Ifg Regulatory News (IFP)

IFG Group plc

Interim Results for the six months ended 30 June 2011

IFG Group plc today (31 August 2011) released its interim statement for the six months to 30 June 2011. Key highlights include:

Financial Highlights

·; Revenue of £56.3 million (2010 HY: £49.6 million)

·; Adjusted operating profit of £11.9 million (2010 HY: £9.8 million)

·; Operating profit of £7.9 million (2010 HY: £0.4 million)

·; Adjusted earnings of £10.0 million (2010 HY: £8.4 million)

·; Proposed dividend in cent per share of 1.50 (GBP equivalent of 1.31 pence per share) (2010 HY: 1.35 cent per share, GBP equivalent of 1.18), an increase of 11%

·; Group net debt £10.3 million (2010 HY: £17.2 million)

·; Total assets under administration and advice of circa £60 billion

Business Highlights

·; Completion of the integration of James Hay on time and within 10% of expected costs

·; Successful launch of James Hay Partnership full private client SIPP and James Hay Partnership iSIPP

·; 1,254 new SIPPs; total SIPPs under administration of 38,987 at the period end

·; Strong performance in UK independent financial advisory services, 79 new client wins in Saunderson House

·; Stable revenue in IFG International demonstrates resilience of the business even in difficult markets

·; Evelyn Bourke appointed as Non-Executive Director

Commenting on the results, Mark Bourke, CEO of IFG Group plc said,

"Our business continues to show resilience and ability to deliver in times of market uncertainty and in difficult economic conditions. With a strong balance sheet we are also well placed in each of our chosen markets to grow organically and by acquisition".

For reference:

Mark Bourke Niamh Hore

Group CEO Investor Relations Manager

IFG Group plc IFG Group plc

Tel: +353 (0)1 275 2800 Tel: +353 (0)1 275 2866

Broker (Ireland): Broker (UK):

Paul Burke Jonny Franklin-Adams/Nick Harland

Davy Macquarie Capital (Europe) Limited

Tel: +353 (0)1 614 9142 Tel: +44 (0)20 3037 2000

IFG Group plc

Financial Highlights

Notes:

1. Adjusted earnings per share is stated before amortisation of intangible assets, share based payment compensation, exceptional items, discontinued operations and salaries of employees laid off.

 Reconciliation of adjusted earnings per ordinary share:

2. In accordance with IFRS the interim dividend is not accrued until paid and as such is not included as a reduction in reserves. The dividends noted above, if paid, will be paid in Euro (€) but are stated in GBP (£), consistent with the presentation currency of the Interim Report.

3. The Group's presentation currency was changed to GBP effective 1 January 2011. This change was effected because a significant majority of the Group's revenues and costs are now sourced and incurred in GBP. The functional currency changed in March 2011 in line with completion of the refinancing of the Group's borrowings. The financial information is presented in GBP with comparative figures restated.

Commentary on Interim Results

The Directors report that adjusted operating profit was £11.9 million (HY 2011 unadjusted: £7.9 million) compared with £9.8 million (HY 2010 unadjusted: £0.4 million) in the previous period on revenues of £56.3 million (HY 2010: £49.6 million). Adjusted earnings per share was 8.02 pence (earnings per share 5.94 pence) compared with adjusted earnings per share of 7.93 pence in HY 2010 (earnings per share HY 2010: 0.83 pence). Group net commitment (net debt plus net contingent consideration) at 30 June 2011 is £10.3 million (30 June 2010: £17.6 million).

The Board expects to declare a dividend of 1.50 cent per share (current GBP equivalent: 1.31 pence per share), an increase from the 2010 interim dividend of 1.35 cent per share (GBP equivalent: 1.18 pence per share), but has deferred doing so pending the outcome of the current discussions regarding a possible offer. In the event that these discussions do not result in an offer being forthcoming, the Board intends to declare and pay the dividend. Payment of the dividend is subject to withholding tax currently at 20%.

