Assurance Statement

Our brief

FirstGroup plc ('FirstGroup') appointed Environmental Resources Management Limited (ERM) to provide independent assurance on selected information presented in its 2010/11 Corporate Social Responsibility (CSR) summary report and associated web pages ('the Report') as follows:

1. AA1000 AccountAbility Principles: FirstGroup's status of alignment against the AA1000 AccountAbility Principles of Inclusivity, Materiality and Responsiveness; and
2. Selected 2010/11 Performance Indicators (KPIs) as follows:

Safety (employees and customers)

• Total passenger injuries per million miles
• Total vehicle collisions per million miles
• Lost Time Injuries (over 1 day) per 1,000 employees
• Assaults on employees per 1,000 employees

Environment

• Average carbon dioxide emissions per vehicle kilometre

Our approach

Standards and criteria used

We performed our work in accordance with the AccountAbility AA1000 Assurance Standard (AS) 2008 Type 2 requirements. We used the following assessment criteria when undertaking our work: AA1000 AccountAbility Principles Standard (APS) 2008 and FirstGroup's own definitions of the selected KPIs.

Level of Assurance and engagement limitations

We planned and performed our work to obtain all the information and explanations that we believe were necessary to provide a basis for our assurance conclusions as to whether the reported information set out in 'Our brief' was appropriately reported (moderate assurance as per AA1000 AS 2008).

If we had been asked to conclude on whether the reported information subject to assurance was robust (high assurance as per AA1000 AS 2008), we would have needed to conduct more work at corporate and site levels and to gather further evidence to support our assurance opinion.

The reliability of the reported information and data is subject to inherent uncertainties, given the available methods for determining, calculating or estimating the underlying information. It is important to understand our assurance conclusions in this context.

Our work

A multi-disciplinary team of sustainability and assurance specialists with experience in FirstGroup's industry sector performed work at corporate level and at a selection of operating locations. Our assurance activities included:

• Face-to-face interviews to understand and test the processes in place for reporting on the AA1000 Principles and the KPIs, and the underlying data management systems;
• Site visits to seven FirstGroup sites across the UK and the USA, which involved testing on a sample basis the measurement, collection, aggregation and reporting processes in place;
• Reporting our assurance findings to management as they arose to provide them with the opportunity to correct them prior to finalisation of our work; and
• Reviewing the presentation of information relevant to the scope of our work in the Report to ensure consistency with our findings.

Respective responsibilities and ERM's independence

FirstGroup is responsible for preparing the Report and for the collection and presentation of information within it. ERM's responsibility is to express our assurance conclusions on the agreed brief.

ERM operates strict conflict checks and we have confirmed our independence to FirstGroup for delivering our assurance engagement.

Our assurance conclusions

Based on the work undertaken as described above, we conclude that in all material respects the following information selected for this assurance engagement has been appropriately reported:

1. FirstGroup's status of alignment against the AccountAbility 1000 Principles of Inclusivity, Materiality and Responsiveness can be found here; and
2. The selected 2010/11 KPIs as presented throughout the Report.

Our key observations and recommendations

Based on our work set out above, and without affecting our conclusions, our key observations and recommendations for improvement are:

In relation to the Inclusivity Principle:

• As presented within its CSR report, FirstGroup engages a wide range of stakeholders in the UK and the USA, and at corporate, regional, operating company and local site levels. Looking forward, we recommend that the business:

  • Strengthens its engagement with local authorities, where relevant with its activities, and leverages such engagement to more strategically drive business performance improvement; and
  • Integrates further the relevant CSR issues within its assessment of stakeholder satisfaction (e.g. within employee and customer surveys).

In relation to the Materiality Principle

• ERM recommends that FirstGroup better integrates the business risk assessment processes and the Materiality process as referred to in the AA1000 section of the online report; and
• Reviews and considers longer-term risk scenarios and their likely impacts on the business (e.g. climate change, demographical changes).

In relation to the Responsiveness Principle and the selected Performance Indicators we have reviewed

• ERM recognises that FirstGroup is making substantial progress with respect to the development of overall business and CSR strategies and ERM looks forward to these being further articulated over the year ahead. In relation to such developments we recommend:

  • Developing a stronger narrative that integrates the company's business and CSR ambitions;
  • Continuing to explore how CSR can contribute to overall business success in the future, for example how its CSR positioning and performance may influence the winning of new franchises and contracts; and
  • Improving internal communication of CSR-related activities, in particular to highlight the business benefits that have been realised from such efforts.
• We commend the work undertaken over the past year by FirstGroup America in further embedding the Group CSR initiatives and performance data collection and reporting processes. Looking forward, it is recommended that this process continues.
• With regards to the selected safety and environmental KPIs on which we have provided assurance, we note FirstGroup's continuing performance improvements.
• In ERM's view, FirstGroup is leading the way in many respects in terms of CSR reporting in its industry. Looking forward, we recommend that it increases the extent of reporting on its North American operations to reflect the contribution of these operations to the Group.

Environmental Resources Management Limited (ERM)

Edinburgh, UK 13 June 2011

ERM is an independent global provider of environmental, social and corporate responsibility consulting and assurance services. Over the past four years we have worked with over half of the world's 500 largest companies, in addition to numerous governments, international organisations and NGOs.

Our assurance statement provides no assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular whether any changes may have occurred to the information since it was first published. These matters are the responsibility of FirstGroup but no control procedures can provide absolute assurance in this area.