internal audit. The work of the internal audit department is focused on areas of priority as identiﬁed by risk analysis and in accordance with 
an annual audit plan approved by the Committee and the Board. Reports are sent to senior executives of the Group and subsidiary units and
there is a follow-up process to ensure that actions to resolve identiﬁed control weaknesses are implemented. The Group Director of Internal
Audit has the right of direct access to the chairman of the Committee.
The Committee is responsible for making recommendations to the Board in respect of the appointment or re-appointment of the Group’s
external auditors and, subject to the approval of shareholders, recommends to the Board the audit fee to be paid to the external auditors. 
The Committee is also charged with monitoring the independence of the external auditors and the objectivity and effectiveness of the external
audit process. The objectivity and independence of the external auditors is considered on a regular basis, with particular regard to the level 
of non-audit fees. The majority of non-audit work is put out to tender, with the exception of due diligence work on acquisitions or potential
acquisitions in both the UK and overseas, where the current auditors’ knowledge of the Company’s business processes and controls means
that they are best placed to undertake this work cost-effectively on the Company’s behalf. The majority of the non-audit work undertaken by
the auditors during the year was associated with acquisition-related due diligence and reviews of the ﬁnancial models for the Company’s rail
franchise bids. Details of the audit and non-audit fees, including a breakdown of the non-audit fee, are set out in note 7 to the ﬁnancial
statements. The external auditors have direct access to the Committee to raise any matters that may concern them.
The Committee reviews with management a detailed analysis of the Group’s ﬁnancial information prior to completion and announcement 
of the half-year and full-year results and receives a report from the external auditors on the audit process. If necessary, the external auditors
also meet separately with the Audit Committee and/or the Chairman, Chief Executive and Finance Director. The Annual Report and Financial
Statements and interim results go through a detailed veriﬁcation and due diligence process involving external advisers.
The Committee may request the Executive Directors and any other ofﬁcers of the Group to attend its meetings but none have the right of
attendance. Committee meetings may be requested by the external or internal auditors if they consider it necessary. 
The business considered and discussed by the Committee during the year included the reports of the external auditors on the half-year and
full-year results, the 2005/06 Group Internal Audit Plan and budget, papers concerning any regular and special audits and an executive
summary of each internal audit report, risk analysis assessments and a review of the implications of changes in accounting standards and 
the application and implementation of International Financial Reporting Standards. 
3. FINANCIAL REPORTING
The Directors have a commitment to best practice in the Group’s external ﬁnancial reporting in order to present a balanced and
comprehensible assessment of the Group’s ﬁnancial position and prospects to its shareholders, employees, customers, suppliers and other
third parties. This commitment encompasses all published information including but not limited to the year-end and interim ﬁnancial
statements, regulatory news announcements and other public information. A statement of the Directors’ responsibility for preparing the
ﬁnancial statements may be found on page 32.
4. INTERNAL CONTROLS
The Board has established procedures to meet the requirements of the Code and its related guidance on internal controls. These procedures,
which are subject to regular review, provide an ongoing process for identifying, evaluating and managing any signiﬁcant risks faced by the
Group.
4.1 Responsibility
The Board has overall responsibility for the system of internal control and assessing risk. The responsibility for establishing detailed control 
and risk management procedures within each subsidiary lies with the Executive Directors and subsidiary unit managing directors. A sound
system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide
reasonable and not absolute assurance against material misstatement or loss.
4.2 Control environment
The Board is committed to business integrity, high ethical and moral values and professionalism in all its activities, principles with which all
managers and employees are required to comply. The Group has a Code of Ethics, which applies to all of its subsidiary undertakings, a copy
of which is available on the Company’s website.
The Group has a deﬁned divisional organisational structure with lines of authority and delegated responsibility which allows the Board to plan,
execute, control and monitor the business in a manner consistent with the Group’s objectives. The day-to-day business management is
delegated to the Executive Directors and subsidiary unit managing directors under the overall direction of the Chief Executive. As noted
above, the Board reserves to itself a number of speciﬁc items, which ensures that it retains control over key business decisions and signiﬁcant
transactions in terms of size, type or risk. A number of the Group’s key functions, including treasury, taxation, insurance, corporate ﬁnance,
legal, corporate communications and procurement are dealt with centrally. Each of these functions is monitored by an Executive Director. CORPORATE GOVERNANCE CONTINUED
22
4.3 Monitoring
The Group adopts a ﬁnancial reporting and information system which complies with generally accepted accounting practice. The Group
Finance Manual, circulated by the Group Finance function to all subsidiaries, details the Group accounting policies and procedures with 
which subsidiaries must comply. These are also available on the Group’s intranet. Budgets are prepared by subsidiary company management
and are subject to review by both Group management and the Executive Directors. Monthly forecasts are completed during the year and
compared against actions required. Each subsidiary unit prepares a monthly report of operating performance, with a commentary on
variances against budget, forecasts and prior year. Similar reports are prepared at a Group level. Key performance indicators, both ﬁnancial
and operational, are monitored on a weekly basis. In addition, business units participate in strategic reviews which include consideration of
long-term ﬁnancial projections and the evaluation of business alternatives.
A process of annual self-assessment and hierarchical reporting provides for a documented and auditable trail of accountability from 
the subsidiary units to senior management to the Executive Directors. This process includes an internal control questionnaire and risk
assessment and is signed off by the subsidiary unit directors. This process and the supporting documentation are reviewed by both 
the internal and external auditors. Detailed action plans are developed from these questionnaires to resolve any control weaknesses 
or signiﬁcant risks identiﬁed. 
4.4 Risk assessment
The Board has established an ongoing process for identifying, evaluating and managing the signiﬁcant risks faced by the Group. As an
integral part of planning and review, management from each business area and major projects identify their risks, the probability of the risks
occurring, the impact on the business should the risks occur and the actions taken to manage the risks. The risks are assessed on a regular
basis and could be associated with a variety of internal and external sources including regulatory requirements, disruption to information
systems, industrial relations issues, control breakdowns and social, ethical and environmental issues. 
4.5 Whistleblowing
The Group has established procedures whereby employees of the Group may, in conﬁdence, raise concerns relating to matters of potential
fraud or other improprieties. These procedures also cover other issues affecting employees including health and safety issues. The conﬁdential
hotline, which covers all businesses across the Group and each country in which it operates, was re-launched during the year and the
Committee is conﬁdent that these ‘whistleblowing’ arrangements are satisfactory and will enable the proportionate and independent
investigation of such matters and appropriate follow-up action to be taken.
4.6 Review of effectiveness of ﬁnancial controls
The Directors conﬁrm that they have reviewed the effectiveness of the system of internal control for the year under review and to the date of
approval of the Annual Report and Financial Statements through the monitoring process described above. In addition, the Directors conﬁrm
that they have conducted a speciﬁc annual review of the effectiveness of the Group’s internal audit function.
5. RELATIONS WITH SHAREHOLDERS
The Group recognises the importance of regular communication with all of its shareholders. The full Annual Report and Financial Statements
are made available to all shareholders and an Interim Report is published and sent to shareholders at the half-year. These reports are intended
to provide shareholders and other interested parties with a clear and balanced understanding of the Group’s operational performance, its
ﬁnancial results and prospects.
All investors are kept informed of key business activities, decisions, appointments etc. via regulatory news and press releases and the 
Group’s website. There is also regular dialogue with institutional shareholders throughout the year and general presentations are made by the
Chief Executive and Finance Director following the announcement of the full and half-year results. Other Directors, including Non-Executive
Directors, attend meetings with major shareholders if requested.
Regular reports on investor relations activity and feedback from investors are submitted to the Board and senior management. 
The Non-Executive Directors have also had informal contact with major shareholders regarding the Group during the year and they 
expect that informal dialogue to continue.
6. ANNUAL GENERAL MEETING
All shareholders have the opportunity to put questions to the Directors at the Company’s Annual General Meeting, at which a report is made
on the highlights of the key business developments during the year under review. The Chairmen of each of the Nomination, Remuneration
and Audit Committees attend the Annual General Meeting to answer speciﬁc questions from shareholders. All Directors were present at the
2004 Annual General Meeting.
Notice of the Annual General Meeting is circulated to all shareholders at least 20 working days prior to the meeting. Separate resolutions are
proposed at the Annual General Meeting on each substantially separate issue. Proxy votes are counted on all resolutions and, where votes
are taken on a show of hands, the proxy results are subsequently announced to the meeting. DIRECTORS’ REMUNERATION REPORT
23
This report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 (the ‘Regulations’). It also meets the
requirements of the Listing Rules of the Financial Services Authority and describes how the Board has applied the main supporting principles
of the Combined Code on Corporate Governance published by the Financial Reporting Council in July 2003 (the ‘Code’) relating to Directors’
remuneration. The Company complies with all of the provisions of the Code. A resolution to approve this report will be proposed at the
Company’s Annual General Meeting to be held on 14 July 2005.
The Regulations require the Company’s auditors to report to the Company’s shareholders on the ‘auditable’ part of the Directors’
remuneration report and to state whether in their opinion that part of the report has been properly prepared in accordance with the
Companies Act 1985 (as amended by the Regulations). This report has therefore been divided into separate sections for audited and 
unaudited information.
UNAUDITED INFORMATION
Remuneration Committee
The Remuneration Committee (the ‘Committee’) is chaired by Jim Forbes. The other current members of the Committee are David Dunn and
John Sievwright. The Board considers each of the members of the Committee to be independent in accordance with the Code. None of the
members of the Committee has any personal ﬁnancial interest (other than as a shareholder) in the matters to be decided, conﬂict of interest
arising from cross-directorships or any involvement in the day-to-day running of the business. 
The remit of the Remuneration Committee was adopted in March 2004 in the light of the recent revisions to the Code and its terms of
reference are available on request and are also published on the Company’s website. These terms of reference will be kept under review to
take into account any changes to the Code and corporate governance practice. The principal purpose of the Committee is to consider
matters related to the remuneration of the Executive Directors and senior management below Board level.
The Committee met four times during the year and all members attended each meeting, with the exception of John Sievwright, who attended
three meetings.
In determining the Executive Directors’ remuneration for the year, the Committee considered publicly available information, including the
remuneration packages of those holding equivalent posts at the Company’s peers within the transport industry and the FTSE350 in general.
The Committee appointed Deloitte & Touche LLP Executive Compensation Consulting to provide advice on remuneration matters to the
Committee including a benchmarking exercise in relation to the Group and its peers and advice on the structure of longer-term incentive
schemes. Deloitte & Touche LLP also acts as the Group’s external auditor. As such, the appointment as remuneration advisors is also subject
to pre-approval by the Audit Committee. Information on other services provided by Deloitte & Touche LLP is given in Note 7 to the ﬁnancial
statements. All services provided by Deloitte & Touche LLP are carried out in accordance with the requirements of the UK Audit Practices
Board Ethical Standard 5, relating to non-audit services performed by a company’s auditors. The Committee also consults with the Chief
Executive although no Director participates in discussions concerning his own remuneration.
Remuneration policy
Aim
The aim of the Committee is to design remuneration packages for the Company’s Executives which attract, retain and motivate the high-
calibre individuals necessary to maintain the Group’s position as a leader in the public transportation industry. In implementing its policy, the
Committee has given full consideration to the Principles of Good Governance of the Code with regard to Directors’ remuneration.
Structure of remuneration packages 
There are currently four main elements to the executive remuneration package:
• basic salary and beneﬁts in kind
• annual cash and deferred share bonus (both paid under the Executive Annual Bonus Plan)
• share options 
• pension provision
The Committee considers the remuneration package as a whole, balancing each of the individual elements to ensure that overall, the
remuneration received by each Executive Director is competitive but not excessive, contains an appropriate balance between ﬁxed and
variable (performance-related) remuneration and that each Executive Director has sufﬁcient long-term incentive to ensure that his interests 
are aligned with those of shareholders. A high proportion of each Director’s potential remuneration is performance-related.
During the year, the Committee, with the assistance of Deloitte & Touche LLP , undertook a comprehensive review of the total remuneration
packages of the Executive team to ensure that they remain competitive. As a result of this review, and following consultation with the
Company’s major institutional shareholders, the Committee has determined to increase the maximum level of bonus payable under the
Executive Annual Bonus Plan for the year commencing 1 April 2005 from 80% to 110% of basic salary for the Chief Executive and from 
80% to 100% of basic salary for the other Executive Directors. Up to half of the award will be payable in shares with the deferral period for
such shares increased from three to ﬁve years. These changes will also apply to senior management within the Group. 
To take account of shareholder feedback during the consultation exercise, the Committee is currently considering the best means of providing
a longer-term incentive to the Executive team in the future. DIRECTORS’ REMUNERATION REPORT CONTINUED
24
The remuneration of the Executive Directors is made up of the following components:
Basic salary and beneﬁts in kind
The basic salary and beneﬁts in kind for each Executive Director are determined by the Committee for each ﬁnancial year and when an
individual changes position or responsibility. In determining appropriate levels, the Committee considers the Group as a whole and also the
packages received by similar individuals at the Company’s peers in the public transport sector and the FTSE 350. Details of the salaries and
beneﬁts in kind received by each of the Executive Directors in the year are shown on page 26.
Executive annual bonus plan
The Group operates a discretionary performance-related bonus plan for its senior management under which payment of bonuses is linked to
achievement of budgeted annual Group operating proﬁt targets and personal objectives (including safety targets). Where an Executive Director
is also directly responsible for one or more operating division(s), payment of a proportion of the bonus is also linked to the proﬁtability of those
divisions. The Committee considers and agrees the Group and divisional objectives for all Executive Directors and the personal objectives for
the Chief Executive. The Chief Executive, in consultation with the Committee, agrees the personal objectives for the other Executive Directors.
Bonus payments comprise a mixture of cash and deferred share awards. Share awards for the years to 31 March 2005 were deferred for three
years and will lapse if the relevant individual leaves the Group during the deferral period for any reason other than redundancy, retirement or ill-
health. The Committee considers it is appropriate for a proportion of the annual bonus to be taken in the form of deferred shares as this acts
as a retention mechanism and also aligns that Executive’s longer-term interests with those of the Company’s shareholders. 
As the award of any bonus is already dependent on the achievement of stringent targets, the Committee considers that it is not appropriate to
attach further performance conditions on vesting of the deferred share element of any bonus other than that the relevant Executive remains
employed by the Group and has not tendered his resignation at the end of the deferral period.
Each year, the Board sets challenging budget targets for the Group as a whole and for each business unit within the Group. The Committee’s
policy continues to be that bonuses will be payable for Group performance against budget of between 90% and 110% although the level of bonus
payable is heavily skewed towards performance in excess of 100% of budget. As mentioned above, a separate portion of the bonus is dependent
upon achievement of safety objectives (up to 25%) and a further portion is dependent on achievement of personal objectives (up to 25%). 
The maximum level of bonus payable to an Executive Director in the year to 31 March 2005 was 80% of basic salary, although actual awards for
the year under review ranged from 58% to 75%. If the maximum bonus were payable, the Chief Executive would receive half of his bonus in
cash and the remaining half in the form of deferred shares. For the other Executive Directors, the proportions would be 25% and 55%,
respectively. 