GROUP PERFORMANCE

The Group is managed from a largely geographic perspective based on three reporting segments: United Kingdom (UK), International and Ireland.

The Group earns its revenues in these segments from two sources:

§ Fees from the provision of services including Trustee & Corporate Services and Pension Administration services; and

§ Commissions earned in the intermediation of financial services products("Financial Services").

The performance of the Group in the first six months, split between segments, was as follows:

*A reconciliation of adjusted operating profit to profit before tax is included in the segmental analysis in Note 4.

UK

Pension Administration

IFG as an organisation administered 38,987 SIPPs at the half year. The rate of new business acquisition is shown below:

The period has been marked by the completion of the integration of James Hay on time and within 10% of expected cost. The focus now turns to the strengthening of the brand and rebuilding distribution.

The James Hay Partnership full private client SIPP and our James Hay Partnership iSIPP were launched in the period. Initial reaction to the features and price has been positive. While re-building James Hay to achieve its full potential is an incremental process, we are confident of continuing to deliver our base-case business plan. The potential is significant and is being pursued systematically.

Independent financial advisory 

The advisory business profit of £2.0 million has increased by 37% on a year on year basis. Saunderson House Limited has had a strong first half year both in terms of new client wins and time charges with 79 new clients and time recovery rates at 85 - 90%.

Saunderson House's proposition of conflict free and high quality financial advice continues to gain ground with clients and is very well positioned in light of the "Retail Distribution Review" (RDR) which is being implemented by the Regulator. The core recommendation of the RDR is to remove commission bias in the IFA and client relationship.

Our traditional advisory businesses were profitable in the first half of 2011.

INTERNATIONAL

The International business has produced a profit of £4.2 million in the first half of the year (HY 2010: £4.8 million). The performance through the first half year is close to plan in each of our major centres, Isle of Man, Jersey and Cyprus. The variance with the prior period is substantially driven by losses in our fund administration business as well as increased cost as we invest for the future by integrating businesses and strengthening teams, particularly in business development/sales in Switzerland, Ireland and Eastern Europe.

The result, while 13% below the prior period, is a reasonable performance given the continued subdued client activity and fee pressure. It demonstrates that the business is predominantly recurring (c. 70%) and delivers even in a stressed environment.

Annual fees and core time charges have held up well in each business centre. Although new entities formed are behind the prior period, the emphasis on quality of service and relationship management have supported performance and the overall resilience of the business.

We are continuing to explore expansion plans in South East Asia and opportunities to build in our key centres.

The strategy in International Division has evolved from a purely geographical offering to a more integrated proposition with centres of excellence and expanded competences which are to be built around accounting services, tax competence, fund or similar complex administration.

As tax rates continue to rise across the developed world, both multi-national corporations and wealthy individuals will continue to structure activities in a manner which legitimately optimises their tax position. The increases in tax rates and the intent of governments in protecting their individual tax base will continue be drivers of the market and revenue growth for the foreseeable future.

IFG as an independent provider of corporate and trust related administrative services, with capability in nine centres (now including BVI, Spain, UK, and Malta), is well placed to service these corporate and high net worth individuals.

IRELAND

General broking

We have continued to build value in the business by widening our product range and network of introducers. Mortgage broking associated activity remains de minimis as there is little activity in the market.

The Group acquired 70% of the issued share capital of A.R.B Underwriting Limited (and its subsidiary A.R. Brassington & Co. Limited, a general insurance brokerage). The acquisition was by way of an investment in shares and a capital contribution totalling €500,000. This was finalised in July 2011.

Financial services including central overhead

In Ireland the Financial Services business which includes Private Clients and Corporate Pensions has traded to expectations. The Corporate Pensions business continues to win business with 21 new clients secured in the first half of the year.

This performance in a very difficult market shows that our offering is meeting our client expectations in terms of price and functionality. The Corporate Pensions business continues to drive the private client business which has also performed well in the first half of the year. We have extended distribution and also sought to widen our competence in this space.

In line with the stated intention the Group concluded the disposal of Foster & Cranfield Limited. This took place in August 2011.

