The Directors present the strategic report, the directors' report and financial statements for the year ended 31 December 2024.

On 28 February 2025, the controlling interest of the holding company was acquired by First Bus Holdings Limited. Since 28 February 2025, the company is considered to be wholly owned subsidiary of FirstGroup plc and part of

the Bus division of FirstGroup plc.

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

Specific business risks faced by the company include the following:

Competition risk

The company faces the risk of loss of customers through other bus companies providing improved services or more competitive pricing. Management mitigate the competitive pressure by monitoring competitors’ behaviour and strategies to ensure that the company acts appropriately under current market conditions.

Litigation and claims risk

The company has three main insurance risks: third party claims arising from vehicle and general operations; employee injuries; and property damage. FirstGroup plc has a very strong focus on safety, as one of its core values. The promotion of a ‘Safety First’ culture at all levels throughout the business minimises insurance premiums and other related claims.

Labour cost and employee relations and retention risk

Labour costs represent the most significant element of the company's operating costs. The directors continue to monitor employee recruitment, training, personal development and remuneration to ensure the company attracts and retains the right people.

To retain the right people the company believes that good communication with employees is effected through regular briefing and negotiating meetings between the directors, the senior management and employee representatives on the central and depot negotiating committees. The briefing meetings enable senior management to consult employees and to ascertain their views on matters likely to affect their interests.

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

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

Principal risks and uncertainties (continued)

Fuel cost risk

Fuel cost represents a significant proportion of the company's cost base. Fuel prices are directly influenced by international, political and economic circumstances as well as natural disasters. Wherever possible, the group seeks to minimise the operational and financial impact of such events through fixed price forward contracts and other operational efficiency measures.

Environmental risk (including climate change)

FirstGroup plc recognises the importance of its environmental policies, monitors its impact on the environment, and designs and implements policies to reduce any damage that might be caused by the group’s activities. The company operates in accordance with group policies, which are described in the group’s Annual Report, which do not form part of this report. Initiatives designed to minimise the company’s impact on the environment include safe disposal of waste, recycling and reducing energy consumption.

Through our core business activities, we are committed to providing safe, good quality, reliable and cost effective public transport to all our customers. Our core business strategy is to increase customer numbers and encourage a greater move towards the use of bus transport. This will support the needs of society to achieve more sustainable travel. We recognise the environmental impacts arising from our business activities and are committed to reducing these through effective environmental management.

Economic risk

Economic risks to the business include increased costs due to inflation, changing customer needs, declining passenger demand, reduced operations due to industrial actions and reduced opportunities for growth.

Whilst passenger demand has been stable, potential changes in passenger behaviours and the applicable economic conditions remain uncertain in the medium term.

The company will prioritise a customer‑focused perspective and seek to provide innovative transport solutions, by adapting to market uncertainties and driving demand, and to focus on controlling costs to ensure it remains competitive.

Section 172(1) statement

The directors have a duty to promote the success of the company for the benefit of its members as a whole. The directors of the company understand the need to have regard to the views and interests of wider stakeholders when assessing the consequences of a decision over the longer term.

FirstGroup plc’s key stakeholders, as identified in the group’s Annual Report are customers, investors, government, our people, communities and strategic partners and suppliers. The directors of First West Yorkshire Limited confirm that its key stakeholders are the same as those of FirstGroup plc.

Further details on how the directors engage with them are set out below.

Customers

The company conducts regular customer and passenger satisfaction surveys to identify what customers feel is done well and what can be improved, and has robust customer feedback processes through online and traditional channels.

Investors

FirstGroup plc engages with investors through various means, including monthly updates from the Chief Executive and regular communications on the website. The group also has an Investor Relations team who are available to discuss the Group’s strategy with major shareholders at any time. The company provides input into the engagement that FirstGroup plc has with investors where relevant.

Section 172(1) statement (continued)

Government

The company works closely with local authorities to pursue formal and informal partnerships which help to deliver better services through measures which cut road congestion and give priority to buses. Other key areas of focus for the directors are compliance with laws and regulations and health and safety. The board is updated on legal and regulatory developments and takes these into account when considering future actions. The company made no political donations in the current or previous period.