Going forward, as a result of the review carried out by Deloitte & Touche LLP , and following consultation with its major institutional
shareholders, the Committee has determined that the maximum level of bonus payable under the plan for the year commencing 1 April 2005
will be 110% of basic salary for the Chief Executive and 100% of basic salary for the other Executive Directors. Bonuses will continue to be
based on a combination of Group and divisional ﬁnancial performance (up to 70%) and safety and personal objectives (up to 30%). This is
considered to be appropriate given the increase in the maximum award potential. 
For all Executive Directors, up to 50% of the award will be payable in shares. The deferral period for these shares will be increased from three
to ﬁve years in order to provide long-term lock-in and to further align the Directors’ interests with those of shareholders. These changes will
also apply to senior management within the Group. The Company consulted its major institutional shareholders on these proposed changes.
The bonus arrangements will be kept under review by the Committee for future years to ensure that they remain appropriate.
Share Option Schemes
Executive Share Option Scheme
The Company operates an Executive Share Option Scheme (‘ESOS’) for Executive Directors and other senior management. Under this
scheme, during the year, options to acquire shares in the Company were granted to Executive Directors and senior management. The exercise
price for such options was based on the average of the middle market quotations for shares in the Company for the three dealing days prior to
the date of grant. The Committee has discretion under this scheme to make awards of up to 200% of basic salary but awards were made
during the year at 1.33x basic salary for the Chief Executive and 1x salary for the other Executive Directors.
The performance target applicable to the awards made in the three years to 31 March 2004 is that growth in the Company’s annualised earnings
per share (‘EPS’) over the three-year performance period must exceed the increase in the retail prices index (‘RPI’) over the same period by an
average of at least 3% per annum. The performance period can be extended for one year if this performance target has not been met over the
initial three years but the EPS increase must still exceed the increase in RPI over the four-year period by an average of at least 3% per annum.
For the options awarded in respect of the year under review, this was reduced to an average of at least 2% per annum for the three-year
performance period but an additional measure was introduced. For the maximum award to vest, the Company’s total shareholder return (‘TSR’)
over the performance period must place the Company in the top 25% of companies in a group of the Company’s listed transport peers. 
A proportion of the options between 0 and 100% (determined on a sliding scale) will vest if the Company’s performance against that peer group is
between the 25th and 50th percentile. No options will vest if the Company’s performance is below the 50th percentile. Unlike the awards made in
previous years, the performance period may not be extended if the targets have not been met at the end of the three-year performance period.  25
The companies in the original TSR comparator group for the options awarded in this year are Associated British Ports Holdings PLC, 
Arriva plc, BAA plc, The Go-Ahead Group plc, The Mersey Docks & Harbour Company, TBI plc, National Express Group plc, Exel plc, 
Tibbett & Britten (now part of Exel plc), Avis Europe plc, Stagecoach Group plc, British Airways plc, Peninsular & Oriental Steam Navigation
Company and EasyJet plc.
If the performance targets are met, an option may be exercised without any further condition at any time during the rest of its ten-year life. If the
holder leaves the Group before the end of the performance period by reason of ill-health, injury, disability, redundancy or retirement, an option
may be exercised within 12 months if the performance target has been satisﬁed at the date of leaving. Early exercise of options may also be
permitted within speciﬁc periods if there is a change of control of the Company as a result of a takeover, reconstruction, amalgamation or
voluntary winding-up of the Company but only to the extent that the relevant performance targets have then been met on a pro rata basis. 
Where the performance period includes the transition to the new International Accounting Standards, the deﬁnition of ‘annualised EPS’ is under
review. The Committee, advised by the Audit Committee and the external auditors, will agree decisions regarding the management of the
transition and will make any necessary adjustments to ensure that comparisons continue to be made on a fair, consistent and reasonable basis.
Taking into account institutional shareholder feedback in the consultation exercise described above, the Committee is currently considering
the suitability of share option awards as a means of providing a longer-term incentive to the Executive team going forwards. 
Save As You Earn (SAYE) Scheme
The Company operates a SAYE Scheme for eligible employees under which options may be granted on an annual basis at a discount of up
to 20% of market value. The Executive Directors are eligible to participate in the SAYE Scheme.
Buy As You Earn (BAYE) Scheme
The Company operates a Share Incentive Plan under the title ‘Buy As You Earn’. The scheme, which is open to all UK employees of the
Group (including the Executive Directors), enables employees to purchase partnership shares from their gross income (before income tax and
National Insurance deductions). The Company provides two matching shares for every three partnership shares, subject to a maximum
Company contribution of shares to the value of £20 a month. The shares are held in trust for up to ﬁve years, in which case, no income tax or
National Insurance will be payable. The matching shares will be forfeited if the corresponding partnership shares are removed from trust within
three years from award.
Retirement beneﬁts
Executive Directors are members of a number of deﬁned beneﬁt Group pension schemes. Their dependants are eligible for dependants’
pensions and the payment of a lump sum in the event of death in service. Further details are set out on page 27. 
Service contracts
It is the Company’s policy to restrict notice periods for Executive Directors to a maximum of 12 months. In line with this policy, all of the
Executive Directors have service contracts with an undeﬁned term but which provide for a notice period of 12 months.
The contracts contain a provision, exercisable at the discretion of the Company, to pay an amount in lieu of notice on early termination of the
contract. Such payments are limited to basic salary plus certain beneﬁts but would not include entitlement to bonus or share options. There
are no contractual provisions governing payment of compensation on early termination of the contracts. If it becomes necessary to consider
early termination of a service contract, the Company will have regard to all the circumstances of the case, including mitigation, when
determining any compensation to be paid. Details of the Executive Directors’ contracts are set out below:
Date of service contract
Moir Lockhead 5 March 2001
Dean Finch as of 26 February 2004
David Leeder 3 September 2001
Iain Lanaghan
1
29 November 2002
Mike Mitchell
2
2 July 1997
1 Retired as a Director on 31 May 2004.
2 Retired as a Director on 3 September 2004.
Where Board approval is given for an Executive Director to accept an outside non-executive directorship, unless the appointment is in
connection with Group business, the individual Director is entitled to retain any fees received. 
Non-Executive Directors
All Non-Executive Directors have a letter of appointment and their fees are determined by the Board based on surveys of fees paid to Non-
Executive Directors of comparable companies. These letters of appointment are available for inspection at the Company’s registered ofﬁce
during normal business hours and will be made available at the Annual General Meeting.
Non-Executive Directors cannot participate in any of the Company’s share option schemes and, other than the Group Employee Director, are
not eligible to join a Company pension scheme. Each of the Non-Executive Directors, other than the Group Employee Director, has elected to
receive 40% of his fees in the form of shares in the Company in order to ensure that their interests are more closely aligned to those of the
Company’s shareholders. The shares are purchased on a monthly basis in the market. The appointment of each of the Non-Executive Directors
is subject to early termination without compensation if he is not re-appointed at a meeting of shareholders where he is up for re-election. DIRECTORS’ REMUNERATION REPORT CONTINUED
26
Total shareholder return
The following graph shows, for the last ﬁve ﬁnancial years of the Company, the total shareholder return on a holding of shares in the Company
as against that of a hypothetical holding of shares made up of shares of the same kinds and number as those by reference to which the
FTSE 250 Index and the FTSE All-Share Transport Index are calculated.
This graph is included to meet the relevant legislative requirements and is not directly relevant to the performance criteria used for the
Company’s Executive Share Option Scheme. Nonetheless, the indices used were selected as the Company believes that they are the most
appropriate and representative indices against which to measure the Company’s performance for this purpose.
AUDITED INFORMATION
Directors’ remuneration
Details of the Directors’ remuneration for the year ended 31 March 2005 are set out on the following pages.
Emoluments and compensation
The total salaries, fees and beneﬁts paid to, or receivable by, each person who served as a Director of the Company at any time during the
year for the period of such directorship are shown in the table below. These include any and all payments for services as a Director of the
Company, its subsidiaries or otherwise in connection with the management of the Group.
Cash Beneﬁts
Salary bonus in kind Fees Total Total
2005 2005 2005
1
2005 2005 2004
£000 £000 £000 £000 £000 £000
Executive Directors
Moir Lockhead 400 160 30 – 590 575
Dean Finch 250 63 17 – 330 32
Iain Lanaghan
2
37 – – – 37 302
David Leeder
3
236 49 18 – 303 –
Mike Mitchell
4
107 72 8 – 187 361
Non-Executive Directors
Martin Gilbert – – – 108 108 103
David Dunn – – – 35 35 34
Jim Forbes – – – 35 35 34
John Sievwright – – – 35 35 34
Martyn Williams – – – 14 14 14
Total 1,030 344 73 227 1,674 1,489
1
The Directors received the following non-cash beneﬁts in the year: Moir Lockhead: £24,000 company car, £5,000 private fuel and £1,000 medical insurance for himself and
spouse; Dean Finch: £11,000 company car, £5,000 private fuel and £1,000 medical insurance for himself and family; David Leeder: £12,000 company car, £5,000 private fuel
and £1,000 medical insurance for himself; Iain Lanaghan: £1,000 medical insurance for himself and family (full year); Mike Mitchell: £14,000 company car/cash car allowance;
£3,000 private fuel and £1,000 medical insurance for himself and family (full year).
2
Retired as a Director on 31 May 2004. To ensure an orderly handover to the incoming Finance Director, it was agreed that he would continue as an employee of the Group for
a period of up to ten months. His employment with the Group terminated on 31 March 2005. Other than a payment of £1,000, and compensation of £7,950 for the loss of
share options under the Group’s SAYE scheme and matching shares under the Group’s BAYE scheme (representing the value of those options and shares at the termination
date), in line with best practice guidelines, no lump sum payment was made but he continued to receive his salary and beneﬁts on a monthly basis. Accordingly, in the
remainder of the year under review, he received salary payments of £183,000 in addition to those disclosed in the table. No bonus was paid to him in respect of the year under
review nor were any share options awarded to him under the Executive Share Option Scheme in that year. 
3
Appointed as a Director on 1 May 2004.
4
Retired as a Director on 3 September 2004 but continued as an employee of the Group for the remainder of the year under review. Accordingly, during the year, he received
salary payments of £135,000 and cash bonus of £100,000 in addition to the amounts disclosed in the table.
50
100
150
200
250
Total shareholder return index
Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
FirstGroup plc Total Shareholder Return FTSE All-Share Transport Index Total Shareholder Return
Source: Datastream
FTSE 250 Index Total Shareholder Return 27
Retirement beneﬁts
Details of the retirement beneﬁts for each of the Directors are set out in the table below:
Moir Dean David Iain Mike 
Lockhead Finch Leeder
1
Lanaghan
1
Mitchell
1
Scheme
23333
Normal retirement age 65
4
60 60 60 65
Directors’ contributions in the year or date of retirement (£) 25,397 11,730 10,753 2,295 6,071
Increase in accrued pension during the year (net of inﬂation) (£ pa) 3,979 2,404 2,172 895 28,931
(plus 11,937 cash)
Increase in accrued pension during the year (£ pa) 9,454 2,705 2,337 1,270
5
30,717
6
(plus 28,362 cash)
Accrued pension as at 31 March 2005 (£ pa) 186,058 12,425 8,160 13,370
5
88,342
6
(plus 558,174 cash)
Transfer value of increase in accrued pension (net of inﬂation) during the year (£) 83,082 14,646 13,239 8,341
5
236,310
6
Transfer value of accrued pension at 31 March 2004 (£) 3,457,401 56,319 34,773 107,154 640,534
Transfer value of accrued pension at 31 March 2005 (£) 3,884,910 75,695 49,738 124,608
5
947,936
6
Increase in transfer value over the year, net of Directors’ contributions (£ pa) 402,112 7,646 4,212 15,159
5
301,331
6
Company contribution to FURBS during the year or to date of retirement (£)
7
–– 10,312 4,664 –
1
Iain Lanaghan and Mike Mitchell retired from the Board on 31 May 2004 and 3 September 2004, respectively and David Leeder joined the Board on 1 May 2004. The details
shown in the table relate to the portion of the year when they were Directors.
2
Aberdeen City Council No.2 Pension Fund.
3
FirstGroup Flexible Beneﬁts Scheme.
4
Normal retirement age under relevant scheme is 65 but beneﬁts can be taken without reduction at 60 so transfer values for the purpose of this table have been calculated
using a retirement age of 60.
5
The increase in accrued pension (net of inﬂation) for the full year was £3,392; the increase in accrued pension for the full year was £3,767; the accrued pension as at 
31 March 2005 was £15,867; the transfer value of the increase in accrued pension (net of inﬂation) during the full year was £31,613; the transfer value of the accrued pension
at 31 March 2005 was £147,880 and the increase in transfer value over the full year net of Director’s contributions was £26,956.
6
Mike Mitchell’s beneﬁts accrued since 1 November 1999 are payable without reduction from age 60 (except for added years purchased with his own contributions). His earlier
beneﬁts are based on a retirement age of 65. The transfer values shown are calculated for each part of his pension based on the earliest age they are payable without
reduction. The increase in transfer value over the relevant period net of inﬂation includes £215,872 in respect of an augmentation to rectify an administrative oversight on a prior
intra-Group transfer of his employment which resulted in the statutory earnings cap mistakenly being applied. The increase in accrued pension (net of inﬂation) for the full year
was £34,786; the increase in accrued pension for the full year was £36,572; the accrued pension as at 31 March 2005 was £94,197; the transfer value of the increase in
accrued pension (net of inﬂation) during the full year was £307,182; the transfer value of the accrued pension at 31 March 2005 was £1,018,809 and the increase in transfer
value over the full year net of Director’s contributions was £332,068.
7
The full year FURBS contribution for Iain Lanaghan was £27,983. Iain Lanaghan and David Leeder received additional salary payments to compensate them for the tax liability
arising from the FURBS contributions. 
The Group does not have one pension scheme but instead operates a number of different schemes. All of the schemes in which the
Executive Directors participate are deﬁned beneﬁt schemes and are not limited in membership to Executive Directors. Dean Finch and David
Leeder are accruing beneﬁts which are subject to the three year average of the Inland Revenue earnings cap (in the case of Dean Finch) and
the one year average of the Inland Revenue earnings cap (in the case of David Leeder). DIRECTORS’ REMUNERATION REPORT CONTINUED
28
Directors’ share options
The outstanding share options under the ESOS, deferred share bonus, long-term incentive plan (‘LTIP’) and SAYE Scheme granted to each of
the serving Directors are set out in the table below. No price was paid for the award of any option. Except as disclosed below in relation to
Iain Lanaghan and Mike Mitchell, there have been no changes to the terms and conditions of any option awarded to Directors.