DEBT

Group net commitment (net debt plus net contingent consideration) is summarised and compared to the previous half year and 2010 year end below.

At 31 December 2010 the Group had substantially degeared with Group net commitment reduced to £12.7 million. At the half year it stood at £10.3 million. The refinancing of our debt was finalised in March this year and provides £19.0 million of additional headroom which can be used to finance further acquisitions as the opportunities arise.

The cost of our refinancing is competitive at between 2.25% and 2.75% over LIBOR, is predominately in GBP which meets the Groups operating cash flow and is repayable over a five year term.

Supplementary note from the Chairman

On 29 June 2011 IFG Group plc ("IFG" or the "Company") announced that following approaches made from two parties in relation to possible offers for the Company, it had invited both parties to proceed with a process of confirmatory due diligence. This was with a view to establishing whether a proposal could be forthcoming which was acceptable to the Board and which could then be put to shareholders. IFG confirms that following the conclusion of that process it has received a proposal regarding a possible offer from Bregal Capital LLP ("Bregal"). IFG has now entered into an exclusivity agreement with Bregal.

If concluded, the proposal contemplates a transaction whereby IFG shareholders would receive a cash offer of €1.80 per IFG share cum dividend. The proposed value represents a premium of 35.0% over the average closing price of €1.333 on the Irish Stock Exchange for the three months up to 20 April 2011, being the day immediately preceding the initial proposal received from Bregal. The proposal values IFG's fully diluted share capital at €231.2 million, based on IFG's 128.4 million ordinary shares in issue when taking into account in-the-money options and LTIP allocations.

Bregal have also undertaken to provide a non-cash alternative for IFG shareholders to re-invest their offer proceeds in the bid vehicle. The exact details of the quantum, terms and conditions of the non-cash alternative will be determined in due course.

The proposal is subject to certain customary pre-conditions, additional due diligence and terms as well as conclusion of banking facilities.

PRINCIPAL RISKS AND UNCERTAINTIES

The Transparency (Directive 2004/109/EC) Regulations 2007 require disclosure of the principal risks and uncertainties which could have a material impact on the Group's performance over the remainder of the financial year.

The principal risks and uncertainties facing the Group are set out in detail in the 2010 Annual Report at http://www.ifggroup.com/pdfs/Annual-2010.pdf and aside from those noted below have not changed. The Group actively manages all risks identified through its internal control and risk management processes.

In the second half of 2011, the principal risks and uncertainties affecting the Group's performance are:

§ Any uncertainty caused by the bid approaches and the potential impact of this on the Group;

§ The risks associated with jurisdictional regulatory requirements, changes to regulation, taxation or legislative requirements applicable to the Group's activities; and

§ The effect of a further deterioration in economic confidence affecting demand for the Group's products and services.

Consolidated Income Statement

Six months ended 30 June 2011

Consolidated Statement of Comprehensive Income

Six months ended 30 June 2011

Consolidated Balance Sheet

As at 30 June 2011

Consolidated Cash Flow Statement

Six months ended 30 June 2011

Cash and cash equivalents for the purpose of the statement of cash flows are comprised of cash and short term deposits net of bank overdrafts. For the purpose of the cash flow statement cash and cash equivalents include the following:

Consolidated Statement of Changes in Equity

Notes to the Financial Information

1. General information

IFG Group plc ("The Company") and its subsidiaries (together the 'Group') are engaged in the provision of financial services and corporate and trustee services. The Company is a public company, listed on the Irish and London Stock Exchanges, and is incorporated and domiciled in the Republic of Ireland. The address of its registered office is IFG House, Booterstown Hall, Booterstown, County Dublin, Ireland. This condensed consolidated interim financial information statement ("financial information") was approved for issue by the Board of Directors on 31 August 2011. This financial information has been reviewed, not audited.

The financial information presented herein does not amount to statutory financial statements that are required by Section 7 of the Companies (Amendment) Act, 1986 to be annexed to the annual return of the Company. The financial information does not include all the information and disclosures required in the annual financial statements.