Our people

Engagement with our people is achieved through formal and informal consultation meetings with both employees and trade union representatives (where appropriate), and the inclusion of an employee director on FirstGroup plc’s board of directors. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests. Further details can be found in the Directors’ Report.

Community

At a group level engagement with the community is driven through targeted engagement plans and activities, community investment, charitable engagement and employee volunteering. Feedback from the community is achieved through regular surveys at group and local level where applicable.

Strategic partners and suppliers

The company understands that collaboration with strategic partners and suppliers enables best practice to be established. The company engages with partners and suppliers through regular formal and informal dialogue, collaboration in cross-industry forums and by adhering to the highest ethical and sustainability standards.

Further details on how the group as a whole has discharged their duties under section 172(1) are discussed in the group’s Annual Report which does not form part of this report. Details of where the group’s Annual Report can be found are set out in note 21.

On behalf of the board

W J Cahill

Director

26 September 2025

The Directors present their Directors' report and financial statements for the year ended 31 December 2024.

The principal activity of the Company continued to be that of the provision of road passenger transport services in the Greater London area.

The results for the year are set out on page 12.

No ordinary dividends were paid (2023: £nil). The Directors do not recommend payment of a final dividend (2023: £nil).

The Directors who held office during the year and up to the date of signature of the financial statements were as follows:

The Company has made qualifying third party indemnity provisions for the benefit of its Directors which were made during the year and remain in force at the reporting date.

The Company's activities expose it to certain financial risks. These include price risk related primarily to fuel prices and interest rate risk. Management reviews financial risks regularly in accordance with company policies. The Company uses financial instruments to hedge financial risks associated with fuel purchases which are a major cost. The Company manages the volatility in its fuel costs by maintaining an ongoing fuel hedging programme whereby derivatives are used to fix the variable unit cost of anticipated fuel consumption. Further details are given in note 17.

The Company's policy in respect of disabled persons is that their applications for employment are always fully and fairly considered, bearing in mind the aptitudes and abilities of the applicant concerned. In the event of a member of staff becoming disabled every effort is made to ensure that employment with the Company continues and where necessary, appropriate training is arranged. It is the Company's policy that training, career development and promotion of disabled persons should, as far as possible, be identical with that of all other employees in a similar position.

The Directors and managers of the Company place considerable value on consultative meetings with employees. Information on matters affecting employees and on various factors affecting the performance of the Company is disseminated through meetings, newsletters and training programmes. Employees' representatives are consulted regularly on a wide range of matters affecting employees' current and future interests.

In 2025 the Company aims to operate over 45% of its bus routes from Westbourne Park with an electric fleet of buses. This focus and programme of electrification will continue over the coming years as the Company supports the TfL ambition to have a 100% zero-emission bus fleet in London in the future by 2030. The Company will continue to bid sensibly for new routes as the opportunity arises.

On 28 February 2025, the controlling interest of the holding company was acquired by First Bus Holdings Limited. The senior management team joined the company over the last three years and have developed and implemented a comprehensive turnaround plan for the business. Good progress has been made since the implementation of the plan, both in enhanced bid discipline with c.30 routes rebid over the past two years across First Bus London, including the early termination of loss making routes at contract review dates as well as improved operational performance and cost control, and workforce stabilisation. This improvement in performance can be seen in the TfL Q2 FY 2025 Bus Operator League Tables, with the three subsidiaries occupying first, second and fourth place in the league table for “operated mileage before non-deductible losses”.

•     an indication of financial risk management objectives and policies required by paragraph 6(1)(a);

•     an indication of exposure to price risk, credit risk, liquidity risk and cash flow risk required by paragraph 6(1)(b); and

•     a statement describing the Company's policy regarding the hiring, continuing employment and training, and career development required by paragraph 10(3).

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

No political donations were made during the current or prior period.

During 2023, the Company evolved the management team to add experience and drive improvements in the underlying business. In 2024 and into 2025, the Company continues to invest in the modernisation of operating standards in the garages, investment in new technology and further electrification of the garage infrastructure, with the expectation that these will reduce the operating loss and help drive the Company back to profitability in the future.

The Directors have therefore deemed it appropriate to prepare these financial statements on a going concern basis.