At beginning Lapsed/
of year or Granted Exercised waived
date of during during during At end
appointment the year the year the year of year
1
Exercise Date from
(number of (number of (number of (number of (number of price which Expiry
Current Directors Scheme shares) shares) shares) shares) shares) (pence) exercisable date
Moir Lockhead LTIP 2000
2
110,168 – 110,168 –– nil 31.3.03 31.3.10
ESOS:
2001 130,985 ––– 130,985 346.5 15.8.04 15.8.11
2002 173,784 ––– 173,784 269 21.6.05 21.6.12
2003 166,958 ––– 166,958 287 18.11.06 18.11.13
2004 – 193,277 –– 193,277 275.08 10.6.07 10.6.14
Deferred share bonus
3
:
2001
4
31,633 – 31,633 –– nil 1.4.04 1.4.05
2002 25,080 ––– 25,080 nil 1.4.05 1.4.06
2003 28,559 ––– 28,559 nil 1.4.06 1.4.07
2004 – 34,062 –– 34,062 nil 1.4.07 1.4.08
Dean Finch ESOS:
2001 18,470 ––– 18,470 346.5 15.8.04 15.8.11
2002 24,535 ––– 24,535 269 21.6.05 21.6.12
2003 58,930 ––– 58,930 287 18.11.06 18.11.13
2004 – 90,883 –– 90,883 275.08 10.6.07 10.6.14
Deferred share bonus
3
:
2001
5
4,800 – 4,800 –– nil 1.4.04 1.4.05
2002 11,660 ––– 11,660 nil 1.4.05 1.4.06
2003 13,720 ––– 13,720 nil 1.4.06 1.4.07
2004 – 27,029 –– 27,029 nil 1.4.07 1.4.08
David Leeder ESOS:
2002 26,914 ––– 26,914 269 21.6.05 21.6.12
2003 64,643 ––– 64,643 287 18.11.06 18.11.13
2004 – 90,883 –– 90,883 275.08 10.6.07 10.6.14
Deferred share bonus
3
:
2002 14,983 ––– 14,983 nil 1.4.05 1.4.06
2003 7,163 ––– 7,163 nil 1.4.06 1.4.07
2004 – 19,941 –– 19,941 nil 1.4.07 1.4.08
SAYE 2002/03 4,921 ––– 4,921 192 1.2.06 31.8.06
Martyn Williams SAYE:
2002/03 787 ––– 787 192 1.2.06 31.8.06
2003/04 636 ––– 636 232 1.2.07 31.8.07
2004/05 – 567 –– 567 267 1.2.08 31.8.08 29
Directors’ share options continued
At beginning Lapsed/ At end
of year or Granted Exercised waived of year
date of during during during or date of
appointment the year the year the year retirement
1
Exercise Date from
(number of (number of (number of (number of (number of price which Expiry
Former Directors Scheme shares) shares) shares) shares) shares) (pence) exercisable date
Iain Lanaghan
6
LTIP 2000
7
55,932 ––– 55,932 nil 31.3.03 31.3.10
ESOS:
2001 50,000 ––– 50,000 346.5 15.8.04 15.8.11
2002 78,067 ––– 78,067 269 21.6.05 21.6.12
2003 75,000 ––– 75,000 287 18.11.06 18.11.13
Deferred share bonus
3
:
2001
8
10,707 ––– 10,707 nil 1.4.04 1.4.05
2002 12,733 ––– 12,733 nil 1.4.05 1.4.06
2003 17,063 ––– 17,063 nil 1.4.06 1.4.07
2004 – 18,800 –– 18,800 nil 1.4.07 1.4.08
SAYE 2002/03
9
4,921 ––– 4,921 192 1.2.06 31.8.06
Mike Mitchell
10
ESOS:
2001 60,606 ––– 60,606 346.5 15.8.04 15.8.11
2002 88,067 ––– 88,067 269 21.6.05 21.6.12
2003 84,607 ––– 84,607 287 18.11.06 18.11.13
Deferred share bonus
3
:
2001
11
22,667 ––– 22,667 nil 1.4.04 1.4.05
2002 16,903 ––– 16,903 nil 1.4.05 1.4.06
2003 19,249 ––– 19,249 nil 1.4.06 1.4.07
2004 – 18,713 –– 18,713 nil 1.4.07 1.4.08
SAYE 2002/03
9
4,921 ––– 4,921 192 1.2.06 31.8.06
1
Details shown for Mike Mitchell as at 3 September 2004 and Iain Lanaghan as at 31 May 2004 (date of retirement as a Director).
2
Exercised on 17 December 2004. The closing price on the date of exercise was 348p and the notional pre-tax gain on exercise was £383,385.
3
The ﬁgures shown represent the number of nil-cost options which were granted under the deferred share element of the Executive Annual Bonus Plan in respect of the
2000/01, 2001/02, 2002/03 and 2003/04 ﬁnancial years. The cash values of the 2004/05 award are Moir Lockhead: £120,000, Dean Finch: £125,000 and David Leeder:
£95,600. These awards will take the form of nil cost options over shares which will, subject to satisfaction of the requirements of the plan, vest on 1 April 2008. The number 
of shares under option will depend on the market price of shares at the close of business on 11 May 2005.
4
Exercised on 8 February 2005. The closing price on the date of exercise was 364.75p and the notional pre-tax gain on exercise was £115,381.
5
Exercised on 9 July 2004. The closing price on the date of exercise was 283.25p and the notional pre-tax gain on exercise was £13,596.
6
Retired as a Director on 31 May 2004. The Committee exercised its discretion to permit him to retain all share options awarded under the Group’s Executive Share Option
Scheme and deferred share awards made under the Executive Annual Bonus Plan following termination of his employment as if he remained an employee of the Company
(subject to relevant performance criteria and the rules of the relevant schemes). 
7
Exercised on 21 June 2004 following retirement from the Board. The closing price on the date of exercise was 284.5p and the notional pre-tax gain on exercise was £159,127.
8
Exercised on 1 June 2004 following retirement from the Board. The closing price on the date of exercise was 274p and the notional pre-tax gain on exercise was £29,337.
9
Lapsed on leaving the Group.
10
Retired as a Director on 3 September 2004 but continued as an employee for the full year. By agreement with the Company, Mike Mitchell took early retirement from the Group
in April 2005. He was subsequently appointed as Director General of Railways in HM Department for Transport. HM Government requires him to exercise all of his options and
sell all of his shares in the Company prior to taking up that appointment. Accordingly, as he was a ‘good leaver’ under the terms of the Executive Annual Bonus Plan, the
Committee has exercised its discretion to allow him to exercise the deferred share awards made to him earlier than their normal exercise dates. In addition, the Remuneration
Committee determined that all of the bonus payable to Mike Mitchell in respect of the year under review should be paid in cash and accordingly, no deferred share awards will 
be made to him in respect of the year. Details of the cash bonus paid are set out in the table on page 26.
11
Exercised on 11 November 2004 following retirement from the Board. The closing price on the date of exercise was 328.5p and the notional pre-tax gain on exercise 
was £74,461.
Market price of FirstGroup plc shares
The market price of FirstGroup plc shares at 31 March 2005 was 343.25p and the range during the year was 256p to 379.25p.
This report was approved by the Board of Directors, on the recommendation of the Remuneration Committee, on 5 May 2005 and signed 
on its behalf by 
BL Ruppel
Company Secretary
10 May 2005 DIRECTORS’ REPORT
30
The Directors have pleasure in submitting their Annual Report and Financial Statements for the year ended 31 March 2005.
PRINCIPAL ACTIVITIES
The principal activity of the Group is the provision of passenger transport services.
REVIEW OF THE BUSINESS
Reviews of the business and principal events and likely future developments are given in the Chairman’s statement, Chief Executive’s review
and in the Financial review set out on pages 4 to 16.
RESULTS AND DIVIDENDS
The results for the year are set out in the consolidated proﬁt and loss account on page 34. The Directors recommend payment of a ﬁnal
dividend of £34.2m (8.69p per share), which, with the interim dividend of £16.4m (4.125p per share) paid on 9 February 2005, gives a total
dividend of £50.6m (12.815p per share) for the year. The proposed ﬁnal dividend, if approved, will be paid on 26 August 2005 to shareholders
on the register at the close of business on 22 July 2005.
SHARE CAPITAL
Details of changes in share capital, including purchases by the Company of its own shares, are set out in notes 22 and 23 to the ﬁnancial
statements. Authority for the Company to make market purchases of up to 60,000,000 of its own shares was renewed at the 2004 Annual
General Meeting. This authority remains in place until the 2005 Annual General Meeting, when it is intended to seek a further renewal.
DIRECTORS
The Directors of the Company who served during the year were Martin Gilbert, Moir Lockhead, David Dunn, Dean Finch, Jim Forbes, David
Leeder (appointed 1 May 2004), Iain Lanaghan (retired 31 May 2004), Mike Mitchell (retired 3 September 2004), John Sievwright and Martyn
Williams. Biographical details of all the serving Directors are set out on page 17.
In accordance with the Company’s Articles of Association, Martin Gilbert and David Dunn will retire by rotation at the forthcoming Annual
General Meeting and, being eligible, offer themselves for re-election. Martyn Williams’ term of ofﬁce as Employee Director expires on
31 December 2005 and he is therefore not offering himself for re-election at the Annual General Meeting this year. Details of the fees and
remuneration of the Directors and their service contracts or terms of appointment are set out in the Directors’ remuneration report on 
pages 23 to 29.
DIRECTORS’ INTERESTS
The Directors who held ofﬁce at the end of the year had the following interests in the ordinary shares of the Company:
Ordinary 5p shares
Beneﬁcial Non-beneﬁcial Beneﬁcial Non-beneﬁcial
David Dunn 17,329 – 21,817 –
Dean Finch 1,500 – 1,500 –
Jim Forbes 9,329 – 13,817 –
Martin Gilbert 48,273 – 62,219 –
David Leeder 817 – 1,364 –
Moir Lockhead 1,440,723 470,690 1,132,524 470,690
John Sievwright 16,829 – 21,317 –
Martyn Williams 965 – 965 –
Details of the Directors’ share options are set out in the Directors’ remuneration report on pages 28 to 29. Moir Lockhead also holds nominal
non-beneﬁcial interests in a number of the Company’s subsidiary undertakings.
Between 1 April 2005 and 10 May 2005, the following changes occurred to Directors’ interests: on 21 April 2005, David Leeder acquired 46
shares pursuant to the Company’s Buy As You Earn Scheme. On 25 April 2005, Martin Gilbert acquired 1,099 shares and each of David
Dunn, Jim Forbes and John Sievwright acquired 353 shares under the standing arrangements whereby they have elected to receive 40% of
their monthly fees in the form of shares in the Company. 
No Director is materially interested in any signiﬁcant contract or agreement with the Group, other than their service contracts.
At beginning of year
or subsequent appointment At end of year 31
SIGNIFICANT INTERESTS
At 10 May 2005, the Company had been advised of the following holders of 3% or more of its issued share capital for the purpose of section
198 of the Companies Act 1985:
Ordinary 5p shares %
Barclays PLC 13,390,197 7.87
M&G Investment Management Limited 21,321,854 5.35
Legal & General Investment Management Limited 15,204,942 3.81
JPMorgan Fleming Asset Management Limited 12,358,252 3.10
EMPLOYEES
The Group is committed to employee involvement and uses a variety of methods to inform, consult and involve its employees in the business.
These include subsidiary company newsletters and circulars and also First Edition, a Group-wide newsletter, which is sent to all employees
across the Group on a biannual basis. Senior managers within each division meet regularly to discuss current issues and employees are
encouraged to discuss any issues with management at any time. Each Division also operates a conﬁdential hotline which staff can use to
report health and safety, employment-related and other issues concerning them. 
The Group also has a regular dialogue with employees and representatives from Trades Unions. Each operating company has either an
elected Company Council or, more typically, an Employee Director on its board. This principle extends to the plc Board where one of the
Employee Directors is elected by his or her peers to represent employees across the Group. 
Each Division has its own information and consultation arrangements and levels of employee involvement in the business differ. However, 
in the UK, the Group has worked with Trades Unions to set up a number of joint schemes, including workplace learning, credit unions, new
national policies on assaults, drugs and alcohol, the restructuring of Group pension schemes and a joint committee to review staff uniform
procedures. 
The Group is committed to wide employee ownership. During the year, employees continued to have the opportunity to participate in the
Group’s Save As You Earn and Buy As You Earn schemes, details of which are set out in note 31 to the ﬁnancial statements. 
First is committed to equality of opportunity in all its employment practices, policies and procedures. To this end, within the framework of 
the law, we are committed wherever practicable to achieving and maintaining a workforce which broadly reﬂects the local catchment area
within which we operate. We aim to ensure that no employee or potential employee will receive less favourable treatment due to their race,
colour, nationality, ethnic origin, religion, sex, gender reassignment, sexual orientation, religion, marital status, trade union membership, age 
or disability.
CORPORATE SOCIAL RESPONSIBILITY
The system of internal control described on pages 21 to 22 covers signiﬁcant risks associated with social, environmental and health and
safety issues. The Group publishes a separate Corporate Responsibility Report covering these matters, which will be available on our website
at www.ﬁrstgroup.com. 
CHARITABLE AND POLITICAL CONTRIBUTIONS
The Group made various donations to UK charities totalling approximately £40,000 during the year (2004: £34,000). It also made a donation
of £65,000 to the Asian Tsunami appeal. No payments were made for political purposes.
CREDITORS
It is the Group’s policy to abide by the payment terms agreed with suppliers wherever it is satisﬁed that the supplier has provided goods and
services in accordance with agreed terms and conditions. A number of signiﬁcant purchases including fuel, tyres and commitments under hire
purchase contracts, ﬁnance leases and operating leases are paid by direct debit. At 31 March 2005, the Group had the equivalent of 27
days’ (2004: 39 days’) purchases outstanding, based on the ratio of Group trade creditors at the end of the year to the amounts invoiced
during the year by trade creditors. The Company does not have any trade creditors in its balance sheet. DIRECTORS’ REPORT CONTINUED
32
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at the Aberdeen Exhibition and Conference Centre, Bridge of Don, Aberdeen, Scotland, AB23
8BL on Thursday 14 July 2005 at 11.00 am. The Notice of Meeting is contained in a separate letter from the Chairman accompanying
this Annual Report.
GOING CONCERN
Whilst any consideration of future matters involves making a judgment, at a particular point in time, about future events which are
inherently uncertain, after making inquiries, the Directors have formed the judgment, at the time of approving these ﬁnancial statements,
that there is a reasonable expectation that the Company and the Group have adequate resources to continue operating for the
foreseeable future. For this reason, they continue to adopt the going concern basis in preparing these ﬁnancial statements.
By order of the Board
B. Louise Ruppel 395 King Street
Company Secretary Aberdeen
10 May 2005 AB24 5RP
DIRECTORS’ RESPONSIBILITIES
United Kingdom Company law requires that the Directors prepare ﬁnancial statements for each ﬁnancial year which give a true and fair view 
of the state of affairs of the Company and the Group at the end of the ﬁnancial year and of the proﬁt or loss of the Group for that period. 
In preparing those ﬁnancial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent; and
• state whether applicable accounting standards have been followed.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the ﬁnancial
position of the Company and the Group and to enable them to ensure that the ﬁnancial statements comply with the Companies Act 1985.