The statutory financial statements for the year ended 31 December 2010 will be annexed to the annual return and filed with the Companies Registration Office in Ireland. The audit report on those statutory financial statements was unqualified and did not contain any matters to which attention was drawn by way of emphasis.

2. Basis of preparation

This financial information for the six months ended 30 June 2011 has been prepared in accordance with the Transparency Regulations 2007, the Transparency Rules of the Central Bank of Ireland and International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the EU. This financial information should be read in conjunction with the financial statements for the year ended 31 December 2010 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.

The accounting policies applied in preparing this financial information are consistent with those used to prepare the financial statements for the year ended 31 December 2010 except as described below.

1. Taxes on income in the interim period are accrued using the tax rate that would be applicable for expected total earnings for the financial year beginning 1 January 2011.

2. Change in presentation currency of the Group financial statements from 1 January 2011 and the change in the Company's functional currency with effect 1 April 2011.

Change in functional currency

IAS 21 "The Effects of Changes in Foreign Exchange Rates" describes functional currency as 'the currency of the primary economic environment in which an entity operates'.

As asignificant majority of the Group's revenues and costs are now sourced and incurred in GBP, having considered the aggregate effect of all the relevant factors,the Directors, concluded that the functional currency of the Company changed in March 2011. This arose from the following

§ the successful refinancing of new borrowings denominated in GBP; and

§ the increased scale of the Group's UK segment following the successful integration of James Hay with the expectation that future dividends of the Company will be driven largely out of UK and International businesses where GBP is the primary currency.

In accordance with IAS21 this change has been accounted for prospectively from 1 April 2011.

Change in presentation currency

The Directors decided that effective 1 January 2011 the Group's presentation currency should be GBP.

Comparative information has been restated in GBP in accordance with the guidance in IAS 21. The 2010 comparatives and associated notes have been retranslated from Euro to GBP using the procedures outlined below:

§ Assets and liabilities were translated into GBP at closing rates of exchange;

§ Income and expenses were translated into GBP at average rates of exchange as they are a suitable proxy for the prevailing rates at the date of transactions;

§ Differences resulting from the retranslation on the opening net assets and the results for the period have been taken to Other Comprehensive Income; and

§ Share capital, share premium and other reserves were translated at historic rates prevailing at the dates of transactions.

New accounting standards

The following standards or amendments were issued in the six months ended 30 June 2011 and will be effective for periods beginning on or after 1 January 2012.

IFRS 9 "Financial Instruments" - in August 2011, the IASB issued an exposure draft that proposes to delay the effective date of IFRS 9 to annual periods beginning on or after 1 January 2014. The original effective date was for annual periods beginning on or after 1 January 2011. The Group is currently evaluating the potential impact that the adoption of this standard will have on its consolidated financial statements.

IAS 19 "Employee Benefits" - in June 2011, the IASB issued amendments to IAS 19. The amended standard eliminates the option for the deferred recognition of all changes in the present value of the defined benefit obligation and in the fair value of plan assets (including the corridor approach, which is no longer applied by the Group). In addition, the amended standard requires a net interest approach, which will replace the expected return on plan assets and will enhance the disclosure requirements for defined benefit plans. The amendments are effective for annual periods beginning on or after 1 January 2013, with earlier adoption permitted. The amendments have yet to be endorsed by the EU. The Group is currently evaluating the potential impact that the adoption of the amendments will have on the presentation of its consolidated financial statements.

IAS 1 "Presentation of Financial Statements" - in June 2011, the IASB issued amendments to IAS 1 to require companies to group together items within Other Comprehensive Income ("OCI") that may be reclassified to the Income Statement. The amendments also reaffirm existing requirements that items in the OCI and Income Statement should be presented as either a single statement or two separate statements. The amendments are effective for annual periods beginning on or after 1 July 2012, with earlier application permitted. The amendments have yet to be endorsed by the EU. The Group is currently evaluating the potential impact that the adoption of the amendments will have on presentation of its consolidated financial statements.