Greenhouse gas emissions, energy consumption and energy efficiency action

In accordance with the disclosure requirements, the table below shows the Company’s greenhouse gas emissions during the financial year:

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Governments conversion Factors for Company Reporting.

First Bus London (the collective trading name for London United Busways Limited, London Sovereign Limited and London Transit Limited) is committed to minimising the impact our operations have on the communities in which they serve. We now have a total of 21 electric routes operating from six garages, with this increasing to 23 by the end of 2025, with ongoing electrification work within these garages to improve charge speed.

Electrification plays a critical part of our business and partnership with Transport for London (TfL). 38% of our fleet is now fully electric growing to 45% by the end of 2025.

Elsewhere in our fleet we run a large number of hybrid diesel-electric buses, which are also much kinder to the environment than conventional diesel, as we work hand in hand with TfL to transition to a 100% zero-emission bus fleet by 2030 and continue to help London achieve its sustainability goals.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 101: Reduced Disclosure Framework ("FRS 101"). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company for that period. In preparing these financial statements, the Directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards, including FRS 101, have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

We have audited the financial statements of London Transit Limited (the 'company') for the year ended 31 December 2024 which comprise the Income Statement, the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and notes to the financial statements, including material accounting policy information.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 101 "Reduced Disclosure Framework" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its loss for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the financial statements" section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

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

•     adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

Based on our understanding of the company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation and anti-money laundering regulation.

To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:

•     Inquiring of management and, where appropriate, those charged with governance, as to whether the company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;

•     Inspecting correspondence, if any, with relevant licensing or regulatory authorities;

•     Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and

•     Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud

We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as: tax legislation, pension legislation and the Companies Act 2006.

In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, revenue recognition (which we pinpointed to the accuracy and cut off assertions) and significant one-off or unusual transactions.

Our audit procedures in relation to fraud included but were not limited to:

• Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;

• Gaining an understanding of the internal controls established to mitigate risks related to fraud;

• Discussing amongst the engagement team the risks of fraud; and

• Addressing the risks of fraud through management override of controls by performing journal entry testing.

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the 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.

The above results were derived from continuing operations.

The notes on pages 17 to 34 are an integral part of these financial statements.

The notes on pages 17 to 34 are an integral part of these financial statements.

The notes on pages 17 to 34 are an integral part of these financial statements.

The notes on pages 17 to 34 are an integral part of these financial statements.

London Transit Limited is a private company limited by shares incorporated in England and Wales. The registered office is Garrick House, Stamford Brook Garage, London, United Kingdom, W4 1SY.

The Company's principal activities and nature of its operations are disclosed in the directors' report.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

In preparing these financial statements, the Company applied the recognition and measurement requirements of UK-adopted international accounting standards ("IFRS"), amended where necessary in order to comply with Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £1,000, unless otherwise stated.

The financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments (i.e. derivatives). The principal accounting policies adopted are set out below.

As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation to financial instruments, presentation of comparative information in respect of certain assets, presentation of a cash-flow statement, standards not yet effective, disclosure of remuneration paid to auditors for non-audit services, related party transactions, key assumptions in cash flow projections and qualitative and quantitative information related to changes in contract assets and contract liabilities. Where required, equivalent disclosures are given in the group accounts of Régie Autonome des Transports Parisiens. The group accounts of Régie Autonome des Transports Parisiens are available to the public and can be obtained as set out in note 22.

The company has applied the exemption available under FRS 101 in relation to paragraphs 30 and 31 of IAS 8, 'Accounting policies, changes in accounting estimates and errors' (requirement for the disclosure of information when an entity has not applied a new lFRS that has been issued but is not yet effective).

There were no amendments to IFRSs or new interpretations effective for the current period that have had a material impact on the company's financial statements.

As at 31 December 2024, the Company had net current liabilities of £36,427,000 (2023 £26,928,000). As the Company was loss-making in the period the ultimate parent company, FirstGroup plc, has given assurance to provide support to the Company for at least twelve months from the date of issuing this report. true

During 2023, the Company continued to evolve the management team to add experience and drive improvements in the underlying business. In 2024 and into 2025, the Company continues to invest in the modernisation of operating standards in the garages, investment in new technology and further electrification of the garage infrastructure, with the expectation that these will reduce the operating loss and help drive the Company back to profitability in the future.