They are also responsible for the system of internal control, for safeguarding the assets of the Company and the Group and hence for taking
reasonable steps to prevent and detect fraud and other irregularities. FINANCIAL STATEMENTS CONTENTS
34 Consolidated proﬁt and loss account
35 Balance sheets
36 Consolidated cash ﬂow statement
36 Reconciliation of net cash ﬂows to movement in net debt
37 Consolidated statement of total recognised gains and losses
37 Reconciliation of movements in equity shareholders’ funds
60 Independent auditors’ report
61 Group ﬁnancial summary
62 Shareholder information 
Notes to the ﬁnancial statements
38 Principal accounting policies
40 Proﬁt and loss account analysis and
segmental information
41 Operating costs
41 Bid costs and other exceptional
items
41 Employees’ and Directors’
remuneration
41 Net interest payable and similar
charges
42 Proﬁt on ordinary activities before
taxation
42 Tax on proﬁt on ordinary activities
43 Equity dividends
43 Earnings per share (EPS)
43 Goodwill
44 Tangible ﬁxed assets
45 Fixed asset investments
46 Stocks
46 Debtors
46 Current asset investments
46 Cash at bank and in hand
47 Creditors
48 Financial assets and liabilities
49 Provisions for liabilities 
and charges 
50 Deferred tax 
50 Called up share capital 
50 Reserves
51 Notes to the consolidated cash 
ﬂow statement
52 Analysis of net debt
53 Major non-cash transactions
53 Summary of purchase of businesses
and subsidiary undertakings
53 Commitments
54 Contingent liabilities
54 Pension schemes
59 Share schemes
33 CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2005 
34
Before Before goodwill Goodwill
goodwill Goodwill amortisation, bid amortisation,
amortisation amortisation costs and other bid costs and
and and exceptional other exceptional
bid costs bid costs Total items items Total
2005 2005 2005 2004 2004 2004
Notes £m £m £m £m £m £m
Turnover
Continuing operations 2,649.0 – 2,649.0 2,479.0 – 2,479.0
Acquisitions 44.4 – 44.4 –– –
Group turnover 2 2,693.4 – 2,693.4 2,479.0 – 2,479.0
Operating proﬁt
Continuing operations 204.7 (37.0) 167.7 204.1 (39.4) 164.7
Acquisitions 6.9 (0.7) 6.2 –– –
Group operating proﬁt 2 211.6 (37.7) 173.9 204.1 (39.4) 164.7
Group operating proﬁt before goodwill 
amortisation, bid costs and other exceptional items 211.6 – 211.6 204.1 – 204.1
Goodwill amortisation 2 – (25.8) (25.8) – (25.9) (25.9)
Bid costs 4 – (11.9) (11.9) – (6.7) (6.7)
Other exceptional items 4 ––– – (6.8) (6.8)
Group operating proﬁt 2 211.6 (37.7) 173.9 204.1 (39.4) 164.7
Proﬁt on disposal of ﬁxed assets – 3.3 3.3 – 19.6 19.6
Proﬁt on ordinary activities before interest 2 211.6 (34.4) 177.2 204.1 (19.8) 184.3
Net interest payable and similar charges 6 (48.3) – (48.3) (42.8) (18.7) (61.5)
Proﬁt on ordinary activities before taxation 7 163.3 (34.4) 128.9 161.3 (38.5) 122.8
Tax on proﬁt on ordinary activities 8 (44.4) 11.7 (32.7) (48.4) 17.8 (30.6)
Proﬁt on ordinary activities after taxation 118.9 (22.7) 96.2 112.9 (20.7) 92.2
Equity minority interests (6.5) – (6.5) (0.9) – (0.9)
Proﬁt for the ﬁnancial year 112.4 (22.7) 89.7 112.0 (20.7) 91.3
Equity dividends paid and proposed 9 (50.6) – (50.6) (47.3) – (47.3)
Retained proﬁt for the ﬁnancial year 23 61.8 (22.7) 39.1 64.7 (20.7) 44.0
Adjusted Actual Adjusted Actual
Basic earnings per share 10 28.2p 22.5p 27.3p 22.3p
Cash earnings per share 10 55.1p – 52.4p –
Diluted earnings per share – 22.3p – 22.2p BALANCE SHEETS
At 31 March 2005
35
Group Company
2004 2004
2005 (restated*) 2005 (restated*)
Notes £m £m £m £m
Assets employed:
Fixed assets
Goodwill 11 450.6 461.2 – –
Tangible ﬁxed assets 12 840.2 797.6 – –
Investments 13 – – 1,684.0 1,683.9
1,290.8 1,258.8 1,684.0 1,683.9
Current assets
Stocks 14 40.1 35.1 – –
Debtors 15 437.8 394.7 933.9 1,219.2
Investments 16 7.5 30.3 – –
Cash at bank and in hand 17 146.6 94.9 – –
632.0 555.0 933.9 1,219.2
Creditors: amounts falling due within one year 18 (660.8) (647.9) (744.5) (1,066.2)
Net current (liabilities)/assets
Amounts due within one year (87.0) (143.0) 189.4 153.0
Amounts due after more than one year 15 58.2 50.1 – –
Net current (liabilities)/assets (28.8) (92.9) 189.4 153.0
Total assets less current liabilities 1,262.0 1,165.9 1,873.4 1,836.9
Creditors: amounts falling due after more than one year 18 (756.3) (682.8) (714.5) (652.6)
Provisions for liabilities and charges 20 (147.5) (128.1) – –
358.2 355.0 1,158.9 1,184.3
Financed by:
Capital and reserves
Called up share capital 22 19.9 20.1 19.9 20.1
Share premium account 23 238.8 238.8 238.8 238.8
Revaluation reserve 23 1.8 3.4 – –
Other reserves 23 4.6 4.4 262.1 261.9
Own shares 23 (18.9) (0.6) (18.4) (0.6)
Proﬁt and loss account 23 101.4 86.8 656.5 664.1
Equity shareholders’ funds 347.6 352.9 1,158.9 1,184.3
Equity minority interests 10.6 2.1 – –
358.2 355.0 1,158.9 1,184.3
*See note 1
These ﬁnancial statements were approved by the Board of Directors on 10 May 2005 and were signed on its behalf by:
Moir Lockhead Director
Dean Finch Director CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2005 
RECONCILIATION OF NET CASH FLOWS TO MOVEMENT 
IN NET DEBT
For the year ended 31 March 2005 
36
2005 2004
Notes £m £m
Net cash inﬂow from operating activities 24(a) 247.2 312.3
Returns on investment and servicing of ﬁnance 24(b) (33.7) (65.2)
Taxation
Corporation tax paid (16.1) (23.7)
Capital expenditure and ﬁnancial investment 24(c) (97.2) (147.3)
Acquisitions and disposals 24(d) (37.2) (49.7)
Equity dividends paid (48.0) (45.9)
Cash inﬂow/(outﬂow) before use of liquid resources and ﬁnancing 15.0 (19.5)
Management of liquid resources
Decrease in liquid bank deposits 22.8 15.4
Financing 24(e) 39.9 46.2
Increase in cash in year 77.7 42.1
2005 2004
Notes £m £m
Increase in cash in year 77.7 42.1
Cash inﬂow from increase in debt and HP contract and ﬁnance lease ﬁnancing (70.0) (75.4)
Debt acquired on acquisition of businesses (20.6) –
Lease and hire purchase contracts acquired with new franchise (2.2) –
Movement in current asset investments (22.8) (15.4)
Fees on issue of Bond and loan facility – 1.3
Amortisation of debt issuance fees (1.5) (0.8)
Foreign exchange differences 7.0 41.9
Movement in net debt in year (32.4) (6.3)
Net debt at beginning of year 25 (630.7) (624.4)
Net debt at end of year 25 (663.1) (630.7) CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS
AND LOSSES
For the year ended 31 March 2005 
37
RECONCILIATION OF MOVEMENTS IN EQUITY 
SHAREHOLDERS’ FUNDS
For the year ended 31 March 2005 
Group Company
2005 2004 2005 2004
£m £m £m £m
Proﬁt for the ﬁnancial year 89.7 91.3 55.4 115.9
Foreign exchange differences (14.2) (63.0) (0.5) 1.3
Total recognised gains for the year 75.5 28.3 54.9 117.2
Group Company
2004 2004
2005 (restated*) 2005 (restated*)
£m £m £m £m
Proﬁt for the ﬁnancial year 89.7 91.3 55.4 115.9
Dividends (50.6) (47.3) (50.6) (47.3)
39.1 44.0 4.8 68.6
Shares issued to QUEST (0.5) – – –
Own shares purchased and cancelled (11.9) (29.2) (11.9) (29.2)
Movement in EBT, QUEST and Treasury Shares during the year (17.8) 0.1 (17.8) 0.1
Foreign exchange differences (14.2) (63.0) (0.5) 1.3
Net (reduction in)/addition to equity shareholders’ funds (5.3) (48.1) (25.4) 40.8
Equity shareholders’ funds at beginning of year 352.9 401.0 1,184.3 1,143.5
Equity shareholders’ funds at end of year 347.6 352.9 1,158.9 1,184.3
*See note 1
No note of historical cost proﬁts and losses is given as there are no material differences between the results as set out in the consolidated proﬁt and
loss account, and their historical cost equivalents. NOTES TO THE FINANCIAL STATEMENTS 
38
1 Principal accounting policies
The following accounting policies have been applied consistently throughout the year and the preceding year, with the exception of the policy for
accounting for ESOP Trusts which is explained in note (b) below, in dealing with items which are considered material in relation to the Group’s
ﬁnancial statements. 
(a) Basis of preparation
The ﬁnancial statements have been prepared under the historical cost convention, modiﬁed to include the revaluation of certain ﬁxed assets, and
in accordance with applicable United Kingdom accounting standards. 
(b) Change in accounting policies
UITF 38 ‘Accounting for ESOP Trusts’ has been adopted. Investments in own shares are now deducted from shareholders’ funds whereas
previously such investments were treated as an asset. The impact of this restatement is to reduce shareholders’ funds at 31 March 2004 by £0.6m.
(c) Basis of consolidation
The consolidated ﬁnancial statements incorporate the accounts of the Company and all of its subsidiary undertakings; all accounts are made up to
31 March 2005.
The results of subsidiary undertakings are included in the ﬁnancial statements under the principles of FRS 6 from the date control passes.
No proﬁt and loss account is presented for the Company as permitted by section 230 of the Companies Act 1985. The retained proﬁt for the
Company for the year to 31 March 2005 is set out in note 23.
In the accounts of the Company, investments in subsidiary undertakings are stated at cost less provision for impairment. Dividends received
and receivable are credited to the proﬁt and loss account to the extent that they represent a realised proﬁt for the Company.
(d) Goodwill
Goodwill arising on acquisitions made after 1 April 1998 is shown on the balance sheet as an intangible ﬁxed asset.
Where capitalised goodwill is regarded as having a limited useful economic life, it is amortised over that life. Where capitalised goodwill is
regarded as having an indeﬁnite useful economic life, it is not amortised. Where capitalised goodwill is amortised over a life of greater than 20
years, or is not amortised, annual impairment reviews are conducted to compare the book value with the recoverable amount. If the recoverable
amount has fallen below the book value, the goodwill is written down to the recoverable amount immediately.
The Companies Act 1985 requires goodwill that is treated as an asset to be amortised systematically over a ﬁnite period. In order to show a
true and fair view of the Group’s results, goodwill of £68.6m arising on the acquisitions of Mainline and Capital Citybus is not being amortised
because of a number of factors which have led the Directors to conclude that the goodwill has an indeﬁnite life. These include the stability of the
bus industry, its lack of fundamental change and the Group’s track record in maintaining and enhancing the values of its businesses. This
treatment of goodwill as having an indeﬁnite life is in accordance with FRS 10. It is not possible to quantify the effect on the Group’s results if the
Act were to be followed, as it would depend on the ﬁnite life that was used.
Capitalised goodwill arising on other acquisitions is being amortised over a period of up to 20 years on a straight-line basis.
Capitalised goodwill arising on foreign acquisitions is denominated in the currency in which the acquired company’s assets and liabilities
are recorded.
Fair value accounting adjustments are made in respect of acquisitions. In the year of acquisition, some adjustments are made using provisional
estimates, based on information available at the time the ﬁnancial statements are prepared, and amendments are sometimes necessary in the
following accounting period, with a corresponding adjustment to goodwill, when the information necessary to determine these estimates 
is available.
Prior to 1 April 1998, all goodwill arising on acquisitions was written off to reserves. This goodwill has not been reinstated on the balance
sheet. On disposal of the businesses concerned this goodwill is included in determining the gain or loss on disposal in the proﬁt and loss account.
(e) Turnover
Turnover of the Group comprises principally of revenue from train passenger and freight services, road passenger transport, and certain
management and maintenance services in the UK and North America. Where appropriate, amounts are shown net of rebates and sales taxes. 
Turnover in UK Rail includes franchise agreement receipts from the Strategic Rail Authority (‘SRA’). Payments to the SRA for amounts due
under the terms of a franchise are included in operating costs. Turnover also includes amounts attributable to the train operating companies
(‘TOCs’), predominantly based on models of route usage, by the Railway Settlement Plan in respect of passenger receipts. Where season tickets
are issued in excess of one week’s duration, the attributable share of income is deferred within creditors and is recognised in the proﬁt and loss
account over the period covered by the season ticket.
UK Bus turnover principally comprises amounts receivable from ticket sales and concessionary fare schemes. 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 contracts with government bodies and similar organisations are recognised as the services are provided. 39
1 Principal accounting policies continued
(f) Fixed assets and depreciation
Depreciation is provided to write off the cost or valuation less residual value of tangible ﬁxed assets over their estimated useful economic lives
as follows:
Freehold buildings – 50 years straight line
Long leasehold buildings – 50 years straight line
Short leasehold properties – period of lease
Passenger carrying vehicles – 7 to 15 years straight line
Other plant and equipment – 3 to 25 years straight line
No depreciation is provided on freehold land, the land element of long leasehold properties or on assets in the course of construction.
Surpluses or deﬁcits arising on the revaluation of tangible ﬁxed assets are credited or debited to a revaluation reserve. On a subsequent
disposal of a revalued asset, the revaluation surplus or deﬁcit relating to this asset is transferred to the proﬁt and loss account reserve.
From 1 April 1999 the Group’s policy has been not to revalue tangible ﬁxed assets. Properties that had been revalued before that date retained
their book value, in accordance with the transitional rules of FRS 15.
(g) Hire purchase contracts and leases
Assets held under hire purchase contracts and under ﬁnance leases, which are those leases where substantially all the risks and rewards of
ownership of the asset have passed to the Group are recorded in the balance sheet as tangible ﬁxed assets. Depreciation is provided on these
assets over their estimated useful lives or lease term, as appropriate.
Future obligations under hire purchase contracts and ﬁnance leases are included in creditors, net of ﬁnance charges. Payments are
apportioned between the ﬁnance element, which is charged to the proﬁt and loss account as interest, and the capital element, which reduces the
outstanding obligations. The ﬁnance charges are calculated in 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 straight-line basis over the life of the lease.
(h) Government grants and subsidies
Rail support grants and amounts receivable for tendered services and concessionary fare schemes are included in turnover and are recognised in
the proﬁt and loss account as the related expenditure is incurred. 
(i) Stocks and work in progress
Stocks are valued at the lower of cost and net realisable value.
(j) Pre-contract expenditure
Pre-contract expenditure is expensed as incurred except where it is virtually certain that a contract will be awarded. In such circumstances, pre-
contract expenditure is recognised as an asset and is expensed to the proﬁt and loss account on a straight-line basis over the term of the contract. 
(k) Foreign currencies
Assets and liabilities denominated in foreign currencies are translated into sterling at rates of exchange ruling at the year end and results of foreign
enterprises are translated at the average rates of exchange during the year. Differences on exchange arising on the retranslation of net investments
in foreign enterprises and from the translation of results at an average rate are taken to reserves. Where foreign currency borrowings or currency
swaps are used to ﬁnance or hedge investments in foreign enterprises, the gain or loss on translation is also taken to reserves. All other exchange
differences are dealt with through the proﬁt and loss account.