In May 2011, the IASB issued IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements", IFRS 12 "Disclosures of Interest in Other Entities", a revised version of IAS 27, "Separate Financial Statements" which has been amended for the issuance of IFRS 10 but retains the current guidance for separate financial statements, and a revised version of IAS 28, "Investment in Associates and Joint Ventures" which has been amended for conforming changes based on the issuance of IFRS 10 and IFRS 11.

IFRS 10 replaces IAS 27, "Consolidated and Separate Financial Statements" and SIC-12 "Consolidation - Special Purpose Entities", and establishes a single control model that applies to all entities, including those that were previously considered special purpose entities under SIC-12. An investor controls an investee when it is exposed, or has right to variable returns from the investee, and has the ability to affect those returns through its power over the investee. The assessment of control is based on all facts and circumstances and the conclusion is reassessed if there is an indication that there are changes in facts and circumstances.

IFRS 11 supersedes IAS 31 "Interest in Joint Ventures" and SIC-13, "Jointly-controlled Entities - Non-monetary Contributions by Venturers". IFRS 11 classifies joint arrangements as either joint operations or joint ventures and focuses on the nature of the rights and obligations of the arrangement. IFRS 11 requires the use of the equity method of accounting for joint arrangements by eliminating the option to use the proportionate consolidation method, which is not applied by the Group.

IFRS 12 establishes the provision of information on the nature, associated risks and financial effects of interest in subsidiaries, joint arrangements, associates and unconsolidated structure entities, as disclosed objectives. IFRS 12 requires more comprehensive disclosure, and specifies minimum disclosures that an entity must provide to meet the disclosure objectives.

IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements", IFRS 12 "Disclosures of Interest in Other Entities" are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted as long as each of the other standards are also early applied. However, entities are permitted to include any of the disclosure requirements in IFRS 12 into their consolidated financial statements without early adopting IFRS 12. Each of the standards has yet to be endorsed by the EU. The Group is currently evaluating the potential impact that the adoption of the standards will have on its consolidated statements.

Critical accounting estimates and judgements

In the six months ended June 2011, there were no significant changes to the Group's approach to, and method of, making critical accounting estimates and judgments compared to those disclosed in Note 4 of the 2010 Annual Report, other than a change in the functional currency of the Company as set out above.

3. Comparative changes - discontinued operations

In June 2009, the Directors approved the plan to sell the trade of a subsidiary, Title Underwriting Ireland Limited (TUIL) which formed part of the Ireland reporting segment. The business of the subsidiary was sold on 31 December 2010. For the purposes of comparison with 31 December 2010, where it was classified as discontinued, the June 2010 comparatives have been restated to re-present the results of TUIL.

4. Segmental information

In line with the requirements of IFRS 8, "Operating Segments" the Group has identified its Chief Operating Decision Maker (CODM). The Group has identified the Chief Executive Officer (CEO) of the company as its CODM. The CEO reviews the Group's internal reporting in order to assess the performance of the Group and allocate resources. The operating segments have been identified based on these reports.

The CEO considers the business from a largely geographic perspective based on three reporting segments: UK, International and Ireland. He assesses the performance of the segments based on a measure of adjusted earnings. The CEO reviews working capital and overall balance sheet performance on a Group wide basis.

The Group earns its revenues in these segments from two sources:

§ Fees from the provision of services including Trustee & Corporate Services and Pension Administration; and

§ Commissions earned in the intermediation of financial services products ("Financial Services").

Goodwill is allocated by management to groups of cash-generating units on a reporting segment level. There has been no change to the allocation of goodwill relating to prior period business combinations.

The segment information provided to the CEO for reportable segments for the period ended 30 June 2011 is as follows;

The restated segment results for the period ended 30 June 2010 are as follows:

The restated segment results for the year ended 31 December 2010 are as follows:

5. Exceptional items and salaries of employees laid off

The Group's accounting policy defines exceptional items as those items of income and expense that the Group considers to be material and/or of such a nature that their separate disclosure is relevant to a better understanding of the Group's financial performance.