Revenue recognition is determined in accordance with IFRS 15 “Revenue from contracts with customers”. The standard prescribes a five-step model to account for revenue which includes: to identify the contract and its performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognise revenue when a performance obligation is satisfied.

Intangible assets consists of computer software and associated implementation costs of that software. None of the costs are internally generated. Intangible assets are stated at cost, less accumulated amortisation and any impairment losses.

Amortisation is charged to write off the cost over their useful lives using the straight-line method of 5 years.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Assets under construction consists of the historical cost of assets under construction and not in use as at the reporting date. Depreciation is not charged against the asset until its completion and it has started to be utilised.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

Right of use assets relates to long leasehold which are depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease.

The Company assesses whether there are any indicators of impairment for all assets at each reporting date. The carrying values of property, plant and equipment, and investments are measured using a cost basis and intangible assets are reviewed for impairment only when events indicate the carrying value may be impaired.

In an impairment test, the recoverable amount of the cash-generating unit or asset is estimated to determine the extent of any impairment loss. The recoverable amount of the asset is quantified at the present value of expected future cash flows that will arise from the sale or use of the asset, and this is calculated as the greater of the fair value of the asset (reduced by any related selling costs), and value in the use of such assets. An impairment loss is recognised to the extent that the carrying value exceeds the recoverable amount.

In determining a cash-generating unit's or asset's value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the cash-generating unit or asset that have not already been included in the estimation of future cash flows.

Inventories consist of fuel as well as parts and materials required for the operation and maintenance of buses. These materials are valued at the lower of cost and net realisable value, being cost less due allowance for obsolete and slow moving items. Cost is based on the cost of purchase on a first in, first out basis.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets are classified as financial assets at fair value through profit or loss, fair value through other comprehensive income or amortised cost as appropriate. The Company determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of instruments not at fair value through profit or loss, directly attributable transaction costs.

Financial liabilities are classified as financial liabilities at fair value through profit or loss or amortised cost, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value, which in the case of loans and borrowings, is net of directly attributable transaction costs. Loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.

Financial assets and financial liabilities are recognised on the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

An impairment loss is recognised for the expected credit losses on financial assets where there is an increased probability that the counterparty will be unable to settle an instrument’s contractual cashflows on contractual due dates, a reduction in the amounts expected to be recovered, or both.

The probability of default and expected amounts recoverable are assessed using reasonable, and supportable past and forward-looking information that is available without undue cost or effort. The expected credit loss on trade receivables is a probability weighted amount determined from grouping the receivables based on days overdue and making assumptions based on historic information to allocate an overall expected credit loss rate for each group.

Trade and other receivables are initially recognised at fair value plus transaction costs, when the Company becomes party to the contractual provisions of the instrument. The Company recognises an allowance for expected credit losses for customers and other receivables and the impairment provision to be recognised on origination of the customer balance based on its estimated credit loss and assessed throughout the life of the balance. Any changes in their value through impairment or reversal of impairment is recognised in the statement of comprehensive income.

Trade payables are not interest bearing and are stated at their amortised cost.

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

The Company's activities expose it to certain financial risks including changes in fuel prices. The Company uses forward contracts to hedge these exposures when considered appropriate, and only when the forecasted transaction which is being hedged is considered highly probable. The Company does not use derivative financial instruments for speculative purposes. Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised in other comprehensive income and the ineffective portion is recognised immediately in the statement of comprehensive income. If the cash flow hedge of a forecasted transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the statement of comprehensive income in the same period in which the hedged item affects net profit or loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the statement of comprehensive income as they arise.

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted at the reporting date.

Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax is recognised in respect of temporary timing differences that have originated but not reversed at the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the statement of financial position and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the Directors' best estimate of the expenditure required to settle the Company's liability. No discount is applied due to the lack of certainty over the timing of settlement and it is not expected that any discounting would be material.

The Company also operates a defined contribution retirement scheme. The contributions of this scheme are recognised as an expense when they fall due. The scheme is open to employees to join, in accordance with the Pension Deed rules and the employee satisfying the scheme eligibility conditions. The scheme permits contributions from both the Company, which are accounted for as and when they fall due, and also contributions paid by the employee into the scheme, which are in general, subject to some exceptions, a deduction from the employees’ salary.