(l) Taxation
The charge for taxation is based on the proﬁt for the year and takes into account taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes. Provision is made for deferred tax on all timing differences except those arising
from the revaluation of ﬁxed assets for which there is no binding agreement to sell on property gains if it is anticipated that rollover relief will be
available and on the undistributed proﬁts of overseas subsidiaries, associates and joint ventures. Deferred tax is calculated at the rates at which it
is estimated the tax will arise. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be
recovered. The deferred tax provision is not discounted to net present value. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
40
1 Principal accounting policies continued
(m) Pension costs
Retirement beneﬁts are provided for most employees of the Group principally by means of deﬁned beneﬁt pension schemes. These are funded by
contributions from the Group and employees. The Group’s contributions are charged to the proﬁt and loss account, based on recommendations
by independent actuaries, in such a way as to provide for the liabilities evenly over the average remaining working lives of the employees. The
difference between the charge to the proﬁt and loss account and the contributions paid by the Group is shown as an asset or a liability in the
balance sheet and the tax effect of this timing difference is included in deferred taxation. 
For deﬁned contribution schemes the amount charged to the proﬁt and loss account in respect of pension costs is the contributions payable
in the year. Differences between contributions payable and contributions actually paid are shown as either accruals or prepayments in the 
balance sheet.
(n) Financial instruments
Various derivative instruments are utilised by the Group principally to manage interest rate, fuel and foreign exchange risks. The Group does not
enter into speculative derivative contracts. All such instruments are used for hedging purposes to alter the risk proﬁle of an existing underlying
exposure of the Group, in line with the Group’s risk management policies. The main instruments used during the year were ﬁxed interest rate
swaps, fuel swaps and currency swaps. Amounts payable or receivable in respect of interest rate swaps and fuel derivatives are recognised as
adjustments to interest expense and fuel costs respectively over the period of the contracts.
(o) Insurance
The Group’s policy is to self-insure high frequency, low value claims within the businesses. To provide protection above these types of losses,
cover is obtained through third-party insurance policies. Provision is made, on a discounted basis, for the estimated cost of settling insurance
claims for incidents occurring prior to balance sheet date.
(p) Debt
Debt is initially stated at the amount of the net proceeds after the deduction of issue costs. The carrying amount is increased by the amortisation
of debt issuance fees in respect of the accounting period and reduced by repayments made in the period.
2 Proﬁt and loss account analysis and segmental information Continuing Total Total
operations Acquisitions* 2005 2004
£m £m £m £m
Group turnover 2,649.0 44.4 2,693.4 2,479.0
Group operating costs
– General (2,444.3) (37.5) (2,481.8) (2,274.9)
– Goodwill amortisation (25.1) (0.7) (25.8) (25.9)
– Bid costs and other exceptional items (note 4) (11.9) – (11.9) (13.5)
Total Group operating costs (note 3) (2,481.3) (38.2) (2,519.5) (2,314.3)
Group operating proﬁt 167.7 6.2 173.9 164.7
*Acquisitions during the year to 31 March 2005 relate entirely to the North America division (for details see note 27).
Operating proﬁt before
goodwill amortisation,
bid costs and other
Turnover exceptional items Net assets/(liabilities)
2005 2004 2005 2004 2005 2004
Segmental information is as follows: £m £m £m £m £m £m
UK Bus 960.7 906.2 107.1 111.2 232.5 228.3
UK Rail 1,059.7 945.0 67.7 49.8 7.2 (4.4)
North America 665.8 620.7 61.2 63.5 450.9 435.8
Financing element of UK Bus leases – – (9.0) (8.3) – –
Group items 7.2 7.1 (15.4) (12.1) (332.4) (304.7)
2,693.4 2,479.0 211.6 204.1 358.2 355.0
Bid costs (note 4) (11.9) (6.7)
Other exceptional items (note 4) – (6.8)
Goodwill amortisation (note 11) (25.8) (25.9)
Group operating proﬁt 173.9 164.7
Proﬁt on disposal of ﬁxed assets 3.3 19.6
Proﬁt on ordinary activities before interest 177.2 184.3
All of the Group turnover and Group operating proﬁt for the year was generated in the United Kingdom, except that shown above as being generated
in North America. There is no material difference between turnover earned by origin and destination. 41
Continuing Total Total
operations Acquisitions 2005 2004
3 Operating costs £m £m £m £m
Materials and consumables 264.4 14.1 278.5 258.9
Staff costs (note 5) 1,215.6 15.8 1,231.4 1,099.9
External charges 869.8 6.4 876.2 826.6
Depreciation, amortisation and other amounts written off ﬁxed assets 131.5 1.9 133.4 128.9
2,481.3 38.2 2,519.5 2,314.3
Total Total
Rail Other 2005 2004
4 Bid costs and other exceptional items £m £m £m £m
Restructuring costs ––– 6.8
Bid costs 10.9 1.0 11.9 6.7
10.9 1.0 11.9 13.5
The tax effect in 2005 was a credit of £3.6m (2004: credit of £4.1m).
5 Employees’ and Directors’ remuneration
2005 2004
The average number of persons employed by the Group (including Directors) during the year was as follows: No. No.
Operational 61,585 56,483
Administration 5,782 5,414
67,367 61,897
2005 2004
The aggregate payroll costs of these persons were as follows: £m £m
Wages and salaries 1,101.5 996.4
Social security costs 82.9 69.3
Other pension costs 47.0 34.2
1,231.4 1,099.9
Disclosures on Directors’ remuneration, share options, long-term incentive schemes and pension entitlements required by the Companies Act
1985 and those speciﬁed for audit by the Financial Services Authority are contained in the tables/notes within the Directors’ remuneration report
on pages 23 to 29 and form part of these audited ﬁnancial statements.
2005 2004
6 Net interest payable and similar charges £m £m
Bond and bank facilities 43.3 37.5
Loan notes 1.6 1.5
Finance charges payable in respect of hire purchase contracts and ﬁnance leases 2.2 3.3
47.1 42.3
Income from short-term deposits and other investments (4.3) (2.4)
Notional interest on provisions 5.5 2.9
Net interest payable and similar charges before exceptional items 48.3 42.8
Cancellation of interest rate swaps – 18.7
48.3 61.5 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
42
7 Proﬁt on ordinary activities before taxation
2005 2004
Proﬁt on ordinary activities before taxation is stated after charging/(crediting) the following: £m £m
Depreciation and amounts written off tangible ﬁxed assets 107.6 103.0
Goodwill amortisation 25.8 25.9
Rentals payable under operating leases
– plant and machinery 20.4 19.4
– track and station access 281.4 272.2
– hire of rolling stock 84.9 78.4
– other assets 11.8 11.4
Net rents receivable from property (0.3) (0.3)
Deloitte & Touche LLP audit fee 0.6 0.5
Deloitte & Touche LLP and associates’ non-audit fees 0.3 1.1
The Company’s audit fee amounted to £0.1m (2004: £0.1m).
Non-audit fees comprised due diligence on acquisitions of £119,000 (2004: £474,000), UK Rail franchise reviews of £nil (2004: £280,000),
other assurance services including the review of the interim accounts of £80,000 (2004: £122,000), UK bond issue £nil (2004: £50,000),
International Financial Reporting Standards work £60,000 (2004: £50,000), tax advisory services of £nil (2004: £33,000) and other non-audit
services of £50,000 (2004: £69,000).
2005 2004
8 Tax on proﬁt on ordinary activites £m £m £m £m
Current taxation
UK corporation tax charge for the year 21.8 20.3
Adjustment in respect of prior years (3.5) 0.2
18.3 20.5
Overseas taxation charge
Current year 0.7 0.8
Total current taxation 19.0 21.3
Deferred taxation (see note 20)
Origination and reversal of timing differences 17.5 10.0
Adjustment in respect of prior years (3.8) (0.7)
13.7 9.3
32.7 30.6
The standard rate of taxation for the year, based on the UK standard rate of corporation tax is 30%. The actual current tax charge for the current
and previous year differed from the standard rate for the reasons set out in the following reconciliation:
2005 2004
% %
Standard rate of taxation 30.0 30.0
Factors affecting charge
Disallowable expenses 1.2 1.7
Property disposals (0.8) (4.8)
Capital allowances in excess of depreciation (10.5) (11.5)
Other timing differences (4.9) (2.2)
Foreign tax charged at different rates 2.4 2.7
Utilisation of tax losses brought forward (0.3) (0.3)
Unrelieved tax losses carried forward 0.4 1.6
Prior years’ tax charge (2.7) 0.2
14.8 17.4
No provision has been made for deferred tax on revalued property. The tax on the gains arising would only become payable if the property were sold
without rollover relief being available. The tax which would be payable under such circumstances is estimated to be £0.2m (2004: £0.2m). These
assets are expected to be used in the continuing operations of the business and, therefore no tax is expected to be paid in the foreseeable future.
No deferred tax has been recognised on property gains as it is anticipated that rollover relief will be available. To beneﬁt from the relief the
proceeds should be reinvested in new property within three years of disposal. The tax that would be payable assuming that reinvestment was not
made within three years amounts to £7.0m (2004: £6.0m).
No deferred tax has been provided on the future remittance of overseas reserves as it is not expected that the reserves will be repatriated to
the UK in the foreseeable future. 43
2005 2004
9 Equity dividends £m £m
Ordinary shares of 5p each
– Interim paid 4.125p (2004: 3.75p) per share 16.4 15.5
– Final proposed 8.69p (2004: 7.9p) per share 34.2 31.8
50.6 47.3
10 Earnings per share (EPS)
Basic EPS is based on earnings of £89.7m (2004: £91.3m) and on the weighted average number of ordinary shares of 399.2m (2004: 410.0m) in
issue. Diluted EPS is based on the same earnings and on the weighted average number of ordinary shares of 402.0m (2004: 411.5m).
2005 2004
No. No.
A reconciliation of the number of shares used in the basic and diluted measures is set out below: (m) (m)
Weighted average number of shares used in basic calculation 399.2 410.0
SAYE share options 2.6 1.5
Executive share options 0.2 –
402.0 411.5
The adjusted basic EPS and adjusted cash EPS measures are intended to demonstrate recurring elements of the results of the Group before
goodwill amortisation, bid costs and other exceptional items. Both the adjusted basic and cash measures of EPS use the same weighted average
number of ordinary shares as the basic EPS measure. A reconciliation of the earnings used in these measures is set out below:
2005 2004
Earnings Earnings
per share per share
£m (p) £m (p)
Proﬁt for basic EPS calculation 89.7 22.5 91.3 22.3
Goodwill amortisation 25.8 6.4 25.9 6.3
Taxation effect of this adjustment (8.1) (2.0) (8.1) (2.0)
Bid costs and other exceptional items 11.9 3.0 13.5 3.3
Taxation effect of this adjustment (3.6) (0.9) (4.1) (1.0)
Exceptional interest rate charge –– 18.7 4.6
Taxation effect of this adjustment –– (5.6) (1.4)
Proﬁt on disposal of ﬁxed assets (3.3) (0.8) (19.6) (4.8)
Proﬁt for adjusted basic EPS calculation 112.4 28.2 112.0 27.3
Depreciation* 107.4 26.9 103.0 25.1
Proﬁt for adjusted cash EPS calculation 219.8 55.1 215.0 52.4
*Depreciation charge of £107.6m per note 12 less £0.2m of depreciation attributable to equity minority interests.
11 Goodwill £m
Cost
At 1 April 2004 562.6
Additions 25.8
Exchange rate differences (13.9)
At 31 March 2005 574.5
Amortisation
At 1 April 2004 101.4
Charge for year 25.8
Exchange rate differences (3.3)
At 31 March 2005 123.9
Net book value
At 31 March 2005 450.6
At 31 March 2004 461.2 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
44
Passenger Other
Land and carrying plant and
buildings vehicle ﬂeet equipment Total
12 Tangible ﬁxed assets £m £m £m £m
Cost or valuation
At 1 April 2004 141.5 1,174.0 154.6 1,470.1
Subsidiary undertakings and businesses acquired 2.9 29.5 2.4 34.8
Additions 12.2 96.5 26.6 135.3
Disposals (6.9) (32.9) (21.1) (60.9)
Exchange rate differences (0.6) (13.0) (1.1) (14.7)
At 31 March 2005 149.1 1,254.1 161.4 1,564.6
Depreciation
At 1 April 2004 21.5 548.5 102.5 672.5
Subsidiary undertakings and businesses acquired ––––
Charge for year 3.0 88.0 16.6 107.6
Disposals (0.7) (29.4) (19.2) (49.3)
Exchange rate differences (0.1) (5.7) (0.6) (6.4)
At 31 March 2005 23.7 601.4 99.3 724.4
Net book value
At 31 March 2005 125.4 652.7 62.1 840.2
At 31 March 2004 120.0 625.5 52.1 797.6
2005 2004
The net book value of land and buildings comprises: £m £m
Freehold 104.2 101.0
Long leasehold 17.2 15.6
Short leasehold 4.0 3.4
125.4 120.0
Depreciation is not provided on the land element of freehold and long leasehold property which amounts to £35.5m (2004: £31.7m).
2005 2004
The assets that have been revalued comprise the following land and buildings: £m £m
At 1993 professional valuations 9.6 12.6
Aggregate depreciation thereon (1.2) (1.3)
Net book value 8.4 11.3
Historical cost of revalued assets 9.2 10.9
Aggregate depreciation based on historical cost (2.6) (3.0)
Historical net book value 6.6 7.9
The 1993 professional valuations were carried out by RICS Chartered Surveyors on the basis of open market value for existing use.
Included in the net book value above is £105.3m (2004: £133.0m) of tangible ﬁxed assets held under hire purchase contracts and ﬁnance leases.
The depreciation charge on these assets during the year was £12.4m (2004: £18.1m). 45
Other
13 Fixed asset investments
investments
Group £m
Cost
At 1 April 2004 and 31 March 2005 7.5
Provision
At 1 April 2004 and 31 March 2005 (7.5)
Net book value
At 31 March 2005 –
At 31 March 2004 –
Unlisted
subsidiary Other
undertakings investments Total
Company £m £m £m
Cost
At 1 April 2004 1,689.3 8.1 1,697.4
Additions 0.1 – 0.1
At 31 March 2005 1,689.4 8.1 1,697.5
Provision
At 1 April 2004 and 31 March 2005 (5.4) (8.1) (13.5)
Net book value
At 31 March 2005 1,684.0 – 1,684.0
At 31 March 2004 1,683.9 – 1,683.9
Subsidiary undertakings
The principal subsidiary undertakings of FirstGroup plc at the end of the year were:
UK local bus and coach operators First Midland Red Buses Limited Transit contracting, ﬂeet maintenance
CentreWest London Buses Limited First PMT Limited and other services
First Aberdeen Limited+ First Somerset & Avon Limited First Transit, Inc†
First Beeline Buses Limited First South Yorkshire Limited SKE Support Services, Inc†
First Bristol Limited First Wessex Limited 
First Capital East Limited First West Yorkshire Limited Rail companies
First Capital North Limited First York Limited Great Western Trains Company Limited 
First Cymru Buses Limited Leicester CityBus Limited (94%) North Western Trains Company Limited
First Devon & Cornwall Limited Northampton Transport Limited FirstInfo Limited
First Eastern Counties Limited First/Keolis TransPennine Limited (55%)
First Edinburgh Limited+ North America school bus operators Hull Trains Company Limited (80%)
First Essex Buses Limited First Student, Inc† GB Railfreight Limited
First Glasgow (No. 1) Limited+ FirstBus Canada Limited‡ First Great Western Link Limited
First Glasgow (No. 2) Limited+ FirstGroup America, Inc† First ScotRail Limited
First Hampshire and Dorset Limited FirstGroup USA, Inc†
First Manchester Limited Cardinal Transportation Group, Inc†
Cardinal Coach Lines Limited‡ (60%) NOTES TO THE FINANCIAL STATEMENTS CONTINUED
46
13 Fixed asset investments continued
All subsidiary undertakings are wholly owned at the end of the year except where percentage of ownership is shown above. All these companies
above are incorporated in Great Britain and registered in England and Wales except those marked + which are registered in Scotland, those
marked † which are incorporated in the United States of America and those marked ‡ which are registered in Canada.