Exceptional foreign currency gain

The exceptional gain of £0.6 million for the period to June 2011 relates to a foreign currency gain on unhedged Euro borrowings. This has been classified as part of "Other gains" on the face of the Income Statement.

Redundancy costs

Redundancy costs relate to a once off charge for a redundancy provision of £0.3 million recorded in the half year to 30 June 2011. See note 13 for further details.

Asset held for sale - impairment

Impairment charge of £0.3 million relates to an impairment taken on the assets of Foster & Cranfield Limited, a subsidiary which formed part of the non-core business which was sold post period end for a nominal amount. The impairment charge arises as the fair value less costs to sell off the net assets of the subsidiary was lower than the carrying amount of those assets. This charge has been classified in "Other expenses" in the Consolidated Income Statement.

Salaries of employees laid off

Salary costs of employees laid off following the acquisition of James Hay were disclosed in prior periods to provide further information about the performance of the Group for those periods.

6. Income tax (expense)/credit

The charge for taxation for the six months ended 30 June 2011 is based on the estimated effective rate of taxation for the year.

During the year, as a result of changes in relevant tax rates including the UK corporation tax rate from 28% to 26% substantively effective from 1 April 2011, certain deferred tax balances have been re-measured resulting in a deferred tax credit of £0.9 million in the half year. The deferred tax liability at 30 June 2011 would be £5.4 million (currently £6.1 million) if the impact of the reduction in the UK corporate tax rate from 26% to 25% substantively enacted on 5 July 2011 had been taken into account.

The half year tax charge is net of a deferred tax credit of £0.3m which has been recorded following the reassessment of the recoverability of the deferred tax asset arising on some tax losses in a UK subsidiary which are available to reduce the tax liability of the Group in the future.

7. Dividends

A final dividend for 2010 of 2.65 cent per share was approved by the shareholders on 29 June 2011. The Board expects to declare a dividend of 1.50 cent per share (current GBP equivalent: 1.31 pence per share) but has deferred doing so pending the outcome of the current discussions regarding a possible offer. In accordance with the Group's accounting policy, this interim dividend is not included in the half year results.

8. Cash generated from operations

9. Analysis of net debt

Significant other non-cash movements

Included in the non-cash movements of £971,000 are exchange rate movements arising on balances denominated in currencies other than GBP and the non cash amortisation of debt facility costs.

Financial Risk Management

The Group's activities expose it to a variety of financial risks; market risk (including interest rate risk, and foreign currency risk), credit risk and liquidity risk.

The financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2010. There have been no changes in any risk management policies adopted by the Group.

Liquidity and capital resources

In March 2011, the Group agreed a refinancing arrangement with a syndicate of banks for a facility of £69.7 million repayable over 5 years. The borrowings, which are predominately in GBP, will ensure that there is less foreign exchange volatility. Upon draw down of the facility in May 2011 the Group repaid £50.0 million of borrowings relating to its earlier facilities.

There have been no scheduled repayments of the new borrowings in the 6 month period to 30 June 2011. The first repayment of £7.6 million is due in December 2011.

Fair value estimation

At 30 June 2011 financial derivatives liabilities of £5,000 (31 December 2010: £14,000) had fair values determined by reference to inputs other than quoted prices in active markets that are observable, either directly (that is as prices) or indirectly. The available-for-sale financial assets of £100,000 (31 December 2010: £100,000) were valued using inputs not based on observable markets.

To date in 2011, there have been no transfers between the levels nor were there any reclassifications of financial assets. There were no significant changes in the business or economic circumstances that affected the fair value of the Group's financial assets and financial liabilities.

10. Share capital and premium

Ordinary shares amounting to 403,000 were issued under the terms of the IFG Group Share Option schemes during the period end 30 June 2011. These shares were issued and allotted following the receipt of the subscription price from the subscribers.

Ordinary shares amounting to 916,667 were issued under the Long Term Incentive Plan (LTIP) to the Trust established for that purpose during the period ended 30 June 2011. These shares are held in trust for the executives including some Executive Directors who are participants in the LTIP.