For any new contracts entered into, the Company considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.

At lease commencement date, the Company recognises a right-of-use asset and a lease liability. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

On the statement of financial position, right-of-use assets have been included in property, plant and equipment.

In the application of the Company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning estimation uncertainty at the balance sheet date that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below:

The key judgements made by the directors in the process of applying the Company’s accounting policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities, including those that are made using key sources of estimation uncertainty as at the reporting date, are set out below:

All of the Company's revenue derives from the provision of road passenger transport services within the United Kingdom.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Directors remuneration

No remuneration is paid to directors through the Company, directors of the Company are remunerated by another group undertaking. The Company is charged a management fee from that group undertaking which includes a recharge of a portion of the directors' remuneration. The portion of the management fee related to directors' remuneration was £259,000 (2023: £284,000).

The charge for the year can be reconciled to the loss per the income statement as follows:

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

The net book value of owned and leased assets included as “Property, plant and equipment” in the balance sheet is as follows:

The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense of £13,000 (2023 £6,000) in profit or loss on a straight-line basis over the lease term.

The net book value of owned and leased assets included as “Property, plant and equipment” in the balance sheet is as follows:

The net book value amount of £195,000 transferred out of buses relates to contractual refurbishment costs. These had been previously capitalised. The amounts have been transferred to contract costs recoverable within Trade and other receivables.

The following are the major deferred tax liabilities and assets recognised by the Company and movements thereon during the current and prior reporting year.

The deferred taxation has been calculated at 25% (2023: 23.52%)

A deferred tax asset is recognised in respect of unused tax losses carried forward only to the extent that the Company considers it probable that there will be sufficient future taxable profit against which the loss can be utilised.

The Company has an unrecognised deferred tax asset of £6,070,000 (2023 £4,700,000) relating to carried forward trading losses.

There is not a material difference between the carrying value of the inventory and its replacement cost.

Current amounts owed by fellow group undertakings are unsecured, interest free and repayable on demand.

Contract costs are specific costs incurred in line with commercial agreements that are required for the delivery of the contracts and are amortised over the life of the contract.

Loan from parent undertaking of £29,900,000 (2023: £13,000,000) is charged interest at SONIA + 1.76% (2023: SONIA + 1.46%), is unsecured and repayable on demand.

Bank overdraft incurs interest at Bank of England Base Rate +4%.

The other amounts owed to fellow group undertakings are unsecured, interest free and repayable on demand.

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

The Company uses derivative financial instruments to reduce exposure to commodity price risk. The Company does not hold or issue derivative financial instruments for speculative purposes. The Company's transport operations consume 2.26 million litres of diesel fuel per annum. As a result, the Company's profits are exposed to the movement in the underlying price of crude oil, which is the major driver of diesel prices. The Company manages the volatility in its fuel costs by maintaining an ongoing fuel hedging programme whereby derivatives are used to fix or cap the variable unit cost of anticipated fuel consumption.

Derivative financial instruments are classified on the balance sheet as at 31 December 2024 as set out below:

Claims

Provision for claims against the Company, mainly for motor related incidents, are established when there is a high probability that the Company will be liable for the claim cost and that this is quantifiable. Claims may relate to personal injury and/or vehicle damage and the Company is advised by 3rd party claims-handling agents on the likelihood of the claim outcome and the estimated monetary cost both of which are monitored and updated over time.

The majority of claims are anticipated to be settled within five years of the balance sheet date, although the timing of any outflow is dependent on the settlement of each individual claim.

The ordinary shares are non redeemable, carry no right to fixed income and carry the right to one vote at general meetings of the Company.

The cash flow hedging reserve represents the net gains or losses, net of tax, on effective cash flow hedging instruments that will be recycled to the income statement when the hedged transaction affects profit or loss.

The underlying contracts relating to the cash flow hedging reserve are held by other group companies and therefore any associated derivative asset or liability form part of the intercompany balance.

Accumulated losses are the cumulative losses of the Company after accounting for dividends.

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

Copies of the financial statements of FirstGroup plc can be obtained on request from the registered address 395 King Street, Aberdeen, AB24 5RP.

The Company's immediate parent company is First Bus London Limited, a company registered in England and Wales.