All shares held in subsidiary undertakings are ordinary shares, with the exception of Leicester CityBus Limited where the Group owns 100% of
its redeemable cumulative preference shares, as well as 94% of its ordinary shares.
All of these subsidiary undertakings are owned via intermediate holding companies. 
There are, in addition to those listed above, a number of subsidiary undertakings which are mostly intermediate holding companies or were
dormant throughout the year. A full list of subsidiary undertakings is ﬁled with the Annual Return to the Registrar of Companies.
Other investments
The interest in other investments at the end of the year is a 6% interest in the ordinary share capital of Prepayment Cards Limited, which is
incorporated in Great Britain and registered in England and Wales. 
2005 2004
14 Stocks £m £m
Spare parts and consumables 30.7 24.0
Property development work in progress 9.4 11.1
40.1 35.1
There is no material difference between the balance sheet value of stocks and their replacement cost.
Group Company
2005 2004 2005 2004
15 Debtors £m £m £m £m
Amounts due within one year
Trade debtors 258.2 233.9 – –
Amounts due from subsidiary undertakings – – 917.7 1,203.0
Corporation tax recoverable – – 15.3 15.3
Deferred taxation – – 0.9 0.9
Other debtors 61.1 52.7 – –
Pension funds’ prepayments 12.1 10.4 – –
Other prepayments and accrued income 48.2 47.6 – –
379.6 344.6 933.9 1,219.2
Amounts due after more than one year
Pension funds’ prepayments 57.0 48.7 – –
Other prepayments and accrued income 1.2 1.4 – –
58.2 50.1 – –
437.8 394.7 933.9 1,219.2
Group Company
2005 2004 2005 2004
16 Current asset investments £m £m £m £m
Ring-fenced bank deposits 7.5 30.3 – –
Group Company
2005 2004 2005 2004
17 Cash at bank and in hand £m £m £m £m
Ring-fenced cash 62.8 68.7 – –
Other cash 83.8 26.2 – –
146.6 94.9 – –
Under the terms of the Rail franchise agreements, cash can only be distributed by the train operating companies either up to the amount of
retained proﬁts or in relation to prescribed liquidity ratios. The ring-fenced cash represents that which is not available for distribution or the amount
required to satisfy the contractual liquidity ratio at the balance sheet date. 47
Group Company
2005 2004 2005 2004
18 Creditors £m £m £m £m
Amounts due within one year
Bank loans and overdrafts 49.6 52.0 179.6 174.4
Other loans 1.8 – – –
Obligations under hire purchase contracts and ﬁnance leases 9.0 20.8 – –
Loan notes 0.5 0.3 0.3 0.3
Trade creditors 122.4 156.4 – –
Amounts due to subsidiary undertakings – – 498.0 834.4
Corporation tax 28.2 25.1 – –
Other tax and social security 24.6 21.2 – –
Other creditors 42.2 15.9 – –
Pension funds’ creditors 9.5 11.7 – –
Accruals and deferred income 324.6 271.8 31.5 24.7
Season ticket deferred income 13.3 40.3 – –
Proposed dividends 35.1 32.4 35.1 32.4
660.8 647.9 744.5 1,066.2
Group Company
2005 2004 2005 2004
£m £m £m £m
Amounts falling due after more than one year
Bank loans
Due in more than one year but not more than two years 1.3 – – –
Due in more than two years but not more than ﬁve years 182.5 110.6 180.0 110.6
Due in more than ﬁve years 3.1 – – –
Other loans
Due in more than one year but not more than two years 1.3 – – –
Due in more than two years but not more than ﬁve years 3.3 – – –
Due in more than ﬁve years 1.3 – – –
Obligations under hire purchase contracts and ﬁnance leases
Due in more than one year but not more than two years 2.5 7.7 – –
Due in more than two years but not more than ﬁve years 7.5 3.6 – –
Due in more than ﬁve years 5.1 4.8 – –
Loan notes
Due in more than one year but not more than two years 20.5 21.0 6.6 6.9
£300.0m Sterling bond – 6.875% 2013 296.0 295.5 296.0 295.5
£250.0m bond – 6.125% 2019 231.9 239.6 231.9 239.6
756.3 682.8 714.5 652.6
Bank loans and overdrafts
Whilst advances under bank facilities are generally repayable within a few months of the balance sheet date, they have been classiﬁed by
reference to the maturity date of the longest reﬁnancing permitted under these facilities in accordance with FRS 4. The bank loans and overdrafts
are unsecured. 
The maturity proﬁle of the undrawn committed borrowing facilities is as follows:
2005 2004
Facilities maturing: £m £m
Within one year 6.4 –
More than two years 340.0 390.4
346.4 390.4
Hire purchase contracts and ﬁnance leases
Hire purchase contract and ﬁnance lease liabilities are secured on the assets to which they relate. The contracts vary in length between four and
12 years.  NOTES TO THE FINANCIAL STATEMENTS CONTINUED
48
18 Creditors continued
Loan notes
The loan notes have been classiﬁed by reference to the earliest date on which the loan note holders can request redemption. Loan notes of
£20.0m (2004: £20.5m) are supported by unsecured bank guarantees.
Bonds
The £300m bond is repayable in 2013 and is shown net of £4.0m (2004: £4.5m) of issue related costs which are being amortised over the term of
the bond. 
The £250m bond is repayable in 2019 and is swapped to US Dollars. The Sterling equivalent shown is net of a foreign exchange gain of
£16.9m (2004: gain of £9.1m) on retranslation at year end and is also net of £1.2m (2004: £1.3m) of issue related costs which are being
amortised over the term of the bond. 
Certain subsidiaries have issued unsecured guarantees to the Company’s bondholders. These unsecured guarantees rank pari passu with
unsecured guarantees provided by those subsidiaries to the Group’s bank lenders participating in the Group’s £520m syndicated bank facility.
19 Financial assets and liabilities
Foreign currencies
At 31 March 2005, the Group’s proﬁt and loss account was not exposed to material exchange rate risk from monetary assets and liabilities
denominated in foreign currencies as all such material balances are used to hedge the Group’s overseas net assets.
Interest rates
After taking into account interest rate swaps entered into by the Group, details of the interest rate proﬁle of the Group’s ﬁnancial liabilities, excluding
cash, was as follows:
Fixed rate liabilities
Weighted
Total average Weighted
ﬁnancial Floating Fixed interest average
liabilities rate rate rate period
£m £m £m % years
At 31 March 2005
Sterling 562.6 192.8 369.8 6.95 7.2
US Dollars 234.1 1.1 233.0 3.40 0.5
Canadian Dollars 20.5 8.3 12.2 7.45 2.5
Euros –––––
817.2 202.2 615.0
At 31 March 2004
Sterling 490.3 108.7 381.6 6.97 8.0
US Dollars 249.6 83.3 166.3 2.89 2.5
Canadian Dollars 8.0 8.0–––
Euros 8.0 8.0–––
755.9 208.0 547.9
No new interest rate derivatives were entered into during 2004/05. Certain US Dollar ﬁxed rate swaps were terminated in March 2005 and new 
US Dollar interest rate collars to March 2009 were entered into shortly after the year end.
Bank margins negotiated on ﬂoating rate debt range from 0.225% to 0.8% over Sterling LIBOR and US Dollar LIBOR where applicable, or the
bank base rate for the currency concerned. 
Financial assets, which consist wholly of cash on deposit and in hand of £154.1m (2004: £125.2m), are all denominated in Sterling except
£15.3m (2004: £3.0m) in US Dollars and £0.8m (2004: £0.6m) in Canadian Dollars. Deposited cash earns interest at commercial rates negotiated
with counterparty banks. 49
19 Financial assets and liabilities continued
Fair values
Details of the book values and fair values of the ﬁnancial assets and liabilities are as follows:
2005 2005 2004 2004
Book Fair Book Fair
value value value value
£m £m £m £m
Bank deposits 7.5 7.5 30.3 30.3
Cash at bank and in hand 146.6 146.6 94.9 94.9
Bank and other loans and overdrafts (244.2) (245.3) (162.6) (162.6)
Obligations under hire purchase contracts and ﬁnance leases (24.1) (24.8) (36.9) (38.4)
Loan notes (21.0) (27.7) (21.3) (25.8)
Interest rate swaps – (2.7) – (6.5)
Fuel derivatives – 31.4 – 9.5
£300m bond (296.0) (320.0) (295.5) (316.3)
£250m bond (swapped to US Dollars) (231.9) (236.6) (239.6) (243.8)
(663.1) (671.6) (630.7) (658.7)
In order to protect the Group’s ﬁnancial position and performance against net interest rate risk, the Group uses interest rate swaps and ﬁxed rate
debt. As a result of movements in interest rates, differences arise between book values and fair values, which are categorised as unrecognised gains
and losses as required under FRS 13.
The Group also protects its ﬁnancial position and performance against fuel price risk using a range of fuel derivatives. Movements in fuel prices
relative to the prices provided by the derivatives gives rise to differences between book and fair values which are categorised as unrecognised gains
and losses as required under FRS 13.
Fair values for derivatives and the bonds have been supplied externally by the respective counterparties and banks using market rates prevailing 
at year end. The book value of the £300m bond is stated at its par value less issue costs of £4.0m (2004: £4.5m). The book value of the £250m
bond, which is swapped to US Dollars is stated at its par value less issue costs of £1.2m (2004: £1.3m) and net of an unrealised foreign exchange
gain of £16.9m (2004: gain of £9.1m). Fair values for hire purchase debt and loan notes have been determined by discounting future cash ﬂows that
will arise under these liabilities. 
The movement in net unrecognised gains and losses on instruments used to hedge interest rate risk and fuel price risk are as follows:
Net unrecognised gains/(losses)
2005 2004
£m £m
At beginning of year 3.0 (15.7)
Arising in previous year but recognised in the year (4.3) 23.4
Arising before beginning of year and remaining at the end of the year (1.3) 7.7
Arising in the year 29.9 (4.7)
At end of year 28.6 3.0
It is expected that £26.8m of the net unrecognised gains (2004: £3.0m) will be recognised in the following year. Further information on ﬁnancial
instruments is given in the Financial review on pages 13 to 16.
20 Provisions for liabilities and charges Deferred Insurance
tax claims Pensions Total
Group £m £m £m £m
At 1 April 2004 96.4 25.8 5.9 128.1
Provided in the year 13.7 20.9 – 34.6
Utilised in the year – (17.6) (0.2) (17.8)
Subsidiary undertakings acquired (2.2) – – (2.2)
Notional interest – 5.5 – 5.5
Exchange rate differences (0.6) (0.1) – (0.7)
At 31 March 2005 107.3 34.5 5.7 147.5
Most of the insurance claims are expected to be settled within eight years. The pensions payments will be spread over several decades. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
50
21 Deferred tax
2005 2004
Group £m £m
Capital allowances in excess of depreciation 134.3 124.8
Other timing differences 13.5 12.7
Trading losses (40.5) (41.1)
Deferred tax provision 107.3 96.4
22 Called up share capital
2005 2004
Group and Company £m £m
Authorised
Ordinary shares of 5p each 30.0 30.0
Allotted, called up and fully paid
Ordinary shares of 5p each 19.9 20.1
No.
The changes in the number and amount of issued share capital during the year are set out below: (m) £m
At beginning of year 403.0 20.1
Shares cancelled (4.2) (0.2)
At end of year 398.8 19.9
Between 14 May 2004 and 14 September 2004, 4,200,000 shares were repurchased at a total cost of £11.9m and cancelled. In addition
between 22 September 2004 and 23 March 2005, 5,200,000 shares were repurchased for a total cost of £17.8m and are being held as Treasury
Shares at 31 March 2005.
Share Proﬁt
23 Reserves premium Revaluation Own and loss
account reserve shares account
Group £m £m £m £m
At 1 April 2004 238.8 3.4 – 86.8
Prior year adjustment on adoption of UITF 38 (note 1) – – (0.6) –
At 1 April 2004 as restated 238.8 3.4 (0.6) 86.8
Cancellation of shares – – – (11.9)
Retained proﬁt for the year – – – 39.1
Movement in EBT, QUEST and Treasury Shares during the year – – (18.3) –
Foreign exchange differences – – – (14.2)
Transfer of realised revaluation reserve – (1.6) – 1.6
At 31 March 2005 238.8 1.8 (18.9) 101.4
Own shares
Details of the number and market value of own shares held in the FirstGroup plc ESOP and other employee trusts are as follows:
No. 2005 No. 2004
(m) £m (m) £m
Own shares held by trustees 1.6 5.5 2.7 7.3
Own shares vested unconditionally (1.3) (4.5) (2.5) (6.6)
0.3 1.0 0.2 0.7
The number of own shares held by the Group at the end of the year was 5,487,369 (2004: 246,431) FirstGroup plc ordinary shares of 5p each. Of
these, 22,906 (2004: 206,422) were held by the FirstGroup plc Employee Beneﬁt Trust, 264,463 (2004: 40,099) by the FirstGroup plc Qualifying
Employee Share Ownership Trust (QUEST) and 5,200,000 (2004: nil) were held as Treasury Shares. The shares held by the QUEST are being used
to satisfy exercises of savings related share options. Both trusts and Treasury Shares have waived the rights to dividend income from the
FirstGroup plc shares. The market value of the shares at 31 March 2005 was £18.9m (2004: £0.7m). 51
23 Reserves continued
Capital
redemption Capital Total other 
reserve reserve reserves
£m £m £m
At 1 April 2004 1.7 2.7 4.4
Cancellation of shares 0.2 – 0.2
At 31 March 2005 1.9 2.7 4.6
The cumulative amount of positive and negative goodwill arising from acquisitions of subsidiaries and associates written off directly to reserves at
the end of the year was £429.6m and £4.7m respectively (2004: £429.6m and £4.7m).