11. Commentary on other balance sheet items

Property, Plant & Equipment (PPE) and Intangible assets

In the half year to 30 June 2011, the Group spent £0.9 million (HY June 2010: £1.4 million) on PPE and intangible assets mainly on computer hardware and software to continue to strive to improve efficiencies across the Group. The Group also charged amortisation and depreciation expense of £4.7 million (HY June 2010: £4.0 million). The increase in amortisation and depreciation expense for 2011 is due to additional 2 months charge on James Hay assets in 2011 compared to 2010.

At 30 June 2011 capital commitments contracted for were £21,000 (31 December 2010: £43,000).

Assets held for sale

In line with stated intentions, the Group concluded the sale of Foster & Cranfield Limited post period end. The net assets of the disposal group have been measured at fair value less costs to sell.

Borrowings

The Group's borrowings at 31 December 2010 were all payable within a year. However in 2011, a new debt facility was drawn down by the Group resulting in a change in the classification of the outstanding balance at 30 June 2011 to reflect the contractual debt repayment profile of the new facility.

Other non-current liabilities

The non-current liabilities balance represents the non-current element of an amount refundable to a former customer of one of the subsidiaries in the International segment.

12. Seasonality of operations

The Group's business operations are not significantly affected by any seasonal factors. 

13. Related party transactions

Key management personnel compensation

The Group considers the Directors of the Company as its Key Management Personnel. Key management received compensation in the form of short-term benefits, post-employment benefits and equity compensation benefits. Key management personnel received total compensation of £1.6 million for the six months ended 30 June 2011 (HY 2010: £1.8 million). The role of CEO UK segment has been made redundant. An expense of £0.3 million has been recorded in the half year results to 30 June 2011 to reflect redundancy entitlements under the terms of the applicable service contract. This amount was discharged in July 2011.

On 29 June 2011, the shareholders of the company approved a new Long Term Incentive Plan for executives of the Group in which a number of Executive Directors are participants. The terms of the LTIP are broadly consistent with the terms of the 2006 LTIP which terminated at the end of 2010.

Transactions and balances with joint ventures and associates

At 30 June 2011, Group companies were owed £1.2 million (31 December 2010: £1.2 million) by Rayband Limited, an Irish unlisted company and associate of the Group. During the year the Group paid £2,000 in expenses on behalf of Rayband Limited. These advances are unsecured, interest free and have no fixed repayment date. Rayband Limited is controlled by Patrick Joseph Moran, a Director of IFG Group plc.

At 30 June 2011, Group companies were owed £0.3 million (31 December 2010: £0.2 million) from IFG McGivern Flynn Teoranta (50% joint venture) for services rendered. £0.4 million is owed arising from the sale of an insurance renewal book to IFG McGivern Flynn Teoranta in 2010. This amount is payable in instalments, the first being due in early 2012.

Transactions involving entities in which key management have an interest

During the half year, Group companies earned £36,000 (HY 2010: £36,000) from TFC Limited, a company based in the Isle of Man and of which, Declan Kenny, Executive Director - International, is a Director. This related to the provision of services to TFC by Group companies. Additionally, Group companies earned £5,000 (HY 2010: £6,500) from TFC's parent Tanyl Limited of which Declan Kenny is also a director and shareholder.

During the first six months of the year, Thomas Wacker, a Non-Executive Director of Group, who retired as a Director on 29 June 2011, invoiced £7,500 (HY 2010: £7,500) to Saunderson House Limited, a subsidiary of the Group, for services rendered during the period.

14. Contingencies

The Group has a small number of claims against it arising from its day to day trading activities. The Group has procedures in place to assess the veracity of the claims and provision has been made to cover its best estimate of the expenditure required to deal with the claims through settlement or defence of the action.

15. Post balance sheet events

Note 7 outlines the details of the interim dividend declared post 30 June 2011.

On 29 July 2011 the Company acquired, through its wholly owned subsidiary IFG Nominees Limited, 70% of the issued share capital of A.R.B Underwriting Limited and its subsidiary A.R. Brassington & Co Limited (ARB). The purchase consideration paid was €0.5 million. The investment in ARB gives equity and also dividend and voting rights for 70% of the acquired business. As the accounting for this transaction is incomplete as at 31 August 2011, further disclosure on this business combination will be included in the 2011 Annual Report.

Post period end the Company has received a proposal regarding a possible offer from Bregal Capital LLP ("Bregal"). IFG has now entered into an exclusivity agreement with Bregal. If concluded, the proposal contemplates a transaction whereby IFG shareholders would receive a cash offer of €1.80 per IFG share cum dividend. The proposed value represents a premium of 35.0% over the average closing price of €1.333 on the Irish Stock Exchange for the three months up to 20 April 2011, being the day immediately preceding the initial proposal received from Bregal. The proposal values IFG's fully diluted share capital at €231.2 million, based on IFG's 128.4 million ordinary shares in issue when taking into account in-the-money options and LTIP allocations. Bregal have also undertaken to provide a non-cash alternative for IFG shareholders to re-invest their offer proceeds in the bid vehicle. The exact details of the quantum, terms and conditions of the non-cash alternative will be determined in due course. The proposal is subject to certain customary pre-conditions, additional due diligence and terms as well as conclusion of banking facilities.

16. Statement of Directors' responsibilities

The Directors are required to prepare the financial statements on the going concern basis unless it is not appropriate. Since the Directors are satisfied that the Group have the resources to continue in business for the foreseeable future, the financial statements continue to be prepared on the going concern basis.

Each of the Directors, whose names and functions are outlined below, confirm that, to the best of each persons knowledge and belief:

§ the condensed set of interim financial statements comprising the condensed Consolidated Income Statement, the condensed Consolidated Statement of Comprehensive Income, the condensed Consolidated Statement of Changes in Equity, the condensed Consolidated Balance Sheet, the condensed Consolidated Cashflow Statement, and the related notes have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the EU;

§ the financial information includes a fair review of the information required by:

(a) Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

The names and functions of the Directors as of 30 June 2011 are listed below:

Colm Barrington - Non Executive Director

Mark Bourke - Executive Director - Chief Executive Officer

Aidan Comerford - Executive Director - Finance & Risk

Declan Kenny - Executive Director - International

John Lawrie - Senior Independent Non-Executive Director

Patrick Joseph Moran - Non-Executive Chairman

Gary Owens - Executive Director - Ireland

Peter Priestley - Non-Executive Director

John Rowan - Non-Executive Director

Evelyn Bourke was appointed to the Board as a Non-Executive Director on 25 August 2011.

The Directors of IFG accept responsibility for the information contained in this interim statement. To the best of their knowledge and belief (having taken all reasonable care to ensure such is the case). The information contained in this interim statement is in accordance with the facts and does not omit anything likely to affect the import of such information. It should be noted that Mr. Peter Priestley's connection with Fiordland Investments Limited, a company which is part of a consortium that has made an approach in relation to the possibility of making an offer for the entire issued ordinary share capital of IFG Group plc, Mr. Priestley, has absented himself from all deliberations, meetings and decisions of the Board since 17 May 2011.

On behalf of the Board

Mark Bourke Aidan Comerford

Executive Director - Chief Executive Executive Director - Finance & Risk

Forward-looking statements

Certain statements in this report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no guarantee that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no commitment to update any forward-looking statements whether as a result of new information, future events or otherwise.

Independent Review Report to IFG Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report ("financial information") for the six months ended 30 June 2011, which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity, and related notes. We have read the other information contained in the financial information and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The financial information is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the financial information in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

As disclosed in the notes, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this financial information has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the financial information based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom and Ireland. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the financial information for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

PricewaterhouseCoopersChartered Accountants

Dublin

31 August 2011

Notes:(a) The maintenance and integrity of the IFG Group plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. (b) Legislation in the Republic of Ireland governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.