Share Proﬁt
premium Own and loss
account shares account
Company £m £m £m
At 1 April 2004 238.8 – 664.1
Prior year adjustment on adoption of UITF 38 (note 1) – (0.6) –
At 1 April 2004 as restated 238.8 (0.6) 664.1
Cancellation of shares – – (11.9)
Retained proﬁt for the year – – 4.8
Movement in EBT, QUEST and Treasury Shares during the year – (17.8) –
Foreign exchange differences – – (0.5)
At 31 March 2005 238.8 (18.4) 656.5
Capital
redemption Capital Merger Total other 
reserve reserve reserve reserves
£m £m £m £m
At 1 April 2004 1.7 93.8 166.4 261.9
Cancellation of shares 0.2 – – 0.2
At 31 March 2005 1.9 93.8 166.4 262.1
2005 2004
24 Notes to the consolidated cash ﬂow statement £m £m
(a) Reconciliation of operating proﬁt to net cash inﬂow from operating activities
Operating proﬁt 173.9 164.7
Depreciation and other amounts written off tangible ﬁxed assets 107.6 103.0
Amortisation charges 25.8 25.9
Loss on sale of non-property ﬁxed assets 1.9 1.3
Increase in stocks (2.6) (1.3)
Increase in debtors (51.0) (49.4)
(Decrease)/increase in creditors and provisions (8.4) 68.1
Net cash inﬂow from operating activities 247.2 312.3
(b) Returns on investments and servicing of ﬁnance
Interest received 6.8 2.4
Interest paid (35.1) (44.3)
Dividends paid to minority shareholders (3.1) –
Cancellation of interest rate swaps – (18.7)
Interest element of hire purchase contracts and ﬁnance lease payments (2.3) (3.3)
Fees on issue of bond and loan facilities – (1.3)
Net cash outﬂow from returns on investments and servicing of ﬁnance (33.7) (65.2) NOTES TO THE FINANCIAL STATEMENTS CONTINUED
52
24 Notes to the consolidated cash ﬂow statement continued
2005 2004
(c) Capital expenditure and ﬁnancial investment £m £m
Purchase of tangible ﬁxed assets (124.3) (179.8)
Sale of ﬁxed asset properties 22.9 25.4
Sale of other tangible ﬁxed assets 4.2 7.1
Net cash outﬂow from capital expenditure and ﬁnancial investment (97.2) (147.3)
(d) Acquisitions and disposals
Purchase of subsidiary undertakings (25.3) (33.7)
Purchase of businesses (15.4) (26.4)
Net cash acquired with purchase of subsidiary undertakings and businesses 3.5 10.4
Net cash outﬂow from acquisitions and disposals (37.2) (49.7)
(e) Financing
Own shares repurchased (29.7) (29.2)
Bond 2019 – 250.0
Shares purchased by Employee Beneﬁt Trust and QUEST (0.3) –
New bank loans 90.4 –
Repayments of amounts borrowed:
– Bank loans – (149.2)
– Loan notes (0.3) (0.6)
New hire purchase contracts and ﬁnance leases – 10.2
Capital element of hire purchase and ﬁnance lease payments (20.2) (35.0)
Net cash inﬂow from ﬁnancing 39.9 46.2
At Other At
31 March non-cash 31 March
2004 Cash ﬂow changes 2005
25 Analysis of net debt £m £m £m £m
Cash at bank and in hand 94.9 52.9 (1.2) 146.6
Bank overdrafts (33.0) 24.8 – (8.2)
Cash 61.9 77.7 (1.2) 138.4
Current asset investments 30.3 (22.8) – 7.5
Bank and other loans due within one year (19.0) (21.1) (3.1) (43.2)
Bank and other loans due after one year (110.6) (69.4) (12.8) (192.8)
Sterling bond 2013 (295.5) – (0.5) (296.0)
Sterling bond 2019 (239.6) – 7.7 (231.9)
Obligations under hire purchase contracts and ﬁnance leases (36.9) 20.2 (7.4) (24.1)
Loans and loan notes (21.3) 0.3 – (21.0)
Financing (722.9) (70.0) (16.1) (809.0)
Net debt (630.7) (15.1) (17.3) (663.1)
Current asset investments represent unencumbered bank deposits of maturity of less than one year. 53
26 Major non-cash transactions
Other non-cash movements in note 25 include £7.0m (2004: £41.9m) of foreign exchange movements.
2005 2004
27 Summary of purchase of businesses and subsidiary undertakings £m £m
Provisional fair values of net assets acquired:
Tangible assets 34.8 15.5
Other current assets 17.1 7.3
Cash at bank and in hand 3.5 –
Loans and ﬁnance leases (20.6) –
Minority shareholders’ interests (4.2) –
Other creditors (19.2) (11.3)
11.4 11.5
Goodwill (note 11) 25.8 14.9
37.2 26.4
Satisﬁed by cash paid and payable 37.2 26.4
There was no material difference between the book value and the provisional fair values of the net assets acquired and there were no adjustments
required in respect of accounting policy alignments.
The businesses and subsidiary undertakings acquired during the year contributed £8.1m (2004: £8.6m) to the Group’s net operating cash
ﬂows. There were no other cash ﬂow movements from the businesses acquired during the year or the previous year.
The businesses and subsidiary undertakings acquired during the year and dates of acquisition were:
SKE Support Services, Inc 1 August 2004
Orange County Limousine Service 10 August 2004
FirstCall South Towns Wheelchair Van Service, Inc 1 November 2004
Village Bus Company, Inc 1 November 2004
Cardinal Coach Lines Limited 1 January 2005
Godeffroy Car Company, Inc 11 February 2005
28 Commitments
Capital commitments
Capital commitments at the end of the year for which no provision has been made are as follows:
2005 2004
£m £m
Contracted for but not provided 97.8 2.1
Capital commitments at 31 March 2005 principally represent buses ordered in both the United Kingdom and North America.
Operating leases
The rail businesses have contracts with Network Rail for access to the railway infrastructure (track, stations and depots). They also have contracts
under which they lease rolling stock.
Commitments for payments in the next year under these operating leases are as follows:
2005 2004
£m £m
Operating leases which expire:
Within one year 139.4 13.2
From one to ﬁve years 11.5 223.1
Over ﬁve years 206.1 52.6
357.0 288.9 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
54
28 Commitments continued
Commitments for payments in the next year under other operating leases are as follows:
Land and Land and
buildings Other buildings Other
2005 2005 2004 2004
£m £m £m £m
Operating leases which expire:
Within one year 2.5 5.4 0.7 3.0
From one to ﬁve years 8.1 14.5 8.4 14.8
Over ﬁve years 1.7 0.3 2.0 1.6
12.3 20.2 11.1 19.4
29 Contingent liabilities
To support subsidiary undertakings in their normal course of business, the Company has indemniﬁed certain banks and insurance companies who
have issued performance bonds for £225.1m as at 31 March 2005 (2004: £186.8m) and letters of credit for £149.2m as at 31 March 2005 (2004:
£138.0m). The performance bonds relate to the North American businesses (£123.9m) and the UK Rail franchise operations (£101.2m). The letters
of credit relate substantially to insurance arrangements in the UK and North America.
The Company has provided a £15.5m (2004: £15.5m) unsecured loan facility to Great Western Trains Company Limited (GWT), a £3.2m
unsecured loan facility to First/Keolis TransPennine Limited (TPE) and a £13.6m unsecured loan facility to First ScotRail Limited as required by the
Director of Passenger Rail Franchising. Neither of the TPE or GWT loans were drawn at 31 March 2005 or 31 March 2004, while the ScotRail loan
was fully drawn at 31 March 2005. 
The Company is party to certain unsecured guarantees granted to banks for overdraft and cash management facilities provided to itself and
subsidiary undertakings. The Company has given certain unsecured guarantees for the liabilities of its subsidiary undertakings arising under certain
loan notes, hire purchase contracts, ﬁnance leases, operating leases, supply contracts and certain pension scheme arrangements. It also provides
unsecured cross guarantees to certain subsidiary undertakings as required by VAT legislation. UK bus subsidiaries have provided unsecured
guarantees on a joint and several basis to Trustees of the UK Occupational Pension Scheme.
Certain of the Company’s subsidiaries have issued unsecured guarantees to the Company’s bondholders. These unsecured guarantees rank
pari passu with unsecured guarantees provided by those subsidiaries to lenders participating in the Group’s £520m syndicated bank facility.
30 Pension schemes
The Group operates or participates in a number of pension schemes which cover the majority of UK employees and certain North American
employees. These are principally deﬁned beneﬁt schemes under which beneﬁts provided are based on employees’ number of years of service and
ﬁnal salary. The scope of beneﬁts varies between schemes. The assets of the schemes are held in separately administered trusts which are
managed independently of the Group’s ﬁnances by investment managers appointed by the schemes’ trustees.
Formal independent actuarial valuations are undertaken at least triennially.
The various deﬁned beneﬁt schemes include ﬁve UK Bus Division schemes where the subsidiary undertaking is a participating employer in a
scheme operated by a local authority. These schemes are subject to relevant local government regulations. Great Western Trains Company
Limited, First ScotRail Limited, First Great Western Link Limited, GB Rail and TransPennine Express have sections in the Railways Pension
Scheme (RPS) which is an industry-wide arrangement for employees of those companies previously owned by British Railways Board. All other
Group schemes are self-administered.
At their last triennial valuations, the deﬁned beneﬁt schemes had funding levels between 68.0% and 121.0%. The market value of the assets at
31 March 2005 for all deﬁned beneﬁt schemes totalled £1,580m (2004: £1,254m). 
Contributions are paid to all deﬁned beneﬁt schemes in accordance with rates recommended by the schemes’ actuaries. The total charge to
the proﬁt and loss account in the year in respect of deﬁned beneﬁt schemes was £43.4m (2004: £31.9m).
The valuation assumptions used for accounting purposes have been made uniform to Group standards, as appropriate, when each scheme is
actuarially valued. For these new valuations (excluding the local government and RPS schemes), the assumptions which are being used are that
the rate of return on investment will be 7.0% pre-retirement (6.75% in respect of future beneﬁt accrual), and 6.0% post-retirement (5.75% in
respect of future beneﬁt accrual), the rate of earnings growth will be 4.0%, and the rate of inﬂation will be 2.5%. These new valuations are made
using the projected unit method. 55
30 Pension schemes continued
Prepayment
A net prepayment of £59.6m (2004: £47.4m) is included in the Group’s consolidated balance sheet in respect of the sum of the cumulative
differences between contributions paid by the Group into the schemes and the charge to the proﬁt and loss account under SSAP 24, and the
surpluses and deﬁcits that have been recognised on acquisition.
For accounting purposes the pension costs for the RPS are determined by spreading the expected company cash contributions over the term
of the relevant franchise. 
Deﬁned contribution schemes
In addition, the Group operates some deﬁned contribution schemes, the assets of which are held in separately administered trusts. The cost of
these in the year was £3.6m (2004: £2.3m).
The Group pays certain costs on behalf of the various pension schemes and then re-charges the costs to the schemes.
Transitional FRS 17 disclosures
The additional disclosures required by FRS 17 during the transitional period for the deﬁned beneﬁt schemes are set out below. They are based on
the most recent actuarial valuations described above, which have been updated by independent professionally qualiﬁed actuaries to take account
of the requirements of FRS 17.
The main ﬁnancial assumptions (per annum) used in this update were as follows:
2005 2004 2003
% %%
Rate of increase in salaries 4.1 4.1 3.6
Rate of increase of pensions in payment* 2.6 2.6 2.1
Rate of increase of pensions in deferment 2.6 2.6 2.1
Discount rate 5.5 5.7 5.7
Inﬂation assumption 2.6 2.6 2.1
*Certain in-house bus schemes’ pensions in payment receive LPI increases of 2.5% (2004: 2.5%) and LPI increases with a minimum of 3% assumed to be 3.3% (2004: 3.3%).
The value of the schemes’ assets and the expected rates of return as at 31 March 2005 were:
Expected rate 
of return UK Bus Rail US Total
%£m£m£m£m
Equities 8.8 718.9 365.5 11.2 1,095.6
Bonds 4.7 230.3 47.9 4.2 282.4
Property 6.7 80.8 41.0 – 121.8
Other 3.6 54.7 24.4 0.7 79.8
1,084.7 478.8 16.1 1,579.6
Total market value of assets 1,084.7 478.8 16.1 1,579.6
Present value of scheme liabilities (1,276.4) (539.5) (25.4) (1,841.3)
Pension deﬁcits (191.7) (60.7) (9.3) (261.7)
Related deferred tax asset 57.5 18.2 3.5 79.2
Net pension deﬁcit (134.2) (42.5) (5.8) (182.5)
As noted in the Financial review, the net FRS 17 deﬁcit of £182.5m at 31 March 2005 comprises a £139.3m deﬁcit (2004: £162.0m deﬁcit) 
relating to non-Rail schemes (including a £0.7m surplus (2004: £0.6m deﬁcit) in respect of GB Railfreight and Hull Trains) and a £43.2m deﬁcit
(2004: £27.5m deﬁcit) relating to Rail franchises where no liability will be borne beyond the period of the franchise. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
56
30 Pension schemes continued
The value of the schemes’ assets and the expected rates of return as at 31 March 2004 were:
Expected rate 
of return UK Bus Rail US Total
%£m£m£m£m
Equities 8.8 610.5 234.8 8.9 854.2
Bonds 4.7 205.2 37.4 2.4 245.0
Property 6.7 88.2 22.9 – 111.1
Other 4.1 42.3 – 1.4 43.7
946.2 295.1 12.7 1,254.0
Total market value of assets 946.2 295.1 12.7 1,254.0
Present value of scheme liabilities (1,165.7) (335.2) (25.3) (1,526.2)
Pension deﬁcits (219.5) (40.1) (12.6) (272.2)
Related deferred tax asset 65.9 12.0 4.8 82.7
Net pension deﬁcit (153.6) (28.1) (7.8) (189.5)
The value of the schemes’ assets and the expected rates of return as at 31 March 2003 were:
Expected rate 
of return UK Bus Rail US Total
%£m£m£m£m
Equities 8.8 469.8 146.8 6.5 623.1
Bonds 4.5 184.7 18.5 2.8 206.0
Property 6.7 46.5 14.6 – 61.1
Other 3.6 42.2 – 1.5 43.7
743.2 179.9 10.8 933.9
Total market value of assets 743.2 179.9 10.8 933.9
Present value of scheme liabilities (1,006.4) (209.1) (27.3) (1,242.8)
Pension deﬁcits (263.2) (29.2) (16.5) (308.9)
Related deferred tax asset 79.0 8.8 6.4 94.2
Net pension deﬁcit (184.2) (20.4) (10.1) (214.7) 57
30 Pension schemes continued
If FRS 17 had been adopted in these ﬁnancial statements, the Group’s net assets and proﬁt and loss reserve would have been as follows:
2005 2004
£m £m
Net assets excluding pension liability 358.2 355.0
Pension liability (182.5) (189.5)
175.7 165.5
Less: SSAP 24 items included in net assets that will be reversed on implementation of FRS 17 (41.7) (33.2)
Net assets on FRS 17 basis 134.0 132.3
Proﬁt and loss reserve excluding pension liability 101.4 86.8
Pension reserve (182.5) (189.5)
(81.1) (102.7)
Less: SSAP 24 items included in net assets that will be reversed on implementation of FRS 17 (41.7) (33.2)
Proﬁt and loss reserve on FRS 17 basis (122.8) (135.9)
It should be noted that the £122.8m proﬁt and loss deﬁcit above is on a consolidated basis. As at 31 March 2005 FirstGroup plc had £656.5m of
retained proﬁts available for distribution.
Had the Group adopted FRS 17 the amounts charged to the proﬁt and loss account would have been as follows:
Analysis of amount charged to operating proﬁt:
2005 2004
£m £m
Current service costs 46.1 41.4
Past service costs – 0.9
Gain on settlements and curtailments – (1.9)
Total operating charge 46.1 40.4
Analysis of amount (credited)/charged to net ﬁnance charges:
2005 2004
£m £m
Expected return on pension scheme assets (89.7) (66.6)
Interest on pension scheme liabilities 80.3 68.7
Net (credit)/charge (9.4) 2.1
Analysis of the actuarial gain in the statement of total recognised gains and losses (STRGL):
2005 2004
£m £m
Actual return less expected return on pension scheme assets 44.2 141.0
Experience gains and losses arising on scheme liabilities 20.3 6.4
Changes in assumptions underlying the present value of scheme liabilities (53.7) (106.1)
Actuarial gain recognised in STRGL 10.8 41.3 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
58
30 Pension schemes continued
Movement in schemes’ deﬁcit during the year:
2005 2004
£m £m
Deﬁcit at beginning of year (272.2) (308.9)
Movement in year: 
Acquisitions and new Rail franchises (19.2) (4.6)
Current service cost (46.1) (41.4)
Contributions 55.6 42.5
Past service costs – (0.9)
Curtailment costs – 1.9
Net ﬁnance income /(cost) 9.4 (2.1)
Actuarial gain 10.8 41.3
Deﬁcit at end of year (261.7) (272.2)
History of experience gains and losses 2005 2004 2003
Difference between the expected and actual return on scheme assets:
Amount (£m) 44.2 141.0 (300.2)
Percentage of scheme assets (%) 2.8 11.2 32.1
Experience gains on scheme liabilities:
Amount (£m) 20.3 6.4 26.8
Percentage of the present value of scheme liabilities (%) 1.1 0.4 2.2
Total actuarial gain/(loss) in the statement of total recognised gains and losses:
Amount (£m) 10.8 41.3 (282.9)
Percentage of the present value of scheme liabilities (%) 0.6 2.7 22.8 59
31 Share schemes
(a) Savings related share option scheme 
The Company operates an Inland Revenue approved savings related share option scheme. Grants were made in December 2002, December
2003 and December 2004. The scheme is based on eligible employees being granted options and their agreement to opening a sharesave
account with a nominated savings carrier and to save weekly or monthly over a speciﬁed period. Sharesave accounts are held with Lloyds TSB.
The right to exercise the option is at the employee’s discretion at the end of the period previously chosen for a period of six months.
The number of options outstanding under each grant at the end of the year was as follows:
2005 2004
Earliest
Number of Ordinary 5p Number of Ordinary 5p Exercise exercise
Grant date employees shares employees shares price (p) date
December 2002 4,356 4,995,147 5,229 5,945,274 192.00 February 06
December 2003 1,919 1,407,555 2,497 1,903,176 232.00 February 07
December 2004 3,382 2,698,997 – – 267.00 February 08
9,657 9,101,699 7,726 7,848,450
(b) Buy As You Earn (BAYE) scheme
BAYE enables eligible employees to purchase shares from their gross income. The Company provides two matching shares for every three shares
bought by employees, subject to a maximum Company contribution of shares to the value of £20 per month. If the shares are held in trust for ﬁve
years or more, no income tax and national insurance will be payable. The matching shares will be forfeited if the corresponding partnership shares
are removed from trust within three years of award.
At 31 March 2005 there were 4,313 (2004: 3,938) participants in the BAYE scheme who have cumulatively purchased 1,361,344 (2004:
730,258) shares with the Company contributing 438,584 (2004: 217,513) matching shares on a cumulative basis. 
(c) Executive share option scheme
The executive share option scheme (ESOS), together with the deferred share element of the Executive Bonus Scheme replaced the Long-term
incentive plan (LTIP). Options are exercisable between three and ten years of the date of grant provided that the pre-determined performance
criteria are met. Further details of the scheme including the performance criteria, are included in the Directors’ remuneration report.
Details of executive share options outstanding at 31 March 2005 are set out below:
Ordinary 5p shares
2005 2004 Exercise Date original
Scheme No. No. price (p) option granted
FirstGroup Executive Share Option Scheme 732,326 742,715 346.5 August 01
FirstGroup Executive Share Option Scheme 1,097,584 1,148,189 269.0 June 02
FirstGroup Executive Share Option Scheme 1,206,346 1,246,983 287.0 November 03
FirstGroup Executive Share Option Scheme 1,381,893 – 275.1 June 04
4,418,149 3,137,887
The performance period for the August 2001 ESOS expired on 31 March 2004. As the performance criterion was exceeded the participants
became eligible to exercise their awards on 15 August 2004 and have seven years from this date to exercise their options.
The initial performance period for the May 2002 ESOS expired on 31 March 2005. The performance criterion was not achieved and under the
rules of the scheme the performance period has been extended for a further 12 months. 
(d) LTIP
Options still unexercised under the LTIP are as follows:
Ordinary 5p shares
2005 2004 Award 
Date of award No. No. price (p)
3 July 2000 151,298 369,644 236.00 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF FIRSTGROUP PLC
60
We have audited the ﬁnancial statements of FirstGroup plc for the year ended 31 March 2005 which comprise the consolidated proﬁt and loss
account, the balance sheets, the consolidated cash ﬂow statement, the reconciliation of net cash ﬂows to movement in net debt, the consolidated
statement of total recognised gains and losses, the reconciliation of movements in equity shareholders’ funds and the related notes 1 to 31. 
These ﬁnancial statements have been prepared under the accounting policies set out therein. We have also audited the information in the part 
of the Directors’ remuneration report that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. 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 auditors’ report and
for no other purpose. To the fullest 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 this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the statement of Directors’ responsibilities, the Company’s Directors are responsible for the preparation of the ﬁnancial statements
in accordance with applicable United Kingdom law and accounting standards. They are also responsible for the preparation of the other
information contained in the annual report including the Directors’ remuneration report. Our responsibility is to audit the ﬁnancial statements and
the part of the Directors’ remuneration report described as having been audited in accordance with relevant United Kingdom legal and regulatory
requirements and auditing standards.
We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and whether the ﬁnancial statements and the part
of the Directors’ remuneration report described as having been audited have been properly prepared in accordance with the Companies Act 1985.
We also report to you if, in our opinion, the Directors’ report is not consistent with the ﬁnancial statements, if the Company has not kept proper
accounting records, if we have not received all the information and explanations we require for our audit, or if information speciﬁed by law
regarding Directors’ remuneration and transactions with the Company and other members of the Group is not disclosed.
We review whether the corporate governance statement reﬂects the Company’s compliance with the nine provisions of the July 2003 FRC
Combined Code speciﬁed for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required
to consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s
corporate governance procedures or its risk and control procedures.
We read the Directors’ report and the other information contained in the annual report for the above year as described in the contents section
including the unaudited part of the Directors’ remuneration report and consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the ﬁnancial statements.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the ﬁnancial statements and the part of the Directors’
remuneration report described as having been audited. It also includes an assessment of the signiﬁcant estimates and judgements made by 
the Directors in the preparation of the ﬁnancial statements and of whether the accounting policies are appropriate to the circumstances of the
Company and the Group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide
us with sufﬁcient evidence to give reasonable assurance that the ﬁnancial statements and the part of the Directors’ remuneration report described
as having been audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also
evaluated the overall adequacy of the presentation of information in the ﬁnancial statements and the part of the Directors’ remuneration report
described as having been audited.
Opinion
In our opinion: 
• the ﬁnancial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 March 2005 and of the proﬁt of
the Group for the year then ended; and
• the ﬁnancial statements and part of the Directors’ remuneration report described as having been audited have been properly prepared in
accordance with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
10 May 2005 GROUP FINANCIAL SUMMARY
61
2005 2004 2003 2002 2001
Consolidated proﬁt and loss account £m £m £m £m £m
Group turnover 2,693.4 2,479.0 2,291.0 2,164.1 2,054.0
Operating proﬁt before goodwill amortisation, bid costs and other exceptional items 211.6 204.1 216.1 215.0 214.3
Goodwill amortisation (25.8) (25.9) (25.8) (27.3) (25.9)
Bid costs and other exceptional items (11.9) (13.5) (10.6) (20.5) (53.5)
Operating proﬁt 173.9 164.7 179.7 167.2 134.9
Proﬁt before interest 177.2 184.3 189.7 164.2 201.3
Net interest payable (48.3) (42.8) (56.3) (56.3) (64.5)
Exceptional interest charge – (18.7) – – –
Proﬁt before taxation 128.9 122.8 133.4 107.9 136.8
Taxation (32.7) (30.6) (35.8) (33.9) (55.2)
Proﬁt after taxation 96.2 92.2 97.6 74.0 81.6
EBITDA 319.2 307.1 315.3 310.1 302.7
Earnings per share pence pence pence pence pence
Adjusted basic 28.2 27.3 26.8 25.8 23.4
Basic 22.5 22.3 23.4 17.6 18.4
Cash 55.1 52.4 50.6 48.5 44.1
Dividend per share 12.8 11.7 11.0 10.3 9.4
Consolidated balance sheets £m £m £m £m £m
Fixed assets* 1,290.8 1,258.8 1,272.5 1,344.5 1,326.2
Net current liabilities (28.8) (92.9) (115.5) (127.4) (210.6)
Creditors: amounts due after more than one year (756.3) (682.8) (630.9) (687.9) (622.6)
Provision for liabilities and charges (147.5) (128.1) (124.0) (110.7) (93.8)
Equity minority interests (10.6) (2.1) (1.1) (1.0) (0.9)
Equity shareholders’ funds* 347.6 352.9 401.0 417.5 398.3
Share data
Number of shares in issue million million million million million
At year end (excluding Treasury Shares) 393.6 403.0 413.4 419.8 422.4
Average 399.2 410.0 416.7 419.8 422.2
Share price pence pence pence pence pence
At year end 343 268 240 302 305
High 379 306 339 365 312
Low 256 219 200 243 140
Market capitalisation £m £m £m £m £m
At year end 1,369 1,078 992 1,268 1,288
*Prior years restated on adoption of UITF 38.  SHAREHOLDER INFORMATION
62
Shareholder enquiries
The Company’s share register is 
maintained on our behalf by Lloyds TSB
Registrars, who are responsible for making
dividend payments and updating the 
register, including details of changes to
shareholders’ addresses and purchases and
sales of the Company’s shares. If you have
any questions about your shareholding in the
Company or need to notify any changes to
your personal details you should contact:
Lloyds TSB Registrars, The Causeway,
Worthing, West Sussex BN99 6DA.
Telephone: 0870 600 3973.
Employees with queries about shares held 
in the Company’s employee share 
schemes should contact Lloyds TSB
Registrars at the same address or by
telephoning 0870 241 3938.
Duplicate shareholder accounts
If you receive more than one copy of
Company mailings this may indicate that
more than one account is held in your name
on the Register. This happens when the
registration details of separate transactions
differ slightly. If you believe more than one
account exists in your name you may
contact the Registrars to request that the
accounts are combined. There is no charge
for this service.
Direct dividend payments
If you would like your dividend to be paid
directly into your bank or building society
account, you should contact the Registrars
or complete the dividend mandate attached
to your dividend cheque. Mandating your
dividends has a number of advantages.
Firstly, the dividend will go into your account
on the payment date – there is no chance of
it being delayed in the post and you do not
have to wait for a cheque to clear. Secondly,
the payment method is more secure than
receiving a cheque through the post. Thirdly,
you still receive tax information about the
dividend, which is sent direct to you at your
registered address.
Online information
The Registrars also provide an online service
enabling you to access details of your
shareholding. To view your details and a
range of general information about holding
shares, visit www.shareview.co.uk.
FirstGroup policy on discounts for
shareholders
Shareholders are reminded that it is not
Group policy to offer travel or other
discounts to shareholders, as they may be
used only by a small number of individuals.
The Group would rather maximise dividends,
which are of beneﬁt to all shareholders.
Unsolicited mail
As the Company’s share register is, by law,
open to public inspection, shareholders may
receive unsolicited mail from organisations
that use it as a mailing list. To limit the
amount of unsolicited mail you receive, write
to the Mailing Preference Society,
FREEPOST 22, London, W1E 7EZ or
register online at www.mpsonline.org.uk. 63
Shareholder proﬁle
Number of 
At 30 April 2005 holders % Shares held %
By category
Individuals 45,897 96.3 59,315,165 14.9
Banks and nominees 1,549 3.3 328,325,173 82.3
Insurance and assurance 3 – 1,158,151 0.3
Other companies 205 0.4 9,952,211 2.5
Other institutions 2 – 621 –
47,656 100.0 398,751,321 100.0
By size of holding
1-1,000 37,226 78.1 9,292,135 2.3
1,001-5,000 8,069 16.9 17,850,500 4.5
5,001-10,000 1,246 2.6 8,655,822 2.2
10,001-100,000 804 1.7 21,305,002 5.3
Over 100,000 311 0.7 341,647,862 85.7
47,656 100.0 398,751,321 100.0
Financial calendar
Annual General Meeting 14 July 2005
Shares trade ex dividend 20 July 2005
Record date for ﬁnal dividend* 22 July 2005
Final dividend payment 26 August 2005
Interim results announced November 2005
Interim dividend paid February 2006
Preliminary announcement of full year results May 2006
*Shareholders recorded on the register at this date will receive the ﬁnal dividend. 64 02 Group overview
03 Financial highlights
04 Chairman’s statement
05 Chief Executive’s review
13 Financial review
17 Board of Directors
18 Corporate governance
23 Directors’ remuneration report
30 Directors’ report
32 Directors’ responsibilities
33 Financial statements contents
34 Consolidated proﬁt and loss account
35 Balance sheets
36 Consolidated cash ﬂow statement
36 Reconciliation of net cash ﬂows to movement in net debt
37 Consolidated statement of total recognised gains and losses
37 Reconciliation of movements in equity shareholders’ funds
38 Notes to the ﬁnancial statements
60 Independent auditors’ report
61 Group ﬁnancial summary
62 Shareholder information
THAT’S IT FOR THIS YEAR, BUT IF YOU WANT 
MORE INFORMATION ON FIRSTGROUP OR YOU
WANT TO BOOK YOUR JOURNEY PLEASE PAY 
US A VISIT AT WWW.FIRSTGROUP .COM TRANSFORMING TRAVEL
ANNUAL REPORT 2005
Principal and Registered Ofﬁce
FırstGroup plc
395 King Street
Aberdeen AB24 5RP
Telephone: 01224 650100
Facsimile: 01224 650140
Registered in Scotland 
number SC157176
London Ofﬁce
FırstGroup plc
Third Floor
E Block
Macmillan House
Paddington Station
London W2 1FG
Telephone: 020 7291 0505
Facsimile: 020 7636 1338
The paper used to produce this report is
made from Totally Chlorine Free (TCF) pulps
sourced from fully sustainable forests.
www.fırstgroup.com
FirstGroup plc Annual Report 2005
Designed and produced by Paufﬂey Ltd  www.paufﬂey.com   Printed by Royle Corporate